If NYS DBL benefits increase, is there still a place for Short Term Disability – STD in NY?
The only thing constant in the insurance industry, as we often say here at The DBL Center, is change. As far back as 2020, The DBL Center has advocated for New York State to boost its statutory short term disability insurance benefits.
NYS DBL benefits have not increased since 1989, holding steady at a mere $170 per week for 26 weeks. The maximum weekly benefit in New York is not adjusted annually for inflation, like so many benefits are. Even when Paid Family Leave in New York was introduced to provide parental leave at a much higher rate, the state did not adjust DBL benefits.
In 2024 dollars, New York workers should receive at least $430 per week had the maximum benefit amount gone up with employee wages and the cost of living.
That’s hardly enough to cover groceries for a family of four in most parts of New York. In New York City, groceries for a single person cost an average of $122 per week, according to an article published by Bankrate.com on the cost-of-living in New York City.
A short term disability payment of just $170 per week leaves very little left over for rent or mortgage payments, gas, or other bills, especially if the person on STD in NY is the primary or sole breadwinner in a household.
New York’s DBL rates fall far short of neighboring states, including New Jersey. Workers in NJ can receive 85% of their average weekly wage, up to $1,055 per week for TDI benefits.
Assembly Labor Committee chair LaToya Joyner hammered home the point in an article published by SpectrumLocalNews.com: “We all know, everyone who lives in New York, in all parts of the state of New York, no one can survive on $170 per week.”
The solution has always been for brokers to encourage their customers to enrich DBL insurance. When an employer offers enriched DBL, benefits are paid up to a maximum of 60% of an employee’s salary, up to $850 per week.
Changes to New York Disability Benefits Law on the Horizon
If New York State Governor Kathy Hochul’s proposal passes, 2024 could bring a substantial increase to DBL benefits for the first time in decades.
Under the terms of the new bill, as reported by TimesUnion.com, benefits would increase incrementally through 2029, beginning in 2025 when workers would receive 67% of their average weekly wage, not to exceed 67% of the state’s average weekly wage. For workers earning less than 67% of the AWW, they would receive benefits equal to 90% of their average weekly wage, not to exceed 50% of the AWW.
If the legislation passes, there would be less need for insurance brokers to enrich DBL coverage for clients. The benefits would be more in line with workers compensation insurance and Paid Family Leave.
However, even with these changes on the horizon, a need for both short-term and long term disability insurance from reputable brokers remains.
Why Enriched DBL Remains Important
Until the legislation passes, New York workers with a serious, short-term medical condition do not receive the funds they need to stay afloat. Short term disability options remain critical in New York for workers that must battle a serious medical condition while financially providing for themselves or their family. This problem, according to local news sources, predominantly affects women in the workplace.
Statistics from ShelterPoint, reported by Spectrum Local News, revealed that women file nearly 70% of New York State disability claims. In spite of PFL benefits available for either parent in the three months following childbirth, 30% of DBL claims are pregnancy-related.
Additional time off work before or after childbirth may be needed to help protect the health of the pregnant parent and the unborn child, or to help them recover following the birth. PFL and DBL cannot be taken concurrently, but consecutive claims can be filed, essentially stretching the allowable time off work to allow new parents time to adapt to life with an infant.
STD, DBL and LTD: Where Can You Fill Gaps?
In addition to being socially and morally important, enriched DBL and STD also remain incredibly relevant as a revenue driver for your insurance company.
By privatizing and enriching DBL, your clients are still likely to see cost savings alongside a more robust benefits package. You can take that savings and help them boost employee benefits with additional insurance, including long term disability, dental, and vision.
While you’re having the discussion, you can introduce the idea of voluntary worksite benefits, which caters to an even broader range of employee’s needs, at no additional cost to the business owner, your client.
STD vs. LTD
While you’re discussing short term disability with clients, it’s a good idea to bring up long term disability, as well. While DBL or STD covers off-the-job injuries or illnesses for up to 26 weeks in New York, long term disability has a waiting period of 90 to 180 days. LTD can extend coverage up to the age of 65.
That means employees can begin collecting long-term disability just as their STD or DBL runs out. Employers can choose to write LTD as a voluntary, tax-free, employee-funded benefit. Or, the employer can cover the benefit in full or share costs with employees.
Final Thoughts
In today’s competitive business environment, providing a variety of benefits to accommodate employees in every stage of life can help companies attract and retain top talent. Let The DBL Center help guide you through New York’s latest legislation and provide the best options for short term disability coverage.
