Many disability policies coordinate benefits with the Social Security Disability Insurance program.
Some financial services clients, including self-employed boomers who have bad backs or bad hearts, may have access to no other formal income protection program.
But America’s Health Insurance Plans, Washington, and the Council for Disability Awareness, Portland, Maine, say U.S. boomers know far less about the SSDI program than their financial services advisors may realize.
Because of widespread ignorance about the SSDI program, “baby boomers believe they have more disability income protection than they actually do,” warns AHIP President Karen Ignagni.
The SSDI program protects workers who become terminally ill or have health problems that prevent them from performing any “substantial gainful activity.”
In 2007, the program paid about $8 billion in benefits, or $979 per month, to 7 million SSDI beneficiaries.
One long-term challenge U.S. workers face is the possibility that the SSDI program might go broke. Actuaries are predicting that the SSDI trust fund could run dry in 2026, according to the U.S. Government Accountability Office.
In the short run, one challenge facing typical boomer financial services clients is lack of awareness of how SSDI works.
When AHIP researchers commissioned a Web-based survey by Harris Interactive Inc., Rochester, N.Y., of 2,387 U.S. adults ages 18 and older, they found that the boomer participants–the participants most at risk of becoming disabled–knew only a little more than all participants about the SSDI program.
About 28% of all participants and 23% of the boomers admitted they have no idea what circumstances might make a worker eligible for SSDI benefits.
When participants were asked about SSDI benefits amounts, 48% of all participants and 43% of the boomers said they don’t know how much assistance the SSDI program might provide.
In addition, 77% of all participants and 68% of the boomers said getting an SSDI claim decision would take 11 months or less or admitted having no idea how long getting a decision would take.
On average, the average length of time for getting an SSDI claim decision is about 17 months, AHIP reports.
When CDA researchers commissioned a survey by Mathew Greenwald & Associates Inc., Washington, of 1,400 full-time workers ages 21 to 65, including 362 “seasoned workers” over age 51, they found that about 35% of all participants and 31% of the seasoned workers were unfamiliar with the SSDI program.
Only 41% of all CDA survey participants and 41% of the seasoned workers said they understand the SSDI program “very well” or “somewhat well,” according to the CDA.
The idea that even seasoned workers know so little about the SSDI program is disturbing, because “you’re paying 6% plus out of your paycheck every week to Social Security,” says CDA President Robert Taylor.
The SSDI program “is the cornerstone of the Social Security safety net for virtually all workers, but one-third don’t know it exists,” Taylor says. “They need to become better educated.”
Executives usually are astounded when they find out how little their workers know about the SSDI program, Taylor adds.
Financial services advisors can help by making sure clients know about the program, and insurers and industry groups might be able to help by working with the Social Security Administration on public service announcement campaigns and other efforts to increase SSDI program awareness, experts interviewed say.
But Taylor says the most effective educational efforts probably will start with employers and their benefits teams.
Employers have educated 401(k) plan participants about individual responsibility for retirement savings, and they are starting to educate members of health plans about individual responsibility for health costs, Taylor says.
Now, “we need to replicate that approach in the disability arena, too,” Taylor says.