Long-Term Disability Programs in Selected Countries by Ilene R
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Long-Term Disability Programs in Selected Countries by Ilene R. Zeitzer and Laurel E. Beedon* In 1985, the Social Security Administration commis- sioned an 18-month research project to study disability in eight industrialized countries: Austria, Canada, Finland, the Federal Republic of Germany, Israel, the Netherlands, Sweden, and the United Kingdom. The study focused on three key areas: (1) the initial determination of disability, (2) the methods of monitoring disability, and (3) the incen- tives to return to work. Although the study revealed great variations among the countries in the definition of long- term disability, the approach followed in providing benefits, and the organization and features of the pro- grams, some basic similiarities were also found. Among the similarities are: (1) most countries have several income- maintenance programs to protect workers in the event that they are disabled, and (2) the disability test to determine whether a person is eligible for a disability benefit is am- biguous in that the various programs each have different eligibility criteria, different definitions of disability, differ- ent considerations given to labor-market conditions, and so forth. This article examines the diversity among the coun- tries and attempts to highlight unique approaches to ad- judicating disability, providing linkages to rehabilitation, and creating incentives for returning to work. This article compares key features of social security Overview long-term disability programs in eight industrialized countries.’ The countries whose program features are Most of the countries in the study have three public surveyed are: Austria, Canada, Finland, the Federal income-maintenance programs to protect workers in Republic of Germany, Israel, the Netherlands, case of disability. The three programs, generally ad- Sweden, and the United Kingdom. These countries ministered on the basis of different legislation and have long-term disability programs that provide exam- criteria, and sometimes including different definitions ples of the major forms of this protection worldwide. of disability, are: (1) cash-sickness benefits for short- A chart highlighting the chief characteristics in the term illness or injury, (2) disability pensions for long- countries studied is included as Appendix I. term illness or injury,2 and (3) work-injury benefits for illness or injury that either occurs at the work- place or during a normal workday or is a result of *Ms. Zeitzer is with the Office of International Policy, Office of the work environment. The Dutch eliminated the Policy, Social Security Administration. Ms. Beedon was formerly work-injury program, and thus make no distinction with the External Liaison Staff, Office of Governmental Affairs, between an injury or illness that is work related and Social Security Administration. ‘The information in this article is based on the findings that one that is not work related. Income loss caused by resulted from a Social Security Administration funded research injury or illness is covered by the cash sickness or project conducted by Rehabilitation International in 1985-86. Coun- try experts obtained the questionnaire responses; the Bureau of Economic Research, Rutgers University, computerized the data and completed the analysis under the direction of Dr. Monroe *In most foreign social security programs, the term “invalidity Berkowitz. pension” is used instead of “long-term disability pension!’ 8 Social Security Bulletin, September 19870’01. 50, No. 9 long-term disability pension programs in the the countries that have universal programs, a portion Netherlands. of the funding for the program comes from employ- Furthermore, most countries also provide means- ers’ contributions, although, in most cases, the major tested benefits to disabled persons, whether or not part of the funding comes from general revenues. they are in covered employment, when individual or Earnings-related systems base eligibility for a disa- family resources are determined administratively to be bility pension directly or indirectly on length of inadequate to meet subsistence or special needs. In covered employment; the amount of the pension is addition to the three national income-maintenance usually related to periods of covered employment as programs for those with disabilities, separate systems well as to the level of the worker’s earnings before on- may exist for specialized occupations such as mining, set of illness or injury. These programs are financed seafaring, railroading, public employment, agriculture, primarily from compulsory payroll contributions-by and to cover the self-employed. These separate sys- employers, workers, or both. tems may provide protection based on each system’s In most of the countries studied, the government definitions and criteria for evaluating incapacity. This also contributes toward financing the disability pen- article does not deal with these means-tested or work- sion program. In some cases, this government contri- injury programs or with special systems, but instead bution is a specific percentage of program costs; in concentrates on the programs that provide long-term others, the government makes up any program deficit; disability benefits for the majority of the populations. and, in still others, it pays for coverage of specific In addition to the disability pensions themselves, population groups who otherwise would not be most of the eight countries studied also provide a insured. range of supplementary benefits and allowances to The countries included in this study exemplify the enable a disabled or handicapped individual to cope following approaches: more easily with everyday life. The nature of these supplementary benefits varies greatly from country to l Universal disability pension programs with country, as do the requirements for eligibility. Often, earnings-related components (Finland, the however, entitlement to these benefits or allowances is Netherlands, and Sweden). determined regardless of the individual’s eligibility for l Earnings-related disability pension programs a disability pension. In other words, the effect of the (Austria, Canada, Israel, the Federal Republic of disabling condition on the individual’s ability to func- Germany, and the United Kingdom). tion is assessedapart from the question of capacity to earn. Some of these additional benefits are explored Concepts of disability vary greatly from country to in more detail where appropriate, but some examples country and even within a country, depending on the include mobility benefits, attendance allowances, and specific programs. Because several of the countries benefits for disabled children. have more than one disability program applicable to different segments of their population or for different degrees of disablement, a brief description is provided Types of Long-Term Disability below concerning the programs discussed in this Pension Coverage study. For the most part, however, the analyses in this study are limited to disability that results from In terms of disability pension coverage, two broad nonwork-connected impairments (except for the approaches are identifiable among the various Netherlands, where no distinction is made) covered methods used to provide cash benefits during periods under the country’s general earnings-related social of long-term illness or injury. The first approach-a security system. (In countries with a two-tiered pro- universal program-provides a disability benefit to all gram, the first-tier data are also given where ap- qualified residents and supplements to their dependents propriate.) regardless of employment status. The second approach-an earnings-related social insurance Austria program-provides a disability benefit to qualified workers and supplements to their dependents. Under The pension insurance system in Austria is divided both types of programs, those qualified can claim into two programs. The first provides Occupational benefits as a matter of right. Typically, social security Incapacity benefits to “white-collar” employees, and systems with a universal disability pension program the second provides Invalidity Pensions to “blue- also have a second-tier earnings-related program. collar” workers. The two programs are essentially Universal programs provide flat-rate cash benefits parallel in that the person’s ability to earn must be to qualified disabled residents or citizens without reduced to less than half that of a nondisabled person respect to income, employment, or assets. In some of with similar training, knowledge, and capabilities. Social Security Bulletin, September 1987/Vol. 50, No. 9 Canada disability. The benefit (paid in addition to the flat- The Canada Pension Plan is the national social rate benefit to those who qualify) is income-related security program (except in the province of Quebec, and based on previous earnings and degree of disabil- which provides benefits under the comparable Quebec ity. For both the GDIA and the DIA, the degree of Pension Plan) that covers all previously employed in- disability is determined by the individual’s reduced dividuals aged 18-65 who become totally incapable of earnings capacity. work because of a disability that is likely to be of long duration or result in death. Sweden In Sweden, a basic (flat-rate) benefit is payable on Finland a universal basis to persons aged 16-64 whose work In Finland, The National Invalidity Pension pro- capacity has been reduced at least 50 percent, regard- gram provides a