Barking Up The Wrong Tree

I don't know whether to post this or just avert my eyes from someone making making a fuss about something he does not understand. From a press release issued by Senator Grassley (R-Iowa):

Senator Chuck Grassley said his survey of private insurers has found that some are needlessly contributing to the Social Security disability backlog, and he urged the Social Security Administration to recommit itself to preventing disability benefit application fraud and to work with the Inspector General to penalize and prosecute those filing false disability claims. ...

Grassley’s said his conclusions about the way private plans are burdening the public program are based on his review of responses from nine major insurance companies to an inquiry he made late last year about private insurers’ policies and practices concerning disability insurance claims.

Every insurer surveyed by Grassley said it “encouraged, requested, required, expected, asked or suggested” that long-term disability claimants apply for Social Security disability payments once a claim is approved. One private insurer requires that individuals apply. All nine of the insurers’ policies reduce claimants’ disability benefits by the assumed amount of Social Security disability insurance benefits unless it granted an exception. Four private insurers provided information to Grassley about approval rates for Social Security disability claims. Of those four, three had approval rates generally below all disability claims processed by the Social Security Administration.

My experience is that the Social Security disability claims of Long Term Disability (LTD) recipients have very good prospects of success. on Social Security disability claims. Why shouldn't LTD carriers encourage their beneficiaries to apply for Social Security disability benefits? The LTD carriers have more at stake than the claimant. Almost all of these claimants will eventually apply anyway. The sooner, the better for them, since they have a stake in the Social Security disability claim also, because of the Cost of Living Adjustment that applies to Social Security disability benefits but not LTD -- and for other reasons not worth detailing here. I have no idea where Grassley is getting his information about LTD recipients having a lower chance of success. I am nearly certain that he misunderstood something.

It is easy to think that there is something scandalous about the offset in LTD plans for Social Security disability benefits. However, without that offset, the costs of LTD would be far too high and no one would have LTD. Far better to have LTD with an offset for Social Security disability benefits than no LTD at all. Most people just misunderstand what LTD is about, probably because the insurance companies do not go out of their way to explain it. Mostly, LTD insures against the delays and uncertainties in the Social Security disability programs. When you think about it that way, things start to make sense. Also, when you think about it that way, you start to wonder whether the real problem is with the delays and uncertainties at Social Security.

Remember, I do not even like the LTD carriers. They jerk too many of my clients around, not by making them apply for Social Security disability benefits, but by cutting off their LTD benefits inappropriately. I only defend the LTD carriers on this issue because it is a bum rap and a distraction from the real problem at Social Security, which is primarily a lack of staff.