You asked three questions about disability insurance in Connecticut. We present the questions and answers below.

Does the Insurance Department maintain a list of insurance companies licensed to sell disability insurance in Connecticut?

According to Debra Korta of the Insurance Department, the department does not maintain a list of companies that sell disability insurance. But it maintains a list of companies licensed to sell insurance. In general, once a company is licensed to sell health insurance, it may sell disability insurance. The list of licensed companies is on the department's website at http://www.ct.gov/cid/lib/cid/Licencom.pdf.

How prevalent are benefit offsets in disability insurance policies?

A “benefit offset” is a policy provision that reduces the amount of benefits available under a disability insurance policy if benefits are also available from other sources (e.g., Social Security).

According to Korta, benefit offsets are common in disability insurance policies. But Connecticut limits offsets to other income that is based on the disability, which typically includes Social Security benefits or benefits from another disability insurance policy. The department does not approve benefit offsets for pension benefits.

The specific offsets allowed depend on the language in the applicable insurance policy. Offsets can vary by company, but Social Security is a common source of “other income” that insurers offset.

For more information about benefit offsets, see OLR Report 2009-R-0105.

Did any recent legislation prohibit benefit offsets in disability insurance policies?

In the 2010 regular session, the Insurance and Real Estate Committee considered SB 141. The raised bill prohibited offsets of disability benefits received under Social Security by an insured's dependent child.

The committee held a public hearing on the bill and reported a substitute bill that did not contain the offset prohibition. Instead, the bill required each group long-term disability (LTD) insurance policy in Connecticut that contained an offset to disclose specified information to the policyholder. It also required each policyholder to provide the disclosure to each individual eligible for LTD benefits under the group policy. The bill was enacted and became Public Act 10-65, which is effective January 1, 2011.

For each group LTD policy with an offset, the act requires each insurer to conspicuously disclose in at least 14-point bold type in a document separate from the policy:

1. that the policy contains an offset;

2. that the offset functions to limit payments to a person insured under the policy, taking into account benefits the person may receive from other sources, including Social Security benefits;

3. what other categories of benefits the policy offsets;

4. the income percentage the policy covers and any maximum dollar limit;

5. at least one example of how the offset works; and

6. that a person eligible for the group LTD policy who does not want an offset may contact an insurance agent or company for an individual policy.

JKL:df