Social Security Disability

This is a re-post from my other blog the, regarding some important new legislation, the ABLE Act:

The ABLE Act is moving through Congress and should get the Presidents approval if the Senate approves the bill.  The Act would creates ways for the disabled to save with no tax consequences and without losing benefits.

According to WISTV.COM, the bill is modeled after the tax-free college savings accounts.  The ABLE Act bill would change the federal tax code to allow states to establish the savings account program. To qualify for the account, a person would be diagnosed as disabled by age 26, with the disability resulting in “marked and severe functional limitation”.  Individuals already receiving Social Security disability benefits would also qualify.

Families could then set up tax-free accounts with banks, depositing up to $14,000 annually to pay for long-term needs such as transportation, health care, and education.  The qualified contributions are to be in after-tax dollars, but earnings will grow tax-free.  ABLE accounts could grow as large as $100,000 without the disabled individual losing their government benefits such as Social Security (current asset limit is $2,000), and Medicaid.


According to an article on the Baton Rouge webpage, the system Social Security uses to administer disputed disability claims is severely backlogged.  This is nothing I didn’t know already.  I see it in my practice every day.  I represent people in Social Security disability cases who have an average wait time of anywhere from one year to two years, in this district.  That wait time is from the date of denial of a disability claim to the date of hearing on the claim.  After the hearing it can take anywhere from a couple of weeks to several months to get a decision from the ALJ.

The story quotes Social Security Administration officials, who claim the backlog is the result of underfunding and under-staffing at the Agency, as well as a dramatic rise in the number of cases, and an increasing number of cases dealing with what they call “hard to  prove ailments”, such as back pain, depression  and anxiety.  The thing to remember is that as our society ages, a huge number of baby boomers are moving into their 50’s, an age when major injuries and illnesses can cause disability.  The number of disability cases in the next 10 years should increase significantly, over and above the already high numbers.  The system needs help right now, to clear out the backlog, as well as to prepare for what will become even greater numbers of disabled people in the future.

Nearly 2/3 of applicants for Social Security disability are denied on their initial application.  The next step after denial is to file an appeal and appear for a hearing before an administrative law judge.  Almost 75% of people who hire an attorney win their appeal at the hearing level.  Last year the average wait time for a hearing was one and a half years.  

According to the Administration, the number of people on SS disability is 7.4 million, double the number of people who were on disability in 1990.  In contrast, the number of staffers at the administration is down by five percent.  Obviously a 50% increase in workload and a 5% decrease in people working the claims is a recipe for disaster.  The administration is working on ways to streamline the process.  They recently hired more judges and staff.  Extra funds were allocated to the administration in this year’s budget.  The administration has an electronic records system, to store and manage medical records and other documents more efficiently.  They are also experimenting with video conferencing systems which would allow attorneys to attend hearings via video conferencing equipment in their offices, which will hopefully expedite the hearing process.  

The newspaper article shares the story of a person who has been waiting several years for her determination.  This is a story I hear on a routine basis.  It is worth the efforts of congress and the administration to fix this system, and speed up help for those among us who are in dire need of help.

Disability insurers have been sued for clogging the Social Security Disability system with unnecessary claims, according to a story in the New York Times.  Disability insurance companies include provisions requiring people on their disability insurance to exhaust all other methods of income, including applying for Social Security disability, or risk getting their payments cut by the amount they might qualify for under SS disability. 

The problem is that the qualifications for SS disability are much more stringent than for disability insurance.  Disability insurance pays short term claims, as well as long term claims.  SS disability is only for those who can demonstrate the inability to work for the past 12 months or that they will not be able to work for 12 months in the future.  It is not for a person who is only not able to work for 6 months.

However, the insruance companies are requiring those who are only going to be disabled for a short time to apply and appeal their denials.  This clogs up the SS system and prevents those who have valid disability claims from getting their hearing date.

“Anybody who is forced to come into this system, and who doesn’t need to be there, is affecting someone else,” said Ken Nibali, a former administrator from the Social Security Disability system, “(t)hey’re holding up cases for the people who have been waiting for months and years, who in many cases are much worse off.”

According to the article, the number of disability cases waiting for a hearing in front of an administrative law judge has doubled since 2000 and the average wait time has risen from 258 days in 2000 to 512 days.

The lawsuits were filed against the Unum Group and Cigna.  The suit claims that the insurance companies require people to file claims and pursue appeals, eeven when the insurance company has evidence that the person could never qualify for SS disability.  The cost to the SS system is staggering.  It article puts the cost of processing one SS disability action at $1,180.  If the claimant goes to the administratice law judge for relief the cost is $4759. 

Insurers benefit financially from this practice in several ways, according to the article.  They can stop paying the claim if the insured refuses to apply.  The insurer can reduce its claims reserves when claimants apply for SS disability, which raises profits.  Also, if the claimant applies over and over for SS, their claim might be accepted, which cuts the amount the insurer pays for the claim.

Article in New York Times describes the worsening condition of the Social Security disability system. Some facts from the article: of the cases that are rejected initially, 2/3 of the people that appeal have their claims granted. Since 2000, the backlog of cases on appeal has soared from 311,00 to 755,000. In 2000 the wait for an appeal took 238 days, now the wait is over 500 days.

Many people lose their houses while waiting for their appeal to be heard. Some are kicked out of their apartments. Others die during the wait. Congress passed a bill that would have added more judges to the system, but unfortunately the bill was vetoed.

Addendum:  New York Times editorial about the situation does a good job of tracing the origins of the problems in the system.