Chapter 16 Disability Income Insurance and Disability Benefit Programs Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

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.  Define the words temporary disability and permanent disability, as related to each type of disability program.

3Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Learning Objectives (cont’d.)  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.  Name states that have state disability insurance plans.  State eligibility requirements, benefits, and limitations of state disability plans.

4Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Learning Objectives (cont’d.)  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.

5Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Chapter 16 Lesson 16.1

6Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

7Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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

8Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

9Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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

10Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

11Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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

12Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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

13Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

14Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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

15Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

16Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

17Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

18Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

19Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Chapter 16 Lesson 16.2

20Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

21Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. State Disability Information Summary

22Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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

23Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

24Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

25Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

26Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

27Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 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.

28Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Form DE 2501 Claim Statement of Employee

29Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Form DE 2501 Claim Statement of Employee

30Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Form DE 2501 Doctor’s Certificate

31Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Notice of Final Payment/ Physician’s Supplementary Certificate Form DE2525XX

32Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Form DE 2547 Request for Additional Medical Information

33Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Form 2547A Medical Inquiry Form