Health problems that keep single, middle-income workers off the job can hit them with losses equal to 20 times the amount of their pre-disability annual income.
Researchers at Milliman Inc., Seattle, have included that estimate in an analysis of the effects of disability prepared for America’s Health Insurance Plans, Washington, and the Life and Health Insurance Foundation for Education, Arlington, Va.
AHIP and LIFE commissioned the analysis in connection with Disability Insurance Awareness Month.
Milliman analysts estimated the effects of disability by considering 4 representative individuals: A single male, age 40, who earned $50,000 per year before becoming disabled; a married male, age 40, who earned $50,000 per year before becoming disabled, and with a spouse earning $25,000 per year; a single female, age 50, who earned $200,000 per year before becoming disabled; and a married female, age 50, who earned $200,000 per year prior to disability, and whose spouse earns $100,000 per year.
One scenario the Milliman analysts considered was a disability lasting until the individual turned 65.
For the high-income, married female, the present value of income reduction, expense increase and tax reduction would be about 3.8 times pre-disability income.