Tuesday, April 01, 2008

Private LTD insurers encourage claimants to make "fake" Social Security disability applications

The disability program, which the Social Security System administers, is overloaded with fake applications, as a result of demands by private insurers that claimants on long term disability policies apply for DI, too. Now Social Security disability is normally payable only to those who are totally disabled and unable to work in any job at all, often people who are terminally ill. In the 1980s, it was common for people with AIDS to apply for it.

There is a lawsuit against some companies brought by whistleblowers, who may have worked for the companies.

The story appears on the front page of the New York Times, April 1, “Insurers Faulted as Overloading Social Security; Whistle-blower suits; Disability filings called dubious—defense from companies,” by Mary Williams Walsh, in the Business Section online, link here.

Most of the time the DI claims to SS are denied, and the applicants never had a chance of qualifying. They are encouraged to apply because insurance companies can improve their bottom line by delaying payments. The workload is slowing down claims from legitimate SSI applicants, who often wait for over a year for claims to pay, when some may not have survived. The issue would not affect claimants who are old enough (and have enough qualifying quarters) to apply for regular retirement benefits.

Various law firms advertise the ability to fight for SSI benefits.

The disability portion of social security is projected to go broke by 2026, sixteen years before the more familiar retirement portion.

The POMS reference for Social Security DI is here.

Generally, to received DIB a worker must have worked long enough to be fully qualified for social security, and must have worked “recently.” There are some complications.

The program should not be confused with SSI, which is a “welfare program” but not an “entitlement” (which retirement and DI both are, as “supposedly” financed by FICA taxes) managed by Social Security but not funded by it.

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