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SSD Insolvency?

Posted by Louis B. Lusk | May 28, 2013 | 0 Comments

SSD Insolvency?

Social Security Disability has not always been a part of the Social Security plan. In 1954, Congress enacted the first disability program under the Social Security Act. In 1956, Congress provided for monthly disability benefits for eligible disabled workers between the ages of 50 and 65. This act also included benefits “for disabled dependent children of a retired or deceased insured worker if the child was disabled before he attained the age of 18.” Also included in the 1956 Amendments was a provision to establish a separate trust fund for disability payments. We have been bombarded by news that the Old-Age and Survivors Insurance (OASI) Trust Fund will be depleted by the 2035. On May 23, 2013, the National Academy of Social Insurance (NASI) issued a report that the Disability Insurance Trust Fund is on its way to being depleted by 2016. The report states 8.8 million workers, 1.9 million of their dependent children, and 0.2 million spouses of disabled workers received SSD benefits in January 2013. The average disabled worker collects about $13,560 a year in benefits while the average disabled worker with dependent children collects about $20,820 per year. For most individuals, this accounts for almost all of their income. The NASI determined that with the current funding allocation to the Disability Insurance Trust Fund, the fund will pay full benefits until 2016. After that, with just the incoming tax allocation, benefits will be reduced to about 80 percent of the scheduled benefits. How did we get here? The number of individuals receiving SSD benefits has risen over the past two decades from 5.2 million to 11.7 million by the end of 2011. There are a variety of reasons for this huge increase. One is that baby boomers are aging and therefore more prone to accidents leading to disability. A second reason 24/7 Wall St. gives is that more women entered the work force in the 1970's and 1980's thereby increasing the total number of workers eligible for SSD. But this article points to high poverty rates with few job opportunities leading to increased enrollment in SSD. But these aren't the only reasons for the increase in SSD rolls and the impending Disability Insurance Trust Fund insolvency. In 1998, the federal government shifted greater financial responsibility onto the states for welfare reform. This encouraged states to get people off of welfare rolls and into the workforce. And in few years, many people were off the welfare rolls. An economist at the San Francisco Federal Reserve looked at the fall in welfare rolls, as well as the increase in disability enrollment. The economist found that states were hiring companies to go through welfare rolls and identify individuals that could possibly qualify for SSD. What can we do? The NASI recommends that Congress reallocate part of the OASI trust fund tax into the Disability Insurance Trust Fund so that both funds can pay full benefits until 2033. Another possible solution is “a 0.2% increase in the tax rate for DI would make DI solvent for the next 75 years.” If you have questions about SSD you already receive or need assistance in applying for SSD, contact our experienced disability attorney. See Related Posts: Social Security Disability, Mental Disorders, and New Classifications How Will Obama's Budget Proposal Effect Social Security?

About the Author

Louis B. Lusk

About Louis B. Lusk – Disability Attorney Attorney Louis B. Lusk has helped thousands of disabled individuals recover Social Security disability and SSI disability benefits.  He is an active member of the National Organization of Social Security Claimant's Representatives (NOSSCR), an organizat...

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If you have been turned down for Social Security disability call me at 1 (800) 501-5416.  I look forward to hearing from you.

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