Benefit Bulletin: September 2018

Benefit Bulletin: September 2018

Waiting Periods Can Bankrupt Disabled Beneficiaries

More than 920,000 Americans await hearings that will determine their eligibility for Social Security disability insurance benefits (SSDI).  The process is a long one, taking on average about 20 months — longer than some applicants may live.  Unlike Supplemental Security Income (SSI), which is a low-income disability program, SSDI is an “earned benefit” paid for by payroll tax deductions from wages.  After months waiting for a determination of eligibility for SSDI benefits, there’s also a mandatory 5-month waiting period before the first benefits are paid.   An individual who is eligible for Social Security disability has to wait even longer — two years — before Medicare benefits start.

These waiting periods are perhaps the most difficult for middle income disabled workers — those of modest means and savings, but whose incomes are too high to qualify for temporary SSI and Medicaid benefits during the waiting periods.  Because disabled individuals frequently lose employer-covered health insurance when they are forced to stop work, middle to higher income individuals must pay all of their healthcare costs out of pocket, which can be bankrupting.

Recently Rebecca W. wrote that she filed for SSDI in 2009 at age 52, after her doctor refused to allow her to go back to work.  At that time, 401(k) investments were tanking and, after penalties for early withdrawals, the $10,000 in her retirement account was worth just $3,000.  While she was so severely disabled that she was found eligible for SSDI benefits after just 6 months, Rebecca still had a two-year wait for Medicare.

“This wiped out my CDs and money market account,” said Rebecca.  Big expenses for dental problems forced her into credit card debt.  Rebecca’s health problems required oxygen tanks, blood transfusions, sleep clinics and sleep apnea machines, diabetic tools, lymphatic pressurized machines for wound care, and lab work, all of which she had to pay for out-of-pocket.  “By the time I was finally able to start Medicare, I was broke,” she said.  “Then came the big stuff, cancer surgery and open heart surgery.  I lost my house and had to file for bankruptcy.  If the cancer returns, I will die because Medicare tells me my co-pay for each treatment is $1,000.  I barely have that to live on,” she wrote.

Are the SSDI and Medicare waiting periods still fair and necessary?  It is hard to fathom that in 1954 when the SSDI waiting period was written into law, lawmakers would have foreseen a determination process for SSDI benefits that would take an average of 20 months, with backlogs of almost one million people.  Medicare did not even exist until 1965.  What do you think?  Please take our online poll and tell us whether these waiting periods should be kept as is, or eliminated.