DMEC Boston Chapter MeetingOctober 16, 2014

Dan Shaughnessy, Chapter President

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DMEC Boston Chapter Meeting

Social Security Past, Present, and Future

October 16, 2014

Presenters:Barbara Mountain,Doherty, Cella, Keane LLP

Vic Arruda, Esq.Social Security Advocates for the Disabled

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Agenda

• The Past– What is Social Security– Why was it created

• The Present– How does Social Security affect other types of

benefits– Disability Benefits– Why apply: the advantage– Who is receiving benefits

• The Future– Opportunities, Options, and Obstacles

• Questions/Discussion

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Social Security History

• 1935 Social Security signed into law by Franklin D. Roosevelt– Creation of an Insurance Program for Workers– Age 65 - Retirement benefits

• 1939 Amendments– Dependent benefits added for spouse and children of a

retired or deceased worker

• 1950 Amendments– Cost of Living Adjustments began– 1954 Disability Freeze began, but not monthly benefits– 1956 Disability benefits for age 50-64

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Social Security History (continued)

• 1960 Disability Benefits for all ages• 1961 Retirement could now be taken at 62

• For women this changed in 1956• 1965 Medicare • 1970 – Social Security Administration began to administer Supplemental Security

Income• 1980’s The First Social Security Financial Crisis

– Reagan – Greenspan Commission – Numerous “tweaks”

• Taxation of SS benefits• Including taxation of Federal Employees• Increase in Retirement age in next century (those born 1938)• Children Benefits end at age 18 or 19 if still in high school • Allowed Inter-fund borrowing

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t

How does SS affect other types of benefits?

Coordination of Benefits• Long Term Disability

– Most Group Contracts and some Individual Contracts have a Social Security Offset Provision• Primary Offset is only for what the claimant receives from SS• Family Offset is for what claimant receives and any dependent

receives based on the claimants SS Disability or Retirement benefit

• Workers Compensation– Typically when a person receives Social Security disability

and Workers Compensation, the Social Security Benefit is reduced based on the WC• However there are 10 Reverse Offset States, in which the WC

may be reduced by the receipt of Social Security benefits – Florida, Colorado, Minnesota, Wisconsin, Louisiana, New

Jersey, Oregon, North Dakota, Washington, Montana, and Ohio

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Social Security Disability Insurance

Income replacement program for disabled workers

• Not at your Full Retirement Age (FRA)• Meets Insured Status (Fully Insured)• Disability Insured (5 out of 10)• Filed an Application• Disabled

– Disability expected to last at least 12 months or result in death

– Can not perform any substantial, gainful work ($1040 month)• 5 month waiting period• Medicare 24 months after the date of entitlement

– ESRD and ALS almost immediately

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Social Security Dependent Benefits

Aged Spouse Benefits Age 62 or older Not entitled to own benefit amt. greater than 50% of the primary

amount

Child in Care Benefits Have a child under the age of 16 in household 50% of the

primary award

Children’s Benefits Child of the Claimant Unmarried Under 18 or 19 and still in high school 50% of the primary award

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Advantages to Filing

Medicare Health Insurance after 24 months - critical protection for your

clients and their employees Disability Freeze

Drops out the years of low earnings from future computations. COLA

More money in the claimant’s pocketDependent Benefits

Protection for Family Members Children, Aged Spouse, Child in Care Additional income through COLA’s

Work Incentives

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Asking a Claimant to File For Social Security

Communication is the key to avoiding a mixed message:

Filing for SS is a requirement in the contract/policy Completely separate program from STD or LTD No effect on the action plan of the LTD claim The goal is RTW, if appropriate: however,

Social Security is extremely important protection for the claimant, customer and the carrier if the claimant is unable to return to work.

But why would a claimant want to file?1. Know the Advantages to filing, and 2. Understand how a SS Representative can help

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DI 13010.105 RTW within 1 year of onset

Work performed within 1 year of onset should be reviewed and possibly revised for either a denial of benefits or a later onset if RTW was unsuccessful

Work performed on or after month of entitlement and after 12 months of onset is protected by TWP

Work performed after 5-month waiting period and after final determination date is protected by TWP

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DI 13010.105 Date of Final Determination

The date the Notice of Decision was received by the Beneficiary

Presume notice was received on the 5th day following the date notice was mailed, unless the exact date notice was received can be established.

Decision is typically SSA’s Notice Of Award

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Example: Maurice

63 YO Male, Post Graduate Degree, Myelofibrosis

Date Last Worked: Oct 15, 2013Date Application Filed: Mar 14, 2014Date RTW: Apr 28, 2014 (PT)Date of SSDI Award: Jun 9, 2014

Is Maurice’s Work Activity in April Protected By TWP?

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Maurice Cont. RTW Apr 28, 2014

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Maurice is NOT protected by TWP

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Maurice is not protected by TWP

Onset is October 15, 2013

Statutory Waiting Period Ends March 31, 2014

Decision is Dated June 9th 2014

RTW is April 28th (after 5-Month Waiting Period, but before date of Decision)

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Example 2: Linda

56 YO Female MD, Post Graduate, Breast Cancer

Date Last Worked: Dec 10, 2013Date Application Filed: May 26, 2014Date RTW: Sep 2, 2014 (PT)Date of SSDI Award: Jul 13, 2014

Is Linda’s Work Activity Protected By TWP?

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Linda Cont. RTW Sep 2, 2014

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Linda IS protected by TWP

Onset is December 10, 2013

Statutory Waiting Period Ends May 31, 2014

Decision is Dated July 13th

RTW is September 2nd (after 5-Month Waiting Period and after date of Decision)

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Who is Receiving Social Security?

Social Security Beneficiaries 59 million beneficiaries in pay

A record 9 million workers—over 5 percent of the U.S. workforcewere receiving SSDI benefits at the conclusion of 2013.

Who is Receiving Social Security Benefits

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SSDI Awards by Diagnosis Category:

Avg. Age: 53

Avg. SSDI: $1146

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Then and Now: Growth in the SSDI Program

Over the past 40 years, the number of disabled workers who receive benefits from the SSDI program has increased more than six-fold.

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What Are the Drivers of SSDI Growth?

• 5 Factors Account for the bulk of Growth in DI Rolls• Population Growth• Population Aging• Growth in women’s labor force participation• Rise in retirement age• Increase in women’s rate of receipt

• Other Factors that have Contributed to DI Growth• Legislative Changes• Economic downturn• Lower death rates (beneficiaries stay on the rolls longer)• DI Recovery Rates (less funding for continuing disability reviews)

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  SSA Award Rates 2013

SSA Award Rates 2012

SSA Award Rates 2011

SSA Award Rates 2010

Initial Level

33% 33% 34% 35%

Recon 11% 12% 12% 13%

ALJ Hearing

48% 52% 58% 62%

Appeals Council

1% 2% 2% 2%

• The ratio of new SSDI awards to the new SSDI applications has been trending downward since the late 1990s. The ratio was 41% in 2001 and 33.5% in 2013

• From 2001 to 2010 the number of applications for new SSDI benefits rose by 92 percent, from 1.5 million in 2001 to 2.9 million in 2010.

• Since 2011 applications are decreasing falling to 2.6 million in 2013

>700,000 claims backlogged awaiting a hearing (average workday 19)

Social Security Disability Award Rates

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Social Security Disability Award Rates

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Questions Regarding the Future of the SSDI Program

Is the SSDI program facing a crisis?

What if the Social Security Disability Insurance Trust Fund runs out of money?

Will the Social Security Disability Insurance Trust Fund run out of money?

What options are the Congress and the President considering – or likely to consider?

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Social Security Board of Trustees 2014 Annual Report

The DI Trust fund will have sufficient assets to pay scheduled disability benefits only until some point in the 4th quarter of 2016, absent action to forestall Trust Fund asset depletion. At that point 81% of benefits payable

If the Trust Funds are reallocated full benefits are payable until 2033 At that point if nothing is done, 77% of benefits are

payable 

 

 

 

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60 Minutes Segment: “Disability USA”

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ALJ Dispositions 2010 to 2013

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Recent Anti-Fraud Legislation

Democratic Bill H.R.4090 The SS Fraud & Error Prevention Act February 2014 Rep. Xavier Becerra (D-CA)

Overview A secure stream of dedicated administrative funding without the

need for annual appropriations Advanced IT improvements to detect fraud Cooperation with other Agencies, state and local governments &

private business (LTD Insurers?) Developing a Culture of prevention & detection Rewarding SSA staff who detect and refer fraud

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Anti-Fraud Legislation Cont.

Republican Bill H.R. 5260 The Stop Disability Fraud Act of 2014 July 2014 Rep. Chairman Sam Johnson (R-TX) Targets Representatives

74% of Claimants are represented as opposed to 37% in 1977 SSA paid $1.5 Billion to representatives in 2013

Overview

Establish CDI (Cooperative Disability Investigations) units in all 50 states (currently 25 units in 7 states)

Prohibit the consideration of any unlicensed or sanctioned physician or health practitioner

Criminalize conspiracy to commit SS Fraud Doctors, Lawyers, interpreters, SSA employees

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H.R. 5260 Continued

Representative Sanctions Immediate disqualification for a felony or crime of moral turpitude

in a Federal or State court Suspension is immediate (current process is the reverse)

Fine and sanction representatives for failure to comply with Commissioner's Rules & Regulations

Civil fine of not more than $7,500.00 for knowingly: Charging Demanding Receiving Collecting Representative Fee in excess of the maximum fee proscribed by Commissioner

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H.R. 5260 Continued

Strengthen Program Integrity Conduct a pre and post quality effectuation review of ALJ

decisions to ensure compliance with regulations and other guidance (emphasis supplied)

Increased Transparency with SSA and American Public Productivity Times Processing Times Pending workloads Decision outcomes Broken down by individual, hearing office, SSA Region, SSA

Commissioner can refer denied individuals to appropriate private or public entity for: Employment Services Vocational Rehabilitation Other services

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What to do about 2016 DI shortfall?

Trust Fund Reallocation Since 1956 it has been done 11 times

In light of the projected depletion of the DI Trust Fund in 2016, the Trustees again call upon Congress to act:

  Therefore, legislative action is needed as soon as possible to address the DI program’s financial imbalance.  Lawmakers may consider responding to the impending DI Trust Fund reserve depletion as they did in 1994, solely by reallocation the payroll tax rate between OASI and DI.  Such a response might serve to delay DI reforms and much needed corrections for OASDI as a whole.  However, enactment of a more permanent solution could include a tax reallocation in the short run

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The Social Security System Needs Reform

8 Proposals for long term solvency -Pros and Cons

1. Raise Full Retirement age (18-44%)

2. Recalculate COLA (16-23%)

3. Increase Payroll Tax Cap (36%)

4. Eliminate the Payroll Tax Cap (86%)

5. Means Test for High Earners (11%)

6. Increase Payroll Tax Rate (64%)

7. Tax Flexible Spending Accounts (10%)

8. Cover all new Government Workers (8%)

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Unemployment Compensation (UI) & SSDI

July 2012 GAO Report

In Fiscal Year 2010, 117,000 Americans Received both SSDI and UI

The combined payout was over $850 Million Funding for Unemployment comes from Federal Unemployment

Tax Act (FUTA)

Current SSA and Federal Regulations provide no authority for SSA Commissioner to treat receipt of UI as a Public Benefit

Worker’s Compensation deemed Public Benefit Long Term Disability deemed Private Benefit

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Legislation to close UI SSDI Loophole

Senate Bill S. 1099 The Reducing Overlapping Payments Act June 2014 Sen. Tom Coburn (R-OK)

Overview Bill would suspend SSDI for any month in which claimant

received Unemployment Benefits SSDI is generally higher than UI

Coburn estimates individuals would forgo the receipt of UI in favor of the higher SSDI benefit

SSA estimates a savings of $2.9 Billion from 2014 – 2023

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Unemployment Legislation Cont.

House Bill H.R. 1502 The Social Security and Unemployment Benefits

Double Dip Elimination Act April 2013 Rep. Sam Johnson (R-TX)

Overview Bill would treat receipt of Unemployment as engaging in SGA for

that calendar month. SSDI Onset would be amended to a point after UI benefits

terminated. Entitlement to Medicare affected as well Effect on Quarters of Coverage? Receipt of UI would be considered 1 month of TWP

SSA estimates a savings of $8 Billion in SSA benefits from 2014 – 2023 and $2.3 Billion in UI benefits

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Unemployment Legislation Cont.

Amendments to Existing Bills Senate Amendment 2631 in Emergency Unemployment

Compensation Act January 2014

Overview SSDI benefits are reduced dollar-for-dollar by receipt of UI during

any calendar month beneficiary received both

SSA estimates a savings of $1.17 Billion in SSA benefits from 2014 – 2023

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Continuing Disability Reviews (CDR)

Initial determination is made at DDS level

Beneficiary informed that Disability Terminated as of X date

Cash benefits continue for 2 additional months

Beneficiary has 10 days to elect interim SSDI benefits pending appeal

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CDR (Interim Benefits) cont.

Right to Interim Benefits is statutory

Matthews v. Eldridge (1976)

Congress granted right to Interim Benefits in 1984

20 C.F.R. 404.1597

Interim benefits are not authorized for a RTW CDR

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CDR (Interim Benefits) cont.

Right to continue Interim Benefits must be made at each level of the appeal process

Good Cause for late request is available

Only Beneficiary can request. Claimant’s Representative cannot make request.

A Representative Payee can make the request as both will be responsible for the

Overpayment

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CDR (Interim Benefits) cont.

SSA Form-795 Right to Interim Benefits

I understand that if I lose my appeal, I will be asked to pay this money back including all checks I received after my period of disability ended through the month such benefits were received if the appeal is not decided in my favor.

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Interim Benefits Strategy For LTD Insurer

Option 1Revert to paying a full Un-reduced LTD Benefit

pending the outcome of the appeal??

OR

Option 2Encourage claimant to continue interim SSA

benefits pending outcome of appeal?

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OPTION 1 Full Un-reduced LTD Benefit

LTD reverts to Paying Full Unreduced benefit?

MIB Due Client SSDI offset Net Pmt$3,000.00 $00 $3,000.00

Appeal is resolved in 10 Months

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OPTION 1 Full Un-reduced LTD Benefit Cont.

10 Months Later

Appeal is DENIED by ALJ(SSDI Benefits Terminate)

Impact on LTD Carrier?None,

Carrier continues to pay full un-reduced LTD benefit pending appeal of ALJ’s decision

Does carrier initiate a follow up Any Occupation analysis?

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OPTION 1 Full Un-reduced LTD Benefit Cont.

10 Months Later

Appeal is Successful(ALJ Continues SSDI Benefits)

SSA Pays claimant a lump sum of $20,000.00 and continues monthly SSDI benefits.

Claimant incurs a $20,000.00 LTD Overpayment.

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OPTION 2 SSA Pays Interim Benefits

SSA pays claimant Interim Benefits pending appeal

MIB Due Client SSDI offset Net Pmt$3,000.00 $2,000.00 $1,000.00

Appeal is resolved in 10 Months

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OPTION 2 Interim SSA Benefits

Encourage claimant to elect interim benefits? 10 Months Later

Appeal is Successful(ALJ Continues SSDI Benefits)

No Change for LTD Carrier ~ Carrier resumes paying reduced LTD benefit

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OPTION 2 SSA pays Interim Benefits Cont.

Appeal is DENIED by ALJ(SSDI Benefits Terminate)

SSA immediately issues Overpayment letter to claimant

$20,000.00 SSDI O/P($2,000./mo x 10 months)

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OPTION 2 SSA pays Interim Benefits Cont.

$20,000.00 SSDI Overpayment

How does claimant repay SSA?

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OPTION 2 SSA pays Interim Benefits Cont.

LTD Carrier is in possession of $20,000.00

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Too Big to Fail

National Academy of Social Insurance Study

74% of Republicans and 88% of Democrats agree it is “critical to preserve Social Security - even if it means increasing Taxes.”

59 Million Beneficiaries

$852 Billion dollars per year

$71 billion each month