Long-term disability claim payments on the rise: Are the unemployed to blame?
Written by Kantor and Kantor insurance Matters on July 14, 2013
After tracking and observing long term disability claims throughout America’s working population, the Council for Disability Awareness (CDA) has identified continuing and emerging trends in long-term disability claims. The CDA is a non-profit organization who’s “members” are all insurance companies. As an industry advocacy group, the CDA’s findings must be viewed in the proper context. However, during their eighth annual review of claims, the CDA revealed that long term disability claim payments continue to rise. In 2012, 662,000 Americans were affected by a debilitating injury/illness which required them to collect disability benefits.
As a member of the rheumatoid arthritis or “invisible illness” community, the steady increase in long term disability claims may not come as a surprise to you. Yet the question remains: what is causing this upward trend? One commonly heard theory for the increase in disability claims is that America’s rising unemployed are unethically and improperly securing long term disability benefits.
At the start of the recession, those who had used up the standard 26 weeks provided by state governments were allotted extra weeks of unemployment benefits. Since early last year, however, the number of weeks for unemployment benefits has gradually diminished across the states – moving back towards the standard 26 weeks of payment. Is this reduction benefits leading the unemployed to scramble for disability as they run out of benefits? Although it seems that those experiencing termination of unemployment benefits would seek out additional funds, such as long term disability benefits, most workers who run out of unemployment insurance do not turn to disability benefits.
According to new research by Jesse Rothstein at the University of California, Berkeley, most workers who ran out of unemployment insurance in the 2007/2008 Great Recession did not start collecting disability benefits. Contrary to the popular belief that many collecting disability benefits are simply unemployed rather than disabled, Rothstein found absolutely no relationship between applications for disability and unemployment recipients.
Many have argued that the rise in disability claim payments can be attributed to the unemployed taking advantage of government assistance, or individuals claiming to be disabled when they are not. As attorneys who represent clients with various types of chronic illnesses, we have come to appreciate the devastating and painful effects of life with a disability. Those who disparage the necessity and validity of long-term disability insurance, which our clients depend on, have probably never suffered from a chronic disabling condition nor had a loved one disabled by disease.
Beyond the physical impact, our society has a long history in which many people acquire a sense of identity and purpose from their occupation. This is lost when they become disabled. Additionally, this is a space where many social relationships are formed as a result of job-related interactions. When illness forces you to prematurely leave your occupation, this experience can be just as painful and isolating as being diagnosed with a debilitating illness. Thus, it is simplistic and inaccurate to characterize the jump in claims as people simply looking to substitute disability payments for employment (or unemployment benefits). This is not the answer to why the number of people receiving long disability benefits is rising.
It is important to consider more likely factors that might contribute to the rise in disability claims and payments.
- Baby-boomers are aging, and with age come a host of disabling conditions.
- During the past 40 years, more and more women have entered the workforce. Although medicine can’t explain why, women tend to be impacted more than men by some severely disabling conditions. The CDA review found that, of the 154,000 newly approved disability claims of 2012, more than half (54 percent) of these were from women. Both of these factors will drive up the number of disability claims.
According to the (CDA), over 37 million Americans are classified as disabled; adding up to about 12% of the total population. Additionally, the CDA’s 2013 review found that diseases of the musculoskeletal system and connective tissue – such as arthritis, spine disorders, back pain, sciatica and osteoporosis – continue to be the leading cause of disability claims (representing 30.7 percent of all 2012 claims). Given the prevalence of disability today, best practice is to think about the possibility of a long term disability insurance claim and a long term disability insurance denial. Whatever the reason for the continuous increase in long term disability claims and payments, it is important to consider and prepare for a battle with your insurance company, for not all disability benefits are easily obtained.
For advice on how to protect yourself from an insurance denial, see our previous blog post. If you find that your illness becomes too disabling to work, and you have questions about submitting a disability claim, contact Kantor & Kantor for a no-cost consultation. We understand, and we can help.
www.kantorlaw.net (800) 446-7529