IS THE DISABILITY TRUST FUND IN JEOPARDY?
WILL THE DISABILITY TRUST FUND RUN OUT OF MONEY?
Most people don’t understand the Social Security and Disability trust funds and how they work. Headlines are constantly claiming the Disability Trust Fund is going to run out of money. Therefore, people with disabilities who cannot work will not receive their payments.
Let’s examine the truth of those headlines.
First, let’s look at the two trust funds that control retirement and disability payments. The Social Security trust funds are two separate accounts. Both accounts are held by the US Treasury. The first account is the Old-Age and Survivors Insurance (OASI) Trust Fund. This fund pays retirement and survivors benefits. This is the fund that will pay you retirement benefits when you reach retirement age.
The second account is the Disability Insurance (DI) Trust Fund. This fund pays SSDI benefits. In order to receive SSDI benefits, a worker must have paid into the insurance system by paying their taxes. Read here to learn more about how your earnings result in disability coverage. Once you can no longer work for 12 months due to a physical or mental condition, you are eligible to receive disability benefits.
Social Security taxes and other income are deposited into the two accounts. Benefits are then paid out from the accounts. By law, the only thing the trust funds can be used for are to pay benefits and to pay the programs’ administrative costs.
ARE THE TRUST FUNDS INSOLVENT?
The Social Security trust funds, by law, must invest it in special Treasury bonds. These bonds are guaranteed by the US government. A market rate of interest is paid to the trust funds on the bonds. When the bonds reach maturity or are needed to pay benefits, then the Treasury redeems them.
Recently, SSA said the Old-Age and Survivors Insurance Trust Fund, which pays retirement and survivors benefits, would be insolvent by 2034. However, some sources state the fund will be insolvent in 2033. Whatever year government sources predict, the main thing to realize is that insolvency for the trust fund does not mean it has run out of money.
Insolvency means that the funds will no longer be able to pay out the full benefits owed to all individuals. By 2033, there will be enough income to pay out about 76% of payments. This means that you would still receive a payment. It will just be less.
A recent Congressional Report offers a number of solutions to that problem. For example, the reports states that maintaining financial balance after trust fund insolvency would require substantial reductions in Social Security benefits. Also, substantial increases in tax revenues could help solve the issue. Or, Congress could use some combination of the two.
Following depletion of the combined funds in 2034, Congress could restore balance by reducing scheduled benefits by about 22%. The required reduction would grow gradually to 26% by 2095. An alternative could be for Congress to raise the Social Security payroll tax rate from 12.4% to 15.8% following depletion in 2034. They could then gradually increase the tax to 16.7% by 2095.
CONGRESS MUST REPLENISH THE TRUST FUND
Perhaps one of the difficulties for those in Congress is it is hard to imagine being alive in 2095. Congress is shortsighted. The most pressing needs always appear to be those that are happening right now.
However, for more than two decades, Congress has been fully aware that it would need to replenish the Social Security Disability Insurance Trust Fund. They must do so in order to continue paying full Social Security Disability benefits for recipients. Despite this commonly known fact, on January 6, 2015, the House of Representatives adopted rules of procedure that bar the House from making a reallocation that would stabilize the Disability Trust Fund through 2033 without accompanying cuts to Social Security Eligibility, coverage, or benefits. The House adopted this rule the night before the vote, with no debate and no opportunity for input from the public.
The adopted rule only affects the House, not the Senate. The House can vote to waive the rule’s requirements to allow reallocation, but they have unnecessarily blocked the simple and sensible way to take care of the shortfall. The sensible choice, which has been used before, is reallocation. For further information about budget issues, read this NOSSCR article.
REPUBLICAN EFFORTS TO CUT BENEFITS ARE THE BIGGEST THREAT TO THE DISABILITY TRUST FUND
Tax plans proposed by Republicans normally pay for themselves by cutting entitlement programs. Republican Congressmen call these program “entitlement programs” as if you didn’t pay for them. They act like programs, such as Social Security Disability and Medicare benefits are a hand-out. They are not.
These are entitlements that working citizens pay for with taxes out of every paycheck. If Congress changes these programs, millions of individuals will reach old age and be left without financial security and healthcare. You will also lose the money that you invest throughout your working life in your entitlements. Again, these are not handouts. This is not welfare.
These are benefits that you paid for with your work. That is why they are called “entitlements”, because you paid for them. Therefore, you are entitled to get what you paid for. If you cannot work due to a mental or physical condition, then the SSDI program should kick in. Disability benefits pay you a monthly amount of money to help replace your income.
Retirement benefits are similar. Most people expect to rely on these benefits at full retirement age. Everyone who works depends on these benefits, at least as a supplement to their retirement savings. The Republicans twist the word “entitlement” to make it sound like you are getting something that you don’t really deserve. That is simply not the meaning of the word. Because you pay for the benefits for your entire life, you own them. You should receive them.
ENTITLEMENTS ARE THERE WHEN YOU NEED THEM
Most Republican Tax Plans contemplate eliminating Medicaid and disability benefits, which workers also pay for with their taxes. Medicaid is the health insurance program that helps the neediest in our society. Without Medicaid millions of people will go without healthcare. Medicare is the program that working citizens become entitled to when they reach the age of 65. Do not believe the Republican politicians when they say that people do not deserve the benefits that they pay for. They do.
Everyone is entitled to the benefits that they work for. If you care about your future, vote for a democrat. Do not vote for the party that only cares about big business. Typically, Republican Tax Plans are giving tax benefits to corporations and the most wealthy individuals in our society. And they do so on the backs of the neediest.
DO NOT RAISE TAXPAYER CONTRIBUTIONS
Over the last five decades, on a bipartisan basis, Congress has repeatedly addressed shortfalls in both of Social Security’s two funds. The two funds are the Old-Age and Survivors Insurance Trust fund and the Disability Insurance Trust Fund. A temporary shift of Social Security’s incoming revenues to the Disability Insurance Trust Fund – called reallocation – will extend the Disability Insurance Trust Fund’s solvency for almost two decades, without cutting coverage, eligibility, or benefits.
Reallocation does not have to increase taxpayer contributions. Also, reallocation has happened 11 times in the past, about equally in both directions. Sometimes, reallocating more to the Disability Insurance Trust Fund and sometimes more to the OAS Trust Fund. Using reallocation, the solvency of the overall Social Security system stays the same. For example, the combined funds remaining fully solvent through 2033. See NOSSCR Social Security Forum, Volume 37, Number 1, January 2015.
While we can debate whether or not reallocation is a proper solution for the long haul. It is certainly a simple short term solution that does not raise taxes. Additionally, it does not put people in jeopardy of losing their benefits.
CANNON DISABILITY’S LAWYERS
Once your concerns about the trust fund running out of money are put to rest, you need to find a lawyer to represent you in your Social Security case. And, you need a lawyer you can trust. If you want to learn more about the lawyers at Cannon Disability Law, then read our About Us page. There you will find more information about each of our representatives. For example, Andria Summers can help you with your Medicare plan. Likewise, she has also won thousands of SSD cases.
Dianna Cannon also has many years of experience representing her clients in court. She has been an attorney for thirty years. During that time, she has won thousands of hearings. Ms. Cannon also has bar licenses to practice law in a number of states. For example, she has law licenses in California, Utah, Nevada, and Washington State.
Additionally, Brett Bunkall has experience helping people obtain their SSI and SSD benefits. He is a legal expert. Also, he has a license to practice law from the Idaho State Bar Association. Find out more about SSD and SSI benefits in Idaho here. Similarly, all of our attorneys and staff are Social Security experts. You can trust us to help you win benefits.
WE CAN HELP YOU WIN DISABILITY BENEFITS
There are many important issues that play a role in whether you receive benefits. You need a lawyer who understands those issues. Also, you need an attorney who knows the law.
Cannon Disability wants to be your legal team. Hire us for our experience. Over the last 30 years, we have won over 20,000 benefit claims. It isn’t an easy task to win. But, we have the tenacity for the job. We also have the experience to win your SSDI and SSI case.
Another important factor to consider when hiring an attorney is cost. Cannon Disability is affordable. Unlike most lawyers, we do not ask you to pay us any money up front. Because we work on a contingency fee basis. That means you do not pay an attorney fee until we win your case. If we win, then the attorney fee comes out of your back benefit. If we do not win your case, then there is no attorney fee for you to pay.
Do not worry about the Social Security trust fund running out of money. Congress has never failed to reallocate monies to support these much needed programs. In the future, even if funds do run short, the trust funds still have enough money to pay partial benefits. While that doesn’t sound great. It is better than zero.
Contact us today. Take advantage of our free review of your case. Call and we will answer your questions. You can explain why your medical or physical condition prevents you from working. We will be able to tell you if you qualify, because we are experts in SSI and SSD benefits. And, we will do our best to win your benefits. Put our experience to work for you.
