Presenter:

Judith Shinogle

Authors:

Judith Shinogle, David S. Salkever

Chair: Sherry Glied; Discussant: Pinka Chatterji Mon June 5, 2006 17:15-18:45 Room 332

Previous research examining employees with long term disability found that health benefita may affect the probability of returning to work as well as duration of claims. This previous research failed to examine the disabled worker applying and receiving Social Security Disability Insurance (SSDI). We fill this void by examining how the relationship between health benefits, other fringe benefits, disability management practices and employer characteristics affect the employee on long term disability insurance’s return to work compared to receiving SSDI. Disability claims data, employer benefit data and surveyed information on disability management from 116 employers insured for long term disability from one large insurer. Data was analyzed using bivariate probit and competing risk models. For the competing risk models, unordered failure events of different types were assumed. The two types of failures in the models were 1) Return to work or 2) Receive Social Security. These models allowed the baseline hazard to vary by failure type but constrain the coefficients to be the same across each failure type. These models assumed that each failure event can only occur once per subject. Next, we allowed the coefficients to vary by each failure type and incorporated unobserved heterogeneity of the individual through the use of frailty models. Preliminary results found that disability insurance characteristics such as the ratio of benefits to wages increase duration on private disability insurance as well as increase time to receipt of SSDI, while certain management principles lengthened claim duration. Availability of short term disability (formal or informal) increases duration on private disability insurance while supervisor involved in short term disability and ability to change jobs decreases duration. Health plan characteristics, such as having a mental health carve out or fee for service, decrease the likelihood of returning to work as well as receipt of SSDI, while having a high deductible for mental health insurance increased duration on private disability insurance. Employer disability management practices that decrease the barriers to work lowered the time the employee was on long term disability insurance. On the other hand restrictive health benefits, such as high deductibles could increase this duration and certain health plans such as mental health carve outs may decrease duration on private disability insurance and shorten time to receipt of SSDI. Policy makers and benefits providers should be cognizant of the interaction between health and disability benefits.