It’s pretty crazy how rumors get started sometimes. We’ve noticed that a bunch of weird stuff—all untrue—have surfaced lately about Social Security Disability Insurance (SSDI).
- SSDI is out of control
- Getting on SSDI is easy and it’s riddled with fraud
- People on SSDI can work
- Payroll tax reallocations robs seniors
Okay, HMMM wants to set the record straight! Let’s look at these rumors one by one:
SSDI is out of control. Hardly! The recent growth in the SSDI rolls stems mostly from well-understood demographic factors like population growth, aging of the baby boomers, growth in women’s participation in the labor force and the rise in Social Security’s full retirement age from 65 to 66.
When all these factors are considered, the upswing in individuals getting SSDI is modest. Actually, the growth in the number of folks on SSDI has slowed to its lowest rate in 25 years. This growth rate will decrease as the economy strengthens and baby boomers move from disability to retirement benefits at full retirement age, and so will the costs for SSDI. But SSDI costs will still exceed revenues.
Getting on SSDI is easy and it’s riddled with fraud: Not so. SSA generally denies applicants who are technically ineligible because they are not insured under the program. Make no mistake: the medical criteria are strict; fewer than half of non-medically eligible applicants are awarded benefits.
People on SSDI can work. SSDI beneficiaries are mostly older (late 50-ish) and have severe physical or mental impairments—and the benefits being paid are modest. For example, the average disabled-worker benefit is $1,165/month; 92% get less than $2,000 a month and only 0.6% get more than $2,500.
Payroll tax reallocations rob seniors. Reallocation of the 12.4 % payroll tax between the retirement trust fund and disability insurance trust fund is not a new option. This has happened many times in the past without negative impact. Basically, it’s a way to extent the solvency of the funds while policymakers roll up their sleeves and work on a long-term solution.