Disability insurance programs assist employees when they are ill, injured or recovering from childbirth. Disability insurance covers employees for injuries sustained outside of work.
State employees in North Carolina are eligible at no cost for basic short-term disability (STD) and long-term disability (LTD) benefits if they participate in the Teachers’ and State Employees’ Retirement System (TSERS) and meet other eligibility criteria. The basic STD and LTD insurance is available through the Disability Income Plan of North Carolina (DIP-NC).
Insurance for College and University Employees
As of January 1, 2020, full-time active employees of a North Carolina state agency, select community college or select charter school who work 30 hours or more per week may purchase supplemental combined STD and LTD disability coverage through the Voluntary Disability Plan. Employees of the University of North Carolina system are not eligible for this supplemental disability insurance.
The supplemental insurance is available through Standard Insurance Company (The Standard). Eligible employees can enroll in the supplemental plan during their initial new hire enrollment period or when experiencing a qualifying life event.
Understanding Short-Term Disability Benefits
Short-term disability insurance provides income replacement if an employee becomes unable to work due to a medical disability. Whether an employee qualifies for STD depends on the number of years of creditable service they have as a participant in TSERS. Disability benefits may be limited if they have less than five years of creditable service.
If an employee is eligible for regular STD coverage after having a qualified disabling illness or injury for a 60-day waiting period, the STD plan will pay a monthly disability benefit for up to one year. The employee must have at least one year of contributing membership service in TSERS earned within the 36 calendar months preceding the disability.
They must also meet all plan requirements. The STD plan pays a monthly benefit equal to half the employee’s monthly salary up to a maximum of $3,000 per month.
Length of Benefit Period
The STD plan pays the benefit until the employee is no longer disabled or 365 days have passed since the beginning of the disability, whichever event comes first. If an employee’s disability is considered temporary but continues past the first year, the plan’s medical board may approve an additional period of STD.
This is not to exceed 365 days. After a year, if the employee is still disabled and eligible for LTD coverage, the LTD plan will pay a monthly benefit for as long as the employee qualifies as disabled.
Supplemental STD Benefits
The regular STD plan does not pay benefits for disabilities that begin before the employee has at least one year of service as a participant in TSERS. An employee can buy supplemental disability coverage if they become disabled during their first year. Supplemental STD benefits begin after a 10-business day waiting period following the disability date.
Supplemental STD benefits continue until day 60. The supplemental plan pays $150 per business day, up to a maximum benefit of $750 per week. There are no offsets to the supplemental STD plan. This means an employee’s benefits are not reduced if the employee receives income from other sources like workers’ compensation or Social Security.
Long-term Disability Benefits in the State of North Carolina
An employee with at least five years in TSERS will receive a benefit from the LTD plan if they remain disabled for longer than 365 days and are considered permanently disabled. The LTD plan pays a monthly benefit that is 65 percent of an employee’s monthly salary up to a maximum of $3,900 per month.
The plan continues to pay the benefit until the employee is no longer disabled or when they qualify for retirement, whichever comes first.
Reductions to Monthly Benefit Amounts for Other Income
Supplemental LTD benefits start to pay after an employee has been continuously disabled for 60 days. The employee’s monthly benefit will be reduced by deductible income such as Social Security or worker’s compensation benefits.
The supplemental plan replaces 66 ⅔ percent of an employee’s eligible earnings, up to a maximum benefit of $12,500 per month. If offsets apply, there is a minimum payout per month of $100 or 10 percent of the LTD benefit.
Firing an Employee on Disability
An individual can be fired for a valid reason, like misconduct, while receiving regular or supplemental STD or LTD. An employer cannot fire an employee for an illegal reason, such as their disability, while the employee is receiving payments from basic or supplemental disability insurance. Such illegal termination is disallowed by the Americans with Disabilities Act (ADA).
Preexisting Medical Condition Provisions
A preexisting condition is defined as a mental or physical condition that:
- The employee would have consulted a physician or other licensed medical professional, received medical treatment, services or advice, undergone diagnostic procedures, including self-administered procedures or taken prescribed drugs or medications.
- Would have been discovered or suspected as a result of any medical examination.
- Existed during the 90-day period before disability coverage became effective.
- May or may not have been diagnosed or misdiagnosed.
An employee is not covered for a short- or long-term disability caused or contributed to by a preexisting condition. The exception is if on the date the employee became disabled, they were continuously insured under the group policy for the exclusion period and were actively at work for at least one full day after the end of a 12-month exclusion period.
If an employee is treatment-free for six consecutive months during the 12-month exclusion period, any remaining exclusion period will not apply.
Comparison With Workers' Compensation
Workers' compensation is an insurance program paid for by employers. The purpose of workers' comp is to assist workers who are injured or get sick at work. Illnesses or injuries that the employee incurs on personal time are not covered. Workers' comp is meant to:
- Cover an employee’s medical expenses resulting from the illness or injury.
- Replace part of the wages the employee misses due to the illness or injury.
- Cover retraining costs if the employee is permanently unable to perform the job after the illness or injury.
- Compensate the employee for a permanent injury, such as disfigurement or the loss of a finger.
- Compensate beneficiaries of an employee who was killed on the job.
Workers' Compensation for State Government Employees
All North Carolina state government employees are covered under the state government workers' comp program. This includes all agency and university employees and officers, as well as state-elected officials and people appointed by the governor to serve on a per diem, part-time or fee basis.
The state government workers' comp program covers full-time employees, part-time employees and temporary employees.
Jessica Zimmer is a journalist and attorney based in northern California. She has practiced in a wide variety of fields, including criminal defense, property law, immigration, employment law, and family law.