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Posts Tagged ‘SSA’

Concerns about SSA funding continue–especially for SSDI benefits

Wednesday, August 31st, 2011

SSDI benefits exempt from many creditors, but funding hammered by high, chronic unemployment

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We’ve addressed this before, but with the debt-ceiling debate, US credit downgrade and endless political posturing, it’s probably a good time to once again discuss the financial health of Social Security overall and the SSDI and SSI programs in particular.

Experts warn of shortfalls in retirement and disability benefits

As we’ve written before, Social Security itself has been declared to be OK until about 2036; in other words, if nothing changes between now and then, the fund will be able to pay out only about 75 per cent of scheduled payments. Medicare is in slightly worse shape, but SSDI (Social Security Disability Insurance) will be busted sometime between 2015 to 2018.

SSDI could run dry as early as 2015

According to long Wall Street Journal piece on SSDI payments increasing in Puerto Rico (but also instructive for its good info on the SSDI national status), “The SSDI is set to soon become the first big federal benefit program to run out of cash—and one of the main reasons is U.S. states and territories have a large say in who qualifies for the federally funded program. Without changes, the Social Security retirement fund can survive intact through about 2040 and Medicare through 2029. The disability fund, however, will run dry in four to seven years without federal intervention, government auditors say.”

Applications have risen along with increased unemployment

According to an Aug. 22 account at Politico.com:

The Social Security disability fund is fast running out of money and may not be able to make payments starting in 2017, thanks in part to the bad economy driving claims up over the past decade, The Associated Press reported.

Applications for benefit claims have risen almost 50 percent in the past 10 years, as many people with disabilities are laid off and cannot find new jobs in the difficult job market. And, the AP added, the rush for benefits is causing a major backup for applicants currently waiting to get their cases decided.

The Congressional Budget Office estimates the disability trust fund will be exhausted by 2017 unless Congress acts. If the fund’s balance falls to zero, it cannot pay out full benefits unless the law is altered. And it’s not the only benefit fund that’s nearly insolvent: In 2040, the CBO projects, Social Security’s retirement fund will also be out of cash.

So, the exact years are in question, but the timeframes are roughly equivalent.

One concern: the ‘multiplier effect’

And it’s not only the SSDI direct benefits that add to the bill. From the NYT’s piece, which gives a dollar figure of benefits in Puerto Rico as averaging a “modest” $1,064 a month:

But the program opens up access for recipients to other government programs, multiplying the ultimate cost to taxpayers.

Anyone who spends two years on SSDI qualifies for the Medicare health program, which usually is available only for those 65 years old and older. SSDI recipients tend to remain tethered to the program for years, and the government’s lifetime financial commitment averages $300,000 per person, estimates David Autor, an SSDI expert who teaches at the Massachusetts Institute of Technology. “The system has profound problems,” Mr. Autor said.

SSDI’s financial woes pose a major test for the White House and Congress, which have been reluctant to tackle the budget-busting costs of entitlements.

Analysts who track the program say the only short-term way to save it without raising taxes would be to fold it into the fund that pays Social Security. That would likely force retirees to face benefit cuts two or three years sooner than they otherwise would have done, because SSDI costs would diminish retirement funds.

SS & SSDI fundings have been combined before

Various sources agree that Social Security (retirement) and SSDI (disability payments) were, in fact, temporarily combined in 1994, as a stopgap, emergency measure. What I’ve not understood, yet–although I do get it about the “multipliers–is how can payroll-funded benefits be such a problem?

In other words, if unemployment is the prime factor, i.e. joblessness strains the system via reduced payroll-tax contributions, then why doesn’t the system seem to care more about unemployment?

Weeding out beneficiaries who ‘sneak back to work’

SSI is not funded by payroll deductions but by the general revenue fund. In other words, a work history is not required to qualify. However, it is much more restrictive. According to the AP, a chronic problem–which we’ve reported about–is lack of review that would spot beneficiaries who have gotten work but kept taking benefits:

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.

Delays can leave unpaid bills piled high

Another concern, according this piece at credit.com, is the delay and lag-time in receiving benefits. As mentioned, the influx of applicants from the unemployed adds to the delay. So what shape are beneficiaries in when they finally begin receiving payments?

For many recipients, Social Security Disability Income (SSDI) and/or Supplemental Security Income (SSI) are their financial lifeline. Their more immediate concern may not be what happens in Washington to save the program, but what happens today to the money they receive. I couldn’t find any statistics about how many SSDI and SSI recipients have past-due bills, but if our email is any indication, plenty of them are struggling and getting calls from creditors or debt collectors threatening to take the little income they do get each month. And because it takes so long to get approved for disability these days, applicants may find themselves already in the hole by the time they start receiving benefits.

Benefits not shielded from child support, taxes or student loans

However, there’s a bright spot in that few creditors can successfully come after these benefits. Again from credit.com: “For those who rely on these benefits, the good news is that they are generally protected from creditors and debt collectors. However there are exceptions in the case of past-due child support, past-due taxes, and federal student loans. “ ‘They can chase you (for student loans) to the grave,’ warns bankruptcy attorney Cathy Moran.”

Free evaluation available

Just remember, we can help connect you with a compatible, trained attorney who can help you with your case–if nothing else, it’s possible that an experienced attorney might be able to steer your case toward a more reasonable outcome.

Help is available whether you’re fighting denied or delayed benefits or whether creditors are threatening to attach benefits you’ve already received. Consider signing up for your free evaluation today.

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Take advantage of all resources when researching, planning for disability

Monday, January 31st, 2011

When you enter the world of disability benefits, it’s easy to become confused. The variety of agencies, bureaus and offices; the forms, paperwork, and regulations: together, everything can seem like a maze.

We have a wealth of resources available at this site, plus our blogs often link to useful, informative external sites.

Glossary more useful than one might think

A sometimes overlooked resource is our glossary, where you can find often used terms, perform a glossary search, or browse by alpha-sorted topics. When researching disabilities, symptom or benefits, it’s pretty common to encounter unknown or confusing terms. If that happens, the glossary is a good first place to start because it’s not limited to simple definitions–you can also learn about related items or processes.

SSA rules the benefits world

For anyone needing information on any program or benefits overseen by the Social Security Administration, the obvious starting place is the SSA’s homepage, which has many useful links, such as:

Apply for benefits

Apply for Medicare

Estimate your retirement benefits

Get help with your situation

Strict criteria

However, there are also more specific, targeted pages. Here’s the SSA’s main disability page, including this intro copy:

The Social Security and Supplemental Security Income disability programs are the largest of several Federal programs that provide assistance to people with disabilities. [Although] these two programs are different in many ways, both are administered by the Social Security Administration and only individuals who have a disability and meet medical criteria may qualify for benefits under either program.

Social Security Disability Insurance pays benefits to you and certain members of your family if you are “insured,” meaning that you worked long enough and paid Social Security taxes.

Supplemental Security Income pays benefits based on financial need.

When you apply for either program, we will collect medical and other information from you and make a decision about whether or not you meet Social Security’s definition of disability.

Use the Benefits Eligibility Screening Tool to find out which programs may be able to pay you benefits.

Everyone needs to consider the possibility of disability

The main SSDI page contains this important insight (emphasis added): “Disability is a subject you may read about in the newspaper, but not think of as something that might actually happen to you. But your chances of becoming disabled are probably greater than you realize.

“Studies show that a 20-year-old worker has a 3-in-10 chance of becoming disabled before reaching retirement age.

“[Although] we spend a great deal of time working to succeed in our jobs and careers, few of us think about ensuring that we have a safety net to fall back on should we become disabled . . . .”Another helpful site is that of the CDA, the Council for Disability Awareness. Its “Chances of Disability” page mirrors the language on the SSDI page:

You, disabled? What are your chances?

Higher than you probably think. You can ignore the problem, but it’s hard to ignore the facts:

  • Almost one-third of Americans entering the work force today (3 in 10) will become disabled before they retire.
  • Freak accidents are NOT usually the culprit. Back injuries, cancer, heart disease and other illnesses cause the majority of long-term absences.

Are you prepared if it happens to you? Probably not. If you’re like most Americans, you don’t have disability insurance. Or enough emergency savings to last 2½ years. Yes, that’s the duration of the average long-term disability.

Statistically speaking, disability planning makes sense

The site also has some interesting statistics on this page:

Disability statistics

It happens more often than you’d imagine:

  • Almost one-third of Americans entering the work force today (3 in 10) will become disabled before they retire.
  • Over 51 million Americans – 18% of the population – classify themselves as fully or partially disabled.
  • 8 million disabled wage earners, over 5% of U.S. workers, were receiving Social Security Disability (SSDI) benefits at the conclusion of June, 2010.
  • In June of 2010, there were nearly 2.5 million disabled workers in their 20s, 30s, and 40s receiving SSDI benefits.

Chances of becoming disabled:

The following statistics come from CDA’s PDQ disability risk calculator:

  • A typical female, age 35, 5’4″, 125 pounds, non-smoker, who works mostly an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:
    • A 24% chance of becoming disabled for 3 months or longer during her working career;
      • with a 38% chance that the disability would last 5 years or longer,
      • and with the average disability for someone like her lasting 82 months.
    • If this same person used tobacco and weighed 160 pounds, the risk would increase to a 41% chance of becoming disabled for 3 months or longer.
  • A typical male, age 35, 5’10″, 170 pounds, non-smoker, who works an office job, with some outdoor physical responsibilities, and who leads a healthy lifestyle has the following risks:
    • A 21% chance of becoming disabled for 3 months or longer during his working career;
      • with a 38% chance that the disability would last 5 years or longer,
      • and with the average disability for someone like him lasting 82 months.
    • If this same person used tobacco and weighed 210 pounds, the risk would increase a 45% chance of becoming disabled for 3 months or longer.

It’s really never too early to plan for the future. That includes retirement planning as well as at least considering what we would do in the event of even a short-term disability.

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Disability planning and programs: Part 2

Tuesday, June 29th, 2010

[Continued from here, discussing links and references from this CDA Web page.]

Step 3 is where we get into “the meat” of disability finance:

  • Employer sick pay
  • State benefits
  • Disability insurance benefits
  • Workers comp
  • SSDI/SSI

Employer sick pay, or sick leave, may be generous in one industry, lean in another. At a small company, nothing may be available other than wishes for good luck. Some large and even mid-size companies offer long-term disability policies. Where ever you work, you should learn the specifics of the policy because it may be your first line of defense, even if it runs out long before a health problem is resolved.

According to the Insurance Information Institute, “In some states, such as Hawaii, New Jersey, New York and Rhode Island, state law requires employers to provide disability benefits for up to 26 weeks.” (Don’t confuse this with workers compensation.)

Over at CostHelper.com, we see that “Disability insurance provides income to help pay your living expenses if you are unable to work for a significant length of time because of injury or illness. Generally benefit payments are 60 percent of your total salary.”

The CDA page explains that “[d]isability insurance can be an invaluable lifeline for disabled workers and their families:

  • If your employer offers disability insurance make sure you fully understand what benefits are available to you and how your company’s disability insurance program works.
  • If disability insurance is NOT provided by your employer, it can be purchased individually at affordable rates. Contact your insurance agent for more information.
  • Self-employed individuals can also benefit greatly by having disability insurance. Consult your financial advisor or insurance agent for assistance.”

The CostHelper.com page says to “[e]xpect to pay between 1 percent and 3 percent of your annual salary for a good disability plan, according to DisabilityQuotes.com. That works out to $600-$1,800 for someone earning $60,000 a year.”

Earlier, we cautioned not to confuse state disability benefits (if available) with workers comp benefits. In the usual sense, workers comp addresses workers who are injured on the job. However, if work-related, an illness and subsequent disability may be covered by workers comp, too. As the CDA page says, “After a short waiting period, workers’ compensation generally pays a portion of your former wages or salary. Benefits vary significantly by state and are restricted to a specific maximum and minimum amount.” Here’s a link to programs in each state.

As mentioned in our preceding post, SSDI is a form of  federal “insurance” that workers qualify for by having paid enough funds into Social Security (from paychecks) by working long enough at jobs with employers who make the payments (including self-employed). Here’s the link to the main disability information page of the SSA, including topics such as basic program information, who is eligible, how to apply and so forth.

In your planning, count on at least a six-month wait before receiving SSDI payments.

SSI is not funded by paycheck contributions but by general tax revenue; it provides cash to meet basic needs for food, clothing, and shelter. The program is designed to help aged, blind, and disabled people, who have little or no income and few resources.

Here is a link to the SSA’s page outlining eligibility requirements for SSI.

Here’s the bracing news: If you don’t have access to any of the preceding resources, you’re pretty much left to your own devices and social-family network. For the “average” long-term disability, you’ll need to cobble together some method to make it for 2 1/2 years.

The first fallback position is personal savings. Then you’re looking at such drastic measures as using credit cards, dipping into a mortgage or retirement funds. Here’s how the CDA page lays it out:

  • “Personal savings
    A small percentage of Americans are lucky enough to have savings, investments or other financial resources that can supplement or replace their income during a prolonged disability. The rest of us, unfortunately, are not so lucky. Any disability, especially one lasting more than 90 days, would quickly drain our savings. After all, Americans’ savings rate is at an all-time low. A full 1/3 of Americans have no retirement savings and no pension, according to the Social Security Administration. Talk about stress!
  • “Last Resort” income sources
    If all else fails, you can begin paying expenses with credit cards, get a second mortgage, take out a home equity line of credit, withdraw money from your retirement plan, and ask family and friends for assistance.”

As you can see, maintaining one’s health is the best option. Of course, no one can do that indefinitely, so financial planning is the next priority. If you’re still healthy, look for ways to promote an even healthier lifestyle. Then, begin your financial planning process.

If you or a loved one needs disability help now, you can use the links provided to contact SSA officials or advocates and disability attorneys.

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Applying for disability benefits from the Social Security Administration can be a daunting and frustrating challenge. For more on the basics of disability, SSI, and SSDI, please click here.You will also have the opportunity to click on information about attorneys who can help you and a link for a free case review.

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Disability benefits explained from square one: Part 1

Thursday, June 24th, 2010

OK, we’re going to cover a lot of ground in the next few installments, so let’s start with a quick review of the basics.

The acronyms SSDI and SSI refer to the most well known programs that help people who develop long term disabilities. Both are administered by the Social Security Administration (SSA), and each is notorious for being cumbersome, slow, and difficult for the average person to deal with–which is why many who need disability help turn to professional advocates and attorneys who specialize in the field.

SSDI = Social Security Disability Insurance, which pays benefits to workers (and some family members) who qualify; the basic qualification to receive these insurance payments is that you have:

  1. worked long enough to have paid
  2. enough Social Security taxes through payday deductions

to fund your “insurance account.” In other words, if your work history comprises jobs that did not pay–or pay enough–into Social Security, in most cases you won’t qualify for SSDI.

In that case, however, you may qualify for SSI, which stands for Supplemental Security Income–this program is not based on payments made from jobs but does award benefits based on financial need.

Together these two programs account for the bulk of what most of us consider the disability program for Americans. However, as mentioned, jumping through the hoops can be maddening, and the built-in delays can result in a payments arriving so slowly that the claimant has already died.

For a quick example of how slow the SSA acts, have a gander at its disability front page. As of post time, you can look to the top, upper right of the page and see a link to a press release with the following headline:

Social Security Administration Attacks Disability Backlog

Which sounds like a good thing, right? Well, it is–always good to catch up on a backlog.

But notice the dateline  ===> Tuesday, October 9 , 2007

Shoot, we have more recent, more accurate info right here, toward the end of a May 2010 post in which we discuss delay issues among the various states.

That being said, SSI/SSDI remain the most publicly known disability programs. But they’re not the only alternative.

The Council for Disability Awareness (CDA) is a nonprofit organization that says its purpose is to inform and educate “the American public about the widespread and growing frequency of disability, and the financial impact it can have.”

However, judging from its “members page,” one might infer the group has an interest in selling disability insurance. That being said, however, the Web site does indeed offer a wealth of information.

For one thing, here’s a page about “reducing your chances” of becoming disabled. Pretty standard stuff: wellness tips such as “quit smoking, get regular checkups,” and so forth. Of course, most people don’t think about disability until a family member or they themselves become disabled.

But the statistics suggest that all adults should be aware of at least the basics of disability. For instance, it seems to be a common misperception that “events” cause most disabilities: a car wreck, an accident at work or home, etc..

But according to CDA, which claims to base its figures on the latest available census data and on info from the Centers for Disease Control, the most common causes of disability are injuries or accidents but rather:

  • “Illnesses like cancer, heart attack or diabetes cause the majority of long-term disabilities. Back pain, injuries, and arthritis are also significant causes.
  • “Most are not work-related, and therefore not covered by workers’ compensation.
  • “Lifestyle choices and personal behavior that lead to obesity are becoming major contributing factors.”

Oddly enough, this CDA page is quite contradictory, both in overall tone and in these specific statements (emphasis added):

  • “It strikes like a bolt from the blue: unwanted, unexpected, unwelcome. Unfortunately, many of us are totally unprepared for the financial hit that disability can bring.
  • “Most Americans live paycheck to paycheck. There’s little or no money left for unexpected emergencies like an injury or illness – the primary causes of disability.

Perhaps the intention was to say something like, “unless you injured in an accident or taken with sudden illness, disability can creep up on you, until there’s a sudden realization that your condition leaves you in financial peril.”

At any rate, the CDA’s suggestions are sound as far as how to think about finances in the event of a disability, including:

  • Your sources of income, monthly expenses and lifestyle
  • The impact a long-term disability could have on them
  • Preparing a plan of action to address the crisis

Step 1 is, basically, preparing a budget. (The page has a link to a “calculator” routine.)

Step 2 is to, as may be expected, isolate and trim unnecessary expenses.

Step 3 is where we get into “the meat” of disability finance:

  • Employer sick pay
  • State benefits
  • Disability insurance benefits
  • Workers comp
  • SSDI/SSI

That is where we will continue the discussion in Part 2.

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Applying for disability benefits from the Social Security Administration can be a daunting and frustrating challenge. For more on the basics of disability, SSI, and SSDI, please click here.You will also have the opportunity to click on information about attorneys who can help you and a link for a free case review.

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