Lawmakers are considering a proposal (SB-716) that will raise employees’ benefit costs by preventing insurance companies from offsetting someone’s long term disability policy payments by the amount he or she is also receiving in Social Security Disability Insurance for the same injury or medical condition.
Offsets are an important way companies control costs and make sure that those who are insured are paid for what they need—income replacement in the event of an unexpected long term disability.
What’s more, the reason why every state currently allows the offsets is because neither long-term disability insurance nor Social Security Disability Insurance are intended to provide anyone with more money while on disability than they would receive while working.
If insurance companies are no longer able to offset long-term disability payments with Social Security Disability Insurance, then employees’ benefit costs will significantly increase and be passed on to individuals and business consumers.
This week, proponents of the bill halted an attempt to approve an amendment that would have changed the bill to require that if an offset plan is offered by an employer, a non-offset plan would also have to be offered. Unfortunately, that modification is expected to be offered again.
To mandate this sort of benefit requirement would have been a detriment to those offering disability insurance as well as those who receive it.
Currently, the bill is awaiting action by the Senate and is likely that it will be referred to the Insurance and Real Estate Committee.
For more information, contact CBIA’s at 860-244-1900.