Social Security’s Disability Program, OnThe Verge of Insolvency

by Don Azarias
February 16, 2012
According to a recent report by the Associated Press (AP), laid-off workers and aging baby boomers are filing unprecedented number of claims through the Social Security’s disability program. As a result, the financially challenged system is moving closer and closer to the brink of insolvency.
 Applications for disability are up nearly 50 percent over a decade ago due to the large number of disabled people losing their jobs and are unable to find new ones in the midst of the economic downturn that left 7.2 million workers unemployed. The great number of benefit claims is overwhelming the system and causing a growing backlog of applicants and further worsening the precarious financial position of the Social Security disability program.
Based on actuarial calculations, 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 to fund the program. Funding the program, however, won’t make us, taxpayers, feel any better because it would mean more borrowing from creditors, foreign and domestic, resulting in additional debts for the already heavily indebted nation. Also, according to the Social Security trustees’ projection, the retirement fund that seniors and retirees are banking on will run out of funds by 2037. Again, this would mean more debts for the United States in order to ensure the program’s survival. Is it any wonder why the nation’s debt and deficit are deemed unsustainable?
 Political wrangling abounds in Washington, D.C. that has to do with fixing Social Security’s retirement system. Some of the proposals are as follows: reduction of benefits, raising the retirement age, increasing worker and employer contribution and boosting future contributions to name a few.
 But according to the trustees that oversee Social Security, it’s the disability program that is in much worse shape compared to the Social Security retirement program. The trustees are asking for congressional legislation that will effect transfer of funds from the retirement program to the disability program. Of course, that would only provide short-term relief while, at the same time, raiding the funds intended to benefit those hardworking seniors and retirees. It’s like robbing Peter to pay Paul. It really makes me wonder why those knuckleheads in the nation’s capital can’t come up with a more acceptable long term remedy to this persistent problem. They seem to always rely on the so-called ”band-aid solution.” 
 Also, according to the trustees, for this year alone, 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 have no other place to go but take a shot at disability.”
 For the readers’ information, 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. Claims for disability benefits typically increase in a bad economy because many disabled people get laid off and can’t find a new job.
 The most recent government report shows that 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.
 The disability program is in dire need of improvement in order to properly handle the two major issues that have been adversely affecting the way benefit claims are processed. Even though these have been ongoing concerns, the ineptness and incompetence on the part of the Social Security administration prevented these issues from being addressed and rectified: Legitimate applicants often have to wait years to get benefits while many others get payments they don’t deserve. Last year, the Government Accountability Office (GAO), found that $1.4 billion in overpayments were made to disabled people who were no longer qualified under this program. They are, mostly, those people who got jobs and are no longer entitled to receive disability benefits. Let me also add that, even for mega-rich people, like Bill Gates and Warren Buffett, $1.4 billion is no pocket change.   
 The deficit reduction package recently enacted 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 (CBO) estimates that increased enforcement would save nearly $12 billion over the next decade.
 Like the way most of those government agencies operate, the application process can be very unpleasant for legitimate beneficiaries who are applying for the first time. It’s estimated that more than half of initial applications are being rejected and that’s enough to discourage those people from further pursuing their claims. Some of them end up dropping their claims altogether. And for those willing to go through an appeals process that can take several years, there’s a chance they will eventually succeed in receiving their benefits. That’s always the case every time you deal with a federal agency. You are more than likely to encounter government bureaucracy. So, it’s really nothing new. 
 And, once again, we are reminded that the dreaded red tape doesn’t go away. It’s always a part of the governmental process. Honestly, I’m not a bit surprised. Are you?