Employer Update

I just received my first short-term disability claim from an employee covered under the Virginia Local Disability Program (VLDP). Does the third-party administrator or the employer pay this benefit?

The employer is responsible for paying employees who are approved for short-term disability. While on short-term disability, employees are still considered active VRS members. The employee continues to accrue service credit and remains eligible for retirement after reaching age and service requirements. Time spent on short-term disability counts toward the five years needed to become vested for a retirement benefit.

While the employee is on short-term disability and the employer is paying the short-term disability benefit to the employee, the employer continues to report the employee's creditable compensation and to deduct the member contribution. The reported creditable compensation should be the full amount of the employee's pre-disability earnings.

Some employers opted out of VLDP and offer a comparable disability program instead. However, they must still pay the short-term disability benefit, report the employee's creditable compensation and deduct the member contribution for employees on short-term disability because the employees are still active VRS members.

For more details about short-term disability reporting, refer to page 15 (Contributions – Short-Term Disability) of the Virginia Local Disability Program chapter of the VRS Employer Manual.