Social Security Disability Insurance on the Brink of Insolvency

According to a widely reported Associated Press article, an aging baby boomer population coupled with increasing numbers of laid-off workers is causing a flood of Social Security Disability Insurance claims, pushing the already financially strained program toward insolvency. These claims generally increase during a bad economy because many disabled people get laid off and can’t find new jobs. Applications have increased almost 50% over the last ten years resulting in qualified applicants waiting up to two years to receive benefits. Congressional estimates state the trust fund that supports the program will run out of money by 2017 unless Congress takes action.

The article notes that the federal government’s focus has been on fixing the Social Security retirement system, but the disability system is in much worse financial shape with fewer plausible solutions. Social Security trustees are urging Congress to reallocate money from the retirement program to the disability program as was done in 1994. But, this would provide only temporary relief at the retirement program’s expense.

A recent Government Accountability Office report cites $1.4 billion in overpayments to disability beneficiaries, mostly to people who got jobs and no longer qualified. According to the article, the recently enacted deficit reduction package allows Congress to increase Social Security’s budget by $4 billion over the next decade to invest in programs identifying people who no longer qualify for disability benefits, which will save an estimated $12 billion over that time period.