The nonprofit Council for Disability Awareness warns that the number of employees protected by private disability income insurance declined in 2011 for the third consecutive year, while the number of long-term disability claims continued to rise.

Top long-term disability insurance carriers paid $9.3 billion in 2011, according to the CDA, a 2% bump over 2010. Insured lives covered by employer-paid and employer-sponsored group long-term disability programs declined by half a percent.

“The aging workforce and a painfully slow jobs recovery are clearly having an impact,” says Barry Lundquist, president of the CDA. “Also, the jobs environment continues to be an obstacle to returning recovering workers to productive employment.”

With such a large portion of long-term disabilities being either unpreventable or unforeseeable, Lundquist says providers have an obligation to talk to wage earners about what they can do.

“Since many employers are moving toward voluntary [benefits], they need to educate their employees,” he says, adding that sponsors should “examine their own plan” as well.

“I think of an HR person sitting across from someone who has to leave because of disability and having to say, ‘at this point, your pay will stop,’ … and it’s awful,” Lundquist says. “No one wants to have that conversation. And it’s so avoidable.”

The CDA says that American workers may think they’re safer than they are, leading them to gamble with their finances.

“Our research continues to demonstrate that workers dramatically underestimate their risk of disability [by a factor of 10 or more],” Lundquist says, “and too often don’t think about protecting their most valuable financial resource – their income.”

The CDA says diseases of the musculoskeletal system and connective tissue (osteoporosis, arthritis, etc.) continue to be the leading cause of disability claims, by a large margin. New claims resulting from pregnancy and childbirth complications increased in 2011, now accounting for more than 9% of long-term claims for women.

Tristan Lejeune is an associate editor with Employee Benefit News.

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