Some right wing "think tanks" have been promoting the notion that mandatory private disability benefits could somehow substitute for or augment Social Security disability benefits. I wouldn't call the ideas even half baked. It's been more like vague notions. The proponents of these ideas got Senator Orrin Hatch to ask the Government Accountability Office (GAO) to do a report on their ideas, to the extent that GAO could even identify what the ideas were. Predictably, the GAO report wasn't encouraging for these reasons:
- Insurers told GAO that is was unclear how expanding PDI [Private Disability Insurance] would affect PDI premiums and the impact this would have on enrollment.
- Employers told GAO they were concerned about potential additional requirements or administrative burdens that would be placed on them if PDI were expanded.
- Employee and disability advocacy groups told GAO they were concerned about whether PDI expansion would provide standard services or employee protections currently available under SSDI, especially with respect to PDI expansion proposals that would replace SSDI for 2 year.
One enormous problem is that long term disability insurance (LTD) as we know it is reduced by the amount that Social Security pays. That means that LTD just pays the full rate until a claimant is approved by Social Security and then supplements the Social Security disability benefits thereafter. There's only a handful of LTD recipients who never get approved for Social Security disability benefits and continue to receive the full unreduced LTD payment indefinitely. Making LTD the primary payor would completely change the insurance product and make it much, much more expensive. It's never been clear to me whether the think tank proponents of private disability insurance understand just how different what they're asking for would be from any product that exists now. The LTD carriers might like to get big contracts for helping Social Security administer its disability benefits programs but I've never seen evidence that the LTD carriers actually want to be the insurers. Apparently, that's what GAO heard directly from the insurance companies.
And, some LTD policies terminate benefits for mental impairments after 2 years. Apples and oranges re SSDI.
ReplyDeleteAnd many private disability insurance companies require the claimant to file for SSDI even though they often will not qualify. This leads to increased workloads for SSA to process these claims.
ReplyDeleteI have LTD insurance, which of course would be offset by any SSDI benefits. If I became disabled, I wonder how hard it would be to convince the insurance company of that. If the insurance company makes it easier than Social Security, they risk getting stuck with the whole thing if SSDI is denied. So I'm afraid the insurance company will make it difficult also. Still, it's not that expensive, so I'm keeping it for now.
ReplyDeleteI thought right wing think tanks didn't like government mandates. Now they want to make employers provide 2 years of disability benefits?
ReplyDeleteActually sounds good to me. Insurers will deny the claims, and then I can represent people in a suit against the insurer, and in a SSD claim. Extra cases for me! Yea!
@11:53AM:
ReplyDeleteYou do not think LTD Insurance is expensive?
In what Universe?
@12:19 PM:
ReplyDeleteIt costs me less than 0.5% of my salary, so yeah, I don't think that is expensive. That's with a 90 day disability period before benefits start, and then 2/3 of income replaced until SSNRA (offset by any SSDI, of course).
11:53, keep your LTD insurance. I think it's a good thing and it usually works with the worker's health insurance so that records are made. It makes my job as a representative before the Social Security Administration easier. However, that insurance is only available with the better jobs. If it were expanded to everyone, that would be a disaster. How is it going to be paid for? We make not like some of the SSA regulations, but the system has been in place and evolved over the years so that we have a very sophisticated system. Improving it? Yes. Dismantling it and privatizing it? Oh (expletive!) no!
ReplyDelete