Good News Regarding Social Security!
Social Security and Medicare continue to face long-term financial challenges, according to an article in the Washington Post, Social Security’s costs will exceed its income in 2020 for the first time in 38 years; Medicare, too, will soon be running in the red, and both programs could exhaust their reserves by 2035. Which means congress must trim benefits or raise taxes — or some of both — to prevent that.
Buried below these headlines, however, the 2019 annual report contained a nugget of very good news: Social Security’s Disability Insurance (DI) Trust Fund, which helps nonelderly people too sick and injured to work, has gotten an unexpected, and apparently durable, new lease on life. In 2015, the trustees warned the DI fund’s reserves might not be able to cover 100 percent of expected benefits in 2016; now they see them sufficient to cover all obligations until 2052, which is great news!
According to another article from the Washington post, the DI does not grow or shrink according to the business cycle’s ups and downs. However, the long-term jobless tend to use it when their unemployment benefits run out in recessions, such as the one that hit in 2008-2009. Which is why the pessimistic 2015 forecast expected an upsurge in disability applications and awards due to difficult times. What they failed to anticipate was that subsequent events, such as an extended period of tight labor markets and low unemployment rates, has brought many formerly disabled people back into the labor force.
The annual report notes that, “disability applications have been declining since 2010, and the number of disabled-worker beneficiaries has been falling since 2014.” Which means spending has been flat at roughly $140 billion per year for the past half-decade, while employed workers’ payroll contributions have continued to rise, enabling reserves to accumulate. Meanwhile, modest and, for workers, generally painless administrative reforms — retraining of judges to make more accurate benefit-award decisions; accelerated work on a backlog of disability reviews — also helped contain program growth. Additionally, the existence of expanded health care has reduced an incentive to go on disability, which includes health insurance.
This is good news for those seeking disability benefits, particularly for the long-term. If you or a loved one is considering disability, or have recently been denied, contact us at Renda Law in Tacoma, and we can help you get the benefits you deserve. Contact us today for a FREE consultation.