SOCIAL SECURITY DISABILITY HEADED FOR INSOLVENCY?

While most of the discussion regarding Social Security insolvency has been about the retirement program, recent Congressional budget estimates have the disability trust fund reaching insolvency in 2017. Full benefits will not be payable at that point. The retirement trust fund, which is separate, won’t reach insolvency until 20 years later.

The culprits are several, including the aging of the Baby-Boomer generation and the persistent recession. Those with disabilities who are working often resort to Social Security when laid off. This year about 3.3 million people are expected to apply for disability, which is 700,000 more than in 2008.

Last year Social Security detected $1.4 billion in overpayments, most to recipients who got jobs or died. Sometimes relatives continue cashing checks.

One possible remedy is stepped-up efforts at collecting overpayments. By increasing the budget for enforcement it is estimated that $12 billion could be saved over 10 years.

Senator Tom Coburn (R-OK) has developed a comprehensive plan entitled Back To Black that would theoretically get the disability back on its feet but contains many controversial changes.

Senator Coburn’s plan includes stepped up fraud investigations, increased continuing disability reviews, eliminating the medical improvement standard on CDRs, eliminating the Reconsideration stage (Michigan hasn’t had the Reconsideration stage for years), having government “representatives” at ALJ hearings to argue against the Claimant, and imposing a time limit for benefits where medical improvement is expected.

One proposed change is similar to the gradual increase in the retirement age. Social Security uses the Medical-Vocational Guidelines (known as the “grids”) to evaluate the claims of those aged 50 or older. Up until age 50 a claimant must be disabled from all work. It gets easier to get benefits at 50 (Closely Approaching Advanced Age), easier again at 55 (Advanced Age), and easier still at 60 (Closely Approaching Retirement Age).

The Coburn plan would bump Closely Approaching Advanced Age to 58, Advanced Age to 61 and eliminate the Closely Approaching Retirement Age category entirely.