Why The Social Security Disability Insurance Program Is Going Broke

Why The Social Security Disability Insurance Program Is Going Broke

"Weakness" in the Social Security Administration's policies and procedures is to blame for billions in overpayments of disability insurance benefits, according to the U.S. Government Accountability Office (GAO). More than half of the $20 billion that the Social Security Administration overpaid over the past decade was due to unreported beneficiary work activity, according to a statement by Daniel Bertoni of the GAO. Between 2005 and 2014, a total of $11 billion was overpaid to beneficiaries with earnings that exceeded program limits.

The Social Security Disability Insurance (SSDI) program pays benefits to almost 11 million disabled beneficiaries and their dependents, and the trust fund is in trouble. Operating separately from the Social Security trust fund that pays retirement and survivors benefits, the disability insurance trust fund is predicted to become fully insolvent by the end of next year. If that happens and Congress fails to take action, disability benefits would have to be reduced about 20% in 2017 to match the level of revenues flowing into the program.

Social Security disability benefits are based on past earnings from work, and, like retirement benefits, are funded by payroll taxes. The program's rules restrict beneficiaries from working and earning "substantial amounts" while they are receiving benefits. Beneficiaries are generally limited to earning no more than $13,080 a year before benefits are eliminated. Regulations require all disabled beneficiaries to promptly notify the Social Security Administration when their condition improves, they return to work, or when the amount of their work and earnings increases.

The House Subcommittee on Social Security recently released a slate of bills aimed at reducing fraud and overpayments in the SSDI program. One bill, for example, would update the 1979 medical vocational guidelines for determining eligibility. An April 2015 report by the Social Security's Inspector General, identified at least 218 cases in Puerto Rico where people were determined disabled based on the current guidelines which provide that speaking English is required to obtain work, even though Spanish is the official language of Puerto Rico.

TSCL is submitting a list of options that we support to strengthen SSDI to the House Subcommittee on Social Security. View the Top 10 Priorities for Fixing the Program.

Sources: "Preliminary Observations on Overpayments and Beneficiary Work Reporting," Testimony of Daniel Bertoni, Government Accountability Office, Before the Subcommittee On Social Security, House Ways And Means Committee, June 16, 2015. "Qualifying For Disability Benefits in Puerto Rico Based On An Inability To Speak English," Social Security Administration Office Of The Inspector General, April 2015.