How Does Privatizing The TDB Plan In New Jersey Affects Payroll?

One of the most common concerns shared by every employer while privatizing their Temporary Disability Insurance is the change in payroll. When you replace your state plan for TBD with a private plan, it is imperative that you must know how it will affect the employee contribution. So, if you are planning to privatize your New Jersey State Disability Insurance plan, then you must be aware of the changes in the payroll that it will bring.

Under the state plan, the employee contribution gets deducted as a Tax, which is collected by the government. Besides, every quarter, the collective amount is being transferred to the state automatically. However, the private plan deducts the employee contribution as a normal deduction from their salary. Both the employer and employee contribution gets collected in the employer's general account. After every quarter, the employer remits the collective fund to the insurance company as bill payment. Unlike the state plan, the insurance company requires the employer to pay the deducted funds every quarter. 

Who updates payroll while privatizing the TDB plan? 

It is the payroll vendor's job to make the required changes in the entire payroll system when switches to a private plan. The hired insurance company works with the payroll vendor to make sure that deductions are getting updated. In case your payroll vendor makes any mistakes while updating deductions or updating the records, the funds will be sent to state further requiring a refund request from the employer. 

Do employee contribution resets while switching?

The straightforward answer is No. Many employers believe that the employee contribution limit resets due to privatizing the plan overcharging them. This is not true as if any employee reached the contribution limit in the second quarter and you privatized the plan in the third quarter, then they don't need to contribute for the rest of the year.

Above are some of the useful information regarding changes in the payroll when you privatize your New Jersey State short term disability insurance plan. If you wish to know more about it, then you can contact any TDB insurance company available near you.