NJ Temporary Disability Benefits (NJ TDB) can be a confusing benefit given the complex nature of the law. At Nelligan Associates, we’ve seen it all – the good, the bad, and the ugly. We will periodically be sending out information on the most frequently asked NJ TDB questions/topics we come across. If you have any questions, please let us know. Enjoy!
As a reminder, the new 2017/18 employer rates have been released by the state. Right now we are working on January 1 implementation dates.
How does a private plan impact payroll?
This is the most frequently asked client question you will come across. It’s important to understand the employee contribution differences between the state and private plans. The state deducts employee dollars as a TAX and pushes the money to the state during or after the quarter. A private plan deducts employee dollars as a NORMAL DEDUCTION and the money sits in the client’s general account just like health insurance deductions. At the end of the quarter, employers remit both the employer/employee funds to carriers. While not automatic like the state, it is a simple bill paid four times per year.
The employee deduction amount is set by the Department of Labor each year and by law is the same for both state and private plans. For 2018, that amount is .19% of the first $33,700 of wages.
Who updates payroll when switching to a private plan? Is it difficult?
The payroll vendor is responsible for making the change in their system. It is a simple task most of the time. We work with the payroll vendor on the client’s behalf to ensure the deductions have been updated accordingly. If the payroll vendor does not update deductions correctly, money will erroneously be sent to the state triggering a refund request.
Do employee contributions reset with a private plan?
No. Payroll systems are set up for an annual contribution limit regardless of state or private plan. If an employee reached the limit in 2Q and a private plan went in place 3Q, they will not be required to contribute for the remainder of the calendar year. Most employers are under the impression that the contribution limit resets therefore overcharging employees.
When is switching to a private plan problematic for payroll?
The only issue we run into is with ADP clients moving on a quarter other than 1/1 due to some system limitations they have. Now is the time to explore private TDB for your ADP groups or they will have to wait for 1/1/19. Very few issues other than that.