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Disability Backlog Crisis Continues in 2008

Allsup Reports on the State of the Social Security Disability Insurance Program in 2008

Every working American who pays FICA taxes receives an annual report from the Social Security Administration outlining their benefits, including the Social Security Disability Insurance (SSDI) benefit amount to which they are entitled.

But the unfortunate situation facing hundreds of thousands of people with disabilities are delays of two to four years before actually receiving these benefits.

Established in 1954, the disability program was designed to provide some economic security to individuals whose capability to work is dashed following a long-term disability. The situation in 2008, however, provides evidence of continuing challenges and increasing struggles for the SSDI program.

Founded in 1984, Allsup was the first private, non-attorney organization to guide people with disabilities nationwide through the SSDI application and appeals process. Allsup offers the following review of the current state of the federal Social Security disability program.

THE GROWING CRISIS

People with severe disabilities are experiencing delays of months and even years in obtaining their rightful benefits.

Nationwide, there is a backlog of more than 765,000 disability cases pending1 before the Social Security Administration. When combined with the waiting list of over 519,000 initial applications2, and over 102,990 reconsiderations3, the extent of the crisis is apparent.

There are currently more than 1.3 million4 people awaiting a decision on their claim at all levels of the SSDI process, which expressly allows people the opportunity for a face-to-face evidentiary hearing at the reconsideration level of appeal.

Action must be taken to ensure that people with disabilities have access to the benefits for which they paid, and that promises made are promises to be kept.

A BRIEF HISTORY

To elaborate, SSDI is an employee payroll tax-funded federal insurance program designed to provide income to people unable to work because of a disability. Legislation signed in 1955 provided the definition of disability and outlined work requirements and the nature of disability determinations.5

In general, individuals qualify for SSDI benefits if they have worked and paid into the program for five of the last 10 years. However, if an individual is under age 31 they may qualify with less work history. They also must be under age 65 and meet Social Security's definition of disability.6

The SSDI program was created in 1954 under President Eisenhower. A year later, in 1955, a "freeze" of workers' records was enacted to allow workers who became disabled to protect their Social Security retirement benefits by freezing their benefit level at the time they became disabled. Without this freeze, which still exists today, a person who stopped paying Social Security taxes would have years of zero payments and have significantly reduced retirement benefits. There is no minimum payment amount under the Social Security retirement program, so people not taking advantage of the disability freeze could see their retirement benefits reduced to zero. From 1956-58, additional changes were made expanding and further defining the program.7

Numerous changes have been made to the program since its inception.

  • 1965 - Disabilities no longer have to be permanent. The original legislation was changed to require the disability to be one lasting 12 months or more.
  • 1967 - Work limitations and the definition of "disability" were clarified.
  • 1975 - Annual cost-of-living increases were introduced.
  • 1980 - Return-to-work incentives were started and a cap on family benefits was put in place.8
    Over the years, the definition of what qualifies as a disabling condition has also changed and expanded.
  • 1985 - Regulations that clarified evaluation criteria were introduced to the Social Security disability program.
  • 1986 - A variety of mental disorders were added indirectly to the list of eligible conditions. This shift occurred when the SSA began evaluating mental conditions based upon the functional ability of the person.
  • 1990 - The first guidelines for evaluating fibromyalgia were written, which significantly expanded the scope of a qualifying disability to include conditions that could not be diagnosed, but met certain defined parameters.
  • 1996 - Conditions caused by alcohol and drug use were stricken from the list of eligible disabilities (for both SSI and SSDI).
  • 1999 - Obesity was also removed.
  • 2002 - Completely revised criteria for the evaluation of musculoskeletal conditions-such as spine and joint disorders, bone trauma and burns-were issued.9

PROGRAM DETAILS

SSDI and Social Security retirement differ from other government programs in that they are not based upon someone's other income or assets (not means based). Disability benefits are determined by how much a taxpayer has paid in premiums over the years, and applicants should file for benefits as soon as they become disabled because it can take a long time to process an application for SSDI .10

There are four levels in the Social Security Administration's (SSA) review and award system for disability. There is an additional level that takes the individual out of the SSA system, although only a small percentage of applicants will pass through all five levels.

  • Level one is the initial SSDI application. There is an extensive amount of paperwork to fill out at this initial level. It is necessary for a doctor to verify information in the application with pertinent medical information and a confirmation that the disabling condition will last 12 months or longer, or is terminal. In 2007, approximately 65 percent of initial applications were denied.11
  • Level two is the reconsideration, or first appeal. At this level, a different individual within the Social Security Administration reviews the application. Approximately 87 percent of first appeals are denied.12
  • Level three is the hearing level, or second appeal. This level takes an applicant away from the SSA claims processors and places them in the hands of an administrative law judge. Approximately 62 percent of second appeals are awarded to the applicant.13 The SSA estimates the average time spent at this level is 535 days in 2008.14 If a disability hearing ends in another denial, the decision can be appealed.
  • Level four is the appeals council, or third appeal. At this level the Appeals Council will review the disability hearing decision to determine if it was rendered properly according to the law. Only 3 percent of cases that reach third appeals (Appeals Council) result in a favorable decision for the applicant.15 The SSA estimates the average time to receive a decision on this third appeal in 2008 is 242 days.16 SSA has said that for 2009 its target time frame is 506 days for the second appeal, and 242 days for the third appeal.17

There is an additional appeal available, which takes an individual into Federal District Court (FDC). In 2007, five percent of decisions in FDC resulted in an award, 46 percent were remanded back to the hearing level for an additional hearing and the remaining cases were either dismissed or denied.18 Note: These figures include Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) figures, which is a Social Security means-based assistance program.

THE CURRENT SITUATION

The disabled population is growing - Since 1990, the number of disabled workers drawing SSDI has more than doubled, from 3 million19 to 7.1 million in 2007.20

As baby boomers continue to age, annual disability claims are expected to rise significantly. The SSA projects that disability and retirement filings will increase the agency's work by about 1 million annual claims by 2017.21

The SSA field staff is shrinking - The SSA projects that 44 percent of its work force will retire by 2016.22

In 1978, SSA had more than 85,600 employees. In FY 2007, SSA had 62,000 employees.23

The declining work force is reflected in the number of field office employees, which saw a 7.1 percent decline to 26,743 in 2007 from 28,790 in 2005.24 According to the Social Security Advisory Board, an independent, bipartisan board created by Congress and appointed by the President and Congress, SSA's disability field staff workforce in 2002 was 30 percent smaller than 20 years ago.25

Between 2005 and 2007, more than 2,000 field office employees left SSA and were not replaced.26

Disability determinations are growing more complicated and time-consuming - In the early 1990s, the types of afflictions considered disabling increased.27

Because these disabilities are often more complex to evaluate, the challenges in preparing and interpreting a comprehensive medical record for disabled applicants are growing.

The result: An exploding backlog - Americans with disabilities are experiencing delays of months - or even years - in obtaining their rightful benefits.

Nationwide, as of July 2008, there was a backlog of more than 760,000 disability cases pending at the Office of Disability Adjudication and Review (hearing level/level 3) alone.28

When combined with the more than 519,000 disability applications waiting an initial decision29 (level 1) and 102,990 pending reconsiderations30 (level 2), the extent of the crisis is apparent.

At the second appeal, the 2008 wait time is estimated by the SSA to be 535 days. Appealing a third time adds an additional 242 days to the application process.31

Currently, there are about 7.1 million individuals collecting SSDI benefits.32

THE 2008 SOCIAL SECURITY TRUSTEES REPORT

On March 25, 2008, the SSA released the 2008 annual report of the OASDI Board of Trustees. The analysis, in conjunction with other predicators and situations, reveals a difficult future for the SSDI program.

In 2007, the Disability Trust Fund received $95.6 billion in contributions, generated $13.2 billion in investment and interest income, having total income of $109.9 billion. Total expenditures, including benefit payments and administrative costs, totaled $98.8 billion. As of December 31, 2007, the Disability Trust Fund had $214.9 billion in U.S. Government obligations.33,40

According to the report, under the intermediate estimate, total expenditures will exceed income in 2017 with the Disability Trust Fund reserves being depleted by 2025. The low-cost estimates predict the SSDI program remaining in good shape past 2085, and the high-cost estimates predict the SSDI program depleting reserve funds by 2017.34

THE FUTURE

Changes are necessary to ensure that the promises made to people with disabilities are kept.

Social Security Administration officials, members of Congress and others are debating the solutions and methods for addressing the backlog now.35

In the short term, people with disabilities will see relief from the actions of policymakers to increase budgetary funding, emergency funding and staff to administer SSDI processes, as well as embrace technology to move claimants through the process more quickly, and combine the best parts of private, nonprofit and government sectors to find innovative solutions-including improved professional relationships with third-party SSDI representatives.

The building pressure from this crisis continues with the expected retirement of 44 percent of the SSA workforce by 201636 and an employment level below 60,000 people-a decline of 20,000 employees since the 1980s.37

Additionally, with the large number of baby boomers becoming disabled, staffing increases alone will not fix this problem. Applications continue to grow, with 235,204 applications in August 2008 and a 2007 total of 2.2 million by disabled workers alone.38

Third-party disability representation organizations, such as Allsup, already work throughout the country with individuals to ensure eligibility, developing an accurate factual record and helping shepherd applicants through the disability decision process.

Technological capabilities, including the use of Web-based applications and digital document-based processes, already are business- and mission-critical to organizations such as Allsup, so they fit hand-and-glove into the SSA's initiatives to eliminate the backlog.39

If closely coordinated with the internal functions of the SSA, this could allow the SSA to focus on issuing disability decisions and clearing backlogged claims, rather than the time-consuming process of developing cases and tracking down medical information.

In the long term, the problem of a decreasing ratio of disability insurance premium payers to benefit collectors needs to be dealt with, while ensuring promises made are promises kept.

There is no easy fix, but action must be taken to ensure that Americans with disabilities have access to the benefits that they paid for-and that the investments they made in their years of work and FICA taxes paid bear fruit.

The SSDI processing delays, the backlog of hearings and the complexity of getting through the SSDI process are unconscionable and represent the breaking of a promise between citizens and their government. People with disabilities who are unable to work and suffering from injury, illness and/or chronic disease are ill-equipped to bear the result of inaction.

2008