On March 31, 2006, the commissioner of Social Security issued regulations revamping the Social Security disability benefit program.
The new rules will change the four-step administrative process that existed in most states since the program began. They also will set up a Quick Disability Determination procedure for claims that are likely to be awarded (see box).
Though the changes are procedural, they will impact disability insurance agents. That’s because agents will have contact with the new system through their customers who become disabled. Some points to keep in mind follow.
The new rules are effective Aug. 1, 2006, initially only in the Boston region (Maine, New Hampshire, Vermont, Massachusetts, Connecticut and Rhode Island). The idea is to get feedback and fine-tune them before expanding to other regions, which the SSA says will not occur for at least one year.
Even if a customer has private disability insurance, such as an individual policy or a group policy, the private insurance may have exclusions and limits. For example, many group long-term disability benefits are limited to two years for mental/nervous claims. But such limitations do not exist for Social Security disability insurance benefits.
As one would expect, the medical and vocational requirements for Social Security disability benefits often are easier for people to meet than is the case with private disability policies.
In addition, some disability insurance policies, particularly group long-term disability, require the insured to apply for Social Security disability benefits. If these benefits are awarded, the LTD payment is then offset accordingly.
Unlike private insurance, where coverage usually begins upon paying a premium, to be insured for Social Security disability benefits, workers must pay into the system for enough years to be covered. But, once that coverage begins, if a person has a steady work record, the coverage can last for up to five years after the date last worked.
Impact for the agent: Those agents who are familiar with these rules can alert a customer to inquire as to eligibility.
Some of SSA’s procedural changes are intended to make the system more understandable and consistent.
For example, the new rules contain a requirement for SSA not only to notify claimants of specific reasons for decisions but also to notify the previous decision-maker of the reasons. Currently, the denials often come as forms that at best just list the medical evidence considered.
The new rules apparently also are expected to solve backlog delays at SSA. In some offices, such delays now can run more than several years. But, considering that some offices do not have the staffing, time or both, even just to answer the phone, it seems the problems at SSA go deeper than procedures.
In response to criticism that the new rules emphasize efficiency over fairness, the preamble to the final rules says that they also are intended to make the correct decision earlier in the process. In fact, the SSA is counting on making favorable decisions earlier on, so the administrative burden is lessened at the later levels.
Any changes that will make the system fairer, more consistent and more efficient are welcome. However, the problems with unmanageable backlogs have existed for so many years that procedures alone are no silver bullet. These new rules will likely take years to roll out in other jurisdictions, so that will leave plenty of time to evaluate their effectiveness.