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Solving the disability shortfall

By Jennie L. Phipps · Bankrate.com
Wednesday, May 29, 2013
Posted: 11 am ET

Social Security Disability Insurance is expected to exhaust its fund reserves by 2016. After that, payroll tax revenues would only cover about 80 percent of promised benefits, according to data from the Social Security Administration analyzed by the National Academy of Social Insurance, or NASI.

To prevent this from happening, the NASI, a nonpartisan think tank studying social insurance risk, suggests that a greater percentage of the payroll tax be used to pay Social Security disability and less used for Social Security retirement benefits.

Right now, of the 6.2 percent of earnings that workers and employers each pay for Social Security, 5.3 percent goes to the Old-Age and Survivors Insurance Trust Fund, and the remaining 0.9 percent goes to the disability insurance trust fund. An additional 0.2 percent contribution annually pulled from the retirement pool and deposited in the disability pot would make disability insurance solvent for 75 years, the academy says.

The change also would reduce the solvency of the retirement program by two years from 2035 to 2033, when the retirement program would only be able to cover 75 percent of benefits if nothing is done to shore it up.

Virginia Reno, vice president for income security at NASI, says that previously the percentage of taxes allocated to disability insurance has been altered 11 times without controversy. This time, some people think such a change deserves a second look.

Critics of the disability insurance program say some disability insurance recipients don't need it. They point to the increase in claimants since the economy soured in 2008 and suggest that more people are applying for disability because they can't get a job. Reno says these critics are misinterpreting the numbers.

"Some people can work despite extraordinary odds against them in terms of their physical health because they have a good support system. If they lose that job, their prospects for finding another are very poor. A bad economy works against people with disadvantages," she says.

A report in 2009 from the National Bureau of Economic Research, a competing nonpartisan think tank, blames the increase in the number of people receiving disability on the relaxation of rules during the Reagan administration, which placed more emphasis on an applicant's pain -- something that's hard to quantify -- and also made it easier to qualify because of mental disorders. This report calls for re-tightening qualification standards.

It's a tough retirement planning dilemma. Few of us are interested in booting the truly handicapped off the disability rolls, but siphoning money from the retirement program, which is already underfunded, doesn't seem like a very good idea either.

What do you think?

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6 Comments
dave
April 22, 2014 at 12:01 am

i am disabled with back problems, if i take enough pills for pain i can work 4 5 hours a day if not a lot of bending or lifting, i am trying to get off of ssd but how i am 57 will need to go to school again. one day i hope to be off of it because i can not live on it not enough money

Powerdawg
June 21, 2013 at 11:33 am

I agree with the comment below about having a serious audit of who is truly disabled and is receiving these benefits that are capsizing SS. The amount of people claiming disabilities is staggering and is not what the system was set up to help. Just because your hemorrhoids cause you pain when you sit in a desk chair does not mean you are disabled. The whole system is infested with fraud and there needs to be a push to find the people and the doctors who sign off on these bogus disabilities and put them behind bars and sell off their belongings to pay back the taxpayer. If we continue to look the other way while leeches suck the money out of the system, the entire Social Security program will default. The same goes for Medicare and every other government entitlement program that rewards failure and punishes success.

S Bright
June 12, 2013 at 2:34 pm

My husband started collecting Social Security Disability when he was in his 60s. (Lung cancer). He is now 70. Is he considered collecting Disability or regular Social Benefits now?

btwt
May 31, 2013 at 4:47 pm

thank you for raising this issue. The current rage against disabled people only focuses on one side, can the person do a job. Most the time, the answer is yes they can do a job and usually a good quality one at that. The other side of that question is will an employer hire a disabled person. The answer is usually no unless the person is in the wheelchair because the wheelchair gives them opportunities for good photo ops.

I've been disabled for 20 years. I have been refused employment because my physical disability somehow keeps my mind from thinking technical thoughts. Even though I am still working, my disability has eaten away at my savings and I am getting by versus being highly paid pre disability. I have been denied employment because my accessibility needs would be "disruptive" to an open office environment.

from what I can see, there is no good reason why an employer should hire disabled person when they can get a not disabled person for less money and less disruption to the work force.

Social Security's disability should be fully funded because it's not that disabled people can't work, it's that, as a rule, companies will not disabled people.

SUNRISE
May 31, 2013 at 3:06 pm

I would like Social Security audit who is "truly disabled". I also think it should be a Public Record of who is collecting SS Disability and who is collecting SSI. After all this is taxpayer dollars going to pay these claims. There should be transparency, and the taxpayers should be able to report fraud. The main confusion is that some people collect SSI and Social Security Disability. I find it hard to believe that some with ADD/HD is collecting Disability, when they are actually collecting SSI. If someone is collecting Disability with ADD/HD, there is something wrong with Social Security. You cannot say the recipient cannot work any type of work.

Social Security Disability Insurance
May 30, 2013 at 4:01 am

I would like to thanks for submitting this nice information inside your post here.