Some Republicans in Congress are asking whether expanding use of private disability insurance could be a way to shore up the federal government’s ailing Social Security Disability Insurance (SSDI) program.
Analysts at the U.S. Government Accountability Office (GAO), a congressional watchdog agency, say the promoters of the three major private disability insurance expansion proposals have provided too little information for the GAO to know how the proposals might really work.
Elizabeth Curda, a GAO director, summarized the analysts’ concerns in a report posted here.
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A GAO team studied the private disability insurance expansion proposals at the request of Sen. Orrin Hatch, R-Utah, and Sen. Mike Lee, R-Utah.
The team looked these proposals:
1. David Babbel and Mark Meyer, of Charles River Associates: They have proposed having the federal government do more to educate employers about the value of providing voluntary, employee-paid disability insurance programs. They want to encourage employers to offer voluntary disability plans on an “opt out” basis . In an opt-out program, the employer puts everyone in a voluntary program automatically, then requires employees who want out to take to active steps to get out of the plan.
2. Rachel Greszler, of the Heritage Foundation: Greszler has proposed using a tax credit to encourage employers to provide private disability insurance coverage. The employer-sponsored coverage would take the place of at least two to three years of SSDI benefits. Social Security Disability Insurance would provide benefits only after a disabled employee had used up the employer-sponsored disability coverage.
3. David Autor and Mark Duggan: These authors have proposed requiring employers to provide at least two years of private disability insurance for all workers. The employees themselves would pay at least 40% of the premiums. Social Security Disability Insurance would provide catastrophic disability coverage after the two years of private disability coverage was used up.