Possible Impacts of Health Care Reform on Disability Insurers

A recent study by a disability consultant and the Disability Management Employer Coalition (DMEC), a group primarily made up of employers with over 5,000 employees, suggested some interesting possible impacts that health care reform (ACA) may have on the disability industry.

The study was based on a survey this summer of 169 large employer benefit managers and 118 senior industry people.

Key takeaways for disability carriers include the following:

• Employers are not focused right now on how absence and disability management will change as the ACA is implemented, but they do believe there will be some impacts.

• 1/3 of employers and over half the insurers polled believe that both claim incidence and claim durations will increase.

• Incidence may rise due to employees no longer fearing loss of health coverage due to longer term disability.

• Durations may increase due to increased waiting times for care as a result of many new insureds entering the US health care system, which respondents believe will outstrip any positive impacts of more timely treatment of conditions under ACA.

• Greater employee awareness of health benefits under ACA will lead to greater awareness of job-protected leave opportunities and disability benefits.

It may be awhile before we see how the ACA itself shakes out, never mind the possible “spillover” ramifications for disability insurers. But even just a small movement – one way or the other – in LTD claim patterns could make a big difference in costs. Disability insurers who don’t pay close attention to health care trends and directions under the ACA in the next couple years will do so at their own peril.