	Background

		Social Security Disability Insurance (SSDI)

In recent decades, economic and demographic factors have contributed  to an increase in the number of SSDI beneficiaries and increased  program costs, which has reduced the size of the Disability Insurance  Trust Fund reserves from a peak of $215.8 billion in 2008 to $46.3 billion  in 2016. Private Disability Insurance (PDI)

In most cases, long-term employer-sponsored private disability insurance  (PDI) is paid for by the employer and provided as part of a package of  benefits for employees, although sometimes employees are required to  pay some of or the entire PDI premium. Proposals to Expand PDI

From our literature review, we identified three distinct proposals for  expanding PDI in order to potentially alleviate financial challenges facing  the SSDI program. SSDI Covers a Much Larger Portion of the Workforce than PDI, and Features of Coverage Differ

		SSDI Covers Almost All Workers, Whereas PDI Covers About One-Third of Workers, Who Are Generally Higher-Paid

According to our analysis of SSA and BLS data, nearly all American  workers pay Social Security taxes and are potentially covered by SSDI,  while only a third of workers have PDI coverage. By contrast, as of March 2017, the Bureau of Labor Statistics (BLS)  estimates that approximately 33 percent of the workforce is insured by  employer-sponsored PDI where the employer pays at least some of the  premium. In addition, while SSDI coverage is higher across all industries and  income levels, PDI coverage is much more prevalent at higher wage  levels and in certain occupations and industries than others. 1). 2). However, there are also  some significant differences, as SSDI and PDI have different definitions  and employment requirements. For both SSDI and PDI, benefits do not usually start immediately upon  disability onset. In contrast,  some PDI policies may pay benefits for a partial disability. In contrast, according to insurance representatives and the three PDI  policies we reviewed, PDI policies may provide early interventions,  funding for workplace accommodations, and case management to help  beneficiaries return to work. Implications of Proposals to Expand Private Disability Insurance Cannot Be Assessed Due to Incomplete Information

Our literature review identified three distinct proposals to expand PDI— through some type of federal action—as a way to provide savings for  SSDI; however, we were unable to assess the implications of these  proposals on SSDI. The authors believe this will address  confusion and uncertainty that is holding employers back from  providing PDI. would be eligible to apply for SSDI at the onset of their  disability, in lieu of PDI. Table 4 summarizes key features of the three proposals to expand PDI  that we identified. Types and Timing of Return-to- Work Assistance Offered

To achieve SSDI cost savings, the three proposals assume that insurers  will provide or reimburse employers for providing vocational rehabilitation,  workplace accommodation, and return-to-work services, but the  proposals provide few, if any details about how this would occur. For  example, the two proposals that describe voluntary PDI enrollment do not  explicitly require that such services be provided through PDI. It is also possible that insurers would make less of an  investment in return-to-work services for PDI beneficiaries under the two  time-limited proposals because the insurers are only responsible for 2 to  3 years of disability payments, compared to traditional PDI policies where  the employer may have financial responsibility to make payments to  beneficiaries until they reach retirement age, unless insurers can help  them return to work. BLS data show that PDI is  currently less prevalent among these workers, and therefore less is  known about the type and effectiveness of return-to-work services that  would be offered to them under PDI expansion. The proposals assert that expanded PDI would provide financial support,  accommodations, and rehabilitation services much sooner than SSDI. Other Factors That Could Affect PDI Enrollment and SSDI Cost Savings

Based on our review of the PDI expansion proposals and interviews with  stakeholder groups, we identified several additional factors that could  affect the extent to which the PDI proposals could increase PDI coverage  and result in SSDI cost savings, especially under the two voluntary  proposals (Babbel and Meyer and Greszler). Missing Details Make Identifying the Implications of the Proposals for Stakeholders Uncertain

Employee advocacy groups, employers, and insurance companies we  spoke with raised various questions and concerns about the potential  impacts of expanding PDI—implications that the proposals did not  explicitly or fully address and therefore remain uncertain. Based on our review of  SSDI and PDI policies and interviews with employee and advocacy  groups, whether or not workers would opt for PDI benefits under voluntary  expansion would depend on the attractiveness of PDI relative to SSDI  and other benefits. Based on our review of SSDI and PDI policies, current PDI  policies typically do not include dependent and spousal benefits offered  by SSDI, and unlike SSDI have exclusions and pre-existing condition  provisions, as well as have time limits on benefit payments for some  conditions, which may result in workers finding SSDI more attractive than  PDI.
Why GAO Did This Study

SSDI, which is administered by SSA, provides financial and other assistance to qualifying individuals who are unable to work due to their disabilities. SSDI is primarily funded by employee and employer payroll taxes that are placed in the Disability Insurance Trust Fund, which is currently projected to not be able to pay full benefits starting in 2028. While there are a number of ways to address the fiscal condition of the Disability Insurance Trust Fund, some researchers have proposed expanding employer-provided PDI. GAO was asked to review whether expanding PDI could result in potential savings to the Disability Insurance Trust Fund.
This report examines (1) what is known about how coverage and key features of SSDI and PDI compare, and (2) the potential implications of three distinct proposals to expand employer-sponsored PDI on the Disability Insurance Trust Fund and various stakeholders.
GAO analyzed data on SSDI and PDI coverage from SSA and BLS for 2016 and 2017; reviewed relevant federal laws, regulations, and guidance; reviewed three PDI policies that three large insurers we selected described as typical for their companies; reviewed three distinct proposals to expand PDI identified through a literature review; and interviewed SSA and Department of Labor officials, authors, researchers, and representatives of insurance, employer, employee, and disability groups for a range of perspectives.

What GAO Found

GAO's analysis found that coverage and key features of Social Security Disability Insurance (SSDI) and long-term employer-sponsored private disability insurance (PDI) differ in a number of ways. Key differences include the number of workers covered; characteristics of covered workers; and eligibility, benefits, and return to work assistance. For example:
According to GAO's analysis of Bureau of Labor Statistics and Social Security Administration (SSA) data, SSDI covers an estimated 96 percent of workers, while 33 percent of workers have PDI coverage through their employers. Also, PDI coverage is more prevalent among workers with higher wages (e.g., management positions) and in certain business sectors (e.g., finance).
GAO's review of SSDI and PDI policies found that some PDI policies may pay benefits for medical conditions that SSDI would not. However, these PDI policies may time limit payments for mental health and musculoskeletal disorders, while SSDI does not. In addition, while both SSDI and PDI policies include features designed to help beneficiaries return to work, PDI policies may provide such supports more quickly than SSDI.
GAO's review of the literature identified three distinct proposals for expanding PDI that the proposals' authors believe would address SSDI's fiscal challenges. Specifically, all three proposals suggest that cost savings for the Disability Insurance Trust Fund could be expected by expanding PDI. According to the proposals, this would happen because expanding PDI would provide workers earlier access to cash and employment supports, which would reduce the number of SSDI claims or the length of time SSDI benefits are paid to claimants. However, GAO's review of the three proposals noted that none of them provide enough information to assess how SSDI enrollment and costs might be affected with an expansion of PDI. Therefore, it is unclear whether cost savings to the Disability Insurance Trust Fund would actually be realized. For example, the proposals do not provide information on the type and timing of return-to-work services that would be provided under expanded PDI, nor do they take into account the differences in the populations served by SSDI and PDI policies. Moreover, stakeholders that GAO interviewed about these proposals raised a number of issues about other implications of PDI expansion that the proposals do not explicitly or fully address. For example:
Insurers told GAO that is was unclear how expanding PDI would affect PDI premiums and the impact this would have on enrollment.
Employers told GAO they were concerned about potential additional requirements or administrative burdens that would be placed on them if PDI were expanded.
Employee and disability advocacy groups told GAO they were concerned about whether PDI expansion would provide standard services or employee protections currently available under SSDI, especially with respect to PDI expansion proposals that would replace SSDI for 2 years.