New Jersey TDB offers profit potential for brokers and advantages for business owners and claimants
For years, New Jersey’s required Temporary Disability Benefit (TDB) was funded entirely by employers at a relatively low premium rate.
Businesses could privatize TDB for better service, no waiting period on claims, and the option to receive benefits as a direct deposit rather than a pre-paid debit card. But there was very little cost savings in writing benefits through a private plan rather than the New Jersey State Insurance Fund (NJSIF) for the past several years.
Now, we expect that New Jersey will reinstate an employee contribution for TDB in 2025 and potentially increase rates. The benefits of writing private TDB have returned, providing brokers with expanded opportunities to collect commissions for a required benefit and help clients roll that cost savings into ancillary benefits and voluntary worksite benefits that employees want.
Let’s explore six reasons why it pays for brokers to privatize TDB for clients through The DBL Center’s select network of top-rated insurance carriers.
No Annual Assessment Fee
When your clients write NJ TDB benefits through the NJ State Insurance Fund, the state institutes an annual assessment fee. Your clients can avoid this fee by writing NJ TDB through a private carrier.
Faster Claims Processing
The State of New Jersey frequently gets backed up processing disability insurance claims. It can take four weeks or longer for the state to process a claim and an injured or ill worker to begin collecting the money they need.
For anyone with a family to feed and a mortgage to pay, missing a full month of income can spell financial disaster. Roughly 60% of Americans have less than $1,000 in savings to cover an emergency, according to a recent GOBankingRates survey.
The Mortgage Bankers Association shared that the median mortgage payment in March 2024 was $2,201. Most people can’t pay their bills for one month without an income. A private TDB plan can process claims and put money in a claimant’s pocket in one week or less, filling that gap between their savings and their bills.
Dedicated Claims Servicing
If a claim gets delayed for any reason, a dedicated claims rep can help workers whose employers write DBL through a private plan. The state of New Jersey doesn’t offer that level of customer service.
Benefit Payment Frequency
When someone is out of work, cash flow can become a tremendous problem. And, as we shared, most Americans don’t have enough savings to cover time off work for an injury or illness. Private TDB plans offer a choice of weekly or biweekly payments so that claimants can stay up-to-date on their bills and feed their families.
Benefit Payment Type
Most workers today are accustomed to receiving their pay in the form a direct deposit to their bank account. When you receive disability benefits from the state of New Jersey, they come in the form of a debit card. Not only does this pose a security risk if the card is lost or stolen, but it limits how you can spend the money.
Private plans offer options for paper checks, which you can deposit at your bank and spend, save, or invest as you please, or electronic funds transfer (ACH deposit), the preferred mode of payment for most workers and businesses today.
Broker Commissions
It feels good to help clients by providing a benefit they need, at a lower rate than they could find through the state, along with better service and flexibility. But, obviously, your insurance company is a for-profit business and you thrive based on the commissioned products you write.
Privatizing TDB with help from The DBL Center puts money in your pocket in the form of commissions. Meanwhile, your clients are paying less for disability insurance then they would through the state.
You can take that cost savings and show them how they can put it toward other benefits their employees want and need, like Group Life / AD&D, dental, vision, and other voluntary worksite benefits. Your clients can choose to share the premium costs with employees or offer them as voluntary benefits funded by the employees only.
Either way, it leads to a happier workforce, better retention rates, and money in your pocket.
If you’ve been ignoring TDB for the past few years, it might be time to consider the profit potential in this required benefit. The DBL Center is here to help.
