Doubling a private long-term disability (LTD) insurance plan’s elimination period to 180 days, from 90 days, might cut the likelihood that workers will file claims in half, but it could the average duration of the claims that do come in.
Three economists have published those conclusions in in a working paper posted by the National Bureau of Economic Research.
The team that wrote the paper includes David Autor and Jonathan Gruber of the Massachusetts Institute of Technology (MIT) and Mark Duggan, a researcher at the University of Pennsylvania.
Gruber is known for advising Mitt Romney on health policy in Massachusetts and for helping the Obama administration defend the proposals that led to the passage of the Patient Protection and Affordable Care Act of 2010 (PPACA).
The researchers say they looked at the private LTD market to try to understand why claims at private LTD plans are lower than at the public Social Security Disability Insurance (SSDI) program and why private LTD return-to-work rates are higher.
The researchers conducted their study by using wage and claims data collected from 2000 to 2006 by a large U.S. private LTD provider. The researchers ended up with access to about 8 million quarterly employment observations from about 10,000 separate employers.
The researchers looked at questions such as how changing the percentage of income that an LTD policy replaces correlates with the likelihood that insured workers will file claims.
The researchers found that a 10% increase in the income replacement ratio might correlate with a 6% increase in the likelihood that a covered worker will file an LTD claim.
The researchers also looked at the effects of LTD policy elimination periods — the gap in time between the day a covered worker becomes disabled and the day the worker can collect LTD benefits.