Changes in the Social Security disability process may have an impact on how insurers conduct their group long-term disability business. The reason is that most group LTD policies have an offset for Social Security Disability Insurance Benefits (DIB). So, a change in the DIB process may directly affect LTD.
The most interesting change under way with DIB, and the one with the most far-reaching potential, is the Social Security Administrations (SSA) conversion from paper to electronic files. Though thinking is only beginning concerning the many ways this can impact the LTD process, at first blush, it would seem that the claims process could benefit greatly from the development.
A difficult problem in the LTD claims process is determining the status of a DIB claim. While the SSA has made attempts at providing online files in the past, the results have been difficult to work with, and generally unsatisfactory. If the electronic file process is successful, it should provide remote access to claim files for parties with the proper authorization and access codes.
Such access would permit an insurer to view online, and without delay, the status of a DIB claim. Indeed, it would allow an insurer to determine if a DIB claim had been filed by the disabled worker.
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Such knowledge would help an insurer determine whether the disabled worker is performing his or her obligations under the LTD contract. The LTD contract generally requires a disabled worker to apply for DIB and to pursue the application through an administrative hearing.
Since some claimants say they have done this, when, in fact, they may not have, or their application for DIB may not be current, the electronic file will allow the insurer to confirm status of a claimants DIB case instantly.
In appropriate cases, if a claimant does not fulfill his or her obligations under the LTD contract, the insurer may offset the LTD benefit by an estimate of the DIB amount that the claimant might receive if the DIB application were filed and benefits awarded.
The electronic file may therefore cut down on administrative time and effort by the insurer to determine the appropriate actions on claims.
Also, large amounts of benefits may be affected by access to current and correct information. Therefore, the insurer may save substantial sums just by being able to act more quickly than is possible when proving claim status with paper documents (which may already have been stale by the time of receipt by the insurer).