The Insurance States of America
Apr 1st, 2008 at 7:35 am by Susie
Now, here’s some Social Security change I can support. What brave legislator will deal with this corporate atrocity?
The Social Security system is choking on paperwork and spending millions of dollars a year screening dubious applications for disability benefits, according to lawsuits filed by whistle-blowers.
Jessica Ortiz of San Diego said her disability insurer called more than 10 times after she was hurt in a car crash, insisting that she apply for Social Security. She was denied, as she had expected.
Insurance companies are the source of the problem, the lawsuits say. The insurers are forcing many people who file disability claims with them to also apply to Social Security — even people who clearly do not qualify for the government program.
The Social Security Administration defines “disabled” much more stringently than the insurers generally do, so it rejects most of the applications, at least initially. Often, the insurers then tell their claimants to appeal, the lawsuits say, raising the cost.
The insurers say that requiring a Social Security assessment is a standard practice and that there is nothing wrong with it.
The policies they sell allow them to coordinate their benefit payments with others to make sure no one is paid twice. Thus, if a disabled person can get benefits from somewhere else — like workers’ compensation, a disability pension or Social Security — the insurance company can reduce the benefit check by that amount.
The flood of referrals, however, is making it hard for Social Security to respond to people who are truly disabled, said Kenneth D. Nibali, the former top administrator of the Social Security disability program.
“Anybody who is forced to come into this system, and who doesn’t need to be there, is affecting someone else,” said Mr. Nibali, who retired in 2002 and is serving as an expert witness for the plaintiffs. “They’re holding up cases for the people who have been waiting for months and years, who in many cases are much worse off.”
This is just reprehensible. I sure hope that the prospect of triple damages gets the ins. companies to change their ways, although I expect a cacophany of whining to result.
Well I didn’t read the whole article but from what I can gather the premise is bunk. Long term disability carriers and worker’s compensation statutes have required claimants to apply for Social Security disability going back in time to forever. The difference now, which is causing the huge backlog, is the freeze on the budget for SSA, which I believe started in 2002, and has continued through the present. In the 1990s the average wait time from appeal of a SSDI denial to a hearing was six to eight months. During the 1990s LTD carriers and WC carriers also required claimants to apply for SSDI, same as now. But now the wait time from appeal to hearing is 14 to 18 months. It has nothing to do with the private insurers or the state WC statutes. As for the WC reqiurement (applicable in only a handful of states, including Colorado–in other states the offset goes in the other direction) it’s called coordination of benefits, the principle being that the employer paid one-half of the FICA tax, and so is entitled to one-half of the SSDI benefit to offset worker’s compensation. By the way, there’s also an offset between SSDI and non-service connected VA benefits.