FAQ – Elective Coverage Premiums

• What is the cost of EC benefits?
• How do I pay my EC premiums?
• If I’m disabled, will I still need to pay my EC premiums? What if I am bonding with a new child or providing care to a seriously ill family member?
• What happens if my EC premiums are not paid or I’m late with them?
• I am delinquent on my EC premiums and have just become disabled or have a family care need. Will you still pay benefits?

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 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.

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.