BASIC (09-08)

The State of California (CA) established the State Disability Insurance program (SDI) in 1946. SDI pays benefits to workers who suffer a wage loss when they can no longer work because of their own illness or injury.

• SDI is funded by non-public employee paycheck deductions,

• Payments are issued by the State Employment Development Department (EDD),

• The injury or illness does not have to be work-related.

Most workers in California entitled to DIB are also entitled to SDI benefits. Some State employees also receive SDI benefits. Federal employees do not receive SDI benefits.

A. Employment Development Department (EDD) disability plans

EDD administers four disability insurance plans.

1. State plan

This plan covers the majority of California employees. The State pays full SDI for a maximum of 52 weeks.

• The maximum number of weeks may be less than 52 if the worker did not earn enough to qualify for 52 weeks of benefits.

• The benefit period may be longer than 52 weeks when a benefit reduction is involved (i.e., the worker may receive a reduced benefit amount which extends the life of the claim).

2. Voluntary plan

This is a private employer plan, approved by the State, which allows an employer to pay SDI benefits directly, rather than through the State Plan. It must offer greater rights to employees covered by the plan than the State-administered program, e.g., weekly benefits in excess of the maximum or an extension of benefits beyond the usual 52-week limitation.

The amount received by the worker from a voluntary plan is the offsettable amount even where the maximum shown in DI 52135.030I.1., Exhibit 1 is exceeded.

Payment of SDI under a voluntary plan may exceed 52 weeks. Offset applies for the entire period for which SDI is paid under the voluntary plan, even if it exceeds 52 weeks.

EXAMPLE: Employer Z pays its California employees a combination of SDI benefits and benefits under the Employer Z Sickness and Accident Income Plan. Use only the amount received by the worker as SDI benefits to offset DIB. 70 percent of the worker's regular salary will be paid up to the maximum as SDI benefits for up to 52 weeks and, thus, amounts in excess of these limits should not be used for offset.

3. Elective Coverage (EC)

This is an optional plan for self-employed workers and employers for coverage under SDI. A maximum of 39 weeks’ benefits may be paid.

4. Non-Industrial Disability Insurance (NDI)

Some California State employees do not contribute to the SDI fund and so they cannot receive SDI. NDI is the State employee version of SDI.

B. Policy – When receipt of SDI causes offset

1. DIB beneficiaries are subject to offset based on receipt of SDI benefits if paid to:

• Private employees

• State and local government employees if the SDI benefit is based on State or local employment not covered under Section 218 of the Social Security Act

2. DIB beneficiaries are not subject to offset based on receipt of SDI benefits if paid to:

State and local government employees whose SDI benefit is based on State or local employment all or “substantially all” (i.e., 85 percent or more) of which is covered under Section 218 for Social Security purposes. See DI 52125.001C.3. for a definition of “substantially all.”

C. Processing guidelines for SDI

1. Secure verification of the amount of SDI, the beginning and the ending dates. If there is an indication that a reduced benefit is involved or there are breaks in payment, secure further verification.

2. If a voluntary plan is involved, develop through the employer for the SDI benefits actually paid under the plan. Be sure that increased benefits are actually SDI benefits paid under the plan and not a combination of SDI benefits and other company benefits.

3. If the SDI benefit was based on State or local government employment, determine:

   • If 85 percent or more of the employment was covered for Social Security purposes, and

   • Whether the PDB covered service exclusion applies see DI 52125.001B.3.

4. Impose offset if the exclusion does not apply following DI 52135.030D.

D. Imposing and removing offset

Payment of SDI is generally at the full weekly benefit amount for 52 consecutive weeks. If the evidence indicates otherwise, obtain additional verification of the rate, breaks in payment, actual ending date, etc.

1. Benefit amount

• SDI bases benefits on a Weekly Benefit Amount (WBA) and pays biweekly.

• Offset the gross amount of the weekly SDI benefit unless the benefit is reduced and the type of reduction is not offsettable (see DI 52135.030F.2. in this section).

• Offset for the number of weeks of SDI benefit receipt excluding known periods of disqualification. See DI 52135.030F.1. in this section.

• See DI 52135.030I.1. - Exhibit 1 Maximum weekly SDI rate and duration chart.

2. Start date

• For disabilities that began on or after 01/01/1994, the State assesses a mandatory 7-day, non-payable waiting period.

• The start date will equal the Claim Effective Date (CED) + 7 days for disabilities beginning 01/01/1994 or the CED for disabilities beginning prior to 01/01/1994. (The CED is also referred to as the “date claim established” on some State forms.)

  EXAMPLE: If the CED is 04/01/2008, impose offset beginning 04/08/2008 (CED + 7 days), unless the evidence shows that the SDI payments began later.

• The start date can be later than CED + 7 if the worker was disqualified or otherwise not eligible for payment until a later date.

• Use the beginning date shown on the evidence for the period represented by the first SDI check if this is consistent with the CED and waiting period.

• Enter the actual start date in MCS and ICF WC/PDB even if the date is earlier than the DIB month of entitlement

3. Ending date

• The ending date will appear as the “THRU” date shown on the final SDI payment stub containing the heading “Notice of Exhaustion of Disability Benefits” or as the “END” date shown for the last check on an EDD abstract (the account balance should show zero).

  NOTE: The ending date for the last SDI payment as shown on the EDD evidence may be incorrect if the amount of the last payment in benefit exhaustion cases is not an even multiple of the Weekly Benefit Amount (WBA).

  EXAMPLE: WBA = $423.00 and the last check is shown as $423.01 for 8 days ending 08/06/2008. The 1-cent fraction is a carryover in the EDD system from the rounding of prior payments; the system treats the fraction as a whole day, moving the ending date.

  To determine the correct ending date in this situation, divide the gross amount of the last payment by the daily rate (daily rate = WBA divided by 7--do not use the EDD “Daily Benefit Amount”) and round to the nearest whole day. If the result equals the number of days shown for the last payment then the ending date shown is correct. If the result is one day less than the number of days shown, subtract one day from the ending date. Any other result, or if the Maximum Benefit Amount (MBA) is for less than 52 weeks or the SDI record shows a balance other than zero, requires further review of the EDD payments. These types of situations can result in true partial day payments, therefore, it may be necessary to enter the partial day amount in ICF by showing a period of one day and a weekly rate equal to the partial day amount times 7. In the example, the correct ending date is 08/05/2008 ($423.00/7=$60.43; $423.01/$60.43=7 days).

• If the Payment stub contains the heading, “Notice of Final Payment” or the SDI payment history query shows an account balance other than zero, the SDI benefits have not been exhausted and may continue once the worker submits paperwork to EDD. In this situation, the field office (FO) will diary (code 42), as needed, to verify that no additional benefits were paid.

• If the ending date is in the past, enter the ending date in Modernized Claims System (MCS) or ICF WC/PDB to remove offset.

4. Ending date in the future

• Do not assume that SDI payments will last the entire 52 weeks.

• If the evidence shows a Maximum Benefit Amount (MBA), divide the MBA by the Weekly Benefit Amount (WBA) and prorate from the start date as determined in DI 52135.030D.2. in this section to determine the ending date. Input of a known ending date via MCS or ICF WC/PDB will pass the future end date to the MBR for future automated offset removal.

• Verify the actual ending date if the evidence indicates any breaks in payment or benefit reduction (see DI 52135.001E below). FOs may need to control individual cases.

For example, in situations where EDD issues a ‘Notice of Final Payment’ and we remove offset but SDI benefits have not been exhausted and could resume. See DI 52140.001H (FO) and DI 52140.010C (PC) for establishing diary controls.

E. Processing RETAP RT47 alerts

We mail an automated direct contact letter requesting proof that SDI payments ended if SDI offset is still in effect 13 months from the periodic payment start date. See DI 52135.030I.3. for Exhibit 3 - Facsimile of CA SDI offset removal letter. If offset remains on the MBR, RETAP generates alert RT47 to the PC 18 months from the periodic payment start date.

1. Verification of SDI termination received but not processed

Use ICF WC/PDB #32 to process the adjustment.

2. Offset in effect and no evidence of SDI termination received

If offset is still in effect, SSA received no response to the automated letter requesting evidence of SDI termination, and there is no indication that SSA previously received the necessary evidence (e.g., a special message or unprocessed evidence in paperless Completed):

• Make one follow-up contact with the beneficiary or with EDD, as appropriate, requesting proof of SDI termination.  If sending a DIRCON letter, model it after Exhibit 3 but show the PSC of jurisdiction’s return address.  Refer to DI 52135.030H. in this section for additional information regarding contacting the CA EDD offices.

• Do not establish a diary control.  No further follow up is required.

• Leave PDB offset in effect if there is no further response and there is no evidence already in the record to support removing offset.

3. Offset is correct and based on a PDB other than California SDI

Process as follows:

• Annotate a special message to the MBR stating the source of the California PDB payments. 

• Read the Action Control Record (ACR) files in (FIN).

F. Reductions in SDI payments

1. Disqualification

SDI benefit withholding occurs for the number of days a worker is determined disqualified from receiving SDI benefits.

• Periods of disqualification may result in breaks in SDI payment. However, breaks in payment do not mean breaks in entitlement (i.e., entitlement on the SDI claim continues during periods of disqualification).

• Periods of disqualification do not affect the total amount of benefits (Maximum Benefit Amount or MBA) payable on the SDI claim. Therefore, breaks in payment may result in SDI benefits extending over a longer period.

• Offset does not apply during periods of disqualification.

2. SDI benefit reduction

This chart shows the types of benefit reduction imposed against SDI payments by the state EDD (EDD refers to these as “offsets”). Additionally, the chart reflects whether SSA uses the gross or net SDI benefit for PDB offset.

EDD payment histories generally display reduction amounts on a separate line following the check amount or in a column next to the check amount and tag the line or column with the full title of the reduction type or an abbreviation (e.g., WORKERS COMP may be shown as WC).

G. Worker receives both SDI and Workers' Compensation (WC)

When a worker receives SDI and later receives WC, EDD usually files a lien against the WC benefits. Full or partial repayment of SDI payments may satisfy the lien. In this situation, SSA considers that the NH received that much less SDI and the amount repaid is not offsettable as SDI. 

• Offset as PDB only that portion of the SDI payments not repaid by WC or a third party

• Offset as WC the EDD lien repayment amount when the repayment amount was taken from the WC award since the lien is not an excludable expense from the WC award. If the lien amount was not repaid from the WC award proceeds (e.g., the amount was repaid separately by the employer or a third party), do not offset the lien amount as WC.

• Offset based on the concurrent amounts if the remaining SDI and WC benefits overlap.

When adjusting PDB offset to exclude the lien repayment amount, choose the more advantageous method:

1. Prorate the reduced SDI total over the entire period of SDI payments (same number of weeks/lower weekly rate), or

2. Divide the reduced SDI total by the regular weekly amount and impose offset over a shorter period (same weekly rate/fewer weeks).

For an example and additional information on concurrent SDI/WC and EDD liens, see DI 52120.030F.

H. Verification of SDI

The number holder is the primary source for verification. If the number holder does not have verification, he or she may request a printout of the SDI payment record by contacting EDD's toll-free hotline at (800) 480-3287. If records are not available from the number holder, obtain verification via the SSA EDD Request website. This site is available to all SSA employees whose job duties may require contact with EDD for verification. Access to the site is determined by your position and office based on your PIN. For requests input via the website, EDD will provide a Claims and Payment History Abstract. See the site’s User Guide for examples showing how to read the abstract.

Note that the EDD only keeps records for 10 years.

1. Verification forms

We accept the following forms as verification of SDI payments:

• Local EDD SDI abstract (DIS0306, PAYMENT HISTORY INQUIRY, or a DIS0312).

• State Form DE 429D

• Form DE2525A (Notice of Exhaustion of Disability Benefits)

• Form DE 2500CKX (Notice of Exhaustion of Disability Benefits or Notice of Final Payment)

• Claims and Payment History Abstract (ABS009.01) provided to SSA under an agreement with EDD.

NOTE: EDD will usually enclose a standard explanatory form DE 2599 with local abstract printouts such as the DIS0306. The DE 2599 explains the entries on the abstract.

See DI 52135.030I.2., Exhibit 2 for assistance in interpreting CA SDI documents.

2. Unacceptable verification forms

• DE 507 (Wage and Claim Abstract)

• Disability Insurance Abstract

• Claimant Abstract

I. Exhibits

• Exhibit 1 - Maximum Weekly SDI Rate and Duration Chart

• Exhibit 2 - Sample SDI Abstract and Explanation of Entries

• Exhibit 3 - Facsimile of CA SDI Offset Removal Letter

1. Exhibit 1 - Maximum weekly SDI rate and duration chart

This table shows the maximum weekly SDI rates and maximum duration:

2. Exhibit 2 – Sample SDI abstract

 View PDF Version

The following chart explains the acronyms found on the typical SDI abstract.

3. Exhibit 3 - Facsimile of CA SDI offset removal letter

 View PDF Version

 View PDF Version

J. References

• DI 52125.001 - Public Disability Benefits (PDB) – Rules for Offset and Definition.

• DI 52125.010 - Determining When to Apply Public Disability Benefit (PDB) Offset.

• DI 52125.015 - Determining Public Disability Benefit (PDB) for State and Local Employment.

• DI 52120.030 - California Workers' Compensation (WC).

• SM 00619.098 - RETAP RT 47, Calif PDB Offset Removal.

• State of California Employment Development Department website