Social Security disability fund could dry up in 2016

No one listened. But now with time running out, President Obama and Congress are finally looking at making drastic cuts which would affect 11 million people.

If Congress can not come up with a solution, the monthly disability benefit check will be reduced to approximately $824, down from $1,017. This would create an automatic 19 percent reduction in benefits.

There is an easy fix available for the disability program: Congress could shift tax revenue from Social Security’s much larger retirement fund, as it has done in the past. After that, income to the trust fund would be adequate to pay about three-fourth of scheduled disabled beneficiaries for the following 50 years. “Most likely an increase in the eligibility age and some form of means testing would save the system”. The program received additional income from the taxation of benefits and interest accumulated on the trust fund reserves, pushing Social Security’s total income up to $884 billion. Republicans want changes in Social Security to reduce fraud and to encourage disabled workers to go back to their jobs. But as the deadline gets closer, advocates say the need to act becomes more urgent.

One of the fund’s trustees, Robert Reischauer, described Social Security and Medicare as being on a “fiscally unsustainable path”, due to the projected increase of beneficiaries entering retirement. And yet, the longer politicians wait, the tougher the adjustments must be.

Fortunately the issue is receiving attention relatively early, and many are calling for changes in the disability program to make sure people can depend on it. According to an article on from the Associated Press, the CEO of the American Association of Retired Persons (AARP) commented on the issue, calling for “meaningful” changes to be made to protect the people who would be affected, now and in the future.

If the retirement and disability funds were combined, they would have enough money to pay full benefits until 2034, the trustees said.

The Medicare and Social Security trustees are the secretaries of the Treasury, Health and Human Services, and Labor departments, as well as the Social Security commissioner and two public trustees – a Democrat and a Republican. The Medicare health system will exhaust its main financial trust fund in 2030, the same year as predicted in the 2014 report. Because no COLA is now expected for 2016, increased costs of outpatient coverage would have to be spread among the remaining 30 percent.

The increases for upper-income beneficiaries would be higher, up to $174 for those in the highest bracket.

State budgets would also take a hit, because states pay the Part B premium for low-income beneficiaries who have dual Medicare and Medicaid coverage. Upon that date, Medicare taxes would only suffice to cover 86 percent of benefits. She said premium increases are expected to average under 5 percent a year over the long term.

Almost 60 million people receive Social Security benefits, including 42 million retired workers and dependents, 11 million disabled workers and 6 million survivors of deceased workers.

Barrett-Martinelli said it’s hard and time-consuming to apply for Social Security Disability, and most people would not choose to be disabled and live on $1,000 a month. The hospital trust fund is only part of the program.