Tarpey Group

New Jersey Temporary Disability (TDB) employee contribution rates have changed. Because the NJ TDB benefit plan is contributory, employees contribute to the cost of insurance. But as of January 1, 2012, the amount employees must pay will be changed.

Recent legislation S 2609 will require the NJ Department of Labor to annually calculate the maximum employee contribution beginning January 1, 2012.

Employee contribution has been fixed at .5% of the taxable wage base in previous years, but for the upcoming 2012 calendar year the maximum employee contribution will be .2% and the taxable wage base is $30,300. This means that employers should make proper adjustments by January 1, 2012 to ensure that the correct deductions are taken from employees.

This change will not affect your company’s premium rate, but FICA withholding will be affected. This is because employees will be paying a smaller share of the premium so a greater portion of their benefits will be taxed.

Below are some Frequently Asked Questions to help further explain the details of this change.

1. Why has the employee contribution changed?

Senate Bill 2609 was signed into law on July 1, 2011 and becomes effective on January 1, 2012. It requires that the NJ DOL recalculate employee contributions each year based on claims paid by the State Plan in the prior year.

2. Will the employee contribution remain at .2%?

No, contribution rates will be reset each year.

3. Since I have a Private plan, why does the State Plan employee contribution rate affect my employees’ contribution?

The Temporary Disability Insurance (TDI) Law requires the maximum employee contribution to be the same for State and Private plans.

4. What if my plan is non-contributory?

You will not be affected by this change.

5. What must employers do?

Ensure that payroll is adjusted so that maximum employee contribution is changed from .5% to .2% starting January 1, 2012 and that the maximum taxable wage base is $30,300.

6. What are some advantages of keeping a Private Plan?

A Private Plan can offer lower costs, faster service, and broader coverage. For more information, feel free to contact Tarpey Group.