The Government Accountability Office (GAO) released a recent study on whether expanding Private Disability Insurance (PDI) benefits, through an employer, would result in savings to the Social Security Disability Insurance (SSDI) Trust Fund. Current projections indicate that SSDI will be depleted to a point where it would only be able to cover about 80 percent of obligations by 2028.
Some of the highlights of the study found that 96 percent of workers are currently covered for SSDI benefits, but only 33 percent have PDI coverage. Coverage by a PDI plan is more prevalent among higher-wage earners and certain sectors of the employment community.
Additionally, many PDI policies have time limits related to payments for certain types of medical conditions, including mental health and musculoskeletal disorders, while Social Security does not.
Concerns For Employers And Employees
The GAO report indicated that employers, employees and disability advocacy groups had significant concerns related to the expansion of PDIs. The major concern for employees and disability advocacy groups was coverage. They had questions about whether PDI expansion would provide standard services or employee protections, which are currently available under SSDI. The employers, as you might suspect, were more concerned about the bottom line. Specifically, they were concerned how expanding PDI enrollment would impact PDI premiums and the administrative burdens that employers would face if PDI plans were expanded.
The main beneficiary of expanding PDIs would be the insurance companies, but even insurers reported some concerns to the GAO. Insurers told GAO that is was unclear how expanding PDI would affect PDI premiums and the impact this would have on enrollment numbers. The entire GAO study can be found here.
One thing, which is reinforced by this study done by the GAO, is that when the idea of privatizing Social Security in anyway is floated, the many people have significant concerns about how the worker would be impacted.
