NEWS

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).

Similar advances in technology may also permit the insurer to recover any overpayments more quickly than currently possible.

For example, sometimes a disabled employee receives LTD for several years before DIB benefits are awarded. This can be for any number of reasons, such as the delay in hearing cases at SSA caused by a large case load. Cases may not get heard by an administrative law judge for over a year after a hearing is requested. If DIB is awarded, the benefits are retroactive to date of disability. The employee then receives a lump sum for these past-due benefits. SSA deposits the lump sum by electronic transfer into the claimants bank account.

In these cases, the award of retroactive DIB benefits creates an overpayment of LTD benefits. In other words, had the DIB been awarded more promptly, the offset in LTD benefits would have occurred earlier in time. So, the LTD insurer is entitled to be reimbursed this overpayment.

These reimbursements more often are now being accomplished by electronic fund transfers. These transfers save the insurer time, and therefore money, as the float is minimized because the reimbursement is deposited directly into the insurers account. Administrative time to receive, rout and otherwise process a paper check is also eliminated.

The additional interest earnings gained by receiving the funds earlier than before may be substantial, in view of the fact that many reimbursements may be made in this manner.

A word of caution. Whenever an organization as big as the SSA undertakes a major change like this, glitches can be expected. Anecdotes are circulating to the effect that this particular change has not been given enough time to be considered and implemented, and that the SSA is rushing to make this change too quickly. Though some difficulties are fully expected, my view is that the SSA should be applauded for moving forward with the concept, as the savings in time and money for all concerned should be substantial.

So far, the SSA is making a very limited number of files available on a CD at the hearing level, whereas before the files had to be copied manually page by page. Now the hearing exhibits in this pilot program are provided on a well-organized CD where exhibits are easily viewed with the software in Microsoft Office. If this is a forerunner of the quality of what we can expect from SSA in the future, then the results should be very good. Of course, only time will tell, but the beginning of this process looks promising.

Reproduced from National Underwriter Edition, March 10, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.