Developments on Social Security Disability Eligibility and Budget Plans

There’s been a lot of talk about Social Security as predictions and budget plans come out. For one, Social Security Administration Chief Actuary Stephen Goss claimed that the program will be able to provide full benefits to eligible recipients in the next 17 years. That’s five years longer than the fund’s solvency last year.

The increase is linked to a drop in Disability Insurance (DI) applications, which occurred after a growth caused by the economic downturn in 2008. There was a peak in applications in 2010, when the number reached 2 million compared to the 1.5 million recorded in 2007. However, the number of people applying for Disability Insurance has been declining since 2013 and the current rate is lower than the number recorded in 2007.

While it’s likely that the number will reach its peak again eventually, this steady drop is extending the fund’s longevity.

What’s in Social Security Disability Eligibility and Budget Plans?

Good or Bad?

It might seem like the drop in applications is a good thing, since it prolongs the fund’s capacity to pay full benefits. However, Andrew Biggs of American Enterprise Institute says that Congress shouldn’t feel complacent about the current numbers since the cause of the drop is not necessarily a good thing.

There are several reasons why fewer people are applying for Disability Insurance. Changes in Social Security Administration practices and policies that might may have affected social security disability eligibility and people’s capability to pay for the benefits. External medical and economic issues are possible causes as well, but the most glaring reason is the decline in labor force participation. If people couldn’t find jobs, fewer people will be able to apply for DI through their employers. This unemployment rate points to an underlying economic problem.

The sustainability of Social Security has become an issue as well. Goss said that Social Security will be difficult to sustain if full scheduled benefits will have to be paid using only the full scheduled revenue. This problem stems from a decline in birth rates after the post-World War II baby boom. The aging population of baby boomers brought down Social Security’s revenue to 4.6% of the national GDP.

While the revenue declined, the cost has increased to 6.1% of the GDP. If legislators fail to act on it, there will be a bigger problem with Social Security’s ability to provide assistance to those in need. Goss said the issue can be addressed by matching the cost and revenue through an increase in revenue or a reduction in full cost by a third.

Moreover, benefits have become harder to obtain and claim these days. This is also a reason why fewer people are applying for DI. Congress needs to push for Social Security sustainability to prevent this problem from getting worse, especially now that beneficiaries are expected to get higher cost-of-living benefits next year. A 2.2% increase is projected for 2018, the highest since 2011.

Budget Plans

The developments with DI applications came amid the new budget plans that the Congressional Budget Office released. According to reports, overall spending during the 2016 fiscal year was $905 billion. Disability Insurance account for $145 billion of that. The new budget plan aims to curb disability spending by excluding Americans who are already getting assistance from their unemployment insurance benefits. It would also cut down Medicaid and Medicare expenses.

While the new spending plan will likely draw mixed reactions, it’s seen to send a clear message that Medicare and Medicaid are releasing a lot of money but are not targeting the right people. If it pushes through, people living above the poverty line such as wealthy seniors won’t receive benefits higher than Americans who are really struggling.

With so much changes about to happen to Social Security, both American citizens and healthcare facilities should be prepared. Revenue cycle management experts must help hospitals make adjustments so they can keep up with their patients’ capacity to pay for medical services.

SSA Trustee Report: Drop in Disability Insurance Applications Extend Fund’s Solvency to 2034,
House GOP Budget Plan Cuts Medicare and Social Security,

Pete Ash

Pete is the Vice President of Sales & Client Services at DECO Recovery Management. He covers the Mid Atlantic region and specializes in Medicaid related topics. It is DECO’s Mission to maximize reimbursement to our clients by leveraging innovative technology, processes and compassionate advocates to provide exemplary service.

Categories: Social Security Disability Eligibility