An obscure but important change to New Jersey Temporary Disability Insurance (TDI) law made in February makes it much easier for employers to get better service and likely save some money. That’s because employers no longer have to hold an employee consent election to opt out of the state’s TDI plan.
While it may not seem like much of a change, Tom Foschino of Arch Insurance says it will make a big difference.
“We’ve seen many employers who say they want to move out of the state plan, but just can’t get the election completed, so it would never go through,” he said.
When new businesses register with the state, they are automatically enrolled in the state TDI plan. To get out, they had to get employees to sign a piece of paper approving of the switch. Logistically, it was tough to do, Foschino explained, because employees are skeptical about what they are being asked to sign, and in the modern workplace, they are often spread out over several locations.
Now that has changed. Employers are free to decide for themselves if it’s in their best interest to opt out of the state plan and move TDI coverage to a private insurance carrier.
Arch is one of several insurance companies that offer alternatives to the state plan, and as an affiliate of NJBIA, Arch offers NJBIA companies a member benefit. For all employers, however, Foschino says the change away from employee elections is overdue.
“The reason this is big is because an employer can now shop for the best disability insurance that fits their business.,” he explained. “They shop the free market for all of their other business insurance and purchase based on their needs and price.”
Until now, disability insurance was the exception. “This barrier to trying to remove yourself from the state plan never really gave the employers the freedom to go out and shop for better service or a better rate.”
Foschino adds that ability to shop the market benefits both New Jersey employers and employees. Employers can save money and the employees get far superior service when they’re out of work on disability. The average time for the state to respond to a TDI claim is 25 days; Foschino says Arch’s average is under five days.
Because TDI is experience-rated, the costs are going to vary from company to company and in many cases Arch can supply a cost savings to what companies are paying for the state TDI coverage. Foschino said.
For NJBIA members, the benefits are twofold. Arch offers a special discount to NJBIA members. It also keeps members in a single pool for experience rating purposes. So if an individual NJBIA member company has a couple of TDI claims back-to-back, their rates won’t necessarily go up because they are part of a larger pool.
“As long as the entire NJBIA group’s experience remains good, no one’s getting a rate increase,” Foschino said.