VPDI vs. STD

Short-term disability insurance is a private insurance policy that provides income replacement for a limited period, typically 3-6 months, if you are unable to work due to illness or injury. Coverage and benefits can vary based on the policy you choose.

California’s Voluntary Plan Disability Insurance (VPDI) and State Disability Insurance (SDI) are state-mandated programs providing similar benefits. SDI is the standard state-run program, while VPDI allows employers to offer their own plans if these meet or exceed the state’s requirements. Both provide approximately 60-70% of your salary in benefits, but VPDI may offer faster payments or additional benefits depending on the employer’s plan.

Employers can provide both mandated VPDI and private STD to enhance coverage of earnings. VPDI, covers a significant portion of earnings, thereby reducing the benefits and premiums required for STD — STD insurance benefits may be reduced by certain types of other income, including:

• Any state or public employee retirement or disability plan (like VPDI),
• Any amount received as loss of time disability income payments under any state compulsory benefit act or law,
• Any income received for disability under a group insurance policy, including benefits for loss of time from work due to disability,
• Any income received for disability under a government compulsory benefit plan or program, which provides payment for loss of time from your job due to your disability, whether such payment is made directly by the plan or program, or through a third party,
• Any income received for disability under a self-funded plan, or other arrangement if the policyholder contributes toward it or makes payroll deductions for it.

There are several provisions where the STD benefit is explicitly not reduced. One is by “individual disability income insurance policies”.