Social Security Benefits America: Disability Insurance Program Briefing

May 7, 2014 3:00 p.m.

Capitol Visitor Center, SVC 203-02

AGENDA

Opening Remarks Carolyn W. Colvin, Acting Commissioner

*** Invited Guests***

Chairman Tom Harkin – Iowa (Senate Health, Education, Labor & Pensions)

Chairman Ron Wyden – Oregon (Senate Finance Committee)

Ranking Member Orrin Hatch – Utah (Senate Finance Committee)

Rep. Sam Johnson – Texas – 3rd

District (House Ways & Means, Social Security Subcommittee – Chairman)

Rep. Xavier Becerra – California – 34th

District (House Ways & Means, Social Security Subcommittee –

Ranking Member)

Panel Stephen C. Goss, Chief Actuary

Marianna LaCanfora, Acting Deputy

Commissioner, Office of Retirement and

Disability Policy (Moderator)

Jim Borland, Assistant Deputy

Commissioner, Office of Disability

Adjudication and Review

Theresa Gruber, Assistant Deputy

Commissioner, Operations

Frank Cristaudo, Acting Chief Counsel,

Boston Region – Office of General Counsel

Questions & Answers Panel Joined by Scott Frey, Deputy

Commissioner, Office of Legislation and

Congressional Affairs

Closing Remarks Carolyn W. Colvin, Acting Commissioner

Social Security Administration – Overview Disability Claims Process – May 7, 2014

An Overview of SSA’s Disability Process

Social Security Disability Insurance :

Growth, Solvency, Sustainability

Stephen C. Goss, Chief Actuary Social Security Administration Briefing

May 7, 2014

3

Social Security Disability Insurance 155 million workers under age 66 are insured against

becoming unable to work

9 million workers now receive DI benefits • 2 million “dependents” - mostly children

Many more protected from loss of insured status • And from lower retirement benefits

Benefits replace 40% to 45% of career earnings on average

• 76% for very-low earner, 27% for steady maximum earner

4

Solvency of the DI Trust Fund; reserve depletion in 2016 2008 recession offset “new economy”; cycles still happen

DI Trust Fund Ratio in 1995, 2008, 2013 Trustees Reports

0

50

100

150

200

250

1990 1995 2000 2005 2010 2015 2020 2025

Rese

rves

as

% o

f Ann

ual C

ost

1995TR2008TR2013TR

"New Economy" irrational

exuberance

2008 Recession

back to reality

5

Recession: Most of the Effect Was from Fewer Workers—Not More Beneficiaries Changes in Disabled Worker Beneficiaries and in

Covered Workers from 2008 TR to 2013 TR

0

2,000

4,000

6,000

8,000

10,000

12,000

2007 2008 2009 2010 2011 2012 2013

Ch

an

ge

in T

ho

us

an

ds

Increase inDisabledWorkers

Reduction inCoveredWorkers

6

Is DI out of control, taking over OASDI? (Note 5% increase in DI cost for 2010 due to recession)

02468

101214161820

1980 2010 2040

DI Cost as a Percent of Total OASDI Cost

1995 TR2013TR

12.8

16.917.9

12.6 12.312.8

7

Sustainability of DI: Cost as percent of GDP has peaked, but scheduled income is too low

DI Cost and Income as Percent of GDP 1975-2090 2013 Trustees Report Intermediate Assumptions

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

2055

2060

2065

2070

2075

2080

2085

2090

Baby Boomers reach ages 45-64

in 2010

Baby Boomers reach ages 25-44

in 1990

DI Cost

DI Income

Note: Recession raised

DI Cost/GDP by 15% for 2010

Increase of 187% in DI Beneficiaries from 1980 to 2010 Is Demographic and Women Working

(SSI similar increase—about 2/3 as many adult disabled under 65)

8

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000DI Disabled Worker Beneficiaries: from 2010 to 1980, in thousands

187 percent above 1980

Age 20-64 popincreases 41%

increases 38%

increases 4%

increases 21%

increases 5%

increases 12%

IncidenceRates, etc

9

Remarkable changes in age distribution Progression of the boomers and drop in birth rates dominate

Figure 2: Age Distribution of the Population Age 25+, 1940 to 2100 (2012TR)

0

10

20

30

40

50

60

70

80

90

100

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Perc

ent o

f Pop

ulat

ion

at A

ges

25+

25-44

45-64

65-84

85+

Boomers become 25-44

Boomers become 45-64

Boomers become 65-84

10

Increased work by women raised insured; men a little lower at younger ages

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%Figure 5: Percent of Population that is Insured for Disability

Male

Female

11

So where are we on DI? • Is the sky falling, cost out of control? No.

• Or are we following a path foreseen? Yes.

• Trust Fund reserves projected to deplete 2016 Need change soon to avoid inability to pay in full & on time Default: Revenue enough to pay 80% of benefits, so:

1. Cut all DI benefits by 20%? 2. Increase DI tax revenue by 25%? 3. Or, reallocate tax rate between OASI and DI?

• Need further changes for long-range solvency

12

Potential tax rate reallocation between OASI and DI: Like in 1994—NO change in total taxes

Social Security Administration – Overview Disability Claims Process – May 7, 2014

An Overview of SSA’s Disability Process

Social Security Administration – Overview Disability Claims Process – May 7, 2014

Who benefits from Social Security?

Retirees & dependents

70%

Disabled workers &

dependents 19%

Survivors 11%

Social Security Administration – Overview Disability Claims Process – May 7, 2014

Who are disability beneficiaries?

56 million Americans live with

disabilities

38 million live with severe

disabilities

15 million receive Social

Security and/or SSI disability benefits

Severe illnesses – advanced cancers, end stage renal failure

Severe physical disabilities – severe cerebral palsy, post-polio syndrome

Mental impairments – significant intellectual disabilities, severe mental illness

Sensory disabilities – deafness, blindness

Source: U.S. Census Bureau, 2010

Social Security Administration – Overview Disability Claims Process – May 7, 2014

What are our eligibility guidelines?

Unable to engage in any substantial gainful activity

Due to a medical condition (physical or mental)

Which has lasted or is expected to last at least one year or result in death

AND

Must have sufficient work history to be eligible for Social Security Disability (SSDI)

or Meet means test for

Supplemental Security Income (SSI)

Social Security pays only for total disability – no benefits are paid for short-term or partial disability.

Social Security Administration – Overview Disability Claims Process – May 7, 2014

What is our disability process?

SSA follows a five-step sequential evaluation process in evaluating claims for disability.

We have four levels of administrative review:

Initial

Reconsideration

ALJ Hearing

Appeals Council

70% of all allowances are made at the initial or reconsideration level

Social Security Administration – Overview Disability Claims Process – May 7, 2014

Initial

•Received nearly 3 million claims last fiscal year via in-person interviews, telephone, internet, and mail

Reconsideration

•Received nearly 785,000 reconsideration requests last fiscal year from claimants in-person, over the telephone, or via surface mail.

Initial and Reconsideration

•DDS applies 5-step process of sequential evaluation

•If allowed, electronically sends to FO for payment

•If denied (or partially favorable), notifies claimant of right to reconsideration or hearing

FO

A Closer Look: The Disability Process in FO and DDS

DDS

To Hearing Office

Social Security Administration – Overview Disability Claims Process – May 7, 2014

Hearing Level

Hearings and Appeals

Appeals Council

•Received nearly 825,000 requests for hearing last fiscal year

•Issued nearly 794,000 policy compliant, legally sufficient decisions last fiscal year

•Received over 172,000 requests for review of hearing denial or partially favorable decisions last fiscal year

•Assists with civil action cases filed in Federal court

Federal Court

From

DDS

Social Security Administration – Overview Disability Claims Process – May 7, 2014

Last year, almost 19,000 claimants appealed their cases to federal court

SSA cases comprise one of court’s largest workloads

Court decides whether substantial evidence supports the decision and whether any errors of law were made

Court can affirm, remand, reverse, or dismiss case

If case is remanded, claimant’s case reviewed again

Courts also influence by interpreting the statute and providing guidance on due process and other critical issues

Federal Court Review

Social Security Administration – Overview Disability Claims Process – May 7, 2014

Two Programs: Benefits are administered under Title II (Social Security Disability Insurance) and Title XVI (Supplemental Security Income) of the Social Security Act.

Social Security pays only for total disability – no benefits paid for partial or short-term disability.

Ongoing focus on service and quality improvements at every step in the process.

To ensure program integrity, we conduct continuing disability reviews on every case at regular intervals to make sure a claimant is still disabled.

The disability programs are essential to individuals with disabilities and their families.

Key Points