Why New Jersey Should Reform Its Disability Benefits

Life happens—you get in a car accident, your foot is broken at a concert, or you find out you’re having a baby.

 There are public programs to help workers who are sick or injured get back on their feet. In New Jersey, one of these government programs needs reform: short-term disability compensation benefits.

 Right now, an employee can’t receive disability benefits and also work. This becomes a difficult position for those who are able and want to work part-time before fully returning to work. If they’re going to lose their government assistance and not be able to pay bills, they may think that there’s no point to returning early.

 New Jersey lawmakers are considering legislation (Assembly Bill 1131/Senate Bill 1072) that would allow beneficiaries to continue receiving disability benefits while working part time. It’s a positive effort to help workers ease back to work without facing financial penalties for doing so, but this bill is not all good news. The reform would reduce a worker’s eligible benefits dollar-for-dollar based on how much he or she receives in part-time wages. Because the worker isn’t financially better off working part-time than just receiving the full disability benefits—there’s no incentive to return to work early even if the employee is able to.

 By altering how benefits are calculated, employees would be incentivized to return to work and they would experience a smoother transition back into their roles, employers get their workers back sooner, and it would save the state money.

 Workers are incentivized. Consider this sliding-scale approach proposed by AFP-New Jersey: If a person makes $800 a week in full-time pay, they are currently eligible for $528 a week in disability benefits. With the proposed benefits calculation, the worker could work part-time earning $400 a week and receive $328 in disability benefits from the state for a total of $728 in weekly income.

 For young adults, an extra $200 a week while on disability can make a huge difference in their ability to make student loan payments and afford daily life. It’s a flexible system that allows the employee to make the right decision for their situation. 

 Transition back to work is easier. It’s hard to transition straight from disability status to full-time work. Allowing employees to work part-time if they are able and willing eases them back in to the 40-hour work week and expectations of their role. It’s also a benefit for employers who get their employees back a little sooner.

 This is also good news for new mothers whose maternity leave is covered by short-term disability benefits. Many moms want to transition back into the workplace, and if employers were able to create these arrangements, it would be good for all: The employer who’s anxious to have the employee back, the baby who needs as much time with mom as possible, and the mom who wants to slowly transition back to full-time work.

 The state saves money. Based on the scenario above, the state saves $200 a week in benefits with the sliding-scale calculation. Depending on pay levels, this approach will save the state between $50 and $550 a week for workers receiving disability benefits and working part-time. This will be much appreciated by taxpayers whose resources can now be used to fund other budget items.

 Looking for ways to help workers in a time of need then transition them back to work while being fiscally smart enjoys bipartisan support. We need New Jersey lawmakers to make this reform to the state’s short-term disability compensation benefits a priority.

Author Generation Opportunity

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