NJ Temporary Disability Benefits (NJ TDB) can be a confusing benefit given the complex nature of the law. At Nelligan Associates, we’ve pretty much 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!
When is the best time to move a TDB plan from the state?
Transitioning from the state fund to a private plan can occur on the quarter – January 1st, April 1st, July 1st, and October 1st. A common misconception is that the state only allows groups to move for January 1st. While most of the activity does occur on 1/1 (mostly because other group benefits renew then and the new employer/employee TDB rates come out between July and November), the other three quarters are perfectly acceptable.
In some instances, it can be easier to work with an employer on TDB when they are not focused on medical, ancillary, etc. There is a level of decision fatigue when trying to decide on privitizing state disability while other benefits are renewing and/or changing.
How far ahead should I be discussing TDB with my clients?
It depends on the size and complexity of the company. A good rule of thumb is to initiate conversations at the beginning of the quarter. So, for a 4/1 effective date, contacting groups in January is a smart idea. This is not to say later in the quarter doesn’t work (in fact, we regularly have groups that are submitted right up to quarter end), but earlier on allows for the client to feel less rushed. We all know how hard it can be to book face time with some groups!
Is there any downside moving off 1/1?
Carriers that do not specialize in TDB may not allow/discourage this because of billing reasons. The nature of taxable wage billing (default TDB billing) is such that the largest premiums paid are in the 1st quarter and decrease each quarter thereafter (think 40% 1Q, 30% 2Q, 20% 3Q, 10% 4Q). However, specialty carriers do not have an issue moving off 1/1 because over a 4 quarter period the premium will be the same. So, this is a non issue.
The other topic to discuss is payroll. In our experience, there is one payroll vendor in particular that may have system limitations with off cycle TDB plans- they will issue two W2’s at year end (one for the state plan and one for the private plan). It comes down to how much this bothers the client as it’s more of a nuisance than anything else.