In California, Voluntary Disability Insurance (VPDI) and State disability insurance (SDI) are programs designed to provide short-term benefits to eligible workers who are unable to work due to a non-work-related illness, injury, or pregnancy, compensating them for loss of income during their time away from their job. SDI is a mandatory state program funded through employee payroll deductions, offering benefits for up to 52 weeks. VPDI (or Voluntary Plan (VP)), on the other hand, is an optional program that employers can offer as an alternative to SDI, potentially providing different benefits or coverage terms. All wage earners in California are required to participate in disability insurance.
A VPDI, as an alternative provided by some California employers, must offer all the benefits provided by SDI, including at least one benefit that surpasses SDI, without exceeding the cost to employees (can be actually lower). Either an employer or a majority of employees may apply for approval of a VP to receive Paid Family Leave (PFL) and Disability Insurance benefits. Employers who offer VPDI must legally make payroll deductions to fund the premiums for this self-insured group insurance policy.
Both programs aim to partially replace income during periods when workers are medically unable to perform their jobs. SDI payments are not taxable (except for those recipients who can’t receive unemployment benefits due to their disability, so they receive SDI instead).
In 2024, SB 951 went into effect, removing the cap on taxable earnings for SDI contributions, and Employee Contribution Rate raised to 1.1% from 0.9% in 2023. This means that higher-income individuals will continue to be subject to SDI withholding on wages above $153,164 each calendar year. In 2025, the SDI benefit percentage will increase again. VPDI/SDI benefits are tax-free although they are not very large — Maximum Weekly Benefit Amount (WBA) for SDI is limited to $1,620 ($84,240 annualy).
The benefit period for VPDI overlaps all of STD’s periods plus the first 6 months of LTD. Thus, we have to account for overlapping benefits.
You can file a claim online at the EDD’s SDI Online page or you can file Form DE 2501, Claim for Disability Insurance Benefits, which you can request be mailed to you from the EDD website. You have only 49 days from becoming disabled to file a claim. You’ll also need to ask your doctor to fill out a medical certificate of disability or register online and certify your disability online.