A growing backlog of pending claims for disability benefits from Social Security indicates that the Social Security system is being swamped through the actions of insurance companies compelling their insureds to file benefit claims with Social Security. Most disability insurance policies have a provision that requires the insured to apply for disability benefits from Social Security and then allows, if that claim is approved, the insurance company to reduce the payment it makes to the insured. Oftentimes, disability insurers refer their insureds to a law firm or company to help them with their claim to Social Security.
Approximately 2.5 million people apply annually for disability benefits from Social Security. A recent study found that 18 percent of these applicants acknowledged being unqualified, because the standard to receive Social Security disability benefits requires that a person be unable to work in any job because of a total and permanent disability. Typically, disability insurance policies pay benefits when a person is disabled from performing their last job, not any job. Some insurance companies have stopped paying benefits where there insured has refused to file a claim with Social Security. An interesting study of this practice and a pending lawsuit was reported as the lead story in the New York Times on April 2, "Insurers Faulted As Overloading Social Security."
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