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Senate advances bill to bar disability-insurance offsets, citing consumer protection
Summary
Senate Bill 157 would prohibit insurers from reducing private disability income benefits by Social Security payments; sponsors framed it as protecting consumers who buy a fixed benefit, while critics warned it could affect premium pricing. The bill passed to third reading, 19–5 (5 absent).
A Utah Senate bill that would prevent disability insurers from offsetting Social Security disability payments against privately purchased disability income policies advanced to third reading on Feb. 12, 1992.
The sponsor described a constituent who bought a $2,000-a-month disability policy but, after being awarded Social Security disability, received only $1,300 because the insurer subtracted $700 in Social Security benefits. "If you buy $2,000 worth of insurance, you get $2,000 of insurance," the sponsor said, arguing the change would create a level playing field among insurers and require clearer notice for consumers.
Supporters framed SB 157 as a consumer-protection measure to prevent surprise reductions in benefits and to ensure that companies that advertise full benefit amounts are not undercut by competitors who take offsets. The sponsor proposed alternatives such as bold disclosures on policy forms or a signed acknowledgment at purchase if offsets apply.
Opponents, including Senator Richards, said insurers already price policies to reflect offsets and warned that banning offsets could raise premiums for consumers by shifting covered risk into higher rates. Senator Levitt and others raised a related policy concern: disability pay structures are typically limited so that benefits do not exceed a worker's prior salary, with common limits cited in debate at 65–90% of wages.
The Senate called the roll on SB 157. The clerk reported the result as 19 ayes, 5 nays and 5 absent; the bill was advanced to the third-reading calendar. The sponsor said the change would be prospective and not retroactive.
