It turns out that the doomsayers who predicted years ago that the Social Security Disability Insurance Trust Fund would eventually run out of money were correct. When the Social Security Board of Trustees released its annual report at the end of May, it acknowledged that, yes, the funds for disability payments will be exhausted by the year 2016.
Why Is the Fund Out of Money?
There are several reasons why the Disability Insurance Trust Fund is running out of reserves. The first is that in 2000, the Baby Boomers started hitting the age of 55—which is approximately when people typically begin qualifying for disability benefits.
The large influx of disability-eligible individuals in a short amount of time created a strain on the available funds, and there are not enough workers paying in to the fund to cover the additional people.
Another reason, and one some people blame more than Baby Boomers, is that due to changes in how disabilities are defined, more people than ever are qualified to receive a disability payment.
For example, between the years 1981-2009, the number of people who were eligible to receive benefits due to medical issues like heart attacks or strokes remained constant—no appreciable changes up or down. However, people with mental illnesses and certain other disorders can now qualify, and those numbers have increased dramatically.
Why Have the Rules for Who Qualifies for Disability Changed?
As more attention has been focused on Social Security disability, more people have come out of the woodwork to get a piece of the pie. It is becoming increasingly clear that many people who are not actually unable to work have taken advantage of the disability fund.
Although a fair number of disability applications are denied immediately for a variety of appropriate reasons, a great number of these cases are later won on appeals. It basically boils down to the government being responsible for proving the claimant is not disabled instead of the claimant proving that he is.
Add to this the fact that the media vultures jump on any story about disabilities being denied and it is no surprise that the guidelines have become more liberal than they were originally intended to be.
Is There a Solution?
Although the Social Security Board of Trustees openly admits that the fund is in serious financial trouble, the only solution they can offer is to turn it over to Congress and let them figure it out—hopefully sooner rather than later. This does not seem like a solution to me, but a classic case of passing the buck.
One thing that would definitely help the Disability Insurance Trust Fund to continue to generate more revenue is by being more stringent about who qualifies for coverage. Nobody wants to deny benefits to people who truly are unable to work due to a debilitating accident or illness. However, most of us have seen people as we go about our daily lives who receive disability payments when they clearly could hold down a job of some sort.
Having more stringent guidelines in place would alleviate a lot of the problem, making it more difficult for non-disabled people to qualify for disability payments.
Taking Personal Responsibility
Although this is not a popular opinion by any means, I have also had the thought that more people should be encouraged to take responsibility for their own financial security in the event of an accident or illness that requires an extended (or even permanent) leave from employment.
There are many different insurance plans available to protect yourself from a future disability. You can choose a short-term disability plan or a long-term disability plan, and can choose coverage for an illness, an accident, or both.
There are so many different options available for nearly any income level that this is an affordable option for most people. Depending on the type of plan you choose, you can guarantee monthly income for as long as 10 years.
However, in this day and age, it seems like fewer people want to be responsible for their own financial security, hence the abuse of programs like the Disability Insurance Fund. For the sake of people who really need help, this needs to change.
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.