This topic contains the following information:

• SDI Benefit Amounts
• SDI Benefits Coverage Period
• SDI Benefits Base Period
• Taxes on SDI Benefits
• Partial SDI Benefits
• EDD Elective SDI Coverage Program
• Voluntary SDI Plans

SDI Benefit Amounts

The weekly SDI benefit ranges from approximately between 70 to 90 percent of the wages the employee earned in the highest quarter of the base period, depending on the employee’s income, and subject to a maximum weekly benefit amount.1 A table of specific benefit amounts based on earnings is in the Disability Insurance and Paid Family Leave Benefit Amounts form.

• Disability Insurance and Paid Family Leave Benefit Amounts

SDI Benefits Coverage Period

There is a seven-day waiting period before disability benefits begin.2

The seven-day waiting period is waived for someone who has already served the waiting period for an initial disability and then files a second disability benefits claim for the same or related condition within 60 days after the first claim.3

The maximum benefit amount is 52 times the weekly benefit amount or the total wages earned in the base period, whichever is less. An individual can be paid for periods longer than 52 weeks if their benefits are reduced because they returned to work on a part-time basis or received other money during the disability period.

SDI Benefits Base Period

The EDD calculates weekly benefit amounts using a base period which covers 12 months and is divided into four consecutive quarters of three months each. The base period includes the wages an individual was paid approximately six to 18 months before the disability claim began, if those wages were subject to the SDI tax. The base period does not include wages paid just before the disability began.

The base period for a claim is determined as follows:

The quarter with the highest amount of earnings in the base period determines the weekly rate. For a disability claim to be valid, a claimant must have earned at least $300 in wages in the base period.

Wages also include all tips received while performing services that constitute employment, included in a written statement furnished to you pursuant to section 6053(a) of the Internal Revenue Code.

Any wages owed to the claimant but unpaid within legal time limits also are counted as wages for the quarter in which they were earned.4

Taxes on SDI Benefits

SDI benefits are generally not taxable, unless they are received in place of UI benefits.

Partial SDI Benefits

An individual who returns to work part-time but suffers a partial loss of wages can receive partial SDI benefits. SDI makes up the difference between the part-time wages and the wages earned before the disability began, but only up to the weekly benefit rate amount. If the wage loss is greater than the weekly disability benefit amount, benefits are paid at the full rate. If the wage loss is less than the weekly disability benefit amount, benefits are the amount of the wage loss only.

EDD Elective SDI Coverage Program

Small business owners and self-employed individuals that are excluded from coverage under the state plan can apply for disability insurance coverage through the Disability Insurance Elective Coverage (DIEC) program.5 Certain requirements must be met and the EDD’s director must approve the applications.

The EDD files elective coverage in the same manner as state plan claims. However, there are some differences in eligibility requirements from those listed at the EDD’s website. For additional information or to apply for coverage, contact EDD’s Disability Insurance Customer Service at (800) 480-3287 or EDD’s Taxpayer Assistance Center at (888) 745-3886.

If the services that an employee performs for you are excluded from disability insurance coverage under the state plan or a voluntary plan, you can file a written election notice with the EDD’s director that states that you consider these services performed by an employee to constitute employment.6 For more information, see Unemployment Insurance.

A school district can elect coverage for disability insurance for the members of a bargaining unit created by the Educational Labor Relations Law.7 This coverage applies only if a negotiated agreement between you and the members of the employee unit mandates the coverage. The district can also choose coverage for its management and confidential employees. This coverage is independent of coverage for the unit.

Counties, cities and special districts can elect coverage for members of a bargaining unit created by the Myers-Milias-Brown Act.8 Coverage applies pursuant to a negotiated agreement between an employer and members of the employee unit. Upon approval, an employer withholds disability insurance contributions from the wages of employees covered by the plan. The local government can choose coverage for its management or confidential employees and its employees who are not part of an existing collective bargaining unit.

Voluntary SDI Plans

The law allows you to operate a voluntary plan in lieu of the state coverage. You must make a formal application, receive the EDD’s approval and ensure ongoing accountability for the plan’s operation.9 The coverage, rights and benefits under a voluntary plan must be equal to the state plan in all respects and better in at least one provision. A majority of the employees eligible for coverage must approve the plan before it goes into effect.

With the exception of some allowable exclusions, you must offer everyone coverage. These exclusions are part-time or short-term employees, as defined by the EDD, or all employees in one or more of your locations.

Under a voluntary plan:

• You pay an assessment to the EDD based on wages paid to the covered employees.10
• You also pay a security deposit to the state treasurer to ensure payment of plan obligations.11
• You must no longer send state disability contributions to the EDD for employees choosing coverage under the voluntary plan, after a voluntary plan is approved.12
• You can withhold up to the same amount of contributions from the employees and hold the money in trust to pay claims and approved expenses incurred in administering the plan.
• You can choose to withhold a lesser amount or even totally fund the voluntary plan program without any cost to employees.

The law requires that a voluntary plan be underwritten by an insurance company or be self-insured. However, the adverse risk stipulations put on insurance companies make it very difficult for the companies to write policies that can underwrite a voluntary plan.13 For details on applying for a voluntary plan, see the EDD’s website.

You must submit the formal application for a voluntary plan no later than the proposed effective date. A seven-day extension is possible with previous approval from the EDD.14

In addition to the application form, you must submit:

• A text document outlining all features of the plan
• A Statement of Coverage that will be distributed to all covered employees15
• A copy of the enrollment literature used to solicit employee consent
• A security deposit to guarantee meeting all obligations

After the EDD approves the plan, you remain accountable to the state. You must file a form with the EDD for each claim received and again when benefit payments are completed,16 and also submit a financial report of the plan transactions each year.17

1. UI Code sec. 2655(f)(1)