Originally posted on Regarding Nannies.
By Tom Breedlove, HomePay by Breedlove
Have you ever thought about what you would do if you were injured outside of work and couldn’t perform your nanny duties for several weeks? Or, are you considering kids of your own and want to prepare for several weeks of leave to care for your baby? In either scenario, disability benefits can provide a safety net to keep you afloat financially while you are unable to work. Here’s what you need to know about this important insurance.
ABOUT DISABILITY INSURANCE
Disability Insurance provides short-term financial assistance with lost wages if you are unable to work due to an injury or illness that is not related to work. (It’s important to note that if the injury or illness is work-related, it falls under an employer’s workers’ compensation insurance coverage). You would qualify to collect disability benefits for things like pregnancy bed rest/maternity leave, a bad illness or a knee injury while skiing. The benefits vary by insurance company and type of policy, but generally cover at least 50% of wages for a minimum of 8 weeks.
ARE YOU ALREADY COVERED?
If you work in California, New Jersey or Rhode Island, disability insurance is already a benefit you receive if you’re being paid legally. Taxes withheld from your pay and/or paid by your employer fund these state-run programs. If you work in New York or Hawaii and are being paid on the books, your employer has purchased a disability insurance policy through the state. In these five states, claims are reviewed and benefits are disbursed by the state agency managing the disability fund.
The other 45 states do not assess disability taxes or require a policy. Instead, employees (or their employers) can purchase an optional short-term disability insurance policy through any state-licensed insurance broker. They are relatively inexpensive, so if you’re planning on having a baby soon or tend to be involved in high-risk hobbies, it’s worth looking into a policy for yourself.
Note: The state of Massachusetts recently enacted a Domestic Worker Bill of Rights. Among the new benefits for nannies is an 8 week job-protected maternity leave. The time off does not have to be paid, but it’s an example of how lawmakers are valuing the work nannies and other household employees do more than ever before.
Lastly, the benefits and policies discussed above are for short-term disability (generally defined as less than 6 months). Your Social Security & Medicare taxes provide coverage for long-term disability benefits. One more benefit of being paid legally.