1. Purpose. The purpose of this Regulation is to prohibit insurers
from including an offset of increased social security benefits in group
disability income policies. While there may be justification from a rate
standpoint for permitting integration of disability income benefits and social
security benefits in determining the initial disability income payment to a
disabled person, there is no justification for offsetting increases in social
security benefits that occur after the disability commences. When Congress
increases social security benefits to disabled persons it is to provide the
disabled persons with additional income regardless of any other income or
insurance benefits payable to such persons. Accordingly, to permit such an
offset would nullify the purpose of the social security legislation and would
result in an inequity which is contrary to the expectations of the disabled
Section 2. Applicability.
This Regulation shall apply to all group disability income policies delivered
or issued for delivery in this State after the effective date hereof; and to
existing group policies on the renewal anniversary date.
Section 3. Prohibition. No group disability
income policy which integrates benefits with social security benefits shall
provide that the amount of any disability benefit actually being paid to the
disabled person shall be reduced by changes in the level of social security
benefits resulting either from changes in the social security law or due to
cost of living adjustments which become effective after the first day for which
disability benefits become payable.
4. Effective Date. This Regulation shall take effect 120 days
after it has been filed with the Secretary of State.