According to Forbes.com, it is very easy to get on Social Security Disability. Not only that, but according to Forbes, there is a 200 billion dollar “disability industrial complex” that has arisen because so many Americans are “gaming the system.” This had led to questions about the solvency on the Social Security trust which funds the Disability Insurance program known as SSDI. Despite the disability trust fund being solvent through at least 2027, politicians maintain that, in addition to the ease with which individuals can get on disability, it is similarly easy for them to commit fraud or other abuses of the system. They maintain that if this “tremendous fraud, waste, and abuse” is eliminated and if it becomes even more difficult to get on disability, the Social Security system would become solvent for all time. These two very common assertions raise the question, why is it so easy to get on disability and game the system?
Of course, to get to the bottom of this, you need to know exactly what you’re talking about, otherwise pundits that purport to know what they are talking about could mislead readers. Forbes contends that the $200 billion in disability payments made each year are paid to people who otherwise might be receiving a form of welfare, and that these people are not motivated to work since a substantial portion of their income is replaced by disability payments. This is one of the ways that Forbes characterized Social Security Disability:
The Social Security Administration pays out benefits in relation to how much money you made when you were working, with some means-testing considerations thrown in. The overall effect is to replace the majority of your income if you’re poor, and a smaller fraction of your income if you were well-paid in your previous jobs.
This is a vague and somewhat disingenuous description that only seems to incorporate the SSDI program. For instance, Forbes’s description seems to imply that just anyone can be awarded benefits. While it is true that the vast majority of people working are in OASDI covered employment (employment that allows you to gain quarters of coverage used toward SSDI eligibility), they are not guaranteed eligibility and the vast, vast, vast majority of OASDI workers would become a technical denial. For example, there are approximately 163 million workers in OASDI covered employment for 2015, but only 2.4 million applications covering 1.47% of all OASDI covered workers (1.7% if we use the greatest number of SSDI applications from the last 15 years, 2.9 million in 2010).
However, you cannot reach the $200 billion mark if you do not also include the approximately $54 billion in SSI payments made each year which, because of math, is clearly what Forbes did. SSI is not funded by the same trust which funds SSDI. It also is primarily means tested and, with very few exceptions, any benefits paid or accrued will be offset by any form of income, earned or unearned, that a claimant may receive. So, in essence, in talking about the program’s solvency, Forbes was already inaccurate by about 25% of their reported figure as any SSDI funding issues would necessarily exclude SSI. This means that the “disability industrial complex” is actually only about $150 billion, 25% less than Forbes’s quoted amount.
The funding figures are relevant in that the amount of benefits an applicant is allegedly guaranteed to receive are too high, and, according to Forbes, that is drawing otherwise able-bodied workers to the program. This is also directly related to the process of obtaining disability benefits as disability applicants must not have any substantial income for twelve months at least in order to qualify.
Funding also becomes relevant because critics like to point out that disability claimants are actively choosing to be paid not to work, since the benefits are so great. But, if claimants are really accepting benefits in order to stay out of work, they are also choosing a lifetime of living around or below to the poverty line that will never improve without them going back to work. Anyone claiming SSI only will have to learn to live on a maximum $773 per month with a state supplemental payment that will be about $50-100. Beyond that, while the maximum benefit an SSDI claimant can receive is $2,663 per month, and the average benefit for SSDI is $1,146 while the average SSI benefit is $510 per month. So, while some people may believe that a person could be set for life collecting disability benefits, if they are an average disability claimant, they would likely be living off of $13,752 per year. The federal poverty line is $11,880 per year or $990 per month which means the average SSI only claimant would be drastically below the poverty line, while the average SSDI claimant would be slightly above the poverty line. In either case, claimants may very well have to rely on programs such as SNAP and TANF, two of the programs that make up welfare as we know it, in order to make ends meet.
Forbes’s contention that disability is the new welfare also comes from the spike in disability applications that comes with higher levels of unemployment. According to Forbes, instead of going to find a job during times of high unemployment, individuals will apply for disability benefits at a greater rate. This is something that can be discerned from SSA’s own data. In 2009, after the beginning of the financial crisis, there was an increase in applications from 2.3 million applications to 2.8 million applications.
There are various ways to look at this. First, this is common sense. During times of high unemployment, there are typically no jobs for people to find regardless of their desire to find them. So, since there are fewer jobs, people necessarily look for alternate means of support. However, the inverse to this is also true, i.e. during times of low unemployment there are fewer applicants. In fact, as the unemployment rate has dropped since 2009, so have the number of applicants down to 2.4 million in 2015. Moreover, levels of high unemployment could also have the effect of making people qualified that might otherwise not be since claimants must be out of work for 12 months. Lastly, Forbes also neglected to mention that technical denials, denials based on an claimant’s lack of basic qualifications, also go up during times of high unemployment while medical denials tend to stay flat. So, while the number of individuals applying may go up precipitously when unemployment is high, actual benefit approvals only tend to increase minimally. This, in and of itself, should show Forbes and other SSA critics that disability is not, in fact, being used to replace “welfare” because you have to be awarded benefits because you can collect them.
Stay tuned later this week when we roll out part II of our answer to the question, “why is it so easy to get disability?”
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