Allsup Reports on the State of the Social Security Disability Insurance Program in 2009
Every person working in America 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.
The unfortunate situation facing hundreds of thousands of people with disabilities are delays of two to four years before actually receiving these benefits.
In 2009, the disability backlog is becoming a massive highway traffic jam as the number of disability applications skyrockets. The SSDI program is now encountering a disability pre-backlog that is significantly higher than what was anticipated a year ago.
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 2009, 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 & TAKING ACTION
People with severe disabilities are experiencing delays of months and even years in obtaining their rightful benefits. As SSA Commissioner Michael J. Astrue has stated, people are dying while waiting for their benefits.
Nationwide, there is a backlog of more than 755,000 disability cases pending1 at the hearing level before the Social Security Administration.
When combined with a projected waiting list of 833,000 initial applications2, and 112,000 reconsiderations3, the extent of the crisis is apparent.
Based on SSA data and 2009 projections, more than 1.7 million4 people will await 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.
Expert disability representatives can provide part of the solution by:
- Helping reduce SSA worker-hours preparing claimant applications.
- Helping educate and inform individuals who don’t meet the standards for SSDI eligibility.
Congress and the president can easily move forward in assembling a partial solution by:
- Directing the SSA to notify applicants that they have options for representation when pursuing their claims.
- Directing the SSA to create an online directory of authorized SSDI representatives, similar to the E-File directory that IRS provides to individuals.5
A BRIEF HISTORY
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 additional direction for the disability program, outlining the definition of disability, work requirements and the nature of disability determinations.6
In general, individuals qualify for SSDI benefits if they have worked and paid into the program for five of the last 10 years. However, people under age 31 may qualify with less work history. They also must be under retirement age (65-67) and meet Social Security’s definition of disability.7
The SSDI program was created in 1954 under President Dwight D. 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.8
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.9 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 also was removed.
- 2002 – Completely revised criteria for the evaluation of musculoskeletal conditions—such as spine and joint disorders, bone trauma and burns—were issued.10
SSA PROGRAM DETAILS
SSDI and Social Security retirement differ from other government programs because they are not based upon income or assets (not means based). Disability benefits are determined by how much a taxpayer has paid in premiums over the years. Applicants should file for benefits as soon as they become disabled because it can take a long time to process an application for SSDI .11
There are four levels in the SSA’s 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 complete 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 2008, approximately 64 percent of initial applications were denied.12
- Level two is the reconsideration, or first appeal. At this level, a different individual within the SSA reviews the application. Approximately 86 percent of first appeals are denied.13
- 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 63 percent of second appeals are awarded to the applicant.14 The SSA estimates the average time spent at this level is 516 days in 2009.15 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 2 percent of cases that reach third appeals (Appeals Council) result in a favorable decision for the applicant.16 The SSA estimates the average time to receive a decision on this third appeal in 2009 is 265 days.17 SSA has said that for 2010 its target time frame is 508 days for the second appeal, and 370 days for the third appeal.18
There is an additional appeal available, which takes an individual into Federal District Court (FDC). In 2008, five percent of decisions in FDC resulted in an award, 47 percent were remanded back to the hearing level for an additional hearing and the remaining cases were either dismissed or denied.19 Note: These figures include Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) figures, which is a Social Security means-based assistance program.
FACTORS IN THE CURRENT SSDI BACKLOG
There are several factors influencing the SSDI backlog, which continues to evolve in light of economic and societal trends in the United States.
- Disabled population is growing. Since 1990, the number of disabled workers drawing SSDI has more than doubled, from 3 million20 to 7.4 million at year-end 2008.21 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 2017.22
- SSA’s experienced work force, including its field staff, is shrinking. The SSA projects that 53 percent of its work force will be eligible to retire by 2017.23 In 1978, SSA had more than 85,600 employees.24 In fiscal year (FY) 2008, SSA had more than 63,000 employees25, in more than 1,400 offices nationwide26, and more than 16,000 state employees in the Disability Determination Services.27 More specifically, field office employees have experienced a decline of 4.4 percent, from 28,790 employees in FY 2005 to 27,534 employees in FY 2008.28 SSA is working to replace workers, with an initiative to hire more than 6,000 new employees between March and the end of FY 2009, according to Commissioner Astrue.
- Disability determinations are growing more complicated and time-consuming. In the early 1990s, the types of afflictions considered disabling increased.29 Because these disabilities are often more complex to evaluate, the challenges in preparing and interpreting a comprehensive medical record for disabled applicants are growing.
- Applications are outpacing workload capabilities. In 2009, a combination of factors, including the worsening economy, higher unemployment rates and the aging populations—are contributing to a disability application rate that is swiftly rising to more than 20 percent compared with FY 2008.35 (Allsup analysis available.). The average time to process initial disability claims is expected to increase by 20 percent, growing to 156 days in FY 2010 from 129 days in FY2009.36 Last year, the SSA forecast 493,000 initial applications pending in the disability process for FY 2009. Now, the agency expects the level of pending initial disability claims to reach 833,000, nearly double the original estimate.37
The result: An exploding backlog. Americans with disabilities are experiencing delays of months – or even years – in obtaining their rightful benefits.
- Nationwide, in 2009, there’s an estimated backlog of more than 755,000 disability cases pending at the Office of Disability Adjudication and Review (hearing level/level 3) alone.30
- When combined with the SSA’s estimate that pending initial disability applications will reach 833,000 by the end of FY 200931 and 112,000 reconsiderations32, the extent of the crisis is evident.
- The average wait times are at or near levels in recent years. In 2009, the wait time at the second appeal (or hearing level) is an estimated 516 days.33 And appealing a third time adds an additional 265 days to the application process.34
Currently, 7.4 million individuals collect SSDI benefits.38
THE 2009 SOCIAL SECURITY TRUSTEES REPORT
On May 12, 2009, the SSA released the 2009 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 2008, the Disability Trust Fund received $97.9 billion in contributions, generated $11 billion in investment and interest income, having total income of $109.8 billion. Total expenditures, including benefit payments and administrative costs, were $109 billion.39
As of Dec. 31, 2008, the Disability Trust Fund had $215.8 billion in U.S. Government obligations.40
According to the report, under the intermediate estimate, total expenditures will exceed income in 2016, with the Disability Trust Fund reserves being depleted by 2020. Disability program costs have exceeded tax revenue since 2005.41
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 2014.42
SOLUTIONS FOR 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.43
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. Improved technology will move claimants through the process more quickly, and combine the best parts of private, nonprofit and government sectors to find innovative solutions. This includes improving professional relationships with third-party SSDI representatives.
Economic and societal factors in 2009 are creating a particularly challenging environment for the SSA. Specific, immediate steps can be taken to help address the increasing pre-backlog of initial disability applications cascading upon the federal agency.
These steps, according to Allsup CEO Jim Allsup, include:
- Directing the SSA to notify applicants that they have options for representation when pursuing their claims.
- Directing the SSA to create an online directory of authorized SSDI representatives, similar to the E-File directory that IRS provides to individuals.44
Additional funding and staffing increases along will not fix the problem.
In that last five years, the SSA’s disability workloads have grown significantly and this trend is expected to continue.45
The agency expects more than 2.9 million disability applications in FY 2009, a 12 percent increase from FY 2008. These activities are taking place alongside growing retirement applications. The SSA expects to process about 4.6 million applications for retirement benefits in FY 2010.46
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 are business-critical to organizations such as Allsup. Improving systems capabilities fit hand in glove with the SSA’s initiatives to eliminate the backlog.47
Expert disability representatives can provide part of the solution by:
- Helping reduce SSA worker-hours preparing claimants applications.
- Helping educate and inform individuals who don’t meet the standards for SSDI eligibility.
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. Action must be taken to ensure that Americans with disabilities have access to the benefits that they paid for during their working careers.
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.
References (2009)