Disability benefits are one of the most important and valuable benefits available through the social security system. Unfortunately, qualifying for these benefits is extremely difficult and the approval process is quite complicated and often requires the assistance of an attorney who specializes in social security disability claims.
If you are considering applying for disability benefits you should not approach this task in a haphazard fashion. There is actually a 5 step approval process that social security follows. It is a sequential process that is dependent on completing each step in order. Knowing how to maneuver through this process will greatly increase your chances of getting approved.
Step #1: Determining if you are working at Substantial Gainful Activity (SGA). If you are not currently working you can move to step #2. If you are working and earn more than $1090 (in 2015) then you will not qualify for disability benefits.
Step #2: Do you have a medical condition that is severe or a combination of conditions that are severe? Social security will determine your condition or combination of conditions to be severe if "they significantly limit your ability to do basic work activities". You will need to gather all your medical records and submit them to social security so they can make their determination.
Step #3: Determining whether your medical condition, or combination of conditions, "meets or medically equals" the criteria of an impairment. Social security has a list of impairments that they call "the listings". If you can prove that you have one of the medical conditions at the level described in the listings then you will be deemed to be disabled. If not, you will have to move to step #4.
Step #4: Determining your "residual functional capacity (RFC)" and whether you have the RFC to do your "past relevant work". Basically, social security must figure out your ability to do physical and mental work activities on a sustained basis. If you are found capable of returning to past relevant work you will be denied and not found to be disabled. Otherwise you will proceed to the final step.
Step #5: Determining if you can do any other work, considering your RFC, age, education and work experience. If social security finds that you cannot do any other work, and your condition is expected to last 12 months or more, then you will qualify for benefits.
To be certain, especially given the history of fraudulent cases in the system, qualifying for social security disability benefits is an extremely difficult and arduous process. Most claims are declined on the first application and the approval process can literally take years.
It is often beneficial, if not necessary, to seek the assistance of an attorney who specializes in social security disability claims. Hiring an experienced attorney who understands the system and can fully and properly prepare your application may be an investment worth making.
Social security disability benefits can be an invaluable benefit for those in need and, in some cases, provides the necessary lifeline to keep the disabled from becoming impoverished. These benefits were put in place to help those in need but, like most governmental programs, it remains your responsibility to make sure you don't become a victim of the bureaucracy when you would otherwise qualify for benefits.
With the presidential election season in full swing the topic of "how to fix social security" is certainly on every candidate's agenda and rightly so. However, at present, the most critical issue regarding social security is the viability of the social security disability fund.
By way of background, the Old-Age and Survivors Insurance (OASI) fund and the Disability Insurance (DI) fund together make up what is known as the Social Security Trust Funds. Retirement benefits are paid out of the OASI Trust Fund while benefits paid to disabled workers are paid from the DI Trust Fund.
As of today, an astounding 60 million Americans receive benefits from social security. That represents nearly 20% of the U.S. population! Furthermore these numbers are expected to continue to rise as the wave of baby boomers reach retirement age and life expectancies continue to increase.
It is important to note however that, of the 60 million social security beneficiaries, 11 million receive disability benefits and therein lies the more pressing issue at hand. Specifically, the social security disability trust fund is expected to run out of funds sometime in 2016.
If that were to happen does that mean that beneficiaries would immediately stop receiving their social security disability checks? No but it does mean that they will see a reduction in their benefits of approximately 19%. The reason their benefits would not stop completely is that their benefits would continue to be funded from current tax revenue coming in from employee payroll taxes. Since a social security disability beneficiary receives on average $1,017 per month they can expect their monthly check to automatically drop to about $824.
It should be noted however that the anticipated depletion of the social security trust fund is not a rare occurrence. This circumstance has happened a number of times in the past and the resolution has always been the same. Congress authorizes a shift of funds from the social security retirement fund to the social security disability fund. In fact, this procedural fix has been so common that it is all but automatic. The problem this time is that even this automatic procedural fix has been politicized with opposition from members of Congress in order to put pressure on Congress to try and force a permanent fix to the issue of social security funding before allowing this historically acceptable fix from being approved.
Once again, the American people (in this case disabled Americans) are caught in the middle of a political debate which often escalates into non-sensical banter with no meaningful collaboration to solve one of the countries most pressing financial issues.
One proposed solution to remove some of the political wrangling from the process would be to combine the social security retirement fund and the disability fund. This would have little impact on the viability of the retirement fund and would remove the inevitable future battles over when and how to use the retirement fund to provide short term financial support for the disability fund.
The viability of both social security funds are indeed at risk. If Congress cannot agree on acceptable and effective changes to the system the social security trust fund is expected to run out of money in 2035 at which time retirement benefits would be reduced by 25% for all recipients. On-going payroll tax receipts would provide for continued benefits, albeit reduced.
So what can be done to resolve the issues potentially crippling the social security system? There are numerous possible solutions including, but not limited to, pushing out the full retirement age for younger Americans from 67 to 68 or even 69. Perhaps increasing the social security taxable wage base from today's $118,500 to say $150,000 so that higher income earners pay more into the system. Possibly reducing cost of living increases by 1% or perhaps increasing the social security payroll tax from 6.2% to 6.5%. Certainly numerous possible solutions have been proposed but it's up to our elected officials to work together to develop and agree on a strategy and move forward.
The question is likely not if changes will be made but which changes can be agreed upon and how and when should they be implemented. Fortunately with a presidential election around the corner we all have an opportunity to let our voices be heard. None of these changes are likely to be easy but they are necessary in order to ensure that social security will be there for the tens of millions of Americans in or approaching retirement.
My previous Blog on July 27, 2015 discussed the Windfall Elimination Provision (WEP) which applies to anyone who has a non-covered pension (a pension funded by earnings not subject to social security tax) in addition to having a social security benefit. For these individuals the WEP comes into play and effectively reduces their social security benefit by up to $413 per month. So if you have a non-covered pension, as do police officers, firefighters, some teachers and some government workers, then your social security benefits may be affected by the WEP.
The purpose of the WEP was to account for what congress deemed to be "double dipping". By excluding the non-covered pension income from the social security earnings calculation such individuals were being paid a higher amount of social security benefits than they would have otherwise received had they included this non-covered pension income in the calculation.
However, congress didn't stop at the WEP. They also instituted what is called the Government Pension Offset (GPO). It is similar to the WEP in that it affects workers who receive a non-covered pension and also qualify for a social security benefit. The difference is that the GPO affects those same workers who may also be entitled to some form of spousal or survivor benefit from social security on the record of their spouse or former spouse.
As a result of the GPO these individuals will have their spousal or survivor benefits reduced by two-thirds of the worker's non-covered pension. For most workers affected by GPO, this rule will affectively eliminate their spousal benefit and also most or possibly all of their survivor benefits! Clearly, the GPO could have a potentially devastating affect on one's otherwise eligible social security retirement benefits.
As an example, assume a police officer received a $2,100 per month police pension and his wife's social security benefit was $2,200 per month (at full retirement age). He may normally be eligible to receive a spousal benefit equal to 50% of her benefit or $1,100 per month. However, since he's affected by the GPO he will not qualify for any spousal benefit. This is because he would have to deduct two-thirds of his police pension or $1,400 (2/3 X $2,100) from 50% of his wife's benefit or $1,100 ($2,200 X 50%) which results in him netting zero spousal benefits. Likewise, if his wife passed away his pre-WEP survivor benefit would be $2,200. However, since he is affected by the GPO his survivor benefit would also be reduced by $$1,400 to only $800 per month ($2,200 - $1,400).
What about workers who have a non-covered pension but choose to take this benefit as a lump-sum instead of annuity payments. Would they be exempt from WEP since they are not actually receiving monthly non-covered pension income? Unfortunately, receipt of a lump-sum benefit will not exempt a non-covered worker from WEP. Social security will simply calculate their WEP reduction as if they had chose to receive their non-covered pension payments on a monthly basis.
If you are a worker affected by WEP and GPO it is important to note that the affect of these provisions on your social security benefits will not be shown on your social security statement. Although a description of WEP and GPO are disclosed on your statement it is up to you to do the calculations to determine the affect they may have on your benefits.
In order to properly identify the affects of WEP and GPO on your benefits, it may be advantageous to work with a social security retirement income specialist who can help you to navigate these complex rules and perhaps identify some filing strategies which may be available to mitigate the affects of WEP and GPO on your benefits. This is one of the most complex areas in the social security retirement benefits program and it's potential affect on one's benefits may be significant to say the least!
Ash Ahluwalia, NSSA, CCSCA, MBA