Social security is such a robust program that it not only covers retired workers but also provides benefits for spouses, ex-spouses, widows/widowers, children and children-in-care. But arguably one of the most important benefits, or "safety nets", are the benefits afforded to the disabled. In fact there are nearly 9 million Americans currently receiving social security disability benefits. These benefits are often a lifeline that protects the disabled from becoming impoverished.
So when benefit reductions target the disabled you have to scratch your head and wonder why this would be? More disturbing perhaps is that these benefit reductions emanated from the Social Security Administration (SSA) and not from Congress. As far as I know, the SSA's job is to administer the social security program and not to set policy. The American people, through their voice when they elect their public officials, should decide what should and shouldn't be policy.
Shockingly, that's not what happened on December 23, 2014. In the blur of pre-holiday hustle and bustle the SSA "clarified" a provision in their Program Operating Manual System (POMS) which effectively removed a benefit which many non-disabled beneficiaries are eligible for. Most policy makers did not pick up on this because of the surreptitious manner in which the SSA implemented this change and also because of the timing of this change.
By way of background, when a disabled worker receives social security disability benefits their benefits are paid from the disability trust fund and not from the retirement trust fund. But when they reach full retirement age (FRA, typically age 66) their benefits continue as is but their benefits automatically convert to retirement benefits, unless they actively choose to withdraw that conversion.
This automatic conversion at FRA to retirement benefits however precludes them from filing for a spousal, widow, divorced spousal or divorced widow(er) benefit (auxiliary benefits) and deferring their own retirement benefits to age 70 so that they can grow by 8% per year plus cost of living adjustments. This deferral could have provided these disabled retirees with a significant increase in retirement benefits, the same benefits available to non-disabled retirees.
However, the way the new language in the POMS is written, if a disabled worker were to pull their disability benefits prior to FRA (in order to file for auxiliary benefits) to avoid the automatic conversion to retirement benefits, then they would have to pay back all of the disability benefits that they have received to date from social security. This typically could amount to tens of thousands or even hundreds of thousands of dollars. Therefore this new provision effectively shuts down this option for the disabled and denies them benefits which are available to non-disabled workers.
So who will this policy really affect? What's the big deal anyway? Well, for one, it will affect the disabled wife of a client of mine that I am meeting with this week. It could also affect other disabled workers and anyone who may become disabled, which of course could be any of us!
It's unusual to find public policy that specifically discriminates against the disabled as this change by the SSA appears to do. The SSA claims they are not setting policy but merely clarifying a provision in POMS. But like many administrative "clarifications" it involves some interpretation. This is a grey area that could have easily been "clarified" to allow for this benefit to continue as is.
The bigger issue here is that the bureaucrats at the SSA should not be the ones setting public policy regarding social security benefits, which they are effectively doing through their interpretation of their rule book (POMS). It is time for Congress to address this particular issue in its larger discussion on the changes they feel are necessary to keep social security viable. Whether this is done by changes to benefits, tax increases or some combination of both is for Congress to decide. It is for us to decide who should be in Congress and who should speak for us.
Ash Ahluwalia, NSSA, CCSCA, MBA