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FAQs for Elective Coverage
Elective Coverage Frequently Asked Questions
What is Elective Coverage (EC)?
Elective Coverage (EC) is an option for self-employed individuals and employers to apply for coverage under State Disability Insurance (SDI). SDI coverage includes Disability Insurance and Paid Family Leave insurance benefits. A self-employed individual or employer is someone who works for himself/herself, such as an independent contractor.
I just started paying into my EC plan. If I become disabled tomorrow am I covered? Am I covered if I have a family care need tomorrow?
There is usually a minimum of six months from the effective date of your EC plan before you are eligible based on EC contributions. However, if you worked as an employee in California approximately 6 to 17 months prior to your EC plan, you may have wage credits in the base period, which may give you a valid claim.
I'm self-employed and I have EC. If I'm hurt on the job, will SDI pay me?
Yes. Disability Insurance EC benefits are payable whether you are hurt on or off the job unless you carry Workers' Compensation coverage on yourself.
What are my benefits under EC?
Elective Coverage weekly benefits range from $51 to $959. Disability Insurance benefits may be paid up to a maximum 39 weeks. Paid Family Leave insurance benefits may be paid for a maximum of 6 weeks during a 12-month period. Your weekly benefit amount is determined using the quarterly income credits as reported on the IRS Form 1040, Schedule SE or Schedule C.
I'm collecting benefits under my EC plan. If I continue to receive income from my business, will SDI still pay me?
Yes. You may continue to receive income or profits from your business and still be eligible for Disability Insurance benefits as long as you meet the basic eligibility requirements. You may still be eligible for Paid Family Leave insurance benefits as long as you meet the eligibility requirements.
I'm interested in applying for EC. Where can I get an application?
The Application for Disability Insurance Elective Coverage (DE 1378DI), as well as the Information Sheet: Elective Coverage for Employers and Self-Employed Individuals (DE 231EC) can be downloaded from our Web site, faxed via Fax on Demand at (877) 547-4503 (Document Nos. 1370 and 3090, respectively), or ordered on the Internet Order Form or from the Taxpayer Assistance Center at (888) 745-3886.
What is the cost of EC benefits?
Premiums are based on the net profit you reported on IRS Form 1040 Schedule SE for the previous tax year. Life insurance salespersons who are not required to file a Schedule SE should use the net income from IRS Form 1040 Schedule C (line 31) in place of Schedule SE net profit to compute the annual premium. For 2009, the annual premium rate is 2.22 percent of the amount reported as net profit up to $90,669, the taxable wage ceiling for SDI contributions. The rate is evaluated and recomputed each calendar year on or about November 30.
How do I pay my EC premiums?
You are sent a statement at the end of each quarter showing the amount due for the quarter. Your payment is due by the last day of the month following the close of the quarter.
If I'm disabled, will I still need to pay my EC premiums? What if I am bonding with a new minor child or providing care to a seriously ill family member?
Premiums may be adjusted if you are disabled or taking time off work due to a family care need for a full or partial quarter. For additional information, contact your local employment tax office. (link to http://www.edd.ca.gov/taxrep/taxloc.htm)
What happens if my EC premiums are not paid or I'm late with them?
If your EC plan is more than two years old and your premiums are not paid by the delinquency date shown on your quarterly statement, a delinquency notice may be issued by the Employment Development Department (EDD). You have 30 days to submit your EC payment. Penalties and interest will be added. If payment plus penalty and interest is not received within 30 days of the date shown on the delinquency notice from EDD, your EC coverage may be canceled. If your plan is less than two years old, EDD may levy an assessment and collect the unpaid amount.
I am delinquent on my EC premiums and have just become disabled or have a family care need. Will you still pay benefits?
No. Benefits will not be paid if your EC account is delinquent or unpaid.
Can I cancel my EC coverage? Can EDD cancel it?
After electing EC coverage, you must participate in the plan for two full years. After that, if you wish to cancel your coverage, submit your cancellation request during January. Cancellation will be effective January 1.
To continue your EC eligibility, you must show a minimum profit of $4,600 per year. If your profits fall below this level for three consecutive years, EDD may cancel your coverage.
For more information please call SDI at 1-800-480-3287 or 1-866-658-8846 (En Español)