Opt-Out Enrollment for Group DI Plans Would Benefit Workers and Federal Disability Program 

Washington, D.C. (August 4, 2015) — In a new study, Charles River Associates finds that increasing participation in group disability income insurance plans through employers would yield benefits for employees and the Social Security Disability Income (SSDI) program. The study was sponsored by the American Council of Life Insurers (ACLI) and America’s Health Insurance Plans (AHIP).

 Prolonged unemployment due to illness or injury can jeopardize a person’s lifestyle and long-term savings. According to the Social Security Administration, almost 1 in 4 of today’s 20 year-olds will become disabled before they retire. Disability income (DI) insurance provides workers with paycheck protection. It provides cash to cover expenses such as mortgage payments, rent, or utilities. It also can pay for training or other assistance needed to return to work.

 Without DI insurance, workers often turn to the SSDI program, which has come under fiscal stress in recent years. The Social Security Administration estimates that the program’s trust fund could be depleted next year.
 
To help address this concern, the study recommends enactment of legislation to clarify that employers can enroll employees in group DI plans. Workers could opt-out of the plans.

Increasing the number of people covered by group DI plans would be a win-win for workers and SSDI. Workers affected by a disability will benefit from the income protection and return-to-work elements of group disability coverage and the number of workers receiving SSDI benefits will be reduced, the study says.

Reflecting the success of similar opt-out programs for 401(k) and other defined contribution plans, the study estimates that if group DI participation increases to just over 50 percent, the SSDI program would save $5-$7 billion over ten years.

 The final study will be released this fall. A preliminary study was presented today at a conference of the McCrery-Pomeroy SSDI Solutions Initiative. ACLI commends the group’s co-chairs, former Reps. Earl Pomeroy (D-N.D.) and Jim McCrery (R-La.), for their efforts to bolster the SSDI program.

The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with approximately 300 member companies operating in the United States and abroad. ACLI advocates in federal, state, and international forums for public policy that supports the industry marketplace and the 75 million American families that rely on life insurers’ products for financial and retirement security. ACLI members offer life insurance, annuities, retirement plans, long-term care and disability income insurance, and reinsurance, representing more than 90 percent of industry assets and premiums. Learn more at www.acli.com.