Financial Impact on Disabled Individuals Can Be Staggering, Says New Study

  • Author: Health Informer
  • Filed under: Health News
  • Date: May 16,2009

AHIP and LIFE Collaboration Also Examines Value of Private Disability Insurance

The financial impact on individuals who become disabled can be staggering if they lack disability insurance — as high as 20 times a person’s annual salary, finds a new study released by the nonprofit LIFE Foundation and America’s Health Insurance Plans (AHIP). Conducted by the global consulting firm Milliman, Inc., the study, titled “The Impact of Disability”, is a rare look at the consequences facing individuals who become disabled and can’t work, and the level to which various types of disability income protection can help to reduce the financial impact. The findings reveal that in the absence of insurance, a majority of Americans would likely have to make difficult financial decisions, or even drastic lifestyle changes, in order to cover the costs associated with disability, regardless of whether the disability is short- or long-term.

The Cost of Disability Hits Single, Low Income and Long-Term Disabled the Hardest

Examining four representative scenarios of newly disabled individuals, the study found, for example, that the financial impact of a disability — equal to lost income plus expenses — to be as high as nearly $1 million for a 40-year-old, single male earning $50,000 per year who suffers a long-term disability lasting until age 65 — nearly 20 times his pre-disability earnings. The study also shows that the costs associated with short-term disabilities can be quite significant — equaling one to nearly two times income in some cases for a disability lasting just two years.

The study by Milliman found that those hit hardest by the costs resulting from a disability are single individuals, who do not have a second income to rely on; lower-income individuals, because added expenses are greater relative to the lost income; and those who suffer longer-term disabilities, since both income and expenses tend to increase with inflation, raising the cost of disability over time. (Further details can be found in Table 1 in the Appendix).

Further illustrating the stark financial reality outlined by these findings is the fact that as a result of the recession, many Americans have less savings and investments to fall back on should they become disabled and can’t work. According to a recent national survey conducted by LIFE, more than a quarter (27%) of Americans admit they would begin having difficulty supporting themselves financially “immediately” following a disability, while nearly half (49%) would reach that point within a month.

“Our experience tells us that if you become disabled and don’t have disability insurance, you’re going to have a very rough go of it. This study quantifies the impact of a disability so working Americans can get a better understanding of financial difficulties they’ll likely face without proper insurance coverage,” said Marvin H. Feldman, CLU, ChFC, RFC, president and CEO of the LIFE Foundation. “Disability Insurance provides a financial safety net that can be counted on to replace lost income if you were suddenly out of work due to illness or injury.”

The Value and Availability of Sources of Disability Income Protection

The study also shows that various sources of disability insurance provide valuable income replacement to help cover the high costs of disability and keep life on track for people who can’t work due to a disabling illness or injury.

In fact, private disability insurance plans, such as employer-sponsored (primarily group) or individual coverage, can reduce the cost of a disability by 70-80%. Individual disability coverage, in combination with employer- or government-sponsored insurance programs, can reduce the financial cost of disability by 80-95%. (Further details can be found in Table 2 in the Appendix).

The study also makes clear that while government-sponsored disability insurance — either through Workers’ Compensation or Social Security — is available to many working Americans, it can be difficult to qualify for. Workers’ Compensation insurance is limited to disabilities that occur on the job, but a vast majority (90%) occur outside the workplace and are therefore not covered by Workers’ Compensation programs. In recent years, only about 45% of initial applications for Social Security benefits have been approved, and the average monthly benefit, $1,062, is barely above the poverty level.

“The Social Security Disability Insurance (SSDI) program can be one source of disability income for many Americans, but this is no guarantee that disabled individuals will be eligible for SSDI,” said Karen Ignagni, President and CEO of AHIP. “Working Americans and their families can benefit from the value that private disability income insurance provides.”

The Non-Financial Impact of Disability

The study also examines the non-financial impacts associated with disability. While difficult to articulate and quantify, they are often tied to an individual’s overall happiness and sense of self-worth, and can be exacerbated by the financial strain that occurs when a disabled person is overwhelmed with expenses in the absence of sufficient income. The availability of benefits from government programs and private insurance during a period of disability can also mitigate the severity of the non-financial costs.

“Not only does a disability take a financial toll, but it also has an impact emotionally and psychologically on the individual and affects the family as well,” said Ignagni. “Private disability coverage helps not only to address the financial toll, but it also allows a person to focus on recovery and rehabilitation.”

May is Disability Insurance Awareness Month

The release of the “Impact of Disability” study from LIFE and AHIP coincides with Disability Insurance Awareness Month, an industry-wide campaign designed to encourage working Americans to take stock of their need for disability income protection.

“The reality is that nearly one out of every three workers will suffer a disability that keeps them out of work for 90 days or longer at some point in their career and yet roughly 70% of working Americans do not have long-term disability coverage,” said Feldman. “It is our hope that through studies such as this one, we can motivate greater numbers of people to investigate their need for disability insurance protection.”

To view the “The Impact of Disability” study in its entirety, visit www.lifehappens.org/DIstudy or http://www.ahip.org/content/default.aspx?docid=27012.

Disability Insurance Awareness Month

Disability Insurance Awareness Month (DIAM) was created to get American workers to think about the need to protect their greatest asset — their ability to earn an income. Held in May, DIAM is an industry-wide effort that is coordinated by the nonprofit LIFE Foundation. More information is available at www.lifehappens.org/diam.

Source: LIFE Foundation; America’s Health Insurance Plans


Reducing Chronic Diseases Critical to Economic Recovery and Health Reform

  • Author: Health Informer
  • Filed under: Health News
  • Date: May 15,2009

An obese 70-year-old will spend approximately 20 percent more on health care over their lifetime – nearly $40,000 – than a peer of normal weight, according to the second annual Almanac of Chronic Disease, released by the Partnership to Fight Chronic Disease (PFCD).

The Almanac is a comprehensive resource that outlines the critical role that preventing and reducing chronic diseases can have on health care reform, economic stability and the health of all Americans. Research highlights from the Almanac’s include:

  • During 2007, the U.S. spent an estimated $1.7 trillion treating patients with one or more chronic conditions – the equivalent of 34 million annual salaries of $50,000.
  • Since the mid-1980s, about two-thirds of the increase in spending on health care in the United States is linked to the rise in the prevalence of treated chronic diseases; about one-third is linked to the doubling of obesity rates.
  • Chronic disease and treatment rates are higher in the United States than in other industrialized nations, and may add as much as $100 to $150 billion in treatment costs to U.S. health spending.

“We need to address the sad reality that 75 cents of every dollar we spend on health care in our nation is to treat people suffering from a chronic disease,” said PFCD National Chairperson Richard H. Carmona, M.D., M.P.H., FACS, 17th U.S. Surgeon General (2002-2006), President of the non-profit Canyon Ranch Institute. “The scientific evidence in the Almanac is clear. The health of our nation and our economy will only improve when we move from a ‘sick-care’ system focused on treating chronic diseases to a true health care system devoted to prevention and wellness. The hundreds of PFCD partners who come from all sectors of American society are leading the way toward making the prevention of chronic diseases a national priority.”

At the press conference, Carmona, who is also Distinguished Professor of Public Health at the University of Arizona, was joined by Sen. Tom Harkin (D-Iowa), a senior member of the Committee on Health, Education, Labor and Pensions (HELP) who leads the Prevention and Public Health Working Group; Kenneth Thorpe, Ph.D., Executive Director of the Partnership to Fight Chronic Disease and Professor and Chair of the Department of Health Policy and Management at the Rollins School of Public Health at Emory University; and Virginia Wangerin, R.N., M.S.N., President of the Iowa Nurses Association.

“We have heard millions of voices across the nation, by way of the President’s forums on health reform and other public events, calling for immediate action to resolve our economic challenges and improve health care in America,” said Thorpe. “What the Almanac shows is that without reducing and better managing our country’s chronic disease rates and changing our delivery system from a treatment-oriented system to a prevention-oriented one, any short-term economic or health reform action will result in long-term failure.”

In addition to the hundreds of charts and statistics included in the Almanac, the publication also includes commentary from sponsoring organizations and excerpts from statements by national leaders in the areas of chronic disease, prevention and health care reform.

“Unless we can realign our health care incentives to encourage preventive care and better disease management, our current course of ‘inaction’ will soon cause irreparable damage to our nation’s economic viability and the strength of our greatest national asset: the health and wellbeing of the American people,” Thorpe continued. “As we enter into a critical phase of the health reform discussion, lawmakers and the public should be aware of the desperate need to address this issue and the commitment of diverse stakeholders, like the PFCD, to see successful reform around chronic disease prevention and management.”

The Almanac was co-sponsored by several PFCD partner organizations: American Academy of Nursing; Canyon Ranch Institute; DMAA: The Care Continuum Alliance; National Association of Chronic Disease Directors (NACDD); National Association of Public Hospitals and Health Systems; Pharmaceutical Research and Manufacturers of America (PhRMA); U.S. Chamber of Commerce; and YMCA of the USA.

For more information on the PFCD and to view a copy of the Almanac of Chronic Disease please visit www.fightchronicdisease.org.

Source: Partnership to Fight Chronic Disease


Hospitals are perceived as safe places, but today they are becoming one of the most dangerous places in America.

Even in the best of economic times, security is not the top priority for most hospitals. In tough times, it is an easy place to cut budget and staff. John Adams, president and COO of SecurAmerica, one of the largest U.S.-based security companies, worked in the hospital industry for 15 years and has witnessed hospital crime firsthand. His company is responsible for corporate security for many of our nation’s largest buildings and companies. With his knowledge in both the security and hospital industries, his top five recommendations for a safer hospital environment include:

1. Anyone can walk into a hospital and wander around the halls. To detour intruders with mal intent from entering, secure all entry points 24-hours a day including front doors, side doors, loading docks, offices with outside access and especially the emergency room entrance. At each entrance include a visitor check-in, a guard and surveillance cameras.

2. Parking decks connected to hospitals are breeding grounds for crime. They should be well lit and include surveillance cameras. Physical security guards patrolling parking decks add extra security.

3. Patients’ possessions can be easily removed from their rooms while they are being transported to other areas in the hospital. Possessions must be properly protected in a secured, locked space such as a drawer or closet. Visitors should also be alert and never leave their belongings unattended in a patients’ room.

4. Every hospital must have an updated fire and life safety plan. Employees must study and practice the plan on a regular basis so they know exactly what to do if a fire breaks out. Plans need to include exit strategy for each patient room, clearly marked exit signs, working fire alarms and sprinkler systems, etc.

5. Employees must be well screened through background checks before hiring and well trained afterwards. Ongoing training for hospital staff will keep employees alert and security fresh on their minds.

These recommendations cannot guarantee that crime will end but it will educate hospital employees on ways to prevent crime.

Source: SecurAmerica


The new Project Management Fundamentals for Healthcare module is now available online as an additional module in the University of Georgia Center for Continuing Education’s Healthcare Management Certificate Program. Participants will learn the basics of project management, experience hands-on application to a work-related project, and learn to maximize their time, money and personnel by using efficient techniques for managing projects in a healthcare environment.

The Project Management Fundamentals for Healthcare module is one in a seven-module management training program designed for healthcare professionals, including nurses, technicians, office managers and others, who have (or soon will have) supervisory or management responsibilities. The minimum requirement for participation is an associate’s degree or equivalent experience.

To earn a Healthcare Management Certificate, one must complete six of the seven modules. You have up to 30 days to complete each module. Upon your successful completion of six modules, you will earn nine CEUs and a Certificate of Completion from Georgia LEADS-University System of Georgia and the University of Georgia.

Online modules/lessons include:

  • Human Resource Development and Staff Relationships
  • Cultural Competency and Diversity Issues
  • Leadership Skill Development for the First-time Supervisor
  • Management Ethics and Values-Based Decision Making
  • Finances and Accounting for the Non-Accountant Manager
  • Systems Thinking and the Management Team
  • Project Management Fundamentals of Healthcare

The Healthcare Management Certificate Program can be viewed at www.georgiacenter.uga.edu/healthcare.

The University of Georgia Center for Continuing Education is a unit of the University of Georgia’s Office of the Vice President for Public Service and Outreach. The Georgia Center provides innovative lifelong learning opportunities through its continuing education programs. On UGA’s campus, the Georgia Center includes a full-service hotel with 200 rooms and suites, restaurants, banquet areas, conference rooms, auditoriums, a fitness center, and a computer lab — all under one roof. For more information, go to www.georgiacenter.uga.edu.


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