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Social Security disability on verge of insolvency

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WASHINGTON (AP) — 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.

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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.

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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.

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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.

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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.

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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.

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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.

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“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,”

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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.

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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.

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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.

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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.

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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.”

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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.

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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.

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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.

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Congress is targeting overpayments.

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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.

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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.

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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.

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“It’s ludicrous to say that the backlog problem is getting worse,”

Astrue said. “The backlog problem has gotten dramatically

better.”

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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.

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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.

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“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.”

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Online:

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Federal disability programs: 

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“-blank”>www.ssa.gov/disability/

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Congressional Budget Office projections: 

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“http://www.cbo.gov/doc.cfm?index=12375” target=

“-blank”>www.cbo.gov/doc.cfm?index12375

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Government Accountability Office report: 

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“http://www.gao.gov/products/GAO-11-724” target=

“-blank”>www.gao.gov/products/GAO-11-724

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