New Jersey Temporary Disability Benefit (“TDB”)

The Benefit: Under the New Jersey Temporary Disability Benefits Law, cash benefits are payable when an individual cannot work because of sickness or injury not caused by their job. An individual must meet certain wage, medical and eligibility requirements to be eligible for temporary disability benefits. The maximum weekly benefit rate is $546 for disabilities beginning on or after January 1, 2009. The maximum benefit amount which may be paid for each period of disability is one-third (1/3) of the total wages you earned in New Jersey covered employment during the base year, or 26 times the weekly benefit amount, whichever is less.

The Cost: Both New Jersey workers and employers contribute to the cost of temporary disability coverage. For 2009, workers contribute at the rate of one-half of one percent (0.5%) on the first $28,900 (taxable wage base) in covered wages earned during this calendar year. The maximum worker contribution for 2009 is $144.50. This contribution is in the form of a salary deduction that the employer takes from weekly wages. Although the taxable wage base is the same as for workers, the contribution rate for employers varies from 0.10% to 0.75%. For 2009, employers contribute between $28.90 and $216.75 on the first $28,900 earned by each employee during this calendar year. On January 1 of each year, the taxable wage base changes, as reported by the New Jersey Department of Labor and Workforce Development.

FICA Liability: A portion of disability benefits is considered taxable income for both the Federal Income Tax and FICA (Social Security). The portion of the benefits payment that is taxable is that portion attributable to the employer's disability contribution. The worker's share of FICA is deducted from State Plan benefit payments. The employer is liable for the employer's share of FICA. Federal income tax is withheld only if requested by the claimant.

Our firm focuses on benefiting our clients. Today, most employers have TDB coverage via the state. There is primarily because of the default implementation of coverage with the state. All New Jersey employers covered by the Unemployment Compensation Law are also subject to the Temporary Disability Benefits Law (with the exception of certain government entities). A subject employer is automatically covered under the State Plan unless workers are covered under an approved private plan for temporary disability benefits.

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