From a March 4, 2014 letter from Stephen Goss, Social Security's Chief Actuary, to the Office of Management and Budget:
I am writing in response to your request for estimates of the financial effects on Social Security of a proposal, included in the President’s FY 2015 Budget, to reduce Social Security Disability Insurance (DI) benefits, dollar for dollar, for any month in which a disabled-worker beneficiary receives unemployment insurance (UI) payments. ...
We estimate that enactment of this proposal in January 2015 would reduce DI benefit payments by $ 2.67 billion in total for calendar years 2015 through 2024, assuming the DI benefit reduction applied for UI claims with payments starting in August 2016 or later (see enclosed Table 1) . Reduction in DI benefit payments through the end of Fiscal Year 2024 would be $2.57 billion (see enclosed Table 2). The proposal specifies that the DI offset would apply for UI claims with payments starting in months beginning at least 18 months after enactment. For the long-range actuarial status of the overall OASDI program, we estimate that enactment of the proposal would reduce the actuarial deficit by about 0.01 percent of taxable payroll. ...
There are at least a couple of problems with this estimate. First, it doesn't factor in the not inconsiderable costs of implementation which will significantly reduce the value of this offset. $2.67 billion is a huge amount of money but it's spread over 10 years. The costs of implementation over the course of 10 years could easily be a billion dollars or more. Nobody ever considers the costs of implementing this sort of proposal. Second, many states already have an offset running in the opposite direction. What will be done about them? Will it be like workers compensation where Social Security doesn't offset if the state does? If so, that dramatically reduces the amount that Social Security can offset. And if you're adopting this offset, is it appropriate to limit it to disability recipients? Shouldn't it also apply to retirement and survivor benefit recipients? There would be a lot more money to offset there. Adopting this offset won't be nearly as simple a matter as OMB and the Chief Actuary seem to think.
7 comments:
The issues addressed in this offset are reasonable and understandable. What about the costs of implementing Obamacare and any justification that is was needed presented in a reasonable and understandable manner?
CTH - Shouldn't it also apply to retirement and survivor benefit recipients?
Why should it? Those individuals are not saying they are unable to work.
Charles, how do you know it does not factor in implementation costs? I saw nothing in the charts or letter that made it clear one way or the other.
Moreover, most of the people collecting UI while asserting disability are going to be collecting UI predominantly during the DIB application period or before (but during a time period of alleged disability). SSA has access to quarterly UI payments to individuals. Therefore, it would just be a process of applying the offset when the PC calculates benefits -- the PC is already applying various other potential offsets. The additional burden should be fairly minimal and not cost much, since the information is already available and routinely accessed.
Therefore, it would just be a process of applying the offset when the PC calculates benefits -- the PC is already applying various other potential offsets. to 10:58 March 5 --" The additional burden should be fairly minimal and not cost much, since the information is already available and routinely accessed."
I love this, just a process of applying the offset. Take a look at the "process" of overpay, underpay, incorrect pay etc.You better believe it will increase overhead and decrease resources.
No matter how you slice it, it is a benefit cut. Workers faithfully pay a UI tax out of their paychecks so if they lose their job and meet the UI program criteria they can get an insurance payout. Ditto with the Social Security Disability program. The programs were designed with that in mind.
This proposed change forces the worker to pay the UI tax or premium, but not collect even though they lost their job and met the program criteria. Workers and taxpayers should not be happy about that. It's a fundamental fairness issue: If you paid to be covered by two programs, you should get the benefit if you meet both program's criteria. If you don't that means someone just picked your pocket.
In states that already offset UI for SSD beneficiaries, the proposal amounts to a shell game. The benefit of the cut is shifted from the UI program to the disability program, and the disabled worker is left holding the empty shell. If the purposes of the programs are to help the unemployed and people with disabilities, this proposed change fails by reducing benefits available to those in need.
10:06 - It's a fundamental fairness issue: If you paid to be covered by two programs, you should get the benefit if you meet both program's criteria. If you don't that means someone just picked your pocket.
Unfortunately, by applying for SSDI, you are saying you are unable to work. By applying for UI you are saying you are able to work and actively seeking employment. Both statements cant be true.
Except in the world of Social Security disability, where if you are fifty or older you can say you are willing and able to work (as long as the job is sedentary if under 55 and light or sedentary if 55 or older) and still be found disabled because SSA (inappropriately) pretends that because of your age, you should be considered disabled even though you can work.
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