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Portfolio > Alternative Investments > Private Equity

DI Insurers Tell Grassley: We're Not Hurting SSDI Program

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Disability insurers plan to aggressively defend themselves against complaints by a powerful U.S. senator that they are hurting the Social Security Disability Insurance program by encouraging claimants who appear not to qualify for SSDI benefits to file SSDI claims.

The response of 9 disability insurers to requests for information from Sen. Charles Grassley, R-Iowa, is due soon.

Grassley requested the information July 21 from Unum, Reliance Standard, Aetna, Cigna, Hartford, Lincoln, MetLife, Prudential and Standard.

In a statement, Grassley contended that “the backlog of Social Security disability cases is abominable, and the last thing those who rely on Social Security need is for insurance companies to be clogging up the system by forcing ineligible applicants to apply.”

He added that, “Policy makers need to know what the insurance companies are doing in order to help the Social Security Administration provide benefits to those who are eligible,” he added.

But, in a July 30 letter to Grassley, Karen Ignagni, president of America’s Health Insurance Plans, aggressively defended the insurers. It is not correct, as the New York Times asserts in a story she wrote, “that private disability insurers compel claimants to submit ‘dubious’ applications for SSDI benefits, or that SSDI applications by privately insured claimants are ‘overloading’ the Social Security disability program.”

She told Grassley that about 2.5 million individuals annually apply for SSDI, versus about 200,000 claims that private DI carriers receive each year–or about 8% of the total.

Of course, she said, “not all of these privately insured claimants file for SSDI and, of those that do, two-thirds are ultimately awarded SSDI benefits.”

Additionally, by providing claimants with expert assistance in completing the application process, private insurers are making the SSA’s review of such applications easier and faster, she said.

The insurers are being asked how many claimants they required to apply for SSDI, how many appeals were mandated and how they pre-screened to ensure claimants had a real chance of qualifying for SSDI benefits.

A staffer for one of the insurers, who asked not to be identified, said the insurers are in contact with Grassley’s staff and are responding to the requests for information.

AHIP also cited a recent Harris Interactive survey which showed 79% of private DI claimants who also receive SSDI said they were satisfied with the process for filing and receiving SSDI benefits.

Moreover, the survey the insurers will cite found that 97% of SSDI claimants said it was least somewhat likely they would have suffered financial hardship if they had received only SSDI benefits and not private disability benefits. A sizable majority, 61%, said it was very likely or extremely likely they would have suffered financial hardship if they did not have access to both programs, according to the survey.

The survey also found, according to AHIP, that 4 out of 5 private disability income insurance claimants, or 82%, are very or somewhat satisfied with their policy.

Robert Zirkelbach, director of strategic communications for AHIP, said the request for information from Grassley was prompted by an article in the Times which said people with private DI found that applying for SSDI benefits created an additional burden.

The article said that having people with private DI also apply for SSDI is partly responsible for the large backlog and long delay in approvals for SSDI coverage, Zirkelbach said.

But, he said, the Harris survey indicates that private claimants are having a positive experience in applying and receiving their SSDI benefits, and that those with long-term disabilities would have suffered financial hardships if both programs had not been available to them.

“Private insurance provides a vital financial lifeline to consumers while they apply for SSDI benefits and in many cases private insurers assist consumers with their application process,” Zirkelbach said.

“There can be a long wait for SSDI benefits because SSDI has a long backlog of applicants, and it is taking a long time for them to get benefits,” he said, but “private insurance benefits come immediately.”


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