They screen their beneficiaries with a view toward rehabilitation, and decisions on what benefits to provide often turn on the cost of rehabilitation vs. the cost of benefits, in addition to job availability. Many larger employers use disability management strategies including early intervention and partial or residual benefits to encourage return to work. Those employees who meet the Social Security definition of disability are encouraged or required to apply for Social Security benefits. Individually Purchased Disability Insurance Individual disability plans are thought to be a small part of the private market although there is a lack of data on the actual extent of coverage. However, experts believe participation is quite limited because they tend to be very expensive.
Participation is mostly limited to highly compensated employees or self-employed individuals.
These plans may replace up to 80 percent of earnings, though more typical replacement rates are 60-70 percent. Often, payments of these plans, in contrast to employer-sponsored longterm disability plans, are not reduced by Social Security or other programs. Costs of Coverage Perhaps the most useful approach in examining the cost of private disability insurance is viewing it in terms of value to the beneficiary. This value can be determined by looking at the proportion of the premium dollar that is returned as benefits to policyholders. We can determine this proportion by looking at the cost structure of companies, although they vary from company to company.