Especially in this economy, employees are taking another look at LTDI, says Diane Garofalo, senior vice president of benefits at Unum in Chattanooga, Tenn. Uncertain economic issues continue to loom, causing many employees to be concerned about their financial security. But with LTDI, employees can have at least some type of income protection many are missing in this economy.

“In the most recent years of the government defaults and the deficit reduction, it has just reinforced to people that they are increasingly responsible for their own safety net should something happen, and they are unable to earn their income for a short or long period of time,” Garofalo says.

Despite the poor economy, two-thirds of the work force still lack LTDI, Garofalo notes. This can largely be attributed to a sense of invincibility many employees have, Murphy says; however, the likeliness of needing LTDI is more common than most employees would like to believe.

“The reality, though, is that you are more likely to become disabled than to die at every age up until 65,” Murphy says. “Almost one-third of Americans entering the work force today, three in 10, will become disabled before they retire—and one in seven workers will be disabled for more than five years. Many people think disabilities are usually caused by accidents, so they think they're safe—but the majority of long-term absences are due to illnesses, like cancer and heart disease.”

Causes of LTDI claims

According to the 2011 Long-Term Disability Claims Review, conducted by the Council for Disability Awareness, musculoskeletal diseases are the most common existing LTDI claims, with nearly three in 10 LTDI claims falling into this category. Other common existing LTDI claims are diseases of the nervous system and sense organs at 13.4 percent, diseases of the circulatory system at 12.7 percent and cancer at 8.4 percent.

Musculoskeletal diseases also rank No. 1 for the most new LTDI claims at 27.5 percent, and cancers are the second highest new LTDI claims at 14.6 percent, the study finds. In Garofalo's experience, breast, prostate and colon cancers have the highest LTDI claim rates of all cancers, she says.

In some cases, such as mental illnesses or chronic pain, determining whether a claim is actually a long-term disability can be difficult. Whether the ailment is a barrier to work is often unclear, and it may take a little probing.

“Does a mental disability keep employees from working or not keep them from working?” Brenner says. “These claims can get dicey because they're not cut and dry. They're complex, and they require a different level of investigation and digging into details to understand them better.”

However, this special level of handling isn't always automatically built into the system, Brenner says. Sometimes it takes reviewing special records and talking with doctors, which can be difficult when working with therapists on mental illnesses because of confidentiality issues, but this is a chance for brokers to prove their value and provide a sense of credibility.

“When the situation is unclear and there's dispute about whether there's a disability need, the broker is obligated to jump in to help navigate to get to a good determination and advocate for the member to get the right answer,” Brenner says. “I'm not suggesting it's our job to get the claim paid, but if it should get paid, it's our job to help, and if it shouldn't be paid, it's our job to make sure everyone understands why it didn't get paid.”

Claimants are also experiencing less down time from these LTDI claims because of new medical technologies, Hader says. For both injuries and diseases, improved medical technologies are helping claimants regain independence, especially among cancer survivors, Garofalo says. Better detection, therapies and surgeries are now available, enabling employees to get back to work sooner.

“We attribute better return-to-work rates for cancer patients to a lot of different improvements,” Garofalo says. “From a cancer technology standpoint, imaging is much more precise than it was 10-15 years ago. Surgery is more targeted than it was, and even treatments, whether they're hormonal treatments or chemotherapy treatments, are less toxic and have less serious side effects. Survivor rates have just improved. Cancer rates have gone from once being a terminal illness to pretty much becoming a chronic illness at this point.”

In fact, between 1975 and 2007, the five-year survival rate of cancer has risen from 50 percent to 68 percent, Hader says, and though more employees may be able to return to work, they often have unique needs. Part-time work accommodations, for example, are an option for those weaning off of LTDI after battling cancer.

New demographics

As older employees are increasingly delaying retirement, LTDI claims among that age group are growing, Murphy says. Incidences of LTDI claims tend to rise as workers age, and with an older work force, more LTDI claims can only be expected. “Workers ages 55 and older have almost double the likelihood of disability than a 25-year-old worker,” Murphy says. “Older workers are less likely to recover from a disability, and if they do recover, their disability duration is usually longer than younger workers. For example, workers at age 24 have a 44 percent chance of recovering from a disability, but 55-year-old workers only have an 11 percent chance of recovering.”

Hader has also seen a gradual increase in the average age of new claimants, which has grown from 47.9 years in 2007 to 49.3 years in 2011, and so far in 2011 nearly 20 percent of new claims are from individuals over the age of 60, compared to 16 percent just five years ago.

Along with age, a claimant's sex is becoming a factor in LTDI. According to the CDA study, more women are falling to injuries and filing LTDI claims, which Garofalo attributes to the number of women in the work force.

“There's a larger prevalence of women in the work force who are primary income earners for their families and when you look at the leading causes of disability, females happen to participate in a couple of those,” Garofalo says. “The prevalence of breast cancer would be one of the supporting factors as well as the fact that complicated pregnancies are historically in the top four to five claims.”

The types of claims can also vary on the work class, as mental illness claims are typically more common among white collar workers, Brenner says. These workers, such as accountants, doctors and lawyers, often have stressful, busy jobs, making them more prone to mental breaks, but there is also a cultural difference that makes the white collar work force more receptive to possible mental-based diagnoses. 

“White collar workers are usually more open to admitting problems they may have and addressing it, much more so than in a blue collar work environment,” Brenner says. “For blue collar workers, it tends to be taboo to admit you have any mental health issue.”

Blue collar workers, however, are more likely than white collar workers to suffer from musculoskeletal injuries, Murphy says. Because of the nature of their work environments, they are more susceptible to physical injuries and are usually down longer from their LTDI claims.

“This is all taken into consideration when designing and pricing plans for different types of employers and industries,” Murphy says. “An employee with a broken leg who runs a machine on the factory floor will probably need to be on disability longer than an office worker who sits at a desk.”

LTDI moving forward

Regarding the future of LTDI, Murphy expects to see a greater emphasis placed on voluntary products for this market segment. Offering LTDI to all employees on a noncontributory basis may be the safest option, but many employers are struggling to cut costs in this economy. Instead, a voluntary LTDI offers some sort of protection to at least a portion of the work force.

“As more employers either stop offering benefits altogether or streamline what they are willing to pay for, employers will still continue to offer LTDI because this coverage is important in attracting and keeping a talented work force,” Murphy says. “They will, however, look for employees to pick up more of the cost themselves.”

Brenner believes LTDI sales will grow over the next couple of years because of health care reform. For some companies, health insurance may no longer be a benefit offering once the exchange system is in place; however, those companies may still want to provide some kind of package to entice new employees as well as retain current workers.

“I think the sales will continue to improve,” Brenner says. “With health care reform changing the health care landscape, some employers are looking at how to shore up their other benefit programs, so if health care isn't something they offer anymore, they still have really strong offerings in other areas. I think that focus will actually enhance disability sales over the next three to five years.”