Disability insurers are working with key members of Congress to win support for legislation that would allow auto enrollment in private disability insurance plans. The provision the industry is seeking would facilitate arrangements where employers enroll employees into coverage, unless they opt out, according to industry officials.
The disability insurers, led by Unum, point out that two-thirds of American workers do not have access to employer-provided disability income insurance. They also cite a survey indicating that 85% of disability beneficiaries agree that employers should automatically enroll new employees in disability insurance, allowing them to opt out of this coverage if they do not want it.
The provision would clarify existing law, according to Marty McGuinness, Unum vice president of government affairs. Besides disability insurers, the American Council of Life Insurers and the America’s Health Insurance Plans are also supporting the proposal, they said.
They have established a website, ProtectingYourIncome.org, and are seeking support from a number of members of Congress, including the founders of the Congressional Income Protection Caucus: Sen. Kay Hagan, D-N.C., a member of the Senate Banking Committee and the Senate Health, Education, Labor and Pension Committee, and Sen. Mark Kirk, R-Ill, who is recovering from a stroke. Meanwhile, Sen. Tom Harkin, D-Iowa, chairman of the HELP Committee, is also sympathetic to the idea.
It is unclear what vehicle would be used to attach such a provision and whether there is enough support in Congress to push it through this year. However, McGuinness noted that the trend is for employers to share the cost of benefit plans to employees. And it comes at an opportune time.
A recent report by Robert C. Merton in the July-August issue of Harvard Business Review released last week cited automatic enrollment in 401 (k)s allowed through a 2006 law has improved employee participation in retirement plans. And, the Department of Health and Human Services last Thursday introduced a proposal that would allow people to auto-enroll in healthcare plans offered through exchanges.
Harkin’s interest stems from his desire to improve the work opportunities for those with disabilities. At a March 2012 hearing, he said making private disability insurance available would also substantively increase the chances that someone who is disabled could stay at work with accommodations or would return to work when ready, McGuinness said.
In testimony at the hearing, Thomas R. Watjen, Unum CEO, said that the average worker has a one in three chance of becoming disabled for six months or more during his or her working life. Despite that, “most Americans are unprepared for the consequences of losing an income even for a short period of time.”
He also said that 91 percent of income protection insurance is sold through the workplace, and that access to these plans is provided to a “broad range” of employees at differing income levels, and are available at premiums as low as $20 to $30 per month.
He also said that private income protection insurers also help employers better manage their business by maximizing productivity and minimizing absence. Studies show that disabilities can cost employers upwards of 15 percent of payroll, Watjen said.