The Actual Language From The Big Deal -- Doesn't Look Dramatic But Hard To Understand

     The reporting from various media sources last night on the Social Security provisions of the deal between the White House and Congressional leaders varied from confused to inadequate to completely wrong. We have the actual bill now. Here is some of the actual text of the bill with my interpretation, or maybe I should say questions, in brackets and bolded:

• Not later than October 1, 2022, the Commissioner of Social Security shall take any necessary actions, subject to the availability of appropriations, to ensure that cooperative disability investigations units have been established, in areas where there is co-operation with local law enforcement agencies, that would cover each of the 50 States, the District of Columbia, Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa. [Congress demands that Social Security extend cooperative disability reviews to every state and even to the Northern Mariana Islands but limits this to the extent that Congress appropriates money, dramatically undercutting the demand]
  
• Section 3 811(a) of such Act (42 U.S.C. 1011(a)) ... is further amended by striking the period at the end and inserting ‘‘, except that in the case of a person who receives a fee or other income for services performed in connection with any determination with respect to benefits under this title (including a claimant representative, translator, or current or former employee of the Social Security Administration), or who is a physician or other health care provider who submits, or causes the submission of, medical or other evidence in connection with any such determination, such person shall be guilty of a felony and upon conviction thereof shall be fined under title 18, United States Code, or imprisoned for not more than ten years, or both.’’. [I don't understand. It's now a crime to submit medical evidence in support of a disability claim? This doesn't make sense to me.]
• Section 1140(b) of such Act (42 U.S.C. 15 1320b-10(b)) is amended by inserting after the second sentence the following: ‘‘In the case of any items referred to in subsection (a)(1) consisting of Internet or other electronic communications, each dissemination, viewing, or accessing of such a communication which contains one or more words, letters, symbols, or emblems in violation of subsection (a) shall represent a separate violation’’. [Even viewing an inappropriately used Social Security symbol is a crime?]
  
• The Commissioner shall carry out a demonstration project ...[A]ny such benefit otherwise payable to the individual for such month (other than a benefit payable for any month prior to the 1st month beginning after the date on which the individual’s entitlement to such benefit is determined) shall be reduced by $1 for each $2 by which the individual’s earnings derived from services paid during such month exceeds an amount equal to the individual’s impairment-related work expenses for such month [OK, we're only talking about a benefits offset demonstration project.] ... For purposes of paragraph (2)(A) and except as provided in subparagraph (C), the amount of an individual’s impairment-related work expenses for a month is deemed to be the minimum threshold amount. [This sounds like a stringent offset. Any earnings over impairment-related work expenses are subject to the offset. That would strongly discourage work by Social Security disability recipients]... In this paragraph, the term ‘minimum threshold amount’ means an amount, to be determined by the Commissioner, which shall not exceed the amount sufficient to demonstrate that an individual has rendered services in a month, as determined by the Commissioner under section 222(c)(4)(A). [What are you saying here? There is a threshold amount beyond the impairment-related work expenses? I don't understand what you're trying to say.] The Commissioner may test multiple minimum threshold amounts.[So lots of thresholds will be tried. Good.] ... An individual who has authorized the Commissioner of Social Security to obtain records from a payroll data provider under subsection (c) shall not be subject to a penalty under section 1129A for any omission or error with respect to such individual’s wages as reported by the payroll data provider.’’.  [You're going to enforce the benefit offset by getting electronic records from employers and you won't punish the claimant if these records are mistaken. Sounds fine if these electronic records are accurate. Are they? I don't think my firm is reporting wages to anyone other than the IRS. What about self-employment?]
  
• If an individual is eligible for a wife’s or husband’s insurance benefit (except in the case of eligibility pursuant to clause (ii) of subsection (b)(1)(B) or subsection (c)(1)(B), as appropriate), in any month for which the individual is entitled to an old-age insurance benefit, such individual shall be deemed to have filed an application for wife’s or husband’s insurance benefits for such month. ... If an individual is eligible (but for section 202(k)(4)) for an old-age insurance benefit in any month for which the individual is entitled to a wife’s or husband’s insurance benefit (except in the case of entitlement pursuant to clause (ii) of subsection (b)(1)(B) or subsection (c)(1)(B), as appropriate), such individual shall be deemed to have filed an application for old-age insurance benefits. [I think they're ending file and suspend.]
  
• An initial determination under subsection (a), (c), (g), or (i) shall not be made until the Commissioner of Social Security has made every reasonable effort to ensure—  ‘‘(1) in any case where there is evidence which indicates the existence of a mental impairment, that a qualified psychiatrist or psychologist has completed the medical portion of the case review and any applicable residual functional capacity assessment; and ‘‘(2) in any case where there is evidence which indicates the existence of a physical impairment, that a qualified physician has completed the medical portion of the case review and any applicable residual functional capacity assessment.’’. [This ends the Single Decision-Maker project. This modestly slows down disability determinations.]
  
• Section 201(b)(1) of the Social Security Act (42 U.S.C. 401(b)(1)) is amended by striking ‘‘and (R) 1.80 per centum of the wages (as so defined) paid after December 31, 1999, and so reported’’ and inserting ‘‘(R) 1.80 per centum of the wages (as so defined) paid after December 31, 1999, and before January 1, 2016, and so reported, (S) 2.37 per centum of the wages (as so defined) paid after December 31, 2015, and before January 1, 10 2019, and so reported, and (T) 1.80 per centum of  the wages (as so defined) paid after December 31, 12 2018, and so reported,’’. [This would end the Disability Trust Fund problem but only for three years, at which point we may have to go through the same "crisis" again.]
  
• The Commissioner of Social Security shall annually submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the number of work-related continuing disability reviews conducted each year to determine whether earnings derived from services demonstrate an individual’s ability to engage in substantial gainful activity. [Is work supposed to trigger a continuing disability review, that is, if you do any work, is Social Security supposed to review your medical records to see if you're still disabled? If that were the case it would be a big deterrent to any attempt to return to work. I think, or maybe hope, that they are just talking about using employment records to determine whether a beneficiary's status under the work incentives.] 
  
• Notwithstanding any other provision of law, the Office of Personnel Management shall, upon request of the Commissioner of Social Security, expeditiously administer a sufficient number of competitive examinations, as determined by the Commissioner, for the purpose of identifying an adequate number of candidates to be appointed as Administrative Law Judges under section 3105 of title 5, United States Code. The first such examination shall take place not later than April 1, 2016 and other examinations shall take place at such time or times requested by the Commissioner, but not later than December 31, 2022. Such examinations shall proceed even if one or more individuals who took a prior examination have appealed an adverse determination and one or more 1 of such appeals have not concluded ...[This is strong pressure on the Office of Personnel Management to assure that enough Administrative Law Judge candidates are available to be hired by Social Security. Why do I suspect that this problem won't go away?]
  

Disability Trust Fund Issue May Be Near Resolution

     Many news sources are reporting that a massive deal is underway to clear out many issues remaining before the Congress. The most imminent is the debt ceiling. CNN is reporting that the deal will include provisions to extend the Social Security Disability Trust Fund. The New York Times reports that this will involve unspecified cuts in Social Security disability.

     Update: The Associated Press says the deal will involve a temporary reallocation of FICA revenues but "changes to the disability program to fight fraud and to encourage disabled workers to return to work" that would presumably be permanent. We could be revisiting this in the not too distant future.

     Update: CBS News says the deal would include the end of the Single Decision Maker (SDM)program for Social Security disability claims. This isa small change in the big picture but it makes disability determination even slower.

     Update: The New York Times is reporting:

... [T]he Social Security Disability Insurance program would be amended so that a medical exam now required in 30 states before applicants could qualify for benefits would be required in all 50 states. That change was projected to save the government $5 billion. ...

     I haven't the slightest idea what they're talking about.

     Update: From The Hill:

The deal would ... create a "flat benefit" for disability recipients, which would be tied to the federal poverty line rather than an individual's own savings.  The idea of the flat benefit has been championed by budget experts at the Heritage Foundation. 

"This would be the first significant reform to Social Security since 1983, and would result in $168 billion long-term savings," according to a source familiar with the talks.

     Update: George Zornick at The Nation has tweeted that he is hearing that there will not be large or across the board in Social Security disability but that the appeal process may get longer and there may be some demonstration of a benefit offset for disability recipients with earnings.

      To put it mildly, we're getting conflicting reports. Reporters are getting incomplete information and don't understand much of what they're hearing.

     Update: Multiple media reports say the budget deal would save $168 billion in Social Security disability. Budget savings are generally reported for a ten year period. For purposes of comparison, Social Security is paying out about $150 billion a year. You wouldn't get that kind of savings without massive across the board cuts.

      Update: Time magazine reporting budget deal will involve a change in the way in which Social Security disability benefits are computed.

NADE Members Hear Of Social Securty's Plans For DOT Replacement

     The National Association of Disability Examiners (NADE), an organization of personnel involved in making disability determinations for Social Security, has released its most recent newsletter, focusing on NADE's recent conference in Portland. 

     NADE members attending the conference heard a presentation on Social Security's effort to create a new occupational information system to replace the outdated Dictionary of Occupational Titles (DOT) used in disability determinations. There are a couple of items of interest from the write-up. The number of occupations listed will go down from the DOT's 12,000 to 1,000, which means that each job title will be even more of a composite. Composite jobs are broader and can only be described in more amorphous ways. Training on the new occupational information system is supposed to begin sometime in 2016.

Disability And Survivor Benefits Matter A Lot

Social Security Planning Telecommunication System Changes

     From a recent announcement, it appears that the Social Security Administration is in the early stages of planning major telecommunications system changes. Huge contracts will be awarded.

Sanitation Problems Close Social Security Cafeteria

     From the Baltimore Sun:

Officials at the Woodlawn-based Social Security Administration took the unusual step Thursday of closing its cafeteria facilities after an internal inspection found problematic "housekeeping conditions," a spokesman said. ...

The agency did not provide detail of what was found, other than to note the issues were "sanitation-related." The agency said an inspection found conditions that "do not meet required standards."...

A spokesman for Brock & Company, the Pennsylvania-based food services vendor for the agency, said in a statement that "sanitation is a top priority at all our locations and we are working with our partner client [SSA] in addressing the housekeeping and facilities issues that were discovered during today's inspection."

     Update: The cafeteria reopens Monday.

Online Appeals System Problems

     I'm hearing many complaints about Social Security's system for filing appeals online. Attorneys are required to use the system but it's unreliable. Much of the time when you try to access the system online you get a message that "This page does not exist."

Comp Cuts Causing Increase In Social Security Disablity Costs?

     The Center for Economic and Policy Research has done a study on Rising Disability Payments: Are Cuts to Workers' Compensation Part of the Story? The charts below, extracted from the report, suggest that the answer is "yes."

Frye Out As President Of AALJ

     Randall Frye of Charlotte has been the president of the Association of Administrative Law Judges (AALJ), the labor union that represents Social Security's Administrative Law Judges for some time. I understand that he has left that position. He is resuming his regular duties as an ALJ. I do not know the circumstances of Frye's departure from his position at AALJ.

Workers Comp Changes Costing Social Security

     From National Public Radio (emphasis added):

Ten ranking Democrats on key Senate and House committees are urging the Labor Department to respond to a "pattern of detrimental changes in state workers' compensation laws" that have reduced protections and benefits for injured workers over the past decade. ...

The letter also referred to NPR/ProPublica stories last week that detailed an emerging trend that permits employers to dump out of state-regulated workers' comp programs, write their own injury plans and limit benefits on their own. ...

The Center for Economic and Policy Research is releasing a study Wednesday that estimates that more than 20 percent of the increase in federal disability cases is due to cuts in workers' comp programs. ...

A 2007 study by J. Paul Leigh, a health economist at the University of California, Davis, estimated that workplace injuries not covered by workers' comp cost government programs about $30 billion a year.

Federal intervention may also come as the result of the "opt out" movement in Texas and Oklahoma, in which employers shun heavily-regulated workers' comp and are permitted to write and administer their own largely-unregulated workplace injury plans. South Carolina and Tennessee are considering opt-out laws now and proponents are aiming for a dozen states by the end of the decade. ...

Which Candidate Is More Interested In Protecting Social Security?

     From a New York Times  comparison of the effects of the Social Security plans of two Presidential candidates:

     Elements of the two plans:

• Christie would raise early retirement age from 62 to 64 and full retirement age from 67 to 69. Sanders wouldn't change either date.
• Christie would eliminate the FICA tax for those 62 and older. Sanders would apply the FICA tax to those with incomes over $250,000, in addition to the current FICA tax structure that applies FICA to incomes up to $118,500.
• Christie would reduce Social Security benefits to those with an income over $80,000 and eliminate all benefits for those with an income over $200,000. Sanders would increase benefits for all recipients, with the amount of the increase being between 2% and 9% depending upon work history. He would also add a special minimum benefit.
• Christie would reduce the Cost of Living Adjustment (COLA). Sanders would increase COLA.

Even WSJ Says COLA Unfair To Retirees

     Even the Wall Street Journal says that the formula used to compute Social Security's Cost Of Living Adjustment (COLA) is unfair to retirees.

Appeals Council To Stop Returning New Evidence

     From a Notice of Proposed Rule-Making (NPRM) that Social Security will publish in the Federal Register tomorrow: 

We propose to amend our regulations by revising our rules regarding the return of evidence at the Appeals Council (AC) level. Our current rules state that the AC will return to the claimant additional evidence it receives when the AC finds the evidence does not relate to the period on or before the date of the administrative law judge’s (ALJ) hearing decision. We are proposing these revisions to give the AC discretion in returning additional evidence that it receives when the AC determines the additional evidence does not relate to the period on or before the date of the ALJ decision.

We now use many electronic services that make the practice of returning evidence unnecessary. For example, we now scan most of the medical evidence into the electronic claim(s) file or appointed representatives submit it through our Electronic Records Express system. ... It is neither administratively efficient or cost effective for us to print out documents that have been submitted to us electronically by a claimant or appointed representative in order to return them to the claimant. ...

The administrative burden of processing and returning evidence also has increased significantly over the last few years. ...

It's OK With Me If You Pretend This Is New -- As Long As You Do It!

     From the Federal Eye column in the Washington Post:

When The Post dug into the backlog for disability benefits at the Social Security Administration a year ago, it discovered that the line was approaching one million applications long. The number of people in this queue was so large that it exceeded the population of six different states.

Since then, the line has only gotten longer, according to a new report...

In July, Social Security replaced the two officials in charge of the appeals office, shifting them to other jobs at the agency in favor of new leadership to tackle the backlog.

Three months later, the new head of the office says she is “putting the finishing touches” on a plan to reduce the number of pending cases and speed the system up.

Terrie Gruber said in an interview that her goal is “compassionate and responsive” service to applicants for disability benefits ...

"We’re committed to new ways of doing business,” she said.

One of the biggest changes will include better triage of cases, so many don’t ever get to a lengthy hearing before a judge. New, electronically-generated data has helped the agency determine which appeals could be screened by attorneys and federal claims examiners, who can make decisions themselves, faster than judges, Gruber said. The number of attorneys is being increased.

When cases do go before judges, a new initiative is assigning support staff to arrange the files in better order, getting rid of duplicate medical documents and evidence that take a long time for judges to sort through. ...

A primary goal is hiring more judges, Gruber said, about 1,800 to 1,900 by fiscal 2018, an increase of about 400. Also, she is making use of new technology to enhance the quality of video hearings in remote locations where there are no judges, and improving support staff’s communications with judges when video hearings are involved.

A new pilot program is creating “pre-hearing” conferences at a handful of  local Social Security offices, so applicants who don’t have attorneys can know what to expect when a judge hears their case.

     The statement that these plans show that the agency is "committed to new ways of doing business" is ridiculous. That doesn't mean I disagree with the plans. It's just that there's virtually nothing new here. I'm actually an enthusiastic supporter of the pre-hearing screenings part and I'd love to see more ALJs hired. The rest is harmless. Let's go through the elements of the plan:

• New, electronically-generated data has helped the agency determine which appeals could be screened by attorneys and federal claims examiners, who can make decisions themselves, faster than judges. This is just the revival of the Senior Attorney and re-recon programs that have been used successfully in the past. Social Security certainly didn't have to replace Glenn Sklar to do this since he supervised the exact same programs in the past. This can make a significant difference. They never should have been dropped. The only reason they were dropped was concern that the agency would be criticized for "paying down the backlog." By the way, ALJs, this is your Bat Signal. It's now OK to issue on the record reversals.
• [A] new initiative is assigning support staff to arrange the files in better order, getting rid of duplicate medical documents and evidence that take a long time for judges to sort through. There's nothing new about this. Support staff has been "pulling" exhibits for at least 37 years. I know. I've been involved with Social Security disability for 37 years. It wasn't new when I started. I don't know why this would even be listed. I can't imagine anything they could be planning that would be new. If anything, ALJs ought to be hearing cases on unpulled files! Yes, ALJs, that's been done before. No, I don't like cases being heard with unpulled files but I'm quite willing to put up with them if we can just get more cases heard. People are waiting two years for hearings. This is a horrible situation that demands urgent action. When cases are heard with unpulled files, the exhibits are eventually pulled, but only if it's going to be a denial.
• A primary goal is hiring more judges, Gruber said, about 1,800 to 1,900 by fiscal 2018, an increase of about 400. They're been saying something like this for at least twenty years. It seems like the Office of Personnel Management (OPM) always makes it impossible for the agency to hire as many ALJs as Social Security says it wants to hire. At least that's what Social Security has claimed.  I've never fully bought into OPM being the villain. I've always suspected that the real reason more ALJs aren't hired is that the agency's budget is way too tight and decisions have been made to devote resources elsewhere. I suspect that the agency uses OPM as its fall guy. I'm pretty sure that there are plenty of names on the ALJ register who could be hired almost immediately if the agency really wanted to hire them.
• A new pilot program is creating “pre-hearing” conferences at a handful of  local Social Security offices, so applicants who don’t have attorneys can know what to expect when a judge hears their case. Pre-hearing conferences haven't been done lately but they may date back a quarter-century. So claimants can know what to expect? Hardly. The primary reason for holding these pre-hearing conferences for unrepresented claimants is to weed out those who don't show up. Send them a show cause notice and then dismiss their cases when they don't respond. Dismissing these cases earlier makes the average numbers look better but it really doesn't reduce the workload by much. Many ALJs already schedule hearings for unrepresented claimants five minutes apart on the assumption that most won't show up. What may be new here is that the agency is talking about doing pre-hearing conferences at local Social Security offices.  Could it be field office personnel doing the pre-hearing conferences?

Opting Out Of The Workers Compensation Offset In Texas

     Let me explain first why I'm writing about a development in workers compensation law. Claimants receiving Social Security disability benefits as well as workers compensation benefits are subject to an offset. Usually, Social Security disability benefits are reduced because of the receipt of workers compensation benefits. Sometimes the offset works in the opposite direction. 

     The states of Texas and Oklahoma now allow employers to opt out of workers compensation. You read that right -- opt out of workers compensation. The employers have to set up benefits that parallel workers compensation but they can arrange things in ways that save money, such as refusing to pay for carpal tunnel syndrome or refusing to pay benefits unless a worker reports an injury by the end of his or her work shift or cutting off all benefits after two years. 

     In terms of workers rights, these plans are very worrisome but I'm writing about the Social Security implications. Social Security has decided that benefits under the company plans that substitute for workers compensation aren't subject to the workers compensation offset. This development is already costing Social Security's Disability Insurance Trust Fund money. Other states are studying what Texas and Oklahoma have done. There may be significant effects upon Social Security. Employers are trying to shift the burden of providing for workers injured on the job to Social Security and Medicare. This needs Congressional scrutiny.

Senate Hearing Postponed

     The Senate Homeland Security and Governmental Affairs Committee hearing on Understanding Social Security’s Long-Term Fiscal Picture that had been scheduled for October 20 has been postponed. No new date has been announced.

The Sad Situation In Kentucky

     The Lexington Herald-Leader has an op ed from Ned Pillersdorf, the attorney who has brought class actions both against Eric Conn seeking damages for his representation of claimants before the Social Security Administration and against the Social Security Administration for its efforts to cut 1,787 of Conn's former clients off disability benefits. 

      It's a sad situation. It's surprising that we're still waiting for a decision from a federal District Court Judge. It's surprising that Social Security has started holding hearings in these cases. It may only be days before some benefits are terminated. Without intervention from the federal courts within a few months hundreds will have lost benefits.

Senate Committee Schedules Hearing

     The Senate Homeland Security and Governmental Affairs Committee has scheduled a hearing for October 20 on Understanding Social Security’s Long-Term Fiscal Picture. Here's the witness list:

• Stephen C. Goss, Chief Actuary U.S. Social Security Administration 
• Jagadeesh Gokhale, Ph.D.,  Director of Special Projects Penn Wharton Public Policy Initiative 
• Dean Baker, Ph.D., Co-Director Center for Economic and Policy Research

Andrew Biggs Is Still Annoying -- And Wrong

     When George W. Bush campaigned for the partial privatization of Social Security, Andrew Biggs, a Social Security employee, was at his side. That rankled me. I felt it was deeply inappropriate for a Social Security employee to take on such a politicized role. Bush later nominated Biggs to become Deputy Commissioner of Social Security. Senate Democrats blocked that nomination, suggesting that I wasn't the only one rankled by what Biggs did.
     After his stint at Social Security, Biggs landed a job at the American Enterprise Institute, a Koch brothers front organization.
     Biggs has a blog at the Forbes website on which he's posted a response to the Social Security discussion at the Democratic Presidential debate Tuesday night. The ideas of expanding Social Security and lifting the cap on wages covered by FICA both came up in the debate. Biggs makes the point that lifting the FICA cap wouldn't generate enough revenues to fund an increase in Social Security benefits. This is accurate but it's also rich coming from someone who campaigned for completely undermining Social Security's finances. President Bush never released a plan for partially privatizing Social Security but he was promising to keep paying benefits to everyone already drawing benefits or near retirement age, to not increase the FICA tax and yet to divert much of the FICA tax receipts to private accounts. Put all of that together and it would cost trillions of dollars. Did Biggs and Bush ever put forward a plan for paying for this? Of course not. Republicans never have to pay for their Social Security plans. Only Democrats have to pay for their plans.

     Biggs points out that raising the FICA cap wouldn't be enough to assure that no further change would have to be made anytime in the next 75 years to protect Social Security's funding. He seems to believe that means there's no point in raising the FICA cap. Right. Lifting the FICA cap would only assure program funding until 2080 so obviously that idea is worthless. In fact, if you remove the FICA cap, you could do some modest benefit increases and still assure the future of the Trust Fund well into the future. That was what the Democratic Presidential candidates were talking about.
     I think that Biggs will have to come up with some better arguments to convince the American people that it's a bad idea to raise taxes on the wealthy in order to give higher Social Security benefits to many.

No COLA This Year

     As expected, there will be no Cost Of Living Adjustment (COLA) this year for Social Security recipients. This is the third time this has happened since 2010. It had never happened before 2010.
     Unfortunately, unless there's a change in the law, Medicare premiums will be increasing dramatically for almost one-third of Social Security recipients. Since the Medicare premiums are deducted from Social Security benefits that means that a lot of Social Security recipients will see a significant drop in the payments they receive.