| State Mandated Insurance – Workers’ Compensation and TDI |
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Wednesday, 29 July 2009
Written by Tracy Martin, CEO of Martin Financial Group in Princeton, NJ. What is Workers Compensation? Workers’ Compensation is a “no fault” insurance program that provides medical treatment, wage replacement, and permanent disability compensation to employees who suffer job-related injuries or illnesses. It is termed “no fault” because it protects the employer by prohibiting civil action on behalf of the employee for pain and suffering or other damages, except in cases of intentional acts. New Jersey Workers’ Compensation Requirements Workers’ Compensation is mandated by the state for: Employers, including Corporations, Partnerships, LLC’s, and Sole Proprietorships, Having one or more employees, Where work or a contract of employment are performed in New Jersey Because a sole proprietor, a partner in a partnership and a member of a limited liability company are not generally considered employees and are thus not required to have worker’s compensation insurance for themselves, a company may be able to generate some cost-savings by declining coverage for these specific individuals. Insurance is obtained through a NJ-licensed insurer, which is responsible for claims administration. Premiums are based on the type of work performed by the employees, the claims experience of the employer and the employer’s payroll. Alternatively, an employer can also choose to be self-insured. The business must obtain approval from the state and must prove that it is stable enough and financially capable of meeting its legal obligations. The self-insured business is responsible for administering its own Workers’ Compensation claims or it may delegate that work to a third-party administrator (TPA). Other requirements include: (1) Posting of official workers’ compensation information form, (2) Communication to workers, especially new hires, of their WC coverage and benefits, how to report an injury, and where to go for treatment if injured on the job, and (3) Immediate report of an injury to insurance carrier or third-party administrator (TPA). Consequences for Failure to Insure There are several significant consequences for failure to provide workers’ compensation coverage. Note that neither general liability nor health and accident insurance can take the place of workers’ compensation insurance. Failure to insure is considered under New Jersey Law a disorderly persons offense and, if determined to be willful, a crime of the fourth degree. Penalties can be assessed up to $1,000 for the first twenty days with additional assessments of $1,000 for each ten-day period of failure to insure thereafter. For corporations, the liability can extend to the corporate officers individually. Penalties assessed for failure to insure are not dischargeable in bankruptcy. Source: http://lwd.dol.state.nj.us/labor/forms_pdfs/wc/pdf/WC-373.pdf What is Temporary Disability Insurance (TDI)?New Jersey Temporary Disability Insurance Benefits Law (N.J.S.A. 43:21-25) mandates cash benefits be payable to an individual who cannot work because of sickness or injury NOT caused by his or her job. The law pertains to: Any worker employed by a NJ employer for at least 20 weks, who earns at least $143 a week (base week) or $7200 or more in a base year. The "Base Year" is the 52 weeks immediately before the week in which the disability begins. Only covered wages earned during the base year period can be used in determining a claim State employees, and county and municipal workers whose employer chooses to provide TDI The law covers those with: Disability or serious health condition which is not related to the job Pregnancy, or the period of incapacity due to prenatal care (up to 4 weeks prior to expected delivery) and recovery from childbirth (up to 6 weeks after actual delivery, longer if medically necessary) Medical certification of disability
Who Pays for TDI, and What is the New Family Leave Insurance? Employers and employees both contribute a tax to help finance temporary disability insurance (TDI). Beginning July 1, 2009, the New Jersey Temporary Disability Benefits law was extended to provide up to six weeks of Family Leave Insurance benefits to covered individuals to bond with newborn or newly adopted children and to care for sick family members. The Family Leave Insurance is financed entirely by employees through an additional withholding tax.
Sources: http://lwd.dol.state.nj.us/labor/forms_pdfs/ui/b426.pdf http://lwd.dol.state.nj.us/labor/tdi/tdiindex.html |
