If you hire a nanny, senior caregiver or other household employee and they get injured or ill while working in your home, workers’ compensation insurance will take care of their medical expenses and lost wages while they recover. But what happens if your caregiver can’t work because they got hurt or sick while off-the-clock? That’s when disability benefits kick in if your employee is covered.
“The average household employee isn’t covered by disability insurance because it’s required in very few states,” says Tom Breedlove, Sr. Director of Care HomePay. “But in certain circumstances, they are very valuable to your caregiver since they allow them to be compensated while unable to work.”
When does an employee qualify for disability benefits?
Disability benefits are short-term financial benefits provided by state agencies or private insurance companies to employees who are unable to work because of an illness or injury that occurred outside of the workplace. An employee would qualify to collect disability benefits for things like maternity leave, surgery, rehabilitation after injury and more.
How does an employee qualify for disability benefits?
If you live in California, New Jersey or Rhode Island, disability insurance benefits are funded through a tax assessed as a part of the payroll process. If you live in New York or Hawaii, you’re required to carry a disability insurance policy to cover your caregiver while they work for you. In these five states, disability claims are reviewed, and benefits are disbursed by the state agency managing the disability fund. Benefits are awarded based on criteria that can vary by state.
What if I don’t live in California, Hawaii, New Jersey, New York or Rhode Island?
If you live in one of the other 45 states that do not assess disability taxes or provide disability benefits through a state-managed fund, benefits are only available if your caregiver purchases a private insurance policy or if you buy it for them. The cost varies by state and the degree in which your caregiver needs coverage, but a good estimate is between 1% and 3% of their gross wages. If your employee knows they will be in need of financial assistance during maternity leave, for example, it is a good idea for them to carry a disability insurance policy.
How much is typically provided in disability benefits and for how long?
The amount of financial benefits your caregiver can receive varies by state and depends on the amount of premiums paid. In general, benefits are 50% – 100% of your caregiver’s salary for up to 14 weeks, but they may be more or less. Please contact your state or insurance agent for more details.
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