Friday, November 15, 2013

Study on Social Security Disability Insurance (SSDI) 2013

This post was excepted from a brief prepared for the Urban Institute. The study was funded by a grant from the Ford Foundation. It was researched by Melissa Favreault and Karen Smith under contract to the Social Security Administration. For more detailed information, charts, sources, sub-notes, acknowledgments and other credits read the full 12-page report here (PDF). This post was edited with excerpts from the Social Security Administration's website. Henceforth, "DI" means disability insurance, as in SSDI (Social Security Disability Insurance) and not SSI (Supplemental Security Income). SSDI is paid for from payroll taxes, whereas, SSI is paid for from the general fund.

From the updated brief from the Urban Institute:

  • DI beneficiaries tend to be older than the general population.
  • DI payments account for the majority of family income for nearly half of all beneficiaries and more than two-thirds of unmarried beneficiaries.
  • DI benefit checks are modest and, on average, replace no more than half of what beneficiaries earned before they entered the program.
  • DI beneficiaries fall well below the average for non-disabled Americans, many live in poverty.
  • DI beneficiaries are insured only if they have worked in Social Security–covered jobs for 10 years with earnings received in about 5 of the past 10 years.
  • Men 55 to 64 are most likely to make a DI claim (because men are more likely to work, and in more labor-intensive jobs, and have worked longer).
  • About four-fifths (79 percent) of adults ages 25 to 59 were insured by DI.

Insured workers may file for benefits if they have a physical or mental impairment that prevents them from engaging in substantial gainful activity * (In 2013, workers are considered to engage in "substantial gainful activity" if they earn at least $1,040 per month.)

* Substantial gainful activity: Applicants must demonstrate that they are unable to engage in any meaningful paid work given their education and experience, not merely the type of work they did before their disability began. Musculoskeletal and mental disorders are the two most common impairments among DI beneficiaries. Some people may have dual impairments (more on that later).

If someone is eventually awarded on their DI claim (which could take years), DI benefits may not begin until five months after disability onset.

Editor's Note: It's unclear what "onset" means; when a DI claim is first filed with the SSA, or when one is first treated by a medical professional for a disability, or when one first believes they became unable to work? Let me know (and I'll update this post.)

DI beneficiaries are also eligible for Medicare health benefits after a two-year waiting period from the date of entitlement.

Editor's Note: Does Medicare eligibly begin 2 years from the date when the DI entitlement was actually awarded by the SSA? Or 2 years after the claim was first filed with the SSA? Let me know (and I'll update this post.)

When DI beneficiaries reach their full retirement age—66 for those now entering retirement (but slated to increase to 67 for those born in 1960 and later) DI benefits convert to retired worker benefits.

Editor's Note: After DI benefits are converted to regular SS benefits, is it for the same previous DI benefit amount? Let me know (and I'll update this post.)

Workers with limited education are much more likely to receive DI benefits than their better-educated counterparts. At ages 60 to 64, for example, almost a quarter (22.6 percent) of adults who did not complete high school collected DI benefits. Adults with relatively little schooling are more likely to work at highly physically demanding jobs, and thus less likely to remain in the labor force after they develop disabilities.

DI’s Disability Screen - The SSA's disability screen explicitly accounts for the applicant’s education, recognizing that less-educated workers with health problems have more limited employment prospects than their better-educated counterparts (Code of Federal Regulations 2012; Hu et al.2001)

From the SSA - "For the purpose of the vocational grid, SSA divides educational level into four categories: 1) Illiterate or unable to communicate in English, 2) limited education or less, 3) high school graduate or more, 4) recent education that trained the applicant for a skilled job. Assessment of previous relevant work experience leads to the categories of unskilled, semiskilled, and skilled. Finally, the determination process takes into account whether the skills the applicant learned from a past job can be transferred to a new, similar position."

From the SSA: "Once vocational considerations such as RFC (residual functional capacity), relevant past work experience, and transferable skills are criteria in the determination process, the decision becomes increasingly complex. For these reasons alone, one would expect some degree of heterogeneity (concepts relating to the uniformity) in disability outcomes."

From Disability Secrets (If any mental disabilities are considered) "A mental RFC form, completed by a DDS psychologist or psychiatrist (done by a doctor on behalf of the SSA), will make reference to a claimant's mental symptoms (for example, poor memory, decreased energy, illogical thinking, and so on). The mental RFC will also indicate a claimant's ability to persist in the areas of concentration and attention, as well as a claimant's ability to interact socially in work settings, assimilate new information, and successfully engage in SRRTs (simple, routine, repetitive tasks). Unfortunately, RFC forms completed by DDS doctors are rarely of any benefit to claimants. At DDS, RFC forms are used to facilitate denials significantly more often than approvals. That's why it's important to get your treating doctor to fill out an RFC form you."

In December 2011, monthly DI benefits averaged $1,399 for men and $1,078 for women. But overall, slightly more than half of all beneficiaries received no more than $1,050 per month. (About half of men received monthly benefits that did not exceed $1,200 --- whereas, 9 percent of men received benefits in excess of $2,000 per month.)

A fifth of all beneficiaries relied on DI benefits for nearly all (90 percent or more) of their incomes. Unmarried beneficiaries, who made up just under half (48 percent) of the beneficiary population ages, depended much more on the program than their married counterparts, many of whom counted on spousal earnings for additional financial support.

For both DI beneficiaries and non-beneficiaries, poverty rates are much higher for unmarried adults, who cannot rely on spousal income, than married adults. Nearly three in five young unmarried DI beneficiaries (57 percent) lived in or near poverty.

Many working-age Americans with serious health problems do not receive DI benefits. Poverty and near-poverty rates are quite high among those who report significant disabilities but are not receiving DI benefits. Indeed , their poverty rates were substantially higher than those for DI beneficiaries who had been receiving program benefits for at least five years.

Other evidence of the financial hardships faced by DI beneficiaries abounds. They are about twice as likely as non-beneficiaries to report that they cannot meet essential expenses.

DI beneficiaries are also about twice as likely to report being unable to afford to see a doctor or dentist, having trouble with utility bills, or having trouble with rent or mortgage payments. They are about three times more likely to report food insecurity (defined as not having enough to eat sometimes or often) than those not receiving DI benefits.

Benefits account for virtually all of the income received by a fifth of beneficiaries. The program is even more important for unmarried beneficiaries, about a third of whom receive nearly all of their income from DI.

The program is not particularly generous, however, and many beneficiaries face financial hardship. Average family incomes are only about half as large for DI beneficiaries as non-beneficiaries, and DI beneficiaries are twice as likely to live in poverty or near poverty.

Possible reasons why DI benefits has grown: population aging; ongoing increases in the full retirement age, musculoskeletal and mental impairments account for an increasing share of DI awards; deteriorating job prospects for less-educated workers; and lower mortality rates. Also, because of the reductions in Continuing Disability Reviews (CDRs), which verify whether beneficiaries are still unable to work --- so fewer beneficiaries are dropped from the disability rolls (called SSDI "terminations").

Editor's Note: Net recipients on disability (awards minus terminations) is up about 1 million since 2008. From SSA: "Various sources of data suggests that [DI] application rates [claims, not awards] increase with labor market shocks. Higher unemployment reduces the opportunity cost of applying for marginally qualifying individuals...application rates are expected to rise in response to a labor market shock....The increase in marginally qualified applicants is anticipated to produce a decline in allowance rates, as those filers have a harder time qualifying through the determination process."

The DI program has been plagued by administrative problems, especially a long application backlog. Applicants who are initially denied benefits may appeal and request hearings before administrative law judges and Social Security’s Appeals Council. The wait for such hearings is longer than a year in some parts of the country (but in many cases, up to 3 years or longer when going through the appeal process.) The backlog may worsen as federal budget pressures limit funding for SSA.

How medical-vocational guidelines vary by age, occupation, and impairment type is another important issue, including how they should treat multiple impairments (such as anxiety or depression and degenerative arthritis) that may not individually meet the stated guidelines, but cumulatively, may impair work ability as much as those impairments that are enumerated in the SSA guidelines. Some evidence suggests that the existing DI determination process may disadvantage those with multiple impairments relative to those with single impairments.

Finally, the overall Social Security retirement program faces a long-term financing deficit. The combined retirement and disability system has been paying more in benefits than it collects in taxes, and that funding gap is projected to continue under current rules until the trust fund that makes up the difference runs out in 2033 (about 20 years from the date of this post). After that, Social Security will be able to fund only about three-quarters of scheduled retiree benefits.

But, the accounting is more pressing in the short run for DI, whose trust fund is projected to be depleted in 2016 (3 years or less from the date of this post) --- although Congress could easily keep the disability program funded by increasing the share of the total Social Security payroll tax it receives.

* Editor's Note: That's why we should either eliminate the $113,700 annual "cap" on earnings subjected to Social Security taxes --- or raise the "cap" to $1 million --- and we should also tax capital gains for Social Security taxes as well. (See this post at the New York Times)

Efforts to address these financing problems should recognize the crucial role that Social Security plays in the financial lives of Americans with disabilities, among the nation’s most vulnerable citizens.

* Editor's Note: There's a big push to EXPAND Social Security, not cut it. Without Social Security, the poverty rate would rise from the revised 16% of the US population to 24.4%. Senator Sherrod Brown is endorsing Senator Tom Harkin's bill to expand Social Security benefits. By the end of last year, there were 8.8 million Americans relying on SSDI (Social Security Disability Insurance).

For additional information and clarification on what's being reported in the media about Social Security disability:

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