REPOST: The elephant in the waiting-room

Social Security Disability Insurance (DI) may be government-subsidised health insurance, but a politicized system can sometimes prevent citizen access. This article from The Economist sheds light on the work a disability lawyer has done to help injured workers obtain relief and assistance from DI in Indiana.

Image source: The Economist

THOMAS SCULLY has a busy law office in Lake County, Indiana. He mainly practices disability law, with good reason. Lake County is home to steel mills. Workers have aching backs and hands warped by machinery. Mr Scully helps them win Social Security Disability Insurance (DI), which provides cash and, after two years, access to Medicare, government-subsidised health insurance meant mainly for the elderly. DI is not supposed to be a safety net for the jobless. “I tell clients”, Mr Scully explains, “disability insurance is not unemployment insurance.” But they should be forgiven for being confused.

Politicians like to deride expensive programmes. DI may be the least discussed and most muddled. The programme is severely strained. The number of awards has spiked in the downturn, rising 28% since 2007. This surge follows decades of growth. DI accounted for about 10% of Social Security spending in 1989 but 18% by 2009. This is not because beneficiaries are bending any rules; the real problem is that the rules are a mess.

Congress created DI in 1956. Since then physical labour has become less common, while medical technology has advanced. One might have thought that DI rolls would shrink, but the opposite has occurred. Even compared with the Social Security Administration's other costly programme for the disabled, DI is huge. Supplemental Security Income (SSI), which gives help to the very poor, doled out $43 billion to adults and children in 2010, up 124% since 1990. DI gave $110 billion to disabled workers, up almost 420%.

The reasons for this are debated. States have an incentive to keep their welfare rolls low, so they may be pushing workers towards the federally funded SSI and DI programmes, argues Nancy Shor of the National Organisation of Social Security Claimants' Representatives, a lawyers' group. But unlike SSI, DI is not a substitute for welfare; DI requires beneficiaries to have worked for five of the past ten years.

Ageing would seem another obvious explanation, as those aged 50-64 account for almost 60% of DI awards. But the rolls grew quickly even when the share of 50- to 64-year-olds was steady, according to David Autor of the Massachusetts Institute of Technology and Mark Duggan of the University of Maryland. Obesity does not seem to be the main cause either. Beneficiaries claiming problems such as diabetes and heart disease comprised a sliver of the awards in 2009.

A more likely culprit is the programme's structure. Messrs Autor and Duggan show that DI awards have become more attractive to those struggling in the labour market. Those awards, meanwhile, have become more accessible. In 1984 Congress made it easier for DI applicants to claim mental illness and musculoskeletal disorders such as back pain—both inherently subjective ailments. In 2009 these two conditions accounted for 22% and 31% of DI awards, respectively, about double their share in 1981. Even if an applicant does not meet DI's basic medical requirements, he may eventually win payments for other reasons. DI's rules, for example, allow an older worker unlikely to retrain to get benefits instead. Persistent applicants can seek the help of lawyers. Of those who appeal their case to a judge, almost 90% are successful.

Given DI's design, it should come as little surprise that enrolment jumps during recessions. Till von Wachter of Columbia University offers three explanations. First, impaired workers may be among the first to be sacked. After they are laid off, they may find that they qualify for DI, as is the case for many of Mr Scully's clients. Second, DI's criteria explicitly include economic factors, such as the ability to retrain. Third, those desperate for cash may use more subjective criteria, such as mental illness and “bad back”, to try to win benefits. Many will fail, but they can appeal.

The Social Security Administration has tried to fix some of these problems. The “ticket to work” programme, for example, is intended to help DI and SSI beneficiaries get jobs. But as of November 2010, just 2.4% of those offered job help actually received it (let alone found work). A newer pilot also encourages those on the rolls to find jobs. Such programmes seemed doom to fail, trying to convince beneficiaries that they can find work after they have spent years arguing otherwise. More effective, says Richard Burkhauser of Cornell University and the conservative American Enterprise Institute, employers should be given incentives to accommodate workers at the onset of their disability. A separate plan by Messrs Autor and Duggan, for the centre-left Hamilton Project, calls for all employers to offer disability insurance.

A solution is needed, and soon. The DI trust fund is expected to dry up in 2018, 22 years before the trust fund for Social Security retirees does. Nevertheless, budget hawks have flown over the issue. Barack Obama's deficit panel said proposals to reform DI would be “critical” but were “beyond the scope of this commission.” Last year Paul Ryan, a Republican congressman, presented a bold plan for reforming entitlements. Of DI, the plan said simply: “disability benefits will see no change.”

After working for Merrill Lynch and AG Edwards, Ted Stearns now serves as the CEO of a California-based insurance company, eDisabilityQuotes Inc. Read about how he helps provide access to disability insurance on this website.

REPOST: Making Decisions around Disability Insurance

Insurance is a mandatory offering in most employment contracts, but industries that deal in manual labor and bio-technology have to increase the incentives to win top talent. This Forbes article talks about which industries need to consider adding disability insurance as part of its benefits package.

Disability Insurance is considered to be a “must have” for employers to be competitive in today’s market when it comes to attracting top talent. Highly compensated employees in fast-growing industries such as technology, bio-tech, etc., want to be offered disability insurance as part of a comprehensive health/benefits package. There are five key decisions an employer needs to consider when planning for disability insurance:

• Offering a contributory or a non-contributory plan. Disability insurance is taxed no matter which type of plan you choose. The decision is whether the employer pays the tax on the premium (contributory) or if the employee pays the tax on the benefit (non-contributory). Most plans pay somewhere around 60 percent of income when an employee goes out on disability… if the employer does NOT pay taxes on premium, than the employee will pay taxes on the claim. This results in an employee netting only 40-45 percent of income, even if the ‘benefit’ is listed at 60 percent. When an employee is out on disability that can be too huge of a hit. However, if the employer pays taxes on the premiums, the employee will receive the full 60 percent while out on leave. Therefore, a contributory plan is much more attractive to the employee, so that they can receive as much income as possible when they are not able to work.
• What percentage to cover. Most carriers offer disability insurance at three different percentage points. At the low end, short-term disability and long-term disability are covered at 50 percent; in the middle, there’s a 60 percent option; and at the high end, plans cover 66 2/3 percent of income. Employers should establish what they’ll cover during the planning process.
• Own vs. any occupation. When writing plan contracts, employers need to establish if plan will cover  the employee to return to their current job (own) or a broader spectrum of any job. Many high-wage earners in specialty fields will want their plans to be written as own occupation. Think of a surgeon whose hands are injured in a car accident. Under an own occupation plan, he/she would be covered until they can return to work as a surgeon. Under an any occupation plan, he/she would stop receiving disability as soon as he/she could return to work in any position.
• What the term ‘earnings’ means. Does that mean just salary? Or does it include bonuses? Commissions? All W-2 income? What about K-1 earnings? Clearly spell out what ‘earnings’ is going to cover so that expectations are clear on what percentage the benefits claim will be based on.
• What the monthly maximum will be. Most disability claims pay out a determined percentage of earnings up to a monthly maximum. For example: 60 percent of earnings up to $5,000 maximum per month. Employers should make an effort to have that monthly maximum cover as many employees as possible. If a company has a large number of high-wage earners, but a low cap, there’s the potential of an employee receiving less than the benefit offer, which may not provide enough coverage for that employee while out on leave. For example, if an employee earns $110,000, but the company has a 60 percent of salary benefit up to a $5,000 monthly maximum payout, then the employee in our example is only receiving 55 percent of their salary due to the cap. Employers should try to avoid this.

Once these decisions are made, the next step for employers is to select a funding method. This is more advanced topic for another day, so I’ll address that in a future post.

Ted Stearns, founder and CEO of eDisabilityQuotes, assists customers by helping them understand and gain access to disability insurance.  Follow this Twitter account for tips and developments in the industry.

How much disability insurance do you need?

Image source: buyshorttermdisabilityinsurance.com

Ideally, if one can get covered for between 60 to 80 percent of current income minus taxes, the better.

Unlike life insurance, disability insurance is availed when the policyholder is still alive, but suffers injury and the loss of income that comes with it. This is supposed to cover income loss in the event of unexpected injury that resulted in incapacity for employment, and could last anywhere between a number of months to a lifetime.

Essentially, it is a precaution against an injury that may cause considerable or permanent disability. It allows principals and their dependents to regain part of the income. While most Americans have opted to ignore disability insurance due to the rather tricky cost-to-benefit analysis involved, most opinions on the matter, from that of Michele Lerner of Bankrate.com to the American Academy of Orthopaedic Surgeons, agree that disability insurance is nonetheless important. Disability insurance can get expensive, and finding the right rate and coverage for projected needs is an important part of getting the most from it.


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Gauging the extent of coverage is the hard part. For the employed, employers may offer some form of employee insurance covering the principal and dependents in the event of disabilities incurred on the job. However, government and work assistance are the common forms of employer-granted buffers, which are not always enough to sustain affected employees and their dependents during long-term injuries. Hence, after a survey of investments and possible income sources, it is wise to get quoted for disability insurance.

Currently the eDisability Quotes CEO, Ted Stearns has spent much of his career learning the ins and outs of financial services. Visit this website for more information on him and his company’s services.


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REPOST: Dealing with disability insurance companies

In theory, disability insurance companies become your friends after sudden events leave you disabled. However, insurance companies were never created equal. Read this post from inMotion to learn more about your options when dealing with disability insurance companies.

Jim's career was interrupted by the loss of a limb and its attendant physical and emotional challenges. Although he was optimistic about his future, he needed an extended adjustment period before he could return to work. Fortunately, Jim's employer had a disability insurance plan that he counted on to sustain him financially while he addressed his many new life issues. Jim applied for benefits, and his physician forwarded supporting data to the insurance company.

Surely, benefits were approved for Jim, right? Wrong!

Carol was a senior executive with a large corporation. Following a transpelvic amputation, her walking and balancing were severely impaired, and she had difficulty obtaining a suitable prosthesis and controlling her phantom pain. After a failed attempt to resume work, she applied for employer-sponsored long-term disability benefits, supported by physician opinions that she could not work for an undetermined time.

Obviously, Carol's benefits were granted for an extended period, right? Wrong again!

Unfortunately, such stories have become commonplace. Disability insurance companies are increasingly refusing benefits because they have lost so much money from years of their own disability-risk miscalculations.

Too often, information supplied by those with disabilities, their employers, and even their own physicians provide insurers with the justification to deny coverage. In today's hostile insurance environment, you are responsible for your own well-being. You cannot rely on your physicians to be your advocates (sometimes, they need their own)! You must be aware of the “rules,” and you must take charge, seeking assistance when necessary.

Here are some basic things that you should know and a few suggestions about what to do and what to avoid when seeking disability insurance benefits.

Some Background

Insurance companies are comfortable that their often-questionable, even bizarre, denials of disability benefits will be protected from scrutiny by anyone outside their own company because of the Employee Retirement Income Security Act of 1974 (ERISA). Decades of court decisions and industry efforts have morphed ERISA from a law intended to protect pensions into one that governs employer-sponsored health and disability insurance plans, “trumping” any contrary state law. A court cannot even review the merits of a benefit denial without first finding that it was made “arbitrarily and capriciously” – a difficult standard to meet. The insurance company's benefits decision will probably be sustained as long as there is some small amount of information to support it, even if there is a lot more medical evidence to the contrary.

Even in those few cases where the threshold for court review is met and the denial is found to be improper, the insurer must pay the employee only what it should have paid initially plus, possibly, attorney fees. There can be no additional damages for the company's wrongful conduct. Even achieving such a limited result can involve years of emotionally and financially draining court battles.

To make things worse, in 2003 the U.S. Supreme Court ruled that the medical opinions of a person's own treating physicians were not entitled to preference over an insurance company's opinion. In other words, if the physician whom you see regularly believes that you cannot work, but the insurance company's medical personnel whom you may never see states otherwise, your claim may be “properly” denied.

Some people believe that insurance companies are merely tightening their claims procedures; others wonder whether any incentive remains for an insurance company to pay benefits under ERISA-governed policies. The more cynical among us believe that the only reason that any benefits are paid is to enable insurers to sell more of their policies!

The Insurer's Proceedings

The insurance companies know that the deck is stacked against you. Therefore, you must thoughtfully approach both the initial claim (usually decided by an insurance analyst who is under pressure to keep payments at a minimum) and your appeal of a denial of benefits (which will be decided by people at the same insurance company that turned down your initial claim). You must provide substantial evidence of the merits of your case presented in a way that will “persuade” the insurer that you are not a person who can be mistreated with impunity. A well-planned and well-applied strategy is imperative, as is perseverance and emotional strength.

Some Dos and Don'ts of Advocacy

Together with your knowledge of what to expect in the claims/appeal process, consider these steps to take or avoid to maximize your chances of success.

DO find a patient advocate, if appropriate.

If you are well enough, you can probably file the initial claim yourself with the help of others with similar experiences. If your claim is denied, however, you should find an advocate immediately to assist you with the appeal. The Amputee Coalition can help you find someone. The risks of loss are too great to “go it alone.” The more that the benefits you seek are needed for basic living, the faster you should get help from an independent advocate. HINT: Find an advocate who will not charge you anything unless your benefits are granted or restored.

DON'T talk to insurance company personnel, if possible, and if you do, limit what you say.

The “concerned” claims representative on the other end of the telephone may be looking for information to cast doubt on your claim. HINT: Always insist that your conversation not be recorded. Tell the caller to speak to your advocate if you have one.

DO have your physician complete the attending physician statement provided by the insurance company

HINT: The physician should only complete sections relevant to his or her specialty. For example, an internist should not respond to questions about a patient's “psychiatric impairments.”

DON'T have your physician send office notes, if it can be avoided.

Even physicians with your best interest at heart are too busy to consider the consequences of what is scribbled in their files. The insurance company will take portions of the notes, often out of context, and use them as a basis for denial. HINT: Rather than sending notes, ask your physician to write a letter summarizing your condition and stating whether you are totally disabled and unable to work. Ask to review the letter before it is sent.

DO schedule regular appointments with your physician.

Disability policies require that a patient remain under the regular care of a physician. Periodic examinations are a must. HINT: Determine an appropriate interval for regular appointments (e.g., monthly), and schedule your next one before you leave the physician's office.

DON'T state emotional symptoms, such as anxiety and depression, as the cause of your disability.

Benefits for disabilities caused by mental or emotional disorders are strictly limited under most disability policies, and insurers will label your condition as “mental” or psychosomatic whenever possible. Almost everyone with a significant physical disorder will have some accompanying anxiety or depression, but they are not the cause of your impairments. HINT: If necessary, get a psychiatrist to rule out mental disease as the cause of your disability.

DO request and review a copy of the insurer's entire file about your claim, as well as other information permitted by ERISA, if your claim is denied.

You may discover facts that you can use in your appeal. HINT: The law requires insurance companies to explain your rights on appeal, but check them out independently.

DON'T forget to ask those helping you with your claim or appeal to contact you before responding to any requests of insurance company representatives.

Insurance companies may hire people to investigate you, and you should know if this is occurring. HINT: Keep a diary of anything that seems unusual. Call 911 if you think that you are being followed.

There are other things to do and to avoid when making a claim or pursuing an appeal. As noted, your personal condition will often dictate how much advocacy you can do yourself and how much help you will need. Remember, fairness and merit will not always determine whether you receive the disability insurance benefits you are entitled to; too often, the decision is based on whether there is a reason for denial. You do not want to unwittingly be the cause of that result.

Also, even though you are preparing for a full, productive life ahead, you will need a period of adjustment, which differs for each person. During such an adjustment period, you may be “totally disabled” under the definition in your insurance policy.

eDisability Quotes CEO Ted Stearns is deeply concerned with creating a positive experience for his clients. Visit this Twitter page to learn more about his business philosophy.

Learning From Outside Help During Failure

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The most intelligent business minds and industry experts will experience pitfalls. The nature of business revolves around uncertainty, and while talented managers can predict and react, a negative impact will echo through any business. To learn how to properly react and prepare for failure or backward progress, work with consultants and experts who will be able to train employees or management to minimize bad performance.

Disappointment will always be a part of business but learning to look past emotions and focus of strategy is crucial to success. Too many businesses fail after one bad quarter or a bad public relations event because the top management makes the wrong decision when clouded by emotion. A good manager of any level will always be passionate about the company and their job, but need to learn when to step back and let others take over or help.

Image Source: telegraph.co.uk

Working with an outside expert or taking the advice of business writers and experts in business philosophy can be vital during this process. Anybody on the outside of a crisis or away from a constant downturn will not be heavily invested nor already influenced by past decisions or assumptions. Outside help will be able to look at a situation with a fresh perspective and bring rationality to discussions. A lot of writers like business expert Ted Stearns will keep a regularly updated blog or advice column, which can be used to get outside advice without paying full price for on-site work.

Writers like Ted Stearns have years of business experience and expertise that can be applied to a wide variety of industries, so are often successful when helping nearly any business. It is crucial to put aside any emotional involvement and bring in help early to avoid future problems inside a business. Ted Stearns and other consultants will help keep businesses profitable into the future, and should never be discounted.

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REPOST: Making money: Shopping for disability insurance, and more

The Week highlights three financial advice, including getting a disability insurance plan even when healthy. Read full article below.

Image Source: theweek.com

Retirement for the self-employed
It isn't as easy for the self-employed to save for retirement, says Farnoosh Torabi at Yahoo, but it's no less important. To amass a nest egg that will carry you through your senior years, consider these three tax-deductible investment tools. The first is an IRA — if you're planning to save less than $5,000 per year, this is the easiest option. If you're putting aside more, consider a Simplified Employee Pension IRA. A SEP IRA allows you to contribute a quarter of your income each year, up to a maximum $51,000 in 2013. And if you want to defer even more, consider a Solo 401(k). These accounts let you defer up to $17,500 in 2013, plus the quarter of your income (up to $51,000) allowed by a SEP IRA. But managing these can be complex and expensive, so consider working with an accountant or financial consultant.

Dealing with debt collectors
"Be wary of debt-settlement calls," says Ann Carrns at The New York Times. Firms that offer to negotiate down your debt with creditors for a fee know they're dealing with desperate people, and often charge too much and fail to provide what they promise. "The better choice is to hang up and do your own research about the legitimate resources that are available to help you." It's usually better to negotiate with creditors yourself, using the thousands of dollars you saved in fees to pay down your debt instead. If you really do need help negotiating your debt, the U.S. Department of Justice's website lists accredited debt counseling organizations you can trust.

Shopping for disability insurance
Even if you're healthy, disability insurance is worth considering, says Jeff Reeves at USA Today. While the Social Security Administration provides disability benefits as a safety net, they're "hardly enough to live comfortably." If living on a few months' income or half your paycheck isn't an option, disability insurance might make sense. Your employer might offer a group plan, but benefits vary widely. They typically "don't come close to replacing your full paycheck," with a reimbursement rate of 60 percent and monthly or annual caps on how much you can be paid. If that sounds insufficient, look into supplemental plans, which can make up some of the difference for a modest monthly fee. But remember, like health insurance, their price "is based on your unique situation and needs."



eDisability Quotes Chief Executive Officer Ted Stearns is a financial advisor with comprehensive understanding of the multiple aspects of financial services.  Get more money tips on this Twitter page.

Developing a business plan to create a solid business structure

“Developing a business plan is one of the most important exercises a business owner can do; it forces us to think thru the minefields before stepping on a landmine.” ~ Business executive Ted Stearns.

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No business has ever prospered without a well-written business plan backing it up. Some are drafted on the back of a napkin, others are hundreds of pages long. Regardless of its size and impact, it is always rewarding. But what makes it more valuable to business owners is its background story, that it was created with a combination of hard work, risk taking, and extensive planning.

The following are a few simple reminders that will encourage investors to draft a plan before spending substantial capital, time, and effort in their investment.

Managing cash flow
Not all business owners are accounting graduates, or at least excellent in mathematics. However, many of them have succeeded in their venture because they created opportunities and resources that helped them manage their company’s monetary system. Delegation is a key to solving this problem. There are hundreds of excellent accounting gurus out there who have the skills and credentials to put up a reliable cash flow management strategy.

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Growth projections
Projections are necessary to determine the feasibility of a certain business project. However, these have to be conservative in nature and must veer away from overestimation. There is much truth in projections that do not promise big numbers.

The team
Businesses invest in people, not ideas. Successful businesses are brainchildren of forward-thinking people—those who have unique capabilities to pioneer innovations and accelerate growth. Hence, building a strong workforce is a staple for every company.

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More ideas on and insights into financial management and corporate decision-making can be found on this website.