California State Disability Insurance (SDI): Insurance Policy

California State Disability Insurance
State Disability Insurance

In the California State, residential workers are required to pay into the State’s Disability Insurance (SDI) program. The SDI is enacted to help people who aren’t able to work due to disability, illness or pregnancy by supplying them with reasonable financial assistance. Read this below article to get to know about this SDI program benefits, requirements for eligibility, application and more. 

The basics of California State Disability Insurance (SDI)

the basics of SDI

California State Disability Insurance (SDI) is a short-term public insurance program run by California’s Employment Development Department (EDD). SDI pays you about 55% of what you used to make at work because you:

  • Have an illness or injury that is not related to your job. These SDI payments can last up to a year.
  • Paid Family Leave (PFL) is required to care for a sick relative or to bond with a new child. PFL payments are made for up to eight weeks.
  • Are expecting a child. This article does not cover Pregnancy Disability Leave. If you have any questions, please contact the EDD.

Important: If you are sick as a result of COVID-19 or are caring for someone who is sick as a result of COVID-19, you may be eligible for SDI or PFL benefits. See EDD’s COVID-19 questions and answers, as well as the state of California’s chart of all the different benefits that may assist families affected by COVID-19.

To qualify for SDI, you must have had California SDI taxes (usually 1.1 percent of your wages) deducted from your pay for a specified period of time. If you’ve done this, SDI will replace some of the income you’re losing when you’re unable to work due to one of the reasons listed above.

There are three main ways to be covered by SDI:

  • The State Plan automatically covers most (but not all) California employees.
  • Some employers instead provide private Voluntary Plans (these plans must provide coverage at least as good as the SDI State Plan and include at least one feature that the State Plan does not).
  • If you are self-employed or own a business, you can pay for Elective Coverage, which provides benefits for 39 weeks rather than a full year.

The rest of this article has more details focusing on the State Plan’s SDI and PFL benefits.

Eligibility and Application

application for SDI

Paying into SDI

If you’re like the majority of eligible California workers, you have State Disability Insurance (SDI) taxes deducted automatically from your paycheck. This means that when you get paid, the SDI receives 1.1 percent of your earnings. These are also known as SDI contributions.

SDI taxes are paid on income up to $145,600 per year, so anything earned above that amount is exempt from SDI tax. Another way to look at it is that the most anyone could have to pay into SDI in 2022 is $1,601.60 (1.1 percent of $145,600).

SDI covers millions of Californians. Their contributions are deposited into a state fund, and the proceeds are used to pay SDI benefits.

Who Is Not Covered By SDI

Most California employees are covered by SDI, but some aren’t. Those who are not covered include:

  • Most government employees, whether federal, state, county, or city. Non-industrial Disability Insurance covers some government employees (NDI). Find out more about NDI.
  • Some domestic employees
  • Employees of the Interstate Railroad
  • Some employees of charitable organizations
  • Self-employed individuals and small business owners who do not pay for Elective Coverage

Types of SDI Plans

There are three different SDI plans.

  1. The State Plan, which includes Paid Family Leave, covers the majority of California employees. This is the SDI strategy outlined in this section.
  2. Some companies provide Voluntary Plans. SDI has approved the following private disability insurance plans. These plans must provide coverage that is at least as good as the State Plan while also including at least one feature that the State Plan does not. The private plan cannot be more costly than the State Plan, and it must be approved by a majority of employees.
  3. If you are self-employed or own a business, you can purchase Elective Coverage from SDI. Some of the rules are unique. For example, Elective Coverage is only available for 39 weeks, and premiums are calculated as a percentage of your previous year’s profit.

Eligibility for the SDI Benefit

SDI gives you a cash benefit if you have paid payroll taxes into it and can’t work for one of these reasons:

You have a disability that has nothing to do with your job. The Social Security Administration defines disability as “any mental or physical condition or injury that prevents you from performing your regular and customary work.” This is a broader definition than that used by the federal Social Security Disability Insurance program.
You must take Paid Family Leave (PFL), which compensates you for missing work to care for a sick relative or bond with a new child.
Learn more about who is eligible for Paid Family Leave.
You’re expecting a child. Although pregnancy is not considered a “sickness or injury,” it is a medical reason for being absent from work. This article does not address pregnancy disability leave. If you have any questions, please contact the EDD.

You also have to meet the following requirements:

  • If you work, you must be disabled or absent from work for more than 7 days before your benefits begin.
  • Please keep in mind that there is no waiting period for Paid Family Leave (PFL).
  • If you are currently unemployed, you must actively seek employment.
  • You must be under the care of a medical provider during the first 8 days of your disability and continue to be under the care of a medical provider while receiving SDI benefits.
  • During your base period, you must have earned at least $300 in wages.

When you file your claim, you must include the date you became unable to work due to your disability, which serves as both the official start date of your disability and the start date of your claim. This date is used to determine whether you have met all of the requirements. Your start date cannot be changed once your claim has been filed.

Application Process

The SDI is run by California’s Employment Development Department (EDD).

For a non-work-related injury or illness

To get SDI benefits when you are unable to work because of a non-work-related injury or illness, you can apply:

  • SDI Online is available online. EDD provides written instructions as well as a video on how to file an SDI claim online.
  • By mail. A paper form can be obtained from an SDI office, your employer, or your doctor/medical practitioner’s office, or you can order one online from EDD’s Online Forms and Publications (the form will be mailed to you). EDD explains how to mail an SDI claim.

You can submit your application as early as 9 days after your disability began (you became unable to work), and you must apply within 49 days of when your disability began or you may be denied benefits. Include a letter explaining why you are filing late if you apply after 49 days.

Part A of the application is completed by you, and Part B, the medical certification of your disability, is completed by your doctor/medical practitioner. Your claim will not be processed until both Parts A and B are correctly completed.

Part B, which can be completed online or by mail, must be completed by your doctor/medical practitioner. Because not all medical offices handle SDI claims in the same way, ask your doctor’s or medical practitioner’s office what you need to do to have them submit their portion of your SDI claim.

For Paid Family Leave

The forms to apply for Paid Family Leave are different, but the options for applying are the same:

  • SDI Online is available online. EDD provides written instructions on how to apply for PFL online, as well as a video on how to apply for PFL online.
  • By mail. EDD explains how to apply for PFL by mail and provides a video tutorial on how to apply for PFL by mail.

The PFL application is divided into several sections. Part A must be completed by you; Part C must be completed by the person you are caring for (if they are unable to do so, call 1-877-238-4373 for instructions and required forms); and Part D must be completed and signed by the person you are caring for’s doctor/medical practitioner.

If your forms are correct, you should begin receiving SDI or PFL benefits about two weeks after submitting your claim. Do not file more than one copy of the same claim, as this will cause your benefits to be delayed.

The benefits of SDI

the benefits of SDI

Benefit Amount

SDI generally pays 55% of your average weekly wage for up to 52 weeks of disability. However, your income can fluctuate from month to month, season to season, or year to year, making it difficult to determine your exact average weekly income.

When SDI examines your earnings to determine how much you should receive in benefits, they consider how much you earned in the 12 months preceding:

  • Approximately 17 months before your disability began
  • Approximately 5 months before your disability began.


These 12 months are referred to as your base period. To be eligible for SDI benefits, you must have earned at least $300 during your base period and paid SDI taxes on those earnings. SDI then divides the 12-month base period into four quarters. They base your benefit amount on the quarter in which you earned the most money.

Benefit Period

You should receive your first benefit payment within two weeks of filing your claim, and subsequent payments will be made every two weeks until your benefit period expires. Most people receive their payments via a debit card, which can be used to make purchases or set to automatically deposit your benefit into a bank account. You can have checks mailed to you if you prefer.

Your benefit period typically ends on the date your doctor/medical provider specified on your claim form as the date you should be able to return to work. When that date arrives, SDI notifies you that your benefit is coming to an end. If you are still unable to work as a result of your disability, you and your medical provider can fill out a form requesting a longer benefit period.

While you are receiving benefits, EDD will ask you to submit a “continued claim certification,” which you can do online through your SDI Online account or by mail. If you have returned to part-time or full-time work, recovered from your disability, or received any other type of income, you must notify EDD immediately. You must also report the death of a person receiving SDI payments immediately. If you do not inform EDD, they may pay you more than you are entitled to. This is known as an overpayment, and you will be required to repay it.

SDI is intended to replace earnings for up to 52 weeks. That is, you can receive benefits until you have received 52 times your weekly benefit amount. You can receive a benefit for more than 52 weeks if you work part-time or have your benefit reduced for another reason.

Please keep in mind that the maximum benefit period for Elective Coverage is 39 weeks, and you can only take up to 8 weeks of Paid Family Leave per year.

Part-time Work

If you return to work part-time, you may be able to continue receiving SDI benefits. If the sum of your SDI benefits plus your earnings is less than what you earned each week before your disability began, you will continue to receive your full SDI benefit amount.

If your earnings plus SDI benefits exceed what you earned before your disability began, your SDI payment will be reduced.

Other Benefit Reductions

Your benefit may be reduced for reasons other than part-time employment. SDI treats certain other types of income as wages. Depending on your circumstances, any or all of the following could reduce your SDI benefit:

  • Commissions \sBonuses
  • Pay for holidays
  • Pay for Sick Leave
  • Payments for Workers’ Compensation
  • Military Compensation
  • Other sources of income
  • SDI does not include earnings from vacation time. It is important to note that any type of income must be reported to SDI, even if it has no effect on your benefit payments.

If you receive a partial benefit, you can continue to receive it until the full amount of your benefit is paid, even if it takes more than 52 weeks.

Paid Family Leave (PFL)

PFL is a component of the SDI program. PFL is not paid separately: if SDI taxes have been deducted from your paychecks, you can get PFL to care for a seriously ill relative (child, parent, parent-in-law, grandparent, grandchild, sibling, spouse, or registered domestic partner) or to bond with a new child.

PFL benefit amounts are calculated weekly in the same way as SDI benefits, by using a base period and calculating your average weekly wages during the quarter in which you earned the most money. Similarly to SDI, your benefit amount may be reduced if you receive income from other sources, such as sick leave, holiday pay, commissions, or bonuses.

However, there are some differences for PFL:

  • PFL makes use of a different claim form. EDD provides videos that demonstrate how to apply for PFL online and by mail.
  • If you are using PFL to care for a sick relative, their illness must be certified by a doctor.
  • PFL is only available for 8 weeks per year.
  • Please keep in mind that prior to July 1, 2020, you could only have 6 weeks of PFL per year.
  • Although some employers are required to follow state and federal leave laws, PFL does not always protect your job.
  • PFL does not have a seven-day waiting period.

Pregnancy

SDI considers pregnancy to be a medical condition that can prevent you from working. The benefit period for uncomplicated pregnancies is usually from 4 weeks before your due date to 6 weeks after delivery. If your pregnancy or recovery prevents you from working beyond that, your doctor must document it on the claim form, and it is then treated similarly to any other medical condition that prevents you from working. EDD responds to frequently asked SDI and pregnancy questions.

After having your child, you do not need to file a separate PFL claim for days off to bond with your new child. After your SDI benefit expires, they will send you a form to complete. You will receive the same benefit check that you received during your pregnancy. So, if you are covered by SDI and have a pregnancy without complications, you will receive SDI for 4 weeks before and 6 weeks after giving birth, with the option of adding a PFL benefit for an additional 6 weeks to bond with your child. EDD provides a video that walks you through the process of switching from SDI to PFL.

SDI and other programs

Social Security Disability Programs

State Disability Insurance (SDI) benefits are typically limited to one year. If you and your doctor/medical provider believe you will be disabled for more than a year, you should apply for Social Security Disability Insurance (SSDI), a federal disability insurance program funded by payroll taxes. You can get this benefit if you’ve paid into the system for a long enough period of time. SSDI requires that your disability last at least a year in order for it to pick up where SDI leaves off. If you are receiving both SSDI and SDI, your SSDI will be reduced.

If you expect your disability to last more than a year or if you haven’t worked long enough to qualify for SSDI, you should also apply for Supplemental Security Income (SSI). This is a federal income program that provides assistance to low-income people who are disabled, blind, or over the age of 65. If you receive both SSI and SDI, your SSI benefit is reduced.

You should apply for both of these programs as soon as possible because claims can take up to a year to be processed.

Workers’ Compensation

SDI is for disabilities that are not related to work. If you are injured or become ill on the job, you are covered by an employer-paid insurance program known as Workers’ Compensation (WC). In most cases, WC and SDI cannot coexist. You can, however, obtain SDI while waiting for a WC claim to be approved. For more information, the Division of Workers’ Compensation of the Department of Industrial Relations explains What to Do If You’re Injured at Work and provides A Guidebook for Injured Workers.

Unemployment Insurance

Unemployed people have their own insurance program. If you’re out of work and disabled, it’s a good idea to apply for SDI benefits before Unemployment Insurance.

  • SDI can provide you with a greater benefit for a longer period of time than UI.
  • You will not receive UI benefits if you are unable to look for work or accept work if it is offered to you
  • You cannot receive UI and SDI at the same time.

Conclusion

California State Disability Insurance (SDI) is a program that provides benefits to employees who are unable to work due to an illness or injury that is not related to their job. If you are a California employer, it is critical that you understand the fundamentals of SDI and how it may affect your business.

We provide an overview of SDI here, including eligibility requirements and covered conditions, so you can ensure your company is in compliance. We also discuss some common misconceptions about SDI and provide advice to employers on how to manage leaves of absence. Are you thinking about applying for SDI benefits? See our How to Apply for California State Disability Insurance Benefits guide for more information. Do you still have questions? Please contact us for assistance.

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