Op Ed On The SSI Marriage Penalty But It's More Complicated Than Presented

    There's an op ed in the New York Times on the marriage penalty in the SSI program which is preventing a couple who each have Down Syndrome from marrying. 

    The author completely misses or at least doesn't write about the strong possibility that the couple will soon be eligible for Disabled Adult Child (DAC) benefits, if they're not already. Marriage won't be a problem for DAC as long as both are eligible for DAC, which is itself crazy! DAC pays benefits on the Social Security account of a parent but the parent must be deceased or on benefits on their own account. Since the man with Down Syndrome is 44 and the woman is 40, their parents are at or near retirement age. Usually marriage ends DAC but not if you marry someone who is also eligible for DAC.

    I hate, hate, hate counseling someone newly entitled to DAC that they probably don't want to get married because it will probably end their DAC but it's my job. This may be the worst provision in the Social Security Act.

Catch 22

     Let's say you're developmentally disabled, meaning you've been disabled from birth. You start drawing SSI as a child due to your disability. You become 18 and Social Security does a review to see whether you're disabled under the adult standard and they decide you are. Then, a parent dies or goes on Social Security benefits when you're 21. That potentially entitles you to Disabled Adult Child (DAC) benefits on your parent's Social Security number since you became disabled before age 22. Shouldn't Social Security just put you on the DAC automatically? You've already been found disabled under the same standard. Under a new addition to Social Security's POMS manual, the answer is not so fast. They first want to make sure they can't find a way to cut you off the SSI benefits you're already drawing. So, if you're the claimant aren't you a little afraid you're going to lose your sole means of support if you file that DAC claim? But, if you don't file the DAC claim, you may lose your SSI because you refused to avail yourself of means of support other than SSI. Nice Catch 22 they've set up for you. That's what all this fancy talk about collateral estoppel is about, finding ways to cut claimants off benefits, or, really, finding ways to avoid collateral estoppel since that doctrine should help the claimant in this situation.

A Good Start

    From a press release:

Senate Finance Committee Chairman Ron Wyden (D-OR), and Senator Bill Cassidy (R-LA), today introduced legislation to remove a Social Security work disincentive for Americans with disabilities. ...

If an adult has a severe medical condition that began before age 22, they may be eligible for a Social Security benefit called the Disabled Adult Child (DAC) benefit. Their benefits are based on their parent’s Social Security earnings, in the same way that benefits of a child under age 18 would be. However, under current law some of these young adults fear that if they try to work they will lose future DAC benefits, which are often higher than any benefit they may qualify on their own. This fear inhibits the ability of Americans with disabilities to explore their ability to work as they transition to adult life.

The Work Without Worry Act promotes financial security by ensuring that any earnings from work – no matter how much – will not prevent an individual from receiving a Social Security DAC benefit from their parent’s work history if they have an eligible medical condition that began before age 22. ...

This change is estimated to improve the lives of nearly 6,000 individuals with disabilities over the next 10 years and would have no significant effect on the Social Security Trust Funds. ...

     Now, how about we do something about the marriage penalty that cuts off DAC if a recipient marries.

Nice Try But I'm Not Buying It

    Nancy Altman, the President of Social Security Works and a past candidate for nomination to become Commissioner of Social Security, has written a piece for Common Dreams arguing for an end to the marriage penalty which terminates Disabled Adult Child (DAC) benefits for recipients who marry. I've been arguing for decades that the DAC marriage penalty is indefensible and should be abolished. Altman is arguing that President Biden should just order an end to the DAC marriage penalty because of the passage of the Religious Freedom Restoration Act which prohibits application of any federal law that substantially burdens religious freedom. The argument is that one's religion may demand marriage therefore making application of the marriage penalty illegal. Altman says that the Disability Rights Education and Defense Fund is trying to convince Social Security to adopt this view.

    My opinion is that this is a strained interpretation of the law that is unlikely to get anywhere. If nothing else, remember that marriage is both a civil and a religious institution but you can have one without the other. Many people choose civil ceremonies but it's possible to have the opposite, a religious wedding without obtaining a marriage license which leaves you without the legal rights and penalties that go along with marriage but with religious sanction for your marriage.

Of All The Crazy Things In The Social Security Act, The Marriage Penalty For DAC Recipients May Be The Most Cruel

    From the New York Times:

Lori Long and Mark Contreras met on Match.com in November 2015. ...

Within weeks of [their first] date, both knew they had found their forever partner. But three months after Mr. Contreras proposed in his Salinas, Calif., home in December 2016 and Ms. Long said an ecstatic “yes,” Ms. Long sat him down for a talk. “I told him, ‘Mark, we’re not going to be able to pursue a life together,’” she said.

She still wanted to marry him, but not if it meant giving up the health care benefits that she relies on to live.

Ms. Long is caught in a governmental quagmire. She was diagnosed at 15 with ankylosing spondylitis, a condition that causes bone fractures and sometimes requires her to use a wheelchair. ...

Because she qualifies for Social Security benefits through a program for adults whose medical disability started before age 22, she is considered a “disabled adult child.” The designation, known as D.A.C., applies to 1.1 million Americans, according to the Social Security Administration website.

Those who qualify generally cannot continue to receive benefits if they marry someone who is not disabled or retired. ...

Ms. Long is among a nationwide network of people pushing for change in Social Security laws as they pertain to marriage. They include not just D.A.C. recipients like her, but also a larger group of disabled Americans — roughly four million — who get S.S.I., or Supplemental Security Income. ...

 

What's A Social Security Disability Claim Worth?

     One question that gets asked from time to time is "How much is a Social Security disability claim worth?" If you try to figure out some average amount of total lifetime benefits that might be paid per person approved, what does it come to? You may be surprised to hear that there are no available official or even unofficial numbers on this. To the best of my knowledge Social Security's actuaries have never produced a figure. I don't recall seeing anyone outside the agency even attempt to come up with a number in many years. The very old estimates I remember were crude.

    I'll jump in with a very rough estimate, $457,000. Let me explain my methodology. The amount of benefits paid last year to all Social Security disability recipients was $145,470 million. The number of people approved for Social Security disability benefits last year was 671,952.  Divide $145,470 million by 671,952 and you get about $249,000. That's what I'm coming up with as a rough estimate of the value of the cash benefits. The amount of Medicare benefits paid for Social Security disability recipients was $139,996 million in 2021. Divide that by the 671,952 who were approved for benefits last year and you get $208,000 as an average value for the Medicare. Total that with the cash benefits and you get $457,000. 

    I don't expect you to say QED!

    Why divide the gross benefits paid in a year by the number added to benefits in that year? My reasoning is that the average length of time that a person stays on disability benefits is the total number of people drawing benefits divided by the number approved per year. The total benefits paid in a year is the summation of the amounts paid to claimants still on benefits who were approved over the years. That number is effectively the amount for one year's cohort of claimants going on benefits multiplied by the average length of time they stay on benefits. I told you that my method was crude but try coming up with a better formula yourself!

    Let me list some objections that I can think of for my methodology and my response:

• Those benefits aren't all being paid in one year. You need to reduce the amount to a current value by discounting it. That's what actuaries do based upon imputed interest rates. Right, but the problem is that reducing the value of an income stream to a current value only works if it's a steady income stream. Both the cash benefits and the Medicare benefits go up over time due to inflation in unpredictable ways. If you factor in the inflation protection, does it really matter that I'm not trying to reduce to current value?
• At best, you're only figuring the value of Disability Insurance Benefits. SSI only claims are worth a lot less. True, but many claimants receive both Disability Insurance Benefits and SSI so those cases are worth more. Don't these two factors roughly offset each other if you're trying to come up with an average? 
• You're not figuring numbers for Disabled Widows and Widowers Benefits or for Disabled Adult Child Benefits. Yes, but those are a fairly small part of the picture. The value of Disabled Widows and Widowers benefits would be lower because of the age of these claimants. On the other hand, the value of Disabled Adult Child Benefits would have to be quite high because of the youth of those claimants.
  
• The number of people approved for Social Security disability benefits in 2021 was below the number approved in prior years due to Covid and other reasons. This means that the average length of time on benefits may be lower than the number on benefits divided by the number approved in 2021. In my mind, this is the most valid of the objections but I'm just trying to come up with a ballpark number.
  
• The value of a claim approved by an ALJ is of more interest to most people reading this blog than a general number for all claims approved. The numbers would have to be significantly higher for cases approved by ALJs since those claimants are younger on average that those approved at the Initial and Reconsideration levels. They're also less likely to have illnesses that are quickly terminal.  Yes, but I have no idea how to compute a number specific to claims approved by ALJs.
• At best, you're only coming up with a dollar figure. The disability benefits approved prevent homelessness in many cases. Disability benefits recipients are able to live in greater dignity. Try living as the uninvited house guest of a relative who doesn't want you in their home but doesn't want to throw you out on the street if you think dignity doesn't matter. Maybe more importantly, approved claimants have medical treatment that allows them to live longer. All I can say to that objection is “Amen.” Social Security disability benefits have a huge value that cannot be expressed in dollars and cents.
  

    As I said above, if you don't like my methodology try coming up with something better. If you do, please share it with us.

    Also, start to think about the process used to adjudicate Social Security disability claims. Is the process commensurate with the value of what's at stake for the claimants and the taxpayers?

Seizure Of Social Security Benefits To Satisfy Student Loan Debt Suspended Until November

      From CNBC:

The U.S. Department of Education has suspended the seizure of tax refunds, Social Security and other government payments to satisfy defaulted student loans until November, the agency said.

About 9 million people have a federal student loan in default, which means they’ve fallen at least 270 days behind on payments.

     Why is it that the government has the power to seize Social Security benefits to collect on a student loan debt? We don't allow collection of other debts in this way. For that matter, why is it nearly impossible to discharge a student loan debt in bankruptcy? 

     I ask clients if they have outstanding student loan debts. I'd say that 90% have no student loan debt and are surprised at the question. The other 10% are surprised to find out that being disabled may have an effect on their student loans. It's like asking about disabled children. Most of my clients don't have disabled children so the question doesn't matter to them but for that minority of my clients who have disabled children, it matters a lot.

Work Without Worry Act

      From a press release:

Senate Finance Committee Chairman Ron Wyden, D-Ore., and Senator Bill Cassidy, R-La., today introduced legislation to remove a Social Security work disincentive for Americans with disabilities. The Work Without Worry Act would allow Americans with disabilities to work to their full potential without causing them to lose out on higher Social Security benefits. ...

If an adult has a severe medical condition that began before age 22, they may be eligible for a Social Security benefit called the Disabled Adult Child (DAC) benefit. Their benefits are based on their parent’s Social Security earnings, in the same way that benefits of a child under age 18 would be. However, under current law some of these young adults fear that if they try to work they will lose future DAC benefits, which are often higher than any benefit they may qualify on their own. This fear inhibits the ability of Americans with disabilities to explore their ability to work as they transition to adult life.

The Work Without Worry Act promotes financial security by ensuring that any earnings from work – no matter how much – will not prevent an individual from receiving a Social Security DAC benefit from their parent’s work history if they have an eligible medical condition that began before age 22. This bill treats all individuals with severe medical conditions that began before age 22 the same – no matter when their parents claim Social Security benefits. This change is estimated to increase Social Security benefits by $100 million and improve the lives of nearly 2,000 individuals with disabilities over the next 10 years.

Additional original co-sponsors include Senators Sherrod Brown, D-Ohio, Amy Klobuchar, D-Minn., Bernie Sanders, D-Vt., Pat Leahy, D-Vt., Jeff Merkley, D-Ore., and Bob Casey, D-Pa. The House of Representatives introduced a companion bill today, led by Congressman John Larson, D-Conn.

     Why don't we get rid of the marriage penalty for DAC recipients while we're at it.