Disability inability

One aspect of Social Security that doesn’t get as much attention as retirement benefits is what’s known as Social Security Disability Insurance (SSDI).

Its monthly payments are designed to help workers who develop a life-threatening physical or mental disability, or one that will prevent them from engaging “in any substantial gainful activity” for at least 12 months.

Eligibility is based on age, degree of disability and length of work record, so the older the applicant, the better the chance of success. More than three-quarters of all SSDI recipients are over 50, and 41% are between 60 and full retirement age. (Disability benefits end once regular Social Security begins.)

Funded by a portion of the payroll taxes withheld from workers’ earnings, SSDI is on a sounder financial footing than Social Security, with funds expected to last through at least 2098.

The bad news is that perhaps one of the reasons it’s in better financial shape is that the SSDI determinations process is dysfunctional, with a waitlist of more than one million applicants (for a program that has seven million recipients). AARP reported that 30,000 applicants died while awaiting an SSDI determination last year.

It takes the Social Security Administration (SSA) more than seven months to render an initial decision to applicants, up from about four months a few years ago.

If rejected initially, as about 70% of all applications are, there are then typically two levels of appeals.

An appeal for “reconsideration” requires another seven-month wait. If that’s denied, a person will typically wait another 15 months before the case is heard by an administrative law judge.

The biggest reasons for these delays may stem from problems not of the SSA’s making.

First, the number of Social Security beneficiaries overall is up about 25% since 2010 (yes, those aging baby boomers). At the same time, Congress has reduced the agency’s budget by nearly 20% in real terms, according to the Center on Budget and Policy Priorities.

We mentioned in an article last month that the average caller to Social Security is now waiting 36 minutes on hold. But that’s nothing compared to waiting 29 months for a determination on your disability claim!

However, it’s not clear that having an inadequate number of workers is the only problem. In some cases, it may have something to do with the staff they do have.

Disability applicants do not qualify for benefits if, despite their disability, they could still reasonably be expected to perform other “substantial” work in a different job.

To determine that, the SSA uses an outdated government listing of occupations developed by the Department of Labor in 1938 and last updated in 1991. Apparently, no other agency, including DOT, still uses the list.

As a result, the SSA sometimes denies disability benefits to workers when they could theoretically find work in occupations that are, in fact, not available in the present-day workforce.

The Washington Post reported a couple of years back that a “vocational expert” hired by the SSA told an incredulous judge that the plaintiff should not qualify for disability insurance because he could obtain work in the U.S. as a “nut sorter, dowel inspector or egg processor,” based on the list.

In June, to some fanfare, SSA announced it had identified 114 occupations it would no longer use to deny eligibility. The three supposed occupations its expert cited are, unfortunately, not among them, though SSA did add that “nut sorter” is a career for which the agency will be “implementing additional evidence requirements” before using it to disqualify an applicant(!).

Economist Mark Warshawsky of the American Enterprise Institute reports that the SSA has spent more than $300 million over the past 15 years to commission a more realistic list of occupations from the Bureau of Labor Statistics. While that effort was at least partly complete by 2020, the agency has still not begun to use it, and SSA Commissioner Martin O’Malley told Congress recently that he wasn’t planning to do so.

So, while part of the blame should be placed on Congress for inadequate SSA funding, it sounds like the agency itself should take a good chunk of responsibility for its ongoing dysfunction.

A word to the wise: If you need to apply for SSDI, hire an attorney (on a contingency basis) who specializes in it. They tend to get better and quicker results.