Employers shift disability insurance costs to workers and trim benefits

Disability insurance is one of those under-the-radar benefits you may take for granted, especially if your employer picks up the tab for the coverage, as many firms do. Because of that, as annual benefit enrollment time approaches you probably aren’t worried about examining your disability coverage details and costs the way you will your health insurance plan options. But you should.

The same pattern that has emerged in health insurance — employers’ shifting more costs onto workers’ shoulders and trimming or eliminating benefits — is occurring in disability coverage. This fall, as employers spell out insurance options for next year, evaluate what’s offered and what it will cost, and make sure you’re adequately covered.

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Of course, one of the main reasons people give disability insurance short shrift is that they don’t think they’ll ever need it. Meanwhile, they routinely buy coverage to protect their lives and their homes, even though “for most people, the risk of long-term disability is far greater than of [early] death or their house burning down,” says Rich Fuerstenberg, a partner with human resources consultant Mercer.

According to the Social Security Administration, a 20-year-old has about a 30 percent chance of becoming disabled by the time he retires. Although many people assume that accidents are the most common reason for a disability insurance claim, illness accounts for 90 percent of all claims, says Barry Lundquist, president of the Council for Disability Awareness, a nonprofit education group funded by the disability insurance industry. The top reasons for new claims last year, according to the organization’s annual claim study, were musculoskeletal conditions such as arthritis or back problems, followed by cancer. A typical disability insurance claim lasts about 2.5 years, according to research compiled by CDA.

When Monica Soltes took a buyout from Merrill Lynch and decided to start her own financial planning business 10 years ago, she made sure she had health insurance but never considered buying disability insurance. “You’re 38 years old and you think, ‘What’s going to happen to me?’ I didn’t even think about it,” she recalls. Soltes moved from the Detroit area to sunny Del Mar, Calif., and rented an office with a view of the ocean.

Not long after the move, she slipped when she stepped off the porch at her cousin’s Santa Monica home and shattered her elbow. After multiple surgeries and an unsuccessful bone graft from her hip, she was no better off. Inadequate supply of blood to her upper arm and hip caused those bones to, effectively, die. Soltes also received a diagnosis of Cushing’s disease, a hormonal condition in which the body produces massive amounts of the hormone cortisol, which can cause bone loss.

Unable to work because of Cushing’s and other medical problems, Soltes moved back to Michigan, where she lives with an uncle. She receives Social Security disability benefits and is insured through the Medicare program. She hopes to start another business soon, perhaps helping disabled people get back to work.