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SSDI's advantages over private long-term disability insurance

If you pay attention to the news, you probably know that Social Security Disability Insurance is a fairly controversial and highly politicized issue. In recent decades, the number of Americans receiving SSDI benefits has risen significantly, and this has led to criticism that the program is unsustainable, “broken” and in need of reform.

Many conservative politicians want to see Social Security Disability abolished or privatized and would like to make it even harder for Americans to qualify for benefits. These attitudes reflect a fundamental misunderstanding of SSDI’s value and purpose as well as who it is designed to help.

If you have worked a job and sufficiently paid into the Social Security Administration through payroll taxes, you are essentially a “policy holder,” just as you would be with a private insurer. According to the Center for American Progress, a young worker with average pay, a spouse and two children will have coverage equal to a private insurance policy worth about $580,000.

Most American workers are covered under SSDI. This is important because the majority of Americans could not afford long-term disability (LTD) insurance through a private insurer. Private plans are more expensive than SSDI and often provide less coverage. Among workers in the private sector, just one-third have LTD insurance provided by their employer, and many of the workers who are covered work in white-collar professions. The rate of LTD insurance among workers earning less than $12 an hour is just 7 percent.

Unfortunately, The United States has among the most stringent criteria for eligibility in the world. Approximately 80 percent of applications are denied when first submitted. After exhausting all appeals, the approval rate for SSDI benefits is still less than 40 percent.

Social Security Disability Insurance is financial protection that Americans earn, and it provides coverage that is more affordable than private plans. Yet eligibility standards are strict to the point of excluding many who can no longer work due to a disabling condition. If the system is “broken,” it is not because SSDI is wasteful and given away too freely. Rather, this valuable safety net needs to be available to more Americans who depend on it and have earned benefits.

Source: Center for American Progress, "Social Security Disability Insurance A Bedrock of Security for American Workers," Rebecca Vallas and Shawn Fremstad, July 8, 2014

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