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California State Rate to Remain at 0.9% for 2002
November 2001
Calabasas, California – The State Disability Insurance (SDI) withholding
rate will remain at 0.9% (.009) for the calendar year starting January 1, 2002,
according to information obtained by VPA from Employment Development Department
sources. The SDI taxable wage limit will remain at $46,327 per employee with a
maximum weekly benefit of $490.00 for the calendar year 2002. The maximum
contribution from an employee will remain at $416.94
Jack Bredehorn, President of VPA, Inc., the
leading administrator of voluntary, private SDI replacement plans, notes that
``... following a period of some uncertainty with respect to rate making
actions for the SDI State Fund, it appears that the Governor is acting more
conservatively with regards to the state fund. As you may recall, the Governor
had to announce an emergency tax rate increase several months into calendar
year 2000 after ignoring staff recommendations to shore up the financial
condition of the fund. This is especially good news for current plan sponsors
and those contemplating starting new, state sanctioned private plans."
Since 1942, the California Unemployment Insurance
Code has required that all employees working in California (except for
employees of government division, religious organizations, and other
miscellaneous groups) must participate in a state audited and regulated
short-term disability income plan replacement plan.
Currently, employers can satisfy their obligation
to make this coverage available to their employees in one of two (2) ways:
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Employers can have employees participate in the State Plan
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Employers can establish a private self-insured plan, known as "self-insured
voluntary plans" under the Unemployment Insurance Code
Significant advantages to self-insuring SDI
benefits are that employers can control the administration of the disability
claims and integrate the SDI benefits seamlessly with their sick pay, salary
continuation, short-term and long-term disability benefits. In addition to
these administrative advantages, the cost savings to employers by having
control over the self-insured SDI benefits and closer coordination of other
disability benefits, can be as much as 25% to 30% of the total disability
benefit costs when the SDI benefits are not self-insured.
About VPA, inc.
VPA Inc., the largest administrator of
self-insured California SDI plans, helps employers solve the challenges
associated with administering and managing complex absence and disability
programs, including FMLA,
short-term, long-term, and
state disability benefit plans. VPA's expertise and technology,
including web intake and inquiry, provide a complete solution to improve
productivity, control costs, and reduce the administrative burden for
self-insured employers.
Source: VPA, Inc.
Contact: Robert Trotta, 800-473-9761
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