Congress has been debating over the issue of disability insurance reform for decades now, but instead of developing a solution that offers meaningful reform, they continuously reallocate funds from other government programs, such as Social Security. In Fact, a budget deal that was just recently decided is set to borrow approximately $150 billion from the Social Security trust fund over the next three years to keep the Disability Insurance (DI) trust fund from becoming depleted. While a solution like this might prove to keep the disability insurance program solvent temporarily, Americans should remember that a more permanent solution needs to be in the future.

The DI program has ballooned significantly in the last two decades, with the number of working-age individuals receiving benefits skyrocketing to an astonishing 11 million throughout the United States, and the percentage of Americans receiving benefits climbing from just 2.8 percent in 1994 to 5.1 percent now. Unfortunately, at this rate the DI trust fund will again be depleted in 2022 unless more permanent measures are taken, and the Social Security Old-Age and Survivors Insurance trust fund (OASI) could be depleted as early as 2033.

While there are measures that can be taken to help ensure that disabled and elderly Americans continue to receive the funds they are eligible for, the actual steps that will be followed remain unseen at this point. A few of the options that are proposed include:

  • Reforming return-to-work incentives for disabled individuals. The current return-to-work incentives for the disabled are so ineffective that an estimated one in 20 working age Americans are currently receiving benefits.
  • Establishing a flat rate for disability. The program currently provides higher benefit amounts to individuals who had higher income levels before they became disabled. A flat rate would have the potential to better protect disabled individuals from poverty and could improve the long term financial situation of the program as a whole.
  • Offering private disability insurance options in exchange for reduced payroll taxes. Private disability insurance would potentially offer more flexibility to disabled workers and help ensure that they do not fall under the poverty line while reducing SSDI costs annually.
  • Continuing Disability Reviews. While an increase in entry to the program certainly plays a role in the lack of funding, reduced exiting has had an impact as well. Inadequate continuing disability reviews enable individuals who are no longer disabled to remain in the program, while many disabled individuals continue to be turned down.