We’ve all heard of insurance fraud, but how about this new twist. Insurance companies are being accused of forcing able-bodied people to apply for Social Security disability benefits. Not only is this unethical, but it is only making the ever-present backlog worse. This means that the disability payment you’ve been waiting for and desperately need could be held up because greedy insurers are committing fraud to increase their profits.
The handling of disability claims by nine insurance companies is being investigated by the Senate Finance Committee. There are also two lawsuits pending against the Cigna Corporation and the Unum Group, accusing them of forcing claimants to file false claims with the Social Security Administration.
The nine insurance companies being investigated by the Senate are:
- Reliance Standard
How is fraud happening?
The Social Security Administration defines disability much more narrowly than most insurance companies, so even though an insurance company will pay a person disability benefits, that same person may not be eligible for federal benefits. However, some insurance companies are forcing individuals who know they are ineligible to file for federal benefits – and if they don’t, the companies are cutting off payments. If the claim is denied by the SSA, insurers are alleged to then force the claimant to file an appeal, further bogging down the disability program.
The insurance companies have defended themselves, claiming that the practice isn’t fraud but is instead intended to ensure that their claimants receive the disability payments they deserve from all possible sources. However, the practice does benefit the insurance company, as any benefits a claimant receives from either workers’ compensation or a disability claim can reduce the insurance company’s payout amount. In addition, as long as a claimant’s paperwork is circulating in the seemingly endless backlog at the SSA, the insurance company can delay or reduce payment.
Impact on the Social Security Disability program
The SSD program is already overloaded with cases. As the American workforce continues to age, more legitimate cases will be added to the pile since older workers take longer to heal and recover from injury and ailments. In fact, since 2000 the number of people waiting for hearings on their claim has more than doubled, and the average wait time has grown from 258 days to 512 days. Not only that, but the disability program is expected to run out of money in 2026, which is 16 years sooner than the retirement program. With these grim statistics, overloading the system with false claims indeed does a disservice to truly injured workers who are relying on a speedy claims process in order to survive.
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