pHandsShowingChart_shutterstock_156640544New rules could force changes to SSDI program

Social Security Disability Insurance provides essential support to many Chicago residents who cannot work due to disabling conditions. In December 2014, the Social Security Administration reported that over 8 million Americans under age 65 draw on SSDI. Unfortunately, as most disability lawyers in Chicago know, projections show the SSDI fund is depleting. The program could soon face significant cuts or reforms under the terms of a recent House rule change.

Coming shortages

The SSDI fund may be exhausted as soon as 2016, according to Forbes. If new funding is not secured, 9 million insured workers could face a 20 percent decrease in benefits. Additionally, 2 million spouses and 160,000 children who collect spouse’s or dependent benefits may see reductions.

The reasons for these shortages may only become worse in time, as many disability lawyers in Chicago understand. As Baby Boomers age, more total workers might start collecting SSDI. Already, 70 percent of SSDI recipients are over the age of 60. Due to the modern increase in female workers, a greater total number of workers are eligible for benefits. Additionally, more workers are collecting SSD benefits at older ages, due to changes in age eligibility rules.

The shifting of funds between the Social Security retirement and disability programs has addressed similar shortages in the past. Time Magazine states that these shifts have been used 11 times to prevent shortfalls in either program. Currently, reassigning just .01 percent of Old-Age and Survivors Insurance funds to SSDI could preserve the program until 2033.

Policy changes

Unfortunately, House leaders recently approved a rule to block such transfers unless reforms to the SSDI program are implemented. To secure external funding, lawmakers would have to make one of the following changes to address long-term shortfalls:

  • Increasing taxes to fund the program
  • Reducing benefits
  • Combining tax hikes with benefit cuts

According to Forbes, House rules like this are sometimes waived. If the rule is observed, it could lead to budget cuts or other measures that might adversely affect beneficiaries. However, it may also result in reforms that benefit people who collect SSD benefits.

As an example, the new rule could result in greater taxes to fund the SSDI program. According to Time Magazine, 72 percent of Americans surveyed in fall 2014 believed greater benefits may be necessary. For 77 percent of the individuals surveyed, paying more in taxes to support higher benefit awards would be acceptable. A reform establishing greater tax funding could extend the lifespan of the SSDI program. As most disability lawyers in Chicago know, this change could also result in more extensive financial support for beneficiaries.