25 Aug Improve the SSDI Program and Address the Impending Trust Fund Depletion in Economics and Finance
Economic and fiscal policy has an impact on so many aspects of our daily lives. BPC Action advocates for policies that promote economic security and opportunity for Americans; call for responsible federal fiscal policy to spur economic growth and stabilize the nation’s debt trajectory; and encourage the private-sector to innovate and mobilize resources in support of a changing economy. The following information is from BPC, our 501 (c) (3) affiliate.
The Bipartisan Policy Center convened the Disability Insurance Working Group in 2014. The group includes individuals from across the ideological spectrum with a variety of backgrounds and viewpoints, including academics, policy researchers, advocates for people with disabilities, representatives of the labor and business communities, and former congressional and agency staff. Working group members share an urgent concern to address the impending exhaustion of the Disability Insurance Trust Fund and to improve the Social Security Disability Insurance (SSDI) program to better meet the needs of Americans with disabilities. There is shared recognition that a bipartisan approach will be necessary and that there are ways in which the program could be improved. While many members of the group would not endorse every provision herein on a stand-alone basis, they have agreed to support the complete package.
By the end of 2015, policymakers should enact a reallocation of the Social Security payroll and self-employment taxes between the Disability Insurance and Old-Age and Survivors Insurance Trust Funds
The SSDI program serves a diverse group of individuals with disabilities with a wide-ranging set of needs. Public policy and practice have come a long way in making the nation more accessible to the needs of individuals with disabilities since the program was created in the 1950s. There is also now a broader range of work opportunities and supports for those individuals with disabilities who wish to work and who have the capacity to do so. The SSDI program, however, remains a vital lifeline for workers unable to do substantial work due to disability or illness. While SSDI program rules contain an array of work incentives and supports for those whose conditions improve and who wish to test their capacity to work, certain program rules—such as the “cash cliff”—work counter to the desire of some who wish to remain in, or return to, the workplace when able to do so.
The trust fund for the SSDI program is on course for insolvency next year. This upcoming deadline is a focus of policymakers and a source of concern for SSDI beneficiaries and their families. Reallocation of funds between Social Security’s Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund is one policy option that has been used on many occasions, in both directions, in the past. Some policymakers have expressed a desire to enact meaningful reforms to strengthen and improve SSDI along with addressing solvency, rather than reallocation alone, which does not address underlying issues within the program or improve longterm sustainability.
- Avoid program insolvency and seek to achieve long term actuarial balance.
- Do no harm: no changes to primary insurance amounts for current beneficiaries and no changes to eligibility standards at the current time.
- Allow beneficiaries to choose whether or not to participate in pilots and work-incentive programs.
- Create employment opportunities for those individuals who want to work, and remove and avoid barriers to work.
- Design a benefit offset that encourages work and improves the economic security of beneficiaries.
- Simplify the administration of SSDI and the Supplemental Security Income (SSI) program in ways that will more closely align work incentives.
- Prevent fraud in the program, but recognize that eliminating all fraud will not yield significant cost savings; fraud is not the reason for the current funding shortfall.
- Improve the recording and processing of earnings to reduce the number and amount of overpayments. Hold beneficiaries harmless for overpayments if earnings reports are made properly.
- Continue attachment to the SSDI program regardless of work activity if a beneficiary continues to be medically disabled.
- Provide adequate resources to administer the program.
- Recognize that SSDI serves a diverse population and disability can be dynamic.
Address Trust Fund Solvency
By the end of 2015, policymakers should enact a reallocation of the Social Security payroll and self-employment taxes between the Disability Insurance and Old-Age and Survivors Insurance Trust Funds to ensure that benefits continue to be paid as scheduled. The working group members could not agree on a recommended reallocation length, with some supporting an equalization of the trust funds to 2034 and some supporting a shorter-term reallocation.