Group long-term disability coverage may well be the unsung hero of employer-sponsored benefits plans.
A study by America’s Health Insurance Plans, the national trade association for the health insurance industry, says GLTD is saving the nation billions of dollars.
The study reports that about a third of the U.S. workforce (40 million employees) is covered by GLTD insurance. While the main objective of the insurance is to provide injured or sick workers with some income, it has other benefits such as assisting workers to return to the job sooner and saving on federal assistance program costs. These are the factors that the AHIP study sought to quantify in putting a number on the estimated savings.
It’s a significant amount of money, if it’s accurate: $25 billion over the next decade.
Here’s what the folks at AHIP came up with.
- “There are at least 65,000 employees at any point in time in recent years that would have been receiving SSDI (and likely other federal benefits) if they had not been covered by GLTD insurance.”
- “The annual total of avoided SSDI and other federal benefits is approximately $30,000 per year for the affected individuals. This further implies that GLTD insurance is saving federal programs at least $2 billion per year.”
- “Going forward, the re-employment assistance provided by GLTD coverage will save the Disability Insurance Trust Fund approximately $1 billion per year in future SSDI benefit payments, and this amount is likely to grow.”
- “GLTD benefits help between 280,000 and 575,000 families each year avoid impoverishment and, therefore, also avoid reliance on public assistance programs. This translates into an additional savings to the government (and the taxpayer) of $2.25 to $4.5 billion per year.”
- “Given current demographic and inflation projections, GLTD insurance as currently configured will save the federal treasury at least $25 billion over the next 10 years – at least $10 billion in SSDI benefits and approximately $15 billion in other federal programs.”
“Beyond the public benefit of reduced federal expenditures on SSDI and other programs, most of the benefits arising from GLTD insurance flow to the employee and his or her family as incomes are maintained and appropriate reemployment is facilitated,” the study said. “In addition, employers are more likely to regain the services of valued employees.”
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
