Q & A
Can you help me understand how the disability program functions?
Complete Question: Social Security disability is all over the news. I keep going back and forth in my own opinions about this situation. Are people taking advantage of the system? Does Social Security give disability to just anyone, and that’s why it’s in trouble? Should I be more sympathetic? My head is spinning and I just don’t know what to think of all this, especially when I wonder if the media is putting a spin on the real story. Do you have any true facts about disability that you can share?
Answer: Understanding the facts is very important when formulating an educated opinion. You are correct in saying that the media is talking a lot about disability lately. This is for two reasons: First, the Disability Insurance (DI) Trust Fund is projected to be exhausted in 2016, which is making many people panic. Second, due to this issue, Congress just passed a law on how this issue should (and should not) be handled. This has caused a lot of controversy because some people think the fund should borrow from the Old-Age and Survivors Insurance (OASI) Trust Fund, while others think there needs to be a more permanent solution. This is because the OASI Trust Fund (what is typically referred to as just “Social Security”) is also projected to be exhausted – but not until 2034. So what does it mean if a Trust Fund is exhausted? This means that money coming into the fund through taxation will be immediately used to pay benefits; however, there will not be enough taxes coming in to pay all benefits at 100%. This could mean delaying payments or reducing payments.
One key piece of information you may want to know is that when the media is discussing this issue, they are specifically talking about Social Security Disability (SSDI), which is paid based on a person’s Social Security credits that they have paid into the system – similar to retirement social security. The other side of disability is Supplemental Security Income (SSI) which is very similar; however, it is paid to disabled individuals who have limited income and resources. Since SSI is not based on Social Security taxation (FICA), eligibility is different, and so is funding. While the Disability Trust Fund is financed by FICA taxes, SSI benefits are paid from general taxes. Therefore, the DI trust fund issue is referring to SSDI, and not SSI.
Another fact you may be interested in is the average disability payment. The Social Security Administration reported that the average monthly SSDI payment in the beginning of 2014 was $1,146 and the average monthly SSI payment was $535 during this same time period. Keep in mind that SSDI is probably higher because it is based on average lifetime earnings, just as old-age Social Security payments are.
Knowing whether or not people are “taking advantage of the system” as you said is virtually impossible to estimate. Of course in any system someone is likely taking advantage, but there are also millions of people in need. The Social Security Administration requires disability applicants to go through a lengthy application process, which includes proof of the disability, as well as proof that they are unable to work. Even though low income is not a requirement to receive SSDI, Social Security will still look at a person’s income level to make sure they are not working too much because that alone would make them not disabled. Of course, the process and determinations are much more complicated than this, but it is certainly not as easy as filling out a form.
The media could be saying a lot of different things about the disability situation. Regardless of what they are saying, there is a funding issue and a lot of people are trying to come up with a workable solution for the DI Trust Fund, as well as the OASI Trust Fund. For now, I hope this helps you make some sense of everything that is going on.