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Feds say big changes are needed to save SSDI program

On Behalf of | Jun 26, 2013 | Social Security Administration News

A new reasearch note from the Federal Reserve Bank of San Francisco suggests that changes are needed within the Social Security Disability program to prevent it from going insolvent. The SSDI program provides federal benefits to workers who can no longer perform their jobs because of disabling conditions, including injuries and illnesses. The program has been under ridicule for the past couple years as a record number of Americans are now receiving benefits.

According to the Social Security Administration, 47 out of every 1,000 workers in the country were depending on SSDI in 2011, compared to just 23 out of every 1,000 workers in 1980. SSA officials say the main reasons for the increase have to do with the aging baby boomer population — who are more prone to injury but don’t yet qualify for retirement — and the rise of women in the workplace — which means a greater number of workers are eligible for benefits.

The good news is that if the rise in SSDI recipients is really being caused by the demographic trends, then the program should be able to recover once the baby boomers reach retirement age and women have been in the workforce for a longer period of time.

However, the note from the Federal Reserve Bank of San Francisco predicts that even after considering the changing demographics, the disability insurance program is in serious trouble “unless program rules and incentives are fundamentally altered.” In fact, analysts predict that the program’s funds will run out in 2016 if the same trends are followed, which could result in significant benefit reductions for recipients who often barely scrape by as it is.

The note from the Federal Reserve Bank of San Francisco estimates that between 40 and 60 percent of the recent growth in SSDI recipients has to do with the fact that it has become easier to qualify for benefits, as the claims are now often judged on subjective criteria such as pain or mental conditions. Undoubtedly, the program will continue to receive plenty of attention in the coming years.

Source: The New York Times, “The Rise of Disability,” Binyamin Appelbaum, June 24, 2013

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