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Social Security Disability Fund Threatened – Are Your Benefits at Risk?

According to recent news, the Social Security disability trust fund is in trouble. The Social Security administration is required to inform Congress about the health of its trust funds and the latest report in July confirmed previous projections: As of now, the trust fund that helps pay for Social Security Disability Insurance benefits is expected to run dry by late 2016.

Yes, that’s not much longer than this time next year. It will be up to Congress to solve the problem but what will happen is far from clear now.

Does this mean the SSDI safety net for disabled workers is in danger of disappearing? By all accounts, not at all, so people shouldn’t fear they’ll be left with nothing if they can’t work and must rely on Social Security disability payments.

As of now, the worst-case scenario is projected to be a cut in benefits, not a stop in benefits. There’s no question this will be a hardship, however, for people on disability who are already living on very tight budgets.

According to the report from Social Security actuaries, disability payments will need to be reduced by 19 percent if the trust fund is depleted. This would drop the average disability check below $1,000 a month.

The program will keep going because of the way the Social Security program is now set up. It is a “pay-as-you-go” system. Payroll taxes are collected from current workers and then used to pay for the benefits of workers who are now retired or disabled.

The Social Security Administration also operates two trust funds that are supposed to supplement any shortfalls from collected taxes. One trust fund is for retired workers and the survivors of deceased workers, and the other for disabled workers.

The trust funds are the equivalent of saving for a rainy day. They are funded by surplus payroll taxes – when the amount collected is greater than what is needed to pay beneficiaries, the surplus is supposed to go into the trust fund. If collected taxes fall short, instead of cutting benefits, Social Security will use money from the trust fund to cover any gaps.

That rainy day has arrived for SSDI and the trust fund is now needed to pay full benefits. Once the fund is depleted – next year if nothing happens to stop it – projections say current payroll taxes won’t be enough to cover full benefits, which is why people would see a cut in disability checks.

Proposed solutions include diverting a slightly higher percentage of payroll taxes to the SSDI trust fund that would normally go into the trust fund for retired workers. That has been done in the past but whether the idea gets anywhere remains to be seen. Last January, Republicans in Congress passed a rule that said such a transfer can’t be made without showing other changes that improve the Social Security program.

Critics also contend that the disability program has become too lenient because the number of beneficiaries has risen significantly since the 1990s, and that more needs to be done to eliminate fraud. They also want more disabled workers to return to work instead of staying on SSDI indefinitely.

But despite the myth that the SSDI system is full of malingerers, it isn’t easy to qualify for Social Security disability. For one thing, the agency’s regulations require that people prove their injury or illness is severe enough to keep them from doing any job, not just their regular job.

I have been working to help people with Social Security disability cases for more than 25 years. Some people consult with me who wouldn’t be classified as disabled according to the guidelines set by Social Security. Or they can’t do their previous job but they can do a different job. Or their work history isn’t long enough to have paid into the Social Security disability system, or they have drug or alcohol problems, or they are indeed malingerers. I don’t take those cases and I advise them that I can’t help.

However, my opinion is although there may be some people who take advantage of SSDI, the claimants I see have lost everything due to their disability. They suffer from depression because they are unable to do anything that makes them happy. These are the people who need SSDI and I do my best to help them navigate the significant rules and regulations of Social Security.

SSDI is an important program that is vital for disabled workers and their families, and I would urge Congress to take action. 2016 will be here soon.