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Hawaii Temporary Disability Insurance (TDI)

Overview

ProPay helps Hawaii employers comply with state Temporary Disability Insurance (TDI) requirements. TDI provides benefits to eligible employees unable to work due to non-work-related illness or injury.

Who Must Provide TDI Coverage

All Hawaii employers must provide TDI or sick leave benefits to eligible employees, with limited exceptions outlined in section 392-5 of Hawaii Revised Statutes.

2026 TDI Rates and Limits

Note: TDI rates and wage bases are updated annually by the Hawaii Department of Labor and Industrial Relations. Always verify current rates at the start of each calendar year.

2026 Rates:

  • Weekly taxable wage base: $1,500.21
  • Maximum weekly employee deduction: $7.50
  • Maximum deduction percentage: 0.5% of weekly wages

The wage base is a weekly maximum taxable amount, not an annual limit.

Official Resource: https://labor.hawaii.gov/dcd/files/2025/12/2026-Maximum-Weekly-Wage-Base.pdf

How TDI is Funded

Employers may:

  • Pay the entire cost of TDI coverage
  • Share the cost with eligible employees

For cost-sharing, employers can deduct the lesser of:

  • Half the premium cost, OR
  • 0.5% of the employee's weekly wages, OR
  • The maximum weekly deduction ($7.50 for 2026)

TDI Coverage Options

Employers must choose one of three methods to provide TDI coverage:

1. Insured Plan

Purchase insurance from an authorized carrier licensed by the Hawaii Department of Labor and Industrial Relations.

2. Self-Insured Plan

Adopt an approved sick leave policy that meets or exceeds TDI Law requirements. Employers must prove financial solvency by:

  • Submitting audited financial statements annually
  • Depositing securities, OR
  • Posting surety bonds

3. Collective Bargaining Agreement

Provide sick leave benefits through a collective bargaining agreement that is at least as favorable as required by TDI Law.

Setting Up TDI in ProPay

  1. Go to Client Functions > Setup > System Setup Defaults and review the default TDI rate.
  2. If your employer pays TDI on behalf of employees:
    • Go to Employer > Employer Setup > Screen 3 (Tax Exemptions and Benefit Accruals).
    • In the SDI section, make the appropriate changes to indicate employer-paid TDI.
    1. Click Save.

    ProPay automatically calculates and applies TDI deductions for each payroll run based on your configuration.

    Troubleshooting

    TDI Deductions Not Appearing on Payslips

    1. Go to Employer > Employer Setup > Screen 3 (Tax Exemptions and Benefit Accruals) and check your TDI configuration in the SDI section.
    2. Verify the employee's wages fall within the taxable wage base.
    3. Confirm the employee is eligible for TDI coverage.

    Incorrect TDI Deduction Amount

    1. Verify the current year's wage base ($1,500.21 for 2026) and maximum weekly deduction ($7.50 for 2026) in ProPay settings
    2. Check the employee's weekly wages to ensure the calculation is correct (0.5% of weekly wages or $7.50, whichever is less)
    3. If the issue persists, contact Paysoft support

    Frequently Asked Questions

    Q: How often do TDI rates change? A: TDI rates are updated annually by the Hawaii Department of Labor and Industrial Relations, typically effective January 1.

    Q: Can I customize TDI plans for different employee groups? A: Yes, ProPay allows you to set up different TDI coverage methods to accommodate various employee groups or collective bargaining agreements.

    Q: How do I generate TDI compliance reports? A: Go to Client Functions > Tax Returns and select Hawaii to access TDI compliance reports.

    Additional Resources

    • Hawaii Department of Labor and Industrial Relations: Disability Compensation Division
    • Hawaii Revised Statutes Chapter 392 (TDI Law)
    • For ProPay support: Visit https://www.paysoft.com

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