Social Security disability program nearly insolvent

Laid-off workers and aging baby boomers are flooding Social Security‘s disability program with benefit claims, pushing the financially strapped system toward the brink of insolvency.

Applications are up nearly 50 percent over a decade ago as people with disabilities lose their jobs and can’t find new ones in an economy that has shed nearly 7 million jobs.

The stampede for benefits is adding to a growing backlog of applicants — many wait two years or more before their cases are resolved — and worsening the financial problems of a program that’s been running in the red for years.

New congressional estimates say the trust fund that supports Social Security disability will run out of money by 2017, leaving the program unable to pay full benefits, unless Congress acts. About two decades later, Social Security’s much larger retirement fund is projected to run dry as well.

Much of the focus in Washington has been on fixing Social Security’s retirement system. Proposals range from raising the retirement age to means-testing benefits for wealthy retirees. But the disability system is in much worse shape and its problems defy easy solutions.

The trustees who oversee Social Security are urging Congress to shore up the disability system by reallocating money from the retirement program, just as lawmakers did in 1994. That would provide only short-term relief at the expense of weakening the retirement program.

Claims for disability benefits typically increase in a bad economy because many disabled people get laid off and can’t find a new job. This year, about 3.3 million people are expected to apply for federal disability benefits. That’s 700,000 more than in 2008 and 1 million more than a decade ago.

“It’s primarily economic desperation,” Social Security Commissioner Michael Astrue said in an interview. “People on the margins who get bad news in terms of a layoff and have no other place to go and they take a shot at disability,”

The disability program is also being hit by an aging population — disability rates rise as people get older — as well as a system that encourages people to apply for more generous disability benefits rather than waiting until they qualify for retirement.

Retirees can get full Social Security benefits at age 66, a threshold gradually rising to 67. Early retirees can get reduced benefits at 62. However, if you qualify for disability, you can get full benefits, based on your work history, even before 62.

Also, people who qualify for Social Security disability automatically get Medicare after two years, even if they are younger than 65, the age when other retirees qualify for the government-run health insurance program.

Congress tried to rein in the disability program in the late 1970s by making it tougher to qualify. The number of people receiving benefits declined for a few years, even during a recession in the early 1980s. Congress, however, reversed course and loosened the criteria, and the rolls were growing again by 1984.

The disability program “got into trouble first because of liberalization of eligibility standards in the 1980s,” said Charles Blahous, one of the public trustees who oversee Social Security. “Then it got another shove into bigger trouble during the recent recession.”

Today, about 13.6 million people receive disability benefits through Social Security or Supplemental Security Income. Social Security is for people with substantial work histories, and monthly disability payments average $927. Supplemental Security Income does not require a work history but it has strict limits on income and assets. Monthly SSI payments average $500.

As policymakers work to improve the disability system, they are faced with two major issues: Legitimate applicants often have to wait years to get benefits while many others get payments they don’t deserve.

Last year, Social Security detected $1.4 billion in overpayments to disability beneficiaries, mostly to people who got jobs and no longer qualified, according to a recent report by the Government Accountability Office, the investigative arm of Congress.

Congress is targeting overpayments.

The deficit reduction package enacted this month would allow Congress to boost Social Security’s budget by about $4 billion over the next decade to invest in programs that identify people who no longer qualify for disability benefits. The Congressional Budget Office estimates that increased enforcement would save nearly $12 billion over the next decade.

At the same time, the application process can be a nightmare for legitimate applicants. About two-thirds of initial applications are rejected. Most of these people drop their claims, but for those willing go through an appeals process that can take two years or more, chances are good they eventually will get benefits.

Astrue has pledged to reduce processing times for applicants’ appeals, and he has had some success, even as the number of claims skyrockets. The number of people waiting for decisions has increased, but their wait times are going down.

“It’s ludicrous to say that the backlog problem is getting worse,” Astrue said. “The backlog problem has gotten dramatically better.”

Patricia L. Foster said she was working as a nurse in a hospital in Columbia, S.C., in 2005 when she was attacked by a patient who was suffering from a mental illness. Foster, 64, said she injured her neck so bad she had a plate inserted. She said she also suffers from post-traumatic stress disorder.

Foster was turned down twice for Social Security disability benefits before finally getting them in 2009, after hiring an Illinois-based company, Allsup, to represent her. She said she was awarded retroactive benefits, though the process was demeaning.

“I have to tell you, when you’re told you cannot return to nursing because of your disability, you don’t know how long I cried about that,” Foster said. “And then Social Security says, ‘Oh no, you don’t qualify.’ You don’t know what that does to you emotionally. You have no idea.”

___

Online:

Federal disability programs: www.ssa.gov/disability/

Congressional Budget Office projections: www.cbo.gov/doc.cfm?index=12375

Government Accountability Office report: www.gao.gov/products/GAO-11-724

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7 Responses to "Social Security disability program nearly insolvent"

  1. woody188  August 22, 2011 at 1:51 pm

    This is why ponzi schemes are illegal. Those coming in late to the scheme get screwed, particularly when those running the scheme have been dipping into the pot to fund their pet projects.

    My wife and I were discussing Social Security, we are both in our thirties. We decided the only reason we pay it is so our parents can live by themselves with some dignity as we know we likely won’t receive a dime of what we have paid into the scheme. Full faith and credit, obviously I have very little of either for our government.

    • Bill Cravener  August 22, 2011 at 3:26 pm

      “we are both in our thirties. We decided the only reason we pay it is so our parents can live by themselves with some dignity as we know we likely won’t receive a dime of what we have paid into the scheme.”

      Funny! My generation (I’m 60) said the same thing about our parents. My parents by the way both died young and never got to receive a penny of SS.

    • Carl Nemo **==  August 22, 2011 at 5:50 pm

      My suggestion Woody is become Amish or a Mennonite then you can opt out of paying SS or start your own ministry which is feasible too. Get some minister’s certification off the web, no different than phony degrees and start holding services in your home or an outbuilding (church), then jettison the SS system from your lives. Check it out. It takes some chutzpah, but is doable. : )

      Carl Nemo **==

      • woody188  August 22, 2011 at 11:26 pm

        Too honest to try something like that buddy. I love horses and farming, but I wouldn’t want to travel in a buggy!

        Besides, then I couldn’t go online and bother all you fine people with my paranoia. :)

        • Carl Nemo  August 23, 2011 at 12:37 am

          Then you could start the “First Church of the Apocalypse” only using the ravings of John from the “Book of Revelations” as your Sunday ‘go to meetin’ primer. Believe it or not you’d probably have a pole-building ‘church’ packed with donatin’ members. :D

          A preacherman can get a lot of ‘fear mileage’ with only this single biblical work.

          http://en.wikipedia.org/wiki/Apocalypse

          Cost benefit: Not paying SS plus ‘church’ donations

          Carl Nemo **==

  2. Walter Wouk  August 22, 2011 at 4:43 pm

    SSA is understaffed and overworked. Despite this fact, SSA management has adopted a policy that requires claims representative to take Federal Welfare (Supplemental Security Income) applications from all applicants for Social Security Disability Benefits — even if they are clearly ineligible.

    SSA does this to artificially inflate their claims processing times. For example, an SSI disability claim that is denied in one day because of excess income still gets counted as a bona fide disability claim when SSA computes its overall processing time. Some SSA personnel have created bogus claims in order to improve processing time statistics.

    According to Witold Skwierczynski, the President of the National Council of SSA Field Operations Locals, in June 2009, the Manager of the Independence, Missouri Social Security Office became concerned when he realized that his office would not meet his quota of SSI claims for the month, so he checked the agency’s computer system to find out who had filed for Social Security Disability, but not SSI. He then manufactured 38 bogus SSI claims by answering questions on the applications without contacting the applicants.

    SSA’s policy of requiring Claims Reps to take bogus SSI claims is a waste of tax-payer dollars and it often delays the payment of past-due SSD benefits due to claimants who are awarded SSD benefits.

    FYI: I am a former SSA Claims Representative.

  3. rick  August 23, 2011 at 12:38 pm

    And just put a lock on “funny money” and that will help. Nothing like six bills a month for a kid with ADHD.

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