Social Security Disability — Just the Facts

For some reason the Social Security disability program has come under attack recently from several media outlets. Reports are leaving the impression that the disability program is a hotbed of fraud and waste. This is totally untrue.

The Consortium for Citizens with Disabilities’ Social Security Task Force prepared a study this month that shows exactly the opposite — that Social Security disability is extremely hard to get, and that many deserving claimants are denied benefits. That has been our experience throughout the many years we have practiced Social Security disability law.

Here is the summary of the study:

Our Social Security system provides peace of mind for all Americans. Not only does it provide the foundation for a secure retirement — it also protects nearly all American workers and their families against the eventuality of a severe disability or illness that prevents substantial work. This peace of mind is all the more important because the alternatives are limited: only about 1 in 3 private sector workers has long term disability insurance through their employer, and plans are often less adequate than under Social Security.1 Social Security’s disability programs serve as a core component of the Social Security system, offering critical protection in our time of need.

Social Security Disability Programs Provide Modest but Vital Support

About 57 million Americans, or 1 in 5, live with disabilities. About 38 million, or 1 in 10, have a severe disability.2 Only those with the most significant disabilities or illnesses—about 13 million working age individuals—receive vital support from our nation’s Social Security system.3
Social Security Disability Insurance, or SSDI, is funded through payroll tax contributions. It provides benefits to workers who have contributed enough via payroll taxes to be insured and who become disabled before reaching full retirement age.
Supplemental Security Income, or SSI, provides support to low-income children and adults with severe disabilities, as well as low-income seniors.
The average SSDI benefit for a disabled worker is about $1,130, just over the federal poverty line, and the average SSI benefit is just $509 per month as of August 2013 —about half the federal poverty level for a single person, and less than $17 per day.4
For most adult disability beneficiaries, SSI and SSDI make up all or most of their income.5
SSDI and SSI benefits keep millions of people with disabilities from deep poverty and homelessness. Poverty rates are substantially higher for people who report significant disabilities but are not receiving SSDI benefits than for people who have been receiving SSDI benefits for at least five years.6 Even with benefits, a full quarter of SSDI beneficiaries live in poverty, and the majority are low-income.7

Social Security Disability Standard is Strict, and Most Applications Are Denied

The Social Security Act’s disability standard is one of the strictest in the developed world. According to the Organisation for Economic Co-operation and Development (OECD), the U.S. has the most restrictive and least generous disability benefit system of all OECD member countries, except Korea.8
Most applicants for Social Security disability benefits are denied. Fewer than four in ten are approved, even after all stages of appeal.9
Beneficiaries have severe impairments and conditions such as cancers, kidney failure, congestive heart failure, emphysema, and multiple sclerosis.
Many are terminally ill: 1 in 5 male SSDI beneficiaries and nearly 1 in 6 female SSDI beneficiaries die within 5 years of receiving benefits.10 SSDI beneficiaries are also three times as likely to die as other people their age.11
Despite their impairments, many beneficiaries report eagerness to do some work, and some do work part-time. But research indicates that the average earning potential of beneficiaries with “work capacity” is a few thousand dollars per year—clearly insufficient to support oneself.12

Demographics Explain Nearly All Growth in Social Security Disability Insurance

The Social Security disability programs have grown significantly since they were signed into law, as well as in recent years. This growth was expected and projected as far back as 1994.
According to Social Security’s Chief Actuary, the growth in SSDI (from 1980 to 2010) is mostly the result of several factors: substantial growth in the U.S. population; the baby boomers aging into their high-disability years; women entering the workforce in large numbers in the 1970s and 1980s so that more are now “insured” for SSDI based on their own prior contributions; and the increase in the Social Security retirement age so that disabled workers continue to receive SSDI benefits for longer before converting to retirement benefits.13
Many experts including Social Security’s Chief Actuary caution against overstating the role that the recent economic downturn has played in contributing to the growth in SSDI. The Chief Actuary estimates that the recession accounts for just five percent of the program’s growth.14
Demographic factors – such as a disproportionately older population – also largely explain geographic variation in rates of receipt of Social Security disability benefits.15

Awards Rates Have Fallen During the Recent Economic Downturn

While economic downturns tend to boost applications for benefits, research finds that they have a much smaller effect on awards.16 This recent economic downturn was no exception on either front.
In fact, the percentage of applicants awarded benefits has declined significantly during the recent economic recession, from 39 percent in FY 2007 to just 33 percent in FY 2011, suggesting that applicants for benefits who did not meet Social Security’s strict disability standard were screened out.17
The drop in the percentage of applicants found eligible at the Administrative Law Judge (ALJ) hearing level has been even more dramatic, falling by more than ten percentage points between FY 2007 and 2012.18

Social Security Disability Programs Reflect Broader Trends Toward “Invisible” Disabilities

According to the World Health Organization (WHO), in rich nations like the U.S. many people are living longer—but with more disability. 19
The WHO also reports that today, the leading causes of disability both in the U.S. and abroad are largely invisible—mental illness and musculoskeletal disorders – a trend reflected in the Social Security disability programs.20
Nonetheless, denial of such “invisible” disabilities remains sadly common. Misconceptions persist that individuals who “look healthy” ought not to be receiving disability benefits, and that disabilities visible to the naked eye are “unambiguous”, whereas impairments less readily observable to an onlooker are “squishy”. page2image27376

Examples of often-hidden yet significant disabilities include cancers, Traumatic Brain Injury (TBI), intellectual disability, Autism, and serious mental illness such as Post-Traumatic Stress Disorder (PTSD) and schizophrenia (among many others).

The Future of the Social Security Disability Programs

As the baby boomers age into retirement, growth in SSDI has already begun to level off and is projected to decline further in the coming years.21
The DI trust fund’s projected 2016 shortfall is not a new development, or an unprecedented one. Since Social Security was enacted, Congress has “reallocated” payroll tax revenues between the OASI (retirement) and DI (disability) trust funds – about equally in both directions – some 11 times to account for demographic shifts. In 1994, the last time such reallocation occurred, SSA actuaries accurately projected that similar action would next be required in 2016.
As it has in the past, Congress could enact a modest reallocation of the 6.2% tax rate between OASI and DI. Under one such plan, both funds would be fully solvent until 2033, and new revenue after that would cover about 75% of Social Security benefits due thereafter.22 Experts at the Center on Budget and Policy Priorities and SSA’s Chief Actuary have urged Congress to take action to ensure long-term solvency of both trust funds.23SSA Needs Sufficient Administrative Funding to Ensure High-Quality Service and Program Integrity.
SSA must have sufficient resources to meet the service needs of the public, including people with disabilities. With the baby boomers entering retirement and their disability prone years, SSA is experiencing dramatic workload increases at a time of diminished funding and staff.
SSA’s administrative budget is equal to just about 1.4 percent of benefits paid out each year. Over the last three years, SSA has received nearly $1 billion less for its Limitation on Administrative Expenses (LAE) than the President’s request. The agency projects that by the end of FY 2013, it will have lost over 11,000 employees since FY 2011 – a 13 percent drop in its workforce – at a time of increasing demand.
Adequate resources are critical for SSA to perform its program integrity workload. SSA is required by law to conduct continuing disability reviews to ensure that benefits are paid only as long as beneficiaries remain eligible. SSA estimates that every $1 spent on a CDR saves the federal government $9 – but reports a current backlog of 1.3 million CDRs due to many years of insufficient administrative funding.Prepared by the Consortium for Citizens with Disabilities’ Social Security Task Force, Oct. 2013. For more information, contact: page3image22456 page3image22616 page3image22776

Rebecca Vallas
NOSSCR Government Affairs Office rebecca.vallas@nosscr.org 202-550-9996

T.J. Sutcliffe
The Arc of the United States sutcliffe@thearc.org

202-783-2229

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Department of Labor Bureau of Labor Statistics, Employee Benefits Survey, Table 16. Insurance benefits: Access, participation, and takeup rates, civilian workers, National Compensation Survey, March 2012; http://www.bls.gov/ncs/ebs/benefits/2012/ownership/civilian/table12a.htm.
U.S. Census Bureau, Current Population Reports, Americans with Disabilities: 2010 (July 2012), http://www.census.gov/prod/2012pubs/p70-131.pdf.
Social Security Administration, Monthly Statistical Snapshot, August, 2013. http://ssa.gov/policy/docs/quickfacts/stat_snapshot/index.html
Id.
Kathy Ruffing, Center on Budget and Policy Priorities, Social Security Disability Insurance Benefits are Vital to Workers with Severe Impairments (Aug. 2012), http://www.cbpp.org/cms/?fa=view&id=3818.
Favreault, M.M., Johnson, R.W., and Smith, K.E.. How Important Is Social Security Disability Insurance to U.S. Workers? Urban Institute (Jun. 2013), http://www.urban.org/UploadedPDF/412847-how-important-is-social- security.pdf.
Anne DeCesaro and Jeffrey Hemmeter,“Characteristics of Noninstitutionalized DI and SSI Program Participants,” Research and Statistics Note, No. 2008-02, January 2008. http://www.ssa.gov/policy/docs/rsnotes/ rsn2008- 02.pdf.
OECD, “Sickness, Disability, and Work: Breaking the Barriers: A Synthesis of Findings across OECD Countries” (2010),http://ec.europa.eu/health/mental_health/eu_compass/reports_studies/disability_synthesis_2010_en.pdf.
See Ruffing, supra note 5.
Id.
Kathy Ruffing, “No Surprise: Disability Beneficiaries Experience High Death Rates,” Off the Charts Blog, April 4, 2013, http://www.offthechartsblog.org/no-surprise-disability-beneficiaries-experience-high-death-rates.
See, e.g., Arif Mamun et al., Employment Among Social Security Disability Program Beneficiaries, 1996-2007, Social Security Bulletin, Vol. 71, No. 3 (2011), http://www.ssa.gov/policy/docs/ssb/v71n3/v71n3p11.pdf.
Testimony of Stephen Goss, Chief Actuary, Social Security Administration, before the House Ways and Means Committee (March 2013), http://waysandmeans.house.gov/uploadedfiles/goss_testimony.pdf.
See id; see also Ruffing, supra note 5; see also Kathy Ruffing, Center on Budget and Policy Priorities, Disability Benefits Are Hard to Get – Even in Recessions, Sept. 3, 2013, www.offthechartsblog.org/disability-benefits-are- hard-to-get-even-in-recessions/
See, e.g., Kathy Ruffing, Center on Budget and Policy Priorities, The State of Disability, March 26, 2013, www.offthechartsblog.org/the-state-of-disability; see also Kathy Ruffing, Not So Hale and Hearty: Explaining Disability Rates in One Alabama County, April 15, 2013, www.offthechartsblog.org/not-so-hale-and-hearty- explaining-disability-rates-in-one-alabama-county.
Ruffing, supra note 5.
Social Security Advisory Board, Aspects of Disability Decisionmaking: Data and Materials (Feb. 2012), Chart B.7 at 12, http://www.ssab.gov/Publications/Disability/GPO_Chartbook_FINAL_06122012.pdf; see also Goss et al., Disabled Worker Allowance Rates: Variation Under Changing Economic Conditions, Actuarial Note 153, August 2013, www.socialsecurity.gov/OACT/NOTES/pdf_notes/note153.pdf; see also Kathy Ruffing, Center on Budget and Policy Priorities, Disability Benefits Are Hard to Get – Even in Recessions, Sept. 3, 2013, www.offthechartsblog.org/disability-benefits-are-hard-to-get-even-in-recessions.
See Testimony of Glenn Sklar before the U.S. House of Representatives Committee on Oversight and Government Reform, Subcommittee on Energy Policy, Health Care and Entitlements, June 27, 2013; see also Testimony of Thomas Sutton, before the U.S. House of Representatives Committee on Oversight and Government Reform, Subcommittee on Energy Policy, Health Care and Entitlements, June 27, 2013.
World Health Organization, Global Burden of Diseases, Injuries, and Risk Factors Study (2010), http://www.healthmetricsandevaluation.org/gbd/research/project/global-burden-diseases-injuries-and-risk- factors-study-2010.
Id.
Goss, supra note 13.
Virginia Reno and Elisa Walker, National Academy of Social Insurance, Social Security Benefits, Finances and Policy Options: A Primer (June 2013), http://www.nasi.org/research/2013/social-security-benefits-finances-policy- options-primer.
See, e.g., Ruffing, supra note 5.