Section 1. Amend Title 29, of the Delaware Code by adding thereto a new Chapter 52A to read as follows:

“Chapter 52A. Disability Insurance Program

§ 5251. Definitions.

(a) ‘Committee’ shall mean the State Employee Benefits Committee as established by §9602 of this title.

(b) ‘Creditable Compensation’ shall mean the same rate of compensation that the employee received before the employee became disabled.

(c) A ‘Disability benefit’ means income replacement payments payable to a participating employee under a short-term or long-term disability benefit program pursuant to this chapter.

(d) An ‘employee’ shall mean an individual who is a member of the State Employees Pension Plan under Chapter 55 of this title and has elected to join the program as specified in §5519 of this title.

(e) ‘Program’ means the program providing sick leave, short-term disability, and long-term disability benefits for participating employees established pursuant to this chapter.

§ 5252. Payment of premium or subscription charges.

The State shall pay premium or subscription charges for the full cost of providing coverage for the program.

§ 5253. Specifications of the coverage.

(a) Participating employees shall be eligible to take sick leave to account for absences due to an incident, illness, or injury for periods when disability benefits are not payable. Participating employees shall be compensated by their employers at 100 percent of creditable compensation for each hour of sick leave taken, not to exceed the employee's sick leave balance.

(b) Short-term disability benefit.

(1) An employee who is found to be mentally or physically incapacitated from performance of the essential functions of the employee’s job with reasonable accommodation as required by federal law, shall be provided with reasonable income replacement, or rehabilitation or retraining services, or a combination thereof, under a program provided by the Committee for a period specified in the rules adopted by the Committee. Short-term disability benefits for participating employees shall commence upon the expiration of a twenty-calendar-day waiting period. The waiting period shall commence the first day of a disability. If an employee returns to work for one day or less during the twenty-calendar-day waiting period but cannot continue to work, the periods worked shall not be considered to have interrupted the twenty-calendar-day waiting period.

(2) Except as provided in §5253(b)(4) short-term disability coverage shall provide income replacement for 75% of a participating employee's creditable compensation during the period that an employee is disabled, as determined by the Committee or its designee.

(3) Creditable compensation during periods an employee receives short-term disability benefits shall include general salary increases awarded during the period of short-term disability coverage.

(4) An employee’s sick leave may be used, on a day for day basis, to extend the period an employee receives short-term disability benefits paid at 100 percent of replacement of creditable compensation.

(5) If a participating employee returns to his position on an active employment basis for fourteen consecutive calendar days or longer, any succeeding period of disability shall constitute a new period of short-term disability.

(1) Long-term disability benefits for participating employees shall commence upon the expiration of a 182-calendar-day waiting period. The waiting period shall commence the first day of the disability. If an employee returns to work for 14 or fewer consecutive calendar days during such 182-calendar-day waiting period and cannot continue to work, the periods worked shall not be deemed to have interrupted the 182-calendar-day waiting period

(2) Long-term disability benefits shall provide income replacement in an amount equal to 60 percent of a participating employee's creditable compensation.

(3) Creditable compensation during periods an employee receives long-term disability benefits shall (i) not include salary increases awarded during the period covered by long-term disability benefits and (ii) be increased annually by an amount approved by the Committee.

(4) Unless otherwise directed, to be eligible for benefits under this section, the employee must apply for Social Security disability benefits.

(d) Eligibility for participation in the program shall terminate upon the earliest to occur of an employee's (i) ability to return to employment based on the Rules and Regulations adopted by the Committee, (ii) death, or (iii) normal service retirement at age 62.

§ 5254. Selection of the group disability insurance carrier. The disability insurance coverage shall be provided through a carrier incorporated under the laws of this State or legally authorized to transact business within this State, having adequate servicing facilities to carry out the terms of the contract.

§ 5255. Disability program design and administration.

The Committee shall contract with a disability program carrier to determine disability, to provide long-term disability insurance coverage, and to administer the disability program based on the rules adopted by the Committee. Such rules shall include but not be limited to standards relating to the determination of disability; requirements for medical or psychological examinations; the adjustment or termination of payments based on the mental or physical condition of the employee, education, training, and experience of the employee; and the monitoring of the disability program administrator's performance by the Committee.

§ 5260. Authority and duties of the State Employee Benefits Committee.

The State Employee Benefits Committee established by § 9602 of this title shall have the following powers, duties and functions under this chapter:

(a) Control and management of the State employee’s group disability insurance program provided for in this chapter.

(b) Authority to establish the State employees group disability insurance program on an insured or self-insured basis.

(c) Selection of the carriers or third party administrators deemed to offer the best plan to satisfy the interests of the State and its employees in carrying out the intent of this chapter.

(d) Authority to adopt rules and regulations for the general administration of the State employees group disability insurance program.

(e) Authority to make and enter into any and all contracts with any agency of the State, or any outside agency, for the purpose of assisting in the general administration of this chapter.”

Section 2. Amend Chapter 55, Title 29, of the Delaware Code by adding thereto a new section to read as follows:

“§5519 Disability Insurance option.

(a) An employee who, as of January 1, 2006, has less than 5 years of credited service, will be ineligible for disability pension coverage under §5524 of this title and shall be covered under the Disability Insurance Program under Chapter 52A of this title.

(b) An employee who, as of January 1, 2006, has 5 or more years of credited service can elect to either:

(1) continue coverage under the disability pension provisions under §5524 of this title; or

(2) elect to be covered under the Disability Insurance Program under Chapter 52A of this title. This election must be made in a form approved by the Committee, filed prior to December 15, 2005, to be effective January 1, 2006 and shall be irrevocable; however, all members of the Delaware National Guard or members of the U.S. Armed Forces Reserves who have been called to active duty must make their election within 45 days of the date they are no longer on active duty.”

Section 3. Amend §5501 (b), Title 29, of the Delaware Code by adding a new paragraph to read:

“(20) Service for the period of time that an employee was collecting disability benefits pursuant to Chapter 52A of this Title.”

Section 4. Amend §5201 (b), Title 29, of the Delaware Code by adding a new sentence at the end of that subsection to read:

“An ‘eligible pensioner’ shall include those employees who are receiving disability benefits pursuant to Chapter 52A of this Title.”

Section 5. Amend §5501 (b), Title 29, of the Delaware Code by adding a new paragraph to read:

“(21) Service for accrued sick leave, not in excess of 1 year, provided that the employee on or before the date of issuance of the first benefit check, pays into the fund an amount equal to 5% of the final average compensation for each month credited. A month of credited service will be granted for every 21 days of sick leave above 90 days of accrued sick leave. Educational employees will receive credited service based on the period of time that has been established for a regular school year. Any credited service purchased under this paragraph shall not be used to determine eligibility for benefits under this chapter. ”