Disability Income Insurance and Disability Benefit Programs Chapter 16 Disability Income Insurance and Disability Benefit Programs Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 1

Chapter 16 Lesson 16.1 Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 2

Learning Objectives Define terminology and abbreviations pertinent to disability insurance and disability benefit programs. Describe benefits and exclusions contained in individual and group disability income insurance. Name federal disability benefit programs. Differentiate between SSDI and SSI. State eligibility requirements, benefits, and limitations of SSDI and SSI. Explain disability benefit programs for disabled active military personnel, veterans, and their dependents. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 3

Disability Claims Disability income insurance Provides benefits under certain conditions when the insured is unable to work due to illness, disease, or injury. Does not provide benefits if the insured is unable to work as a result of a work-related event. Disability income insurance does not cover costs of medical care (i.e., medical expenses) but provides income only. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 4

History of Disability Insurance 1880s – emergence of disability income policies for accident and illness early 1900s – first noncancelable policy 1956 – Congress extended Social Security program to disabled adults over 50 years old 1965 – Social Security program expanded to cover workers regardless of age Paul Revere Insurance Company introduced the first noncancelable policy that guaranteed income and no premium increases. In order to be covered for disability under the Social Security program, certain conditions must be met. Now, disability insurance is offered through private and employer-sponsored plans. Federal and state programs are available for the disabled. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 5

Disability Income Insurance Individual Provides specific income if disabled. Insured pays premiums. Medical expenses not covered. Disability must not be work-related. Insured must meet specific policy criteria. Individual policies usually end when the person retires or reaches a certain age. Each policy can be written with specific exclusions denying or limiting coverage for certain situations (e.g., preexisting condition, self-inflicted injury, mental condition). With a waiver of premium in the contract, the premiums are paid by the insurance company if the person becomes totally and permanently disabled. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 6

Disability Income Insurance (cont’d.) Waiting period time from beginning of disability to beginning of first benefit payment benefit period maximum span of time that benefit will be paid to the disabled party During the waiting period the disabled individual is not eligible to receive any benefits, even though he/she is unable to work. Benefit periods can range from 1 or 2 years to life, depending on the specific policy. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 7

Disability Insurance Benefits Residual benefits Benefits are paid if disability is partial or limits the capacity to work full-time. Supplemental benefits Specific provisions may increase payments. Accidental death and dismemberment benefit Special clause addresses accidents that result in death or permanent disability. Supplemental benefits may include a cost-of-living adjustment that is factored into the policy when it is written. Some policies will distribute a portion of the premiums if the policy is maintained for over 10 years with no claims filed. Double indemnity policies will pay twice the face amount to beneficiaries in cases of accidental death. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 8

Types of Disability Total disability Person cannot perform most normal work duties Partial disability Person cannot perform all normal work duties Temporary disability Person cannot perform all normal work duties for a limited period of time These definitions vary greatly by specific policy. Usually in total disability, the person can no longer perform the major duties of his or her specific occupation. Provide another name for partial disability. (Residual disability) Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 9

Disability Income Insurance Clauses Policies can be guaranteed renewable or noncancelable, with a waiver of premium Exclusions Examples are preexisting conditions, mental conditions, or other disabilities AIDS/HIV Consent and notice form is needed for testing Under a waiver of premium, the policy pays all premiums while the employee is disabled. What are “exclusions”? (Provisions written into the insurance contract denying coverage or limiting the scope of coverage under the insurance policy) States govern the use of questions related to AIDS/HIV in the insurance application process. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 10

Disability Income Insurance (cont’d.) Group Some employers offer as an optional benefit. Contracts are between the insurer and the employer. Employer pays premiums, with or without employee contributions. Policy terminates when employee leaves the company. The employees are not policyholders; they hold certificates of insurance. Benefits can be for short-term and/or long-term disabilities. Benefits are taxable if the employee is not making any contributions towards the premiums. Exclusions such as those in individual disability policies are also usually present in group policies. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 11

Federal Disability Programs Social Security Disability Insurance (SSDI) Supplemental Security Income (SSI) Civil Service Retirement System (CSRS) Federal Employees Retirement System (FERS) Armed Services Disability Veterans Affairs (VA) Disability Program The Social Security Administration (SSA) has two different programs that pay monthly benefits to disabled persons under age 65: SSI and SSDI. In both programs the severe disability must be for at least 1 year. The Disability Determination Service (DDS) makes the determination as to which, if any, Social Security program may provide benefits. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 12

Federal Disability Programs (cont’d.) Social Security Disability Insurance Long-term plan provides benefits to workers and self-employed who meet eligibility criteria. Insured also may be eligible for Medicare after 24 months. Converts to retirement benefits at age 65. Workers must be insured in accordance with SSA guidelines in order to receive SSDI. Explain who is eligible to receive SSDI if disabled. (See bulleted list in the textbook for specific criteria.) Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 13

Federal Disability Programs (cont’d.) Supplemental Security Income Long-term disability program provides benefits to adults and children regardless of employment history. Many persons also qualify for Medicaid. Benefits are intended for those with limited income and few other resources. Explain who is eligible to receive SSI if disabled. (See bulleted list in the textbook for specific criteria.) Work incentives exist that allow disabled or blind people receiving SSI or Social Security payments to still work within limits. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 14

Federal Disability Programs (cont’d.) Civil Service and Federal Employees Retirement System Disability Benefits are payable for life to individuals who qualify. Armed Services Disability Benefits are payable for life if disability occurs or is aggravated while person is on active duty. CSRS requires 5 years service, FERS requires 18 months service. Armed Services Disability payments are based on years of service, base pay, and severity of disability. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 15

Federal Disability Programs (cont’d.) Veterans Affairs Disability Service-connected disability is eligible for outpatient treatment if filed within 1 year of injury. Non-service-connected disability may be eligible for same benefits if criteria are met. Criteria change frequently for VA benefits. Consult a current booklet or VA Web site. If a VA facility is not within a reasonable distance, the veteran may see a private physician. Physician must notify VA facility of proof of medical necessity within 15 days of treatment. If more than 15 days, physician must use Form 10-583 (Claim for Payment of Cost of Unauthorized Medical Services). Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 16

Chapter 16 Lesson 16.2 Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 17

Learning Objectives Name states that have state disability insurance plans. State eligibility requirements, benefits, and limitations of state disability plans. Explain voluntary disability insurance plans. Recognize forms used for processing state disability plans. Describe topics and contents of a medical report. List guidelines for federal disability claims. Explain procedures for state disability claims. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 18

State Disability Insurance Nonindustrial disability insurance programs exist in only five states and Puerto Rico. To fund the programs, a percentage of wages is deducted from paychecks, or the employer pays the plan costs. Eligibility ceases upon retirement. Started in Rhode Island in 1944, California in 1946; also in Hawaii, New Jersey, New York, and Puerto Rico. Many workers are excluded from coverage, including: employees of nonprofits, churches, schools, and domestic workers. Can anyone collect? Are there residency requirements for eligibility? (See bulleted list on p. 541 for specific criteria.) Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 19

State Disability Information Summary Point out differences between states. (See Table 16-1.) Benefits are determined by the wages earned in a base period or on percentage of average wages. Reduced benefits may apply if other types of income are paid (e.g., unemployment benefits, vacation pay). IME exam may be required. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 20

State Disability Insurance (cont’d.) Restrictions time limit for filing exceeded condition covered under workers’ compensation insurance unemployment benefits beyond a specified amount employer has a voluntary disability plan and does not participate in state plan Eligibility requirements vary greatly between states; restrictions are very specific. You should become familiar with the rules and regulations for your state. Explain what other restrictions or exceptions apply. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 21

Voluntary Disability Insurance Designed for persons who reside and work in states without state disability insurance programs. Local private insurance carrier arranges coverage. If disabled, the person receives fixed weekly or monthly income, usually for 6 months. If disability becomes permanent, the person may qualify to receive small payment for life. Explain what type of workers might be expected to seek out this type of insurance. (Residents of states without state disability insurance programs) Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 22

Claims Submission Disability Income Claims Person must provide completed proof of loss to establish disability. Attending physician usually must complete portions of this form. Medical report may be attached to the form for additional explanation of disability and treatment. Additional reports and/or claim forms may need to be filed monthly or weekly if the disability continues. IME may have to validate the disability, especially if condition is prolonged or circumstances questionable. Explain what the physician must have on file from the patient before these documents are prepared and released. (Patient’s authorization to release medical information) Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 23

Claims Submission (cont’d.) Federal Disability Claims SSA has teledictation service for physician to dictate medical report directly over the phone. Only data less than 1 year old is allowed. Prognosis should be based on medical findings. Claim should include functional assessment of work-related activities. Typed transcripts are sent to the physician for review and signature. Functional assessments include ability and/or tolerance to sit, stand, lift, bend, speak, reach up, or travel if job requires. In mental impairment, assessments may include memory, communication, and social interactions. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 24

Claims Submission (cont’d.) VA Disability Outpatient Clinic Claims Processing of claims is usually long and complicated. Consider billing VA monthly to avoid payment delays. Follow instructions on patient’s ID card closely. Private physician may bill patient directly. Patient then submits claim for reimbursement. Same guidelines must be followed. Important: Keep terminology consistent with what is shown as diagnosis or condition on the ID card. Patient’s name used in medical bills should be exactly as name on ID card from VA. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 25

Claims Submission (cont’d.) State Disability Claims Residents of states with disability benefits must obtain claim forms from nearest state filing office. Physician must substantiate disability for claim to be processed. Additional forms/filings may be required if disability is prolonged. Time limits for filing must be strictly adhered to or benefits may be denied. SSA number, last day worked, and first day of disability (too sick/impaired to perform duties) must be included. Patient must report any income received to the state disability insurance office because it may affect benefit allocation. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 26

Form DE 2501 Claim Statement of Employee Fig. 16-3. Discuss typical questions asked in disability claim forms. FIGURE 16-3 Form DE 2501, Claim Statement of Employee. This side of the three-part form is completed by the claimant. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 27

Form DE 2501 Claim Statement of Employee (cont’d.) Fig. 16-3 Discuss typical questions asked in disability claim forms. FIGURE 16-3 Form DE 2501, Claim Statement of Employee. This side of the three-part form is completed by the claimant. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 28

Form DE 2501 Doctor’s Certificate Fig. 16-4 Continue discussion of typical questions asked in disability claim forms, even when not in state of California. The physician must complete and submit this form within a set time frame to initiate benefits. If the patient sees another physician, this form should be mailed to that physician to secure certification or clarify a specific claimed disability period. FIGURE 16-4 Form DE 2501, Doctor’s Certificate. This side of the form is completed by the attending physician. It is submitted within a set time period, determined by the beginning date of disability, to initiate benefits. If the patient is seen by a second physician, this form is mailed to the claimant to secure the certification of a new physician or to clarify a specific claimed period of disability. ` Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 29

Notice of Final Payment/ Physician’s Supplementary Certificate Form DE2525XX FIGURE 16-5 Notice of Final Payment/Physician’s Supplementary Certificate Form DE 2525XX. This form indicates that the period of disability is “closed” or terminated with the accompanying check on the basis of the information in the claim records. Benefits will cease unless the reverse side of the form is completed by the claimant’s physician, extending the duration of disability. This form is pink. One side of the form is in English and the other is in Spanish. Fig. 16-5 This form indicates to the patient that the disability period is terminated with the accompanying check. Benefits will cease unless the physician completes the reverse side–which is pink–extending the duration of disability. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 30

Form DE 2547 Request for Additional Medical Information Fig. 16-6 This form is mailed to the physician when the normal expectancy date of the disability is reached. FIGURE 16-6 Request for Additional Medical Information Form DE 2547. This form is mailed to the physician when the normal expectancy date of the disability is reached, provided that the physician has requested a longer than normal duration without complications as indicated. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 31

Form 2547A Medical Inquiry Form Fig. 16-7 This form is mailed to the physician at any time during the life of the claim if any questions need to be answered. FIGURE 16-7 Medical Inquiry Form DE 2547A. This form is mailed to the physician at any time during the life of the claim if any questions need to be answered or if the physician has failed to enter a prognosis date. Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved. 32