FY 2007 Budget: Workers Comp Offset To Change and LSDP To End

The President's Budget Proposal for Fiscal Year (FY) 2007 is out. The proposed budget would give a 5% increase in funding for Social Security's administrative budget. Despite this increase, the proposal projects that the average length of time to get a hearing decision from SSA will increase from 443 days to 467 days even though the proposal assumes a 2% productivity gain at OHA, which is probably unrealistic in any case but especially given implementation of E-DIB and the Commissioner's proposal.

The President proposes a number of changes in Social Security law, some of which will be controversial. The Proposal would alter worker's compensation offsets dramatically:

One proposal would replace the current, complicated reduction to DI benefits for beneficiaries in some States who also receive Workers Compensation benefits with a uniform offset that would affect all such beneficiaries for not more than five years. This simplified offset will reduce erroneous DI payments and the burden on claimants in making large repayments, and will save SSA $7 million a year in administrative costs.

The Budget Proposal would end the Lump Sum Death Benefit:

A third proposal will eliminate the lump sum death benefit that currently goes to surviving spouses and children who receive benefits under a deceased worker’s Social Security record. This one time payment of $255 no longer provides meaningful monetary benefit for survivors and is normally less than one month’s widow/widower benefits and children’s benefits. This small payment costs SSA $15 million to administer annually, which will be redirected to higher priority activities beginning in 2007.

Less controversially, SSI recipients would be allowed to save money for certain purposes:

The Budget promotes the Administration’s Ownership Society agenda among the low-income disabled. In 2007, SSA will launch the Disability Freedom Account demonstration project to help disabled Supplemental Security Income (SSI) beneficiaries save more money to pay for their first home, education, or other services needed to get back to work, or for assistive technologies to make their lives easier. Current SSI asset limits will be waived for these individuals. Certain SSI recipients who also receive Medicaid and self-direct their long-term care support services may also be eligible to participate in this demonstration.