Which States Require Disability Insurance for Employees?

When putting together a benefits package for your employees, you may be wondering whether disability insurance should be part of the mix. After all, it’s a great way to provide them peace of mind should they get injured and be unable to work. And if you’re an employee looking for a job, seeing disability insurance as an offering can help you feel appreciated.

California, Hawaii, New Jersey, New York, and Rhode Island have statutory short-term disability insurance programs or coverage requirements. Puerto Rico also has a mandatory temporary non-occupational disability program. 

Short-term disability insurance can replace part of an employee’s wages when an illness, injury, pregnancy, or other qualifying medical condition keeps them from working. For employers, the requirements depend on where employees work, with different rules for coverage, payroll contributions, and benefits. 

Key Takeaways 

• California, Hawaii, New Jersey, New York, and Rhode Island have statutory disability programs or coverage requirements.
• Puerto Rico has a mandatory temporary non-occupational disability program known as SINOT.
• Funding and coverage requirements vary, with some jurisdictions using employee contributions and others requiring employers to secure coverage.
• Statutory disability programs typically address non-work-related medical conditions, while workers’ compensation covers qualifying work-related injuries and illnesses.
• Employers should verify current state requirements, especially when managing employees across multiple jurisdictions. 

Which States Require Disability Insurance? 

Here is a 2026 snapshot of the jurisdictions with statutory disability programs or coverage requirements. 

What Does Required Disability Insurance Mean? 

Required disability coverage isn’t one nationwide program. In some jurisdictions, employees pay into a state fund. In others, employers must purchase or provide compliant coverage. Some allow an approved private or self-insured plan instead of the default state arrangement. 

Short-term disability is also different from workers’ compensation. Workers’ compensation typically addresses job-related injuries and occupational illnesses, while statutory disability programs cover qualifying conditions that arise outside work. Paid family leave is different, too. Disability benefits replace wages when an employee can’t work because of their own condition, while paid family leave covers qualifying bonding or caregiving time. 

Disability Insurance Requirements by State 

Disability insurance requirements vary by state, including who must provide coverage, how benefits are funded, and who may be eligible. Below are the requirements in California, Hawaii, New Jersey, New York, and Rhode Island. 

California Disability Insurance Requirements 

California State Disability Insurance (SDI) includes Disability Insurance (DI) and Paid Family Leave (PFL). Covered workers fund the system through payroll deductions. The California Employment Development Department lists a 2026 SDI contribution rate of 1.3%. California has no taxable wage ceiling or maximum annual SDI contribution, and the 2026 maximum weekly DI benefit is $1,765. 

For 2026 claims, DI typically pays about 70% to 90% of qualifying wages, depending on income, up to the weekly maximum. According to California’s Disability Insurance guidance, benefits can continue for up to 52 weeks when the worker remains eligible and medically certified. 

Employers may apply to use an approved Voluntary Plan instead of the State Plan. The plan must meet California requirements and provide benefits that are at least as favorable as the state program. PFL uses the same broader SDI system, but it covers qualifying bonding and caregiving reasons rather than the employee’s own disability. DI benefits alone don’t create job protection; separate leave laws may apply. 

Hawaii Temporary Disability Insurance Requirements 

Hawaii requires covered employers to provide TDI for eligible employees who can’t work because of a qualifying non-work-related illness, injury, or pregnancy. According to the Hawaii Department of Labor and Industrial Relations, the 2026 maximum weekly wage base is $1,500.21, the maximum weekly benefit is $871, and the maximum weekly employee deduction is $7.50. 

An employee typically needs at least 14 weeks of Hawaii employment during the 52 weeks before disability, with at least 20 hours worked in each qualifying week and at least $400 in total earnings. The employee must also meet Hawaii’s current employment rules. 

Hawaii doesn’t pay these benefits from a state disability fund. Employers secure coverage through an authorized insurance company, an approved self-insured plan, or another arrangement allowed by law. An employer may pay the full cost or share it with eligible employees, but the employee’s share can’t exceed half the premium cost or 0.5% of weekly wages, subject to the applicable cap. 

New Jersey Temporary Disability Insurance Requirements 

New Jersey TDI provides cash benefits for a non-work-related physical or mental health condition, including pregnancy and recovery after childbirth. The New Jersey Department of Labor and Workforce Development lists the 2026 employee TDI rate at 0.19% on the first $171,100 of covered wages, for a maximum employee contribution of $325.09. Employer TDI rates range from 0.10% to 0.75% on the first $44,800 paid to each covered employee. 

For 2026, a worker typically qualifies by earning at least $310 in each of 20 base weeks or at least $15,500 during the applicable base year. According to New Jersey’s Temporary Disability Insurance guidance, TDI pays 85% of average weekly wages, up to $1,119 per week in 2026, and benefits may be available for up to 26 weeks with medical certification. 

Employers can use the State Plan or an approved private plan. A private plan must meet or exceed State Plan standards, and its eligibility rules can’t be more restrictive. Family Leave Insurance (FLI) is separate from TDI. In 2026, employees fund FLI at 0.23% on the first $171,100 of covered wages, and employers don’t contribute to FLI. 

New Jersey also expanded its job-protection rules during 2026. According to the New Jersey Department of Labor, changes effective July 17, 2026, provide additional protections for eligible employees receiving TDI or FLI benefits whose leave is not otherwise protected by applicable family and medical leave laws. 

New York Disability Benefits Requirements 

New York requires covered employers to provide disability benefits for eligible employees who can’t work because of an off-the-job illness or injury. The New York State Workers’ Compensation Board states that the statutory benefit is 50% of the employee’s average weekly wage for the last eight weeks worked, up to $170 per week. 

A seven-day waiting period typically applies, with benefits beginning on the eighth consecutive day of disability. Benefits may be paid for up to 26 weeks in a 52-consecutive week period. Employers can purchase coverage from an authorized private insurance company or the New York State Insurance Fund, or they can apply to self-insure. 

Employers may collect an employee contribution of 0.5% of wages, capped at $0.60 per week. New York Paid Family Leave is separate from disability benefits, although the coverages are closely connected. An employee can’t receive both at the same time, and combined disability and PFL benefits typically can’t exceed 26 weeks in a 52-week period. 

Rhode Island Temporary Disability Insurance Requirements 

Rhode Island TDI is an employee-funded state program for wage loss caused by a non-work-related illness or injury. The Rhode Island Department of Labor and Training set the 2026 TDI contribution rate at 1.1% on the first $100,000 of wages, for a maximum annual employee contribution of $1,100. Employers withhold and remit taxes. 

For claims effective January 1, 2026, or later, a worker typically needs at least $19,200 in base-period wages. A worker who doesn’t meet that amount may qualify through Rhode Island’s alternative earnings test if all additional wage conditions are met. 

Rhode Island adjusts TDI benefit limits on a midyear schedule. According to the state’s TDI and TCI guidance, benefit years beginning July 1, 2026, or later have a minimum weekly benefit of $148 and a maximum of $1,150 before any dependency allowance. TDI may be available for up to 30 full weeks, depending on the worker’s base-period wages and weekly benefit rate. 

Temporary Caregiver Insurance (TCI) is part of Rhode Island’s TDI system but covers different reasons for leave. TDI applies to the employee’s own disability. TCI can provide up to eight weeks of income support for qualifying caregiving or bonding situations. 

Puerto Rico Temporary Non-Occupational Disability Insurance 

Puerto Rico’s Seguro por Incapacidad No Ocupacional Temporal (SINOT) covers qualifying illness or injury that isn’t related to employment or an automobile accident. According to the Puerto Rico Department of Labor and Human Resources, eligible workers must have earned at least $150 in insured wages during the applicable base year and meet the program’s medical requirements. 

The SINOT contribution is 0.60% of wages up to $9,000 per calendar year. The employee share can’t exceed 0.30%. The employer and employee may share the cost, or the employer may pay the full contribution. Certain employers and worker categories are exempt under Puerto Rico law. 

Under the public program, the weekly benefit depends on insured wages. Government guidance lists a minimum weekly benefit of $12 and a maximum of $55 for the agricultural phase or $113 for the industrial phase. Benefits can typically continue for up to 26 weeks in a 52-consecutive week period. Puerto Rico also recognizes approved private plans and authorized self-insured arrangements.

Disability Insurance vs. Paid Family Leave 

The key difference is why the employee is away from work. Disability benefits cover the employee’s own qualifying illness, injury, pregnancy, or medical condition. Paid family leave provides wage replacement for qualifying caregiving or bonding time. 

The programs can exist side by side. An employee may receive disability benefits while medically recovering from childbirth and later use paid family leave for bonding, depending on the jurisdiction. Employers that want to offer coverage beyond statutory programs can also consider voluntary worksite benefits as part of a broader benefits package. 

Disability Insurance vs. Workers’ Compensation 

Disability insurance and workers’ compensation both provide financial support when an employee can’t work, but they address different causes. Workers’ compensation typically applies to injuries and occupational illnesses arising from employment. Statutory disability programs apply to qualifying non-work-related conditions. 

Workers’ compensation may also pay medical expenses connected to a covered work injury. Short-term disability is primarily wage replacement. An employee hurt while performing job duties may have a workers’ compensation claim, while an employee recovering from an unrelated surgery may qualify for short-term disability benefits instead. 

What Should Employers Know About Disability Coverage? 

A standard commercial short-term disability policy doesn’t automatically satisfy a statutory mandate. Where coverage is required, a policy or plan may need to meet specific rules for eligibility, waiting periods, benefits, payroll deductions, plan approval, notices, and reporting. 

Multi-state employers should review each employee’s work location separately. California uses an employee-funded state system with approved Voluntary Plans, while Hawaii and New York place coverage obligations on employers. New Jersey combines employer and employee funding and allows approved private plans. Rhode Island uses an employee-funded state program. 

Disability coverage is only one part of the benefits picture. Employers may also pair it with medical insurance, group life insurance, and other worksite benefits. Understanding the most common types of employee benefits can help employers see how these coverages fit together. 

Because rates, wage bases, benefit caps, and leave rules can change, employers should verify current requirements with the responsible government agency and consult payroll, legal, or benefits professionals when a specific compliance question arises. 

Explore Disability Insurance Options With InsureOne 

State disability mandates set minimum requirements, but employers may want additional protection for their workforce. InsureOne can help employers compare disability insurance options and consider coverage that fits their broader benefits program. 

Ready to explore your options? Get a quote online, call 877-495-1922, or find an InsureOne location near you to speak with an agent. You can also explore the InsureOne Employee Benefits Knowledge Center for more information on workplace coverage. 

Frequently Asked Questions About Disability Insurance Requirements 

Do All Employers Have to Provide Short-Term Disability Insurance? 

No. California, Hawaii, New Jersey, New York, and Rhode Island have statutory disability programs or coverage requirements, and Puerto Rico has SINOT. The rules, exemptions, funding methods, and employer obligations differ by jurisdiction. Employers elsewhere may still offer short-term disability voluntarily, and separate paid family and medical leave laws may apply. 

Who Pays for Mandatory Disability Insurance? 

It depends on the jurisdiction. California and Rhode Island primarily use employee payroll deductions, while New Jersey TDI receives contributions from workers and employers. Hawaii requires employers to secure coverage and allows limited employee cost sharing. New York employers provide coverage and may collect a limited employee contribution, while Puerto Rico allows the SINOT contribution to be shared or paid entirely by the employer. 

Is Disability Insurance the Same as Workers’ Compensation? 

No, disability insurance and workers’ compensation address different types of medical conditions and injuries. Statutory disability insurance covers qualifying conditions that are not caused by the employee’s job. Workers’ compensation applies to work-related injuries and occupational illnesses and may include medical benefits as well as wage replacement. 

Can an Employer Use a Private Disability Plan Instead of a State Program? 

Sometimes, depending on the jurisdiction. California permits approved Voluntary Plans, while New Jersey allows approved private plans. Hawaii permits approved insured and self-insured arrangements; New York allows coverage through authorized insurance companies or approved self-insurance, and Puerto Rico recognizes approved private and self-insured plans. A regular commercial policy doesn’t automatically satisfy a statutory requirement. 

Is Paid Family Leave the Same as Short-Term Disability Insurance? 

No, the programs cover different reasons for taking leave. Short-term disability replaces wages when an employee can’t work because of their own qualifying medical condition. Paid family leave applies to qualifying caregiving or bonding situations. Some states administer both through related agencies or payroll systems, but eligibility rules, duration, and funding can differ.