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State Disability
There are five states plus the Commonwealth of
Puerto Rico that currently provide statutory disability programs. All, except
Rhode Island, permit employers to self-insure and use a plan administrator such
as Sedgwick CMS.
For self-insurance to make financial sense, a
company generally should have a minimum of 500 employees and usually 1,000 or
more workers. This varies by state, depending on several factors, including
benefit plan design and contribution rates.
State disability programs are separate and
different from the better-known State Workers' Compensation programs in that
state disability plans cover workers who become disabled for non-work related
accidents or illnesses. Typically, the most frequent type of claim in a state
mandated plan involves maternity.
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Benefits of Self-Insuring State Disability
Self-insuring statutory disability insurance is
probably the most advantageous step an employer can take to reduce overall
benefit expenses. Self-insuring allows the employer to have a single, consistent,
nationwide STD program for all employees and eliminates the
duplicate costs for coverage under any concurrent or
simultaneous program.
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Lowers overall retention costs of insured plan by at least 50%.
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Lack of early intervention and case management increases length of state
benefits by 25% or more.
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Supplemental employer paid benefits are typically provided for the same period
and duration as the state benefits.
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State benefits (and workers' compensation) are primary to all other Disability
benefits. Benefits must be integrated with sick pay or salary continuation
programs on a prospective or retrospective basis.
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