Disability Insurance

State Disability Insurance in California


California State Disability Insurance Program is a worker-funded program that greatly contributes to the state’s economic security by enabling the eligible workers to enjoy affordable benefits. The Disability Insurance Program or DI, as we call it, takes care of all those workers who are unable to work due to some injury outside work, non-work related illness or pregnancy. This program provides benefits to such workers. There are Workers’ Compensation Laws dealing with work-linked illnesses and disabilities, still, DI can offer benefits to such workers under special circumstances as prescribed legally.

California Unemployment Insurance Code was extended further by the addition of Disability Insurance in 1946. Apart from California, the other states providing disability insurance to the workers are New York, Rhode Island, Hawaii and New Jersey. But it was California that pioneered this innovative implementation of DI as:

• California is the first state to approve state plans for DI coverage.

• California provides State Disability Insurance for agriculture and farming workers too, first of its kind approval.

• It was California who first of all gave the DI coverage to self-employed individuals on an elective basis.

• California is the first state to authorise benefits to individuals recovering from drug-induced illnesses and alcohol dependency who stay at approved recovery facilities.

• Again, the first state to sanction paid family leaves to people caring for a seriously ill family member or for bonding with the new minor children.

Coverage by SDI

About 12.85 million workers in California are covered by the California State Disability Insurance Program. The legislation entails coverage for employees who are working for companies with payrolls in excess of $100 every three months. Although, there are a few exceptions to those who are covered under SDI. The ones explicitly excluded are:

• Special cases of governmental employees

• Special cases of domestic workers

• Interstate railroads employees

• People working at some nonprofit organisations

• People claiming religious exemptions

There is a list of those workers who does not require participation, still, they may opt for SDI coverage and may avail. The list contains:

• Employers having sole proprietorships and partnerships

• Self-employed persons (check 8714CC)

• Some governmental employees

• Out of state units of employers in California

• Individuals in family employment, otherwise excluded

State Plan

The California State Disability Insurance program contains a State Plan as well as a Voluntary Plan. State Plan coverage is obligatory for those employees who are insured unless their employer chooses a Voluntary Plan coverage, of course with the consent of the employees working for that employer. State Plan is administered by the Employment Development Department (EDD) and is entirely financed by the workers of California as they pay a payroll tax levied on their incomes.

The State Law was effective on January 1, 2009, the State Disability Insurance withholding rate got increased to 1.1 percent. The State Disability Insurance taxable wage limit was $90,669 per worker for the first year of 2009. The Law sets the wage limit as well as the tax rate for California State Disability Insurance.

Taxes which are collected directly go into the Disability Fund and are used only for making payment of Paid Family Leave benefits or Disability Insurance and for the administration of State Disability Insurance program.

Voluntary Plan

It is a private plan authorised and approved by the Director of State Employment Development Department of California. Many times Voluntary Plan benefits match those of State Plan, then these can be substituted for each other, even in a few circumstances, Voluntary plans provide greater benefits with the same cost as compared to the State Plans. About 3 to 4% of total California’s workers are covered under the Voluntary Plans.

Eligibility and Benefits

Benefits under the Disability Insurance are payable for the employee under coverage only in the condition if the employee suffers a wage loss because he or she cannot work due to non-work related illness or injury or pregnancy. Any reason should be not related to the job. To receive DI benefits one must:

• File insurance claim in compliance with rules and regulations

• Serve a non-payable waiting period of seven days

• Get paid at least $300 in wages, in subjugation to California State Disability Insurance taxes

• Get a medical examination done and certificate submitted

• File a disability certificate signed by a religious practitioner or an authorised medical practitioner


Any client is not eligible for the benefits under California State Disability Insurance if:

• The client receives Paid Family Leave payments or unemployment insurance

• The client receives full payment

• The client is in a legal custody as a result of some conviction as confined by the law of court

• The client has religious exemptions from SDI taxes

• The client no longer works in a labour market

• The client receives worker’s compensation at rates greater than SDI rate

TLC is a market leader in assisting its clients file for SDI coverage if they fall under the eligibility criteria.

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Disability Insurance

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