Federal Reserve Chairman Pushes Social Security "Reform"

Ben Bernanke, the Chairman of the Federal Reserve Board, was pushing the idea of Social Security "reform" in a speech in Washington yesterday, according to McClatchy-Tribune. He urged action now so that the nation would not have to drastically cut benefits, cut other government spending or raise taxes later. Since it seems clear from the context of his remarks that he does not want any increase in taxes, either now or later, or any decrease in funding for other governmental activities, he must be calling for dramatic cuts in Social Security benefits.

Four Experienced SSA Employees Nearing Retirement

Dale Moss, writing in the Louisville Courier-Journal reports on Ellen McCoskey, Donna Whiteley, Carol Lanham and Betty Denbo, four Social Security employees in one field office, each nearing retirement after a career spanning 40 years.

The article notes that the office manager is begging the women to continue working and for good reason. The sad fact is that under current circumstances when these four women retire they will not be replaced. The loss of their experience would be unfortunate anyway, but when nothing replaces that experience, not even a new employee, some of the 150 people who come into that office every day seeking help may wait in the office all day and never be seen by a Social Security employee. How long will it be before people who need to do business with Social Security in person have to line up before daybreak outside Social Security offices, as is often the case already with Immigration and Naturalization offices?

Report From SSAB On Disability Benefits

The Social Security Advisory Board has published a report entitled "A Disability System For The 21st Century." The report concerns the Holy Grail of Social Security disability benefits -- rehabilitating far more people so that they can get off Social Security disability benefits or, better yet, never get on benefits in the first place. As in the Arthurian legends, the quest to return the disabled to work is a noble undertaking, but like the quest for the Holy Grail, no one ever seems to find the path that leads to the prize.

So far, the quest for rehabilitation has brought about mandatory referrals of Social Security disability recipients to Vocational Rehabilitation, the Trial Work Period, the Extended Period of Eligibility, the PASS program, the end of the minimum disability benefit, expedited re-entitlement, the Ticket to Work program, etc. None of this has worked to any appreciable extent. There are no examples that I am aware of from other country in which rehabilitation programs have had any significant effect upon Social Security disability programs. Private disability plans have shown what appears to be dramatic success, but once you look closer, it becomes obvious that these plans have only used rehabilitation as a tool to harass disabled people and to cook up justifications for stop benefits, with no meaningful rehabilitation accomplished.

Below, I will give my opinion why these efforts are doomed. What follows immediately are some excerpts from this report:

The Social Security Act equates disability with inability to do any substantial work. This core definition is as old as the program itself. It was adopted at a time when attitudes about the capabilities of people with disabilities were markedly different than they are today. As the Board pointed out in the 2003 report, The Social Security Definition of Disability, the definition was adopted for a program that was limited to individuals approaching retirement age, and the program was explicitly viewed as representing a kind of early retirement. It was adopted by a Congress that could not have foreseen the great advances that would take place over the next fifty years in medical science, adaptive technology, and rehabilitative practice and therapy.

... [I]n the extensive study the Board has undertaken since 2003, the Board has also heard concerns expressed about what it would mean to modify the definition of disability used for Social Security programs. Changing the definition could result in narrowing eligibility in ways that would exclude individuals who have no alternative but to depend upon the benefits those programs provide or could result in broadening eligibility so as to increase the costs of the program and provide benefits to individuals beyond the currently intended scope. We recognize the validity of these concerns. It is our purpose in this report to suggest neither that the existing disability programs should provide coverage more broadly nor that they should be contracted to prevent individuals who are unable to engage in substantial work from receiving their benefits. The problem that we see is in the way in which those programs are, or rather are not, integrated into an overall approach to disability that supports the aspirations of people with disabilities to achieve their maximum potential. Correcting this problem will require a statutory change to define disability in a way that encompasses such an integrated approach. ...

One question that might arise is whether such decreased expenditures or possible savings, or much of them, could be achieved by doing a better job of screening applicants for disability benefits so that those who have the ability to work do not become beneficiaries in the first place. Similarly, will doing a better job of rehabilitating those on the rolls so that they stay on for a shorter period result in large savings? Although these are logical questions, the answer to both is no. Certainly, every effort should be made to make initial eligibility determinations accurately. And, certainly it is worthwhile to try to support and encourage rehabilitation efforts by those who do find themselves on the disability benefit rolls. However, past experience has shown that these approaches are largely ineffective and are likely to remain so. The reason is that by the time an individual applies for disability benefits and, even more so, by the time he or she is actually placed on the benefit rolls, the best opportunity for restoring or retaining the capacity for self-support has already been lost. In the absence of a disability system designed to manage toward self sufficiency, the realistic possibilities of someone with a work limitation remaining productive begin to fade. The process itself tends to make an individual who might have been able to work at an earlier point in time less and less capable of doing so. Attachment to an employer, the maintenance and improvement of skills, the sense of belonging to the workforce, the mindset that work is possible—the loss of all of these factors, combined with the passage of time and with the program requirements that reward inability to work, conspire to transform a person from an “impaired individual” with potential into an individual who, in fact, has come to meet the definition “unable to work.” ...

We believe that it is time to set aside old paradigms and look more broadly at what is possible. Clearly, a shift in public policies is needed to sustain the employment of people with disabilities. It is time to reexamine our national disability programs with a view to investing in human capital — our most valuable asset. A new disability system must incorporate elements that embrace change and:
• provide assistance and support to individuals and strive to maximize employment outcomes to the extent of each individual’s capabilities;
• facilitate a culture shift within society to establish the expectation that individuals with disabilities can and should work to the extent of their capabilities and that society should assist individuals with disabilities in that endeavor;
• recognize and accommodate the dynamic nature of disability and its sometimes cyclical impact on work capacity; and
• facilitate rehabilitation and employment by coordinating and integrating the various sources of assistance and support that are now inconsistently provided by multiple uncoordinated programs.

So why will none of these noble ideas advanced by the SSAB work? First of all because they are incredibly fuzzy. The SSAB says that a new definition of disability is needed, but cannot give any idea what the new definition of disability would look like. They deny that they want to approve or deny more claims, but any change in the definition of disability will inevitably result in a change in who gets approved. If there is no effect upon who gets approved, what is the point in making a change? The SSAB wants more emphasis on rehabilitation, but where is the evidence that more emphasis on rehabilitation will do anything other than waste money? Why would this rehabilitation effort be any more effective than what already exists? The SSAB wants to divert people who want to file claims for Social Security disability benefits into rehabilitation before they even get a chance to file a claim, but how do these people support themselves while they are awaiting the miracles of rehabilitation? The SSAB has noble ambitions but no answers to any of these questions.

The basic problem is that the well-intentioned people writing reports such as this have little idea of who applies for disability benefits. Those who write such reports live in a nice well-educated middle class world where they seldom interact with Social Security disability claimants. When they think of disabled people, they think of automobile accidents and wheelchairs, but automobile accidents and wheelchairs are not nearly as commonly the cause of disability as other health problems, such as schizophrenia and osteoarthritis. The scourge of schizophrenia is invisible to most people in this country and osteoarthritis seldom disables people who work in offices. Disability due to osteoarthritis happens to blue collar workers. People who write reports such as the SSAB has released know few blue collar workers and spend little time thinking about what their lives are like.

Why is rehabilitation such an elusive goal? Most of the disabled people I see professionally present at least one and usually more than one of the following problems, any one of which is likely to make rehabilitation impractical:

1. The claimant has a chronic, progressive disease such as diabetes or osteoartritis. Rehabilitating such a person is like trying to hit a moving target. By the time you get the claimant rehabilitated so that they can work with the limitations they had when they first saw you, they will be sicker and have more limitations, making all the rehabilitation efforts a waste.
2. Many, many Social Security disability claimants suffer from chronic pain. It is impossible to do much work if you are in severe pain or if you have to take narcotic medication for pain on a regular basis. There is no solution on the horizon for this problem. Rehabilitation will not make pain go away.
   
3. Most Social Security disability claimants are older. As we age our adaptability diminishes. This is a problem for which modern medicine and rehabilitation have no solution. Rehabilitation has some hope of working with carefully selected younger people. With people in their 50s, it is almost always hopeless.
4. We do not live in Lake Wobegone. All of the children are not above average and neither are the adults. A high percentage of people filing claims for Social Security disability benefits have IQs in the low average or borderline mentally retarded range. Such folks have little or no ability to benefit from rehabilitation, since they have limited learning ability.
5. In a related vein, many claimants have low educational attainments. Before they can take advantage of any rehabilitation, these claimants need to get a GED, but that can be difficult and time consuming. By the time they do this, they will probably be sicker and they will certainly be older. And, of course, the usual reasons that people fail to get a high school diploma are that they had a low IQ or were already suffering from mental illness when they were in school and those problems usually do not go away.
   
6. Many, many claimants suffer from life long nagging psychiatric problems such as depression, anxiety and personality disorders. These problems were not enough to completely exclude work, but they always made it tough. When the person had good physical health, he or she could work, although usually not too successfully. Once their health declined, they had little to fall back on. Psychiatric treatment is of only modest benefit to such individuals.
   
7. Many Social Security disability recipients suffer from major psychiatric problems, such as bipolar disorder or schizophrenia. Few people who suffer from schizophrenia work on any regular basis. That is just a fact. Many with bipolar disorder do, but there are plenty of others with bipolar who are just unable to work and all the psychiatric treatment and all the rehabilitation in the world will not return these folks to work.

In the end, even though the SSAB members are mostly conservative politically, they make the classic naive liberal mistake of believing in the perfectability of human beings.

Reassurance On SSA 1099s To Attorneys

Everett Jackson, who is in charge of Social Security's plan to collect Social Security number information on attorneys and others qualified for direct payment of fees for represesting Social Security claimants, was kind enough to call me in response to an e-mail I had sent.

The information from him is that attorneys will provide their individual SSNs on each client, but will also provide their firm's Employer Identification Number (EIN) on a one time basis. Social Security will then issue 1099s to the individual attorneys and to the law firms as well. The 1099s to the attorneys will show the income in Box 14, but the IRS does not pay attention to the information in Box 14. The law firm's 1099 will show the income in Box 7, which is the one that the IRS pays attention to. Social Security will use a database to link the individual attorney information into the composite 1099 for the firm.

Jackson also told me that there will be another Federal Register notice on November 18 concerning direct deposit of attorney fees.

The concern that I have with direct deposit is identifying the client to whom the direct deposit pertains. That can already be a problem with checks, but may be even more of a problem with direct deposits, depending upon the electronic information that accompanies the check. He was unaware that this might be a problem, but seemed willing to work to make sure we can solve the problem.

From NCSSMA The Question: Will Social Security Field Offices Be Replaced By H&R Block?

The National Council of Social Security Management Associations (NCSSMA), an organization of Social Security management employees has posted the minutes of its September Executive Committee meeting. It is obvious from the Minutes that the overriding concern during this meeting was the perception that Social Security is being forced by budget problems to move away from field office service to Social Security claimants, even at a time when there is more demand for field office service than ever before.

The NCSSMA Executive Committee wondered if there was some plan to privatize service to Social Security claimants, as this segment of the Minutes shows:

Linda [McMahon, Social Security's Deputy Commissioner for Operations, who met with the NCSSMA Executive Committee] feels that we should be talking with 3rd party organizations and finding out how they want to work with us [by using electronic means to file claims]. There is a huge untapped potential and Linda believes that we need to find out how to make it work. The Agency is looking to work with large employers and working through their HR departments. A question was raised about whether our eGov strategy includes encouraging private sector companies to help applicants file for benefits with SSA electronically, like H&R Block helps them with taxes. Linda said it is not in our strategy to take a position but we can certainly tap into one if one exists.

There was discussion suggesting that SSA is devising more creative ways of discouraging claimants from staying on the line when they make 800 phone calls to SSA:

In FY07, we will see something called “screen splash”. This is where 6 questions for verification will be asked through voice activated questions before the caller gets to an agent. The questions would be asked and then show up on the screen to the agent – to show which ones verified and which ones didn’t. At that point, the agent may only have to re-ask a few questions. This saves 30 seconds at a minimum per call. By saving time, it frees up capacity.

The NCSSMA Executive Committee heard that Social Security will not have a budget for fiscal year 2007, which began on October 1, until after the election and that if Democrats take control of the House of Representatives there may be no budget until sometime into 2007. Efforts are underway to restore funding for SSA.

The minutes reveal that NCSSMA is hearing that the agency is now looking to spread out the effects of any furlough of agency personnel that may be required by the fiscal year 2007 budget, probably meaning that the agency would close for only one day at a time and that these days would be spread out over a long period. This was somewhat controversial with the NCSSMA executive committee since some saw it as disguising the severity of the problem.

There was the following discussion of the provisions that recently came into effect that spread out SSI back benefits in almost all cases:

Employees are spending large amounts of time explaining why all the money can’t be released at once. Only under certain circumstances can the money be released in one payment. This issue is regulation and part of the budget process. This workload is an unfunded mandate.

The minutes contained this brief report on the early days of the Disability Service Improvement (DSI) initiative:

Offices are busy preparing for DSI. Boston’s experience so far has been very good. The quick decisions cases are being decided well within the 20 days. In fact Connecticut had one decided in 3 hours. Overall the impact on the field offices has been minimal. Some regions have mandated quality reviews on their disability cases which are very onerous.

New Mod Assignments At SEPSC

Social Security's Southeastern Program Service Center has reassigned Social Security number ranges to the modules, usually called "mods", which do most of its work. Here are the new assignments:

• MOD # SSN ASSIGNED PHONE NUMBER
• 1 0000-0624 (205) 801-3015
• 2 0625-1249 (205) 801-3025
• 3 1250-1874 (205) 801-3035
• 4 1875-2499 (205) 801-3045
• 5 2500-3124 (205) 801-3055
• 6 3125-3749 (205) 801-3065
• 7 3750-4374 (205) 801-3075
• 8 4375-4999 (205) 801-3085
• 9 5000-5624 (205) 801-3095
• 10 5625-6249 (205) 801-3105
• 11 6250-6874 (205) 801-3115
• 12 6875-7499 (205) 801-3125
• 13 7500-8124 (205) 801-3135
• 14 8125-8749 (205) 801-3145
• 15 8750-9374 (205) 801-3165
• 16 9375-9999 (205) 801-3175

This confusing alignment is the best that Blogger will do.

Federal Register Notice On Attorneys Providing SSNs

As expected, Social Security published a notice in the Federal Register today requiring attorneys who represent Social Security claimants to submit their Social Security numbers as a condition of getting direct payment of fees for representing Social Security claimants. To do so, an attorney must undertake two actions. First, the attorney must complete a form SSA-1699 on a one time basis. Second, the attorney must complete a form SSA-1695 for each individual case. The form SSA-1695 appears to not be ready yet. This will result in attorneys receiving SSA-1099 forms showing their payments from Social Security. Eventually, this will require direct deposit of attorney fees, although that is apparently not being required for now.

There is a problem with the notice that will affect all attorneys who practice in a corporate form or who work for another attorney. This is an e-mail I sent today to , whose e-mail address is shown on the Federal Register notice, as the person at SSA to contact for further information:

I have just read the notice published this morning in the Federal Register and I'm confused, or perhaps I should say it appears to me that Social Security is confused.

My law firm is a professional corporation. It has its own taxpayer identification number. It files its own corporate tax return. We have 6 attorneys all representing Social Security claimants. All of the fee checks we get go into the firm's bank account and are reflected on the firm's tax return, not our individual returns.

If each of us provides our individual SSN, we will each get an SSA-1099, but we will not be reporting that income on our individual tax returns. If we do it the way this notice says we are supposed to, each of the attorneys in the firm will have a problem with the IRS every year, since we will have a good deal of income shown on our SSA-1099s under our individual SSNs that is not reflected on our individual tax returns.

I don't think that SSA is requiring those who contract with the agency to provide goods and services to provide their individual SSNs. You recognize that there are such things as corporations. I think you need to recognize that fact when you deal with attorneys. In fact the act that requires SSA to issue these 1099s, talks of TINs, as your notice indicates, but the notice seem to be contradicting the statute to require SSNs.

SSA needs to publish a new notice making it clear that we can provide TINs.

Upcoming Meetings and CLE

• October 3, 2006 Valpariso Law School CLE, Valpariso, IN
  
• October 6-7, National Council of Social Security Management Associations (NCSSMA) Regional Meeting, Atlanta, GA
  
• October 11-14, 2006 National Organization of Social Security Claimants Representatives (NOSSCR) CLE, Phoenix, AZ
• October 13, 2006 Lycoming Law Association CLE, Williamsport, PA
  
• October 16-19, 2006 NCSSMA National Meeting, Milwaukee, WI
• October 24, 2006 D.C. Bar CLE, Washington, D.C.
• October 26, 2006 Social Security Advisory Board, Washington, DC
• October 27, 2006, ABA Administrative Law Section CLE on Social Security Court, Washington, D.C.
  
• November 2-4 2006, NCSSMA Regional Meeting, San Juan, PR
  
• November 17, 2006 SSI Coalition Meeting, Boston, MA
• March 9, 2007 Ohio Academy of Trial Lawyers CLE, Columbus, OH
  
• April 18-20 2007, NADE Regional Conference, Albuquerque, NM
  
• April 18-21 2007, NOSSCR CLE, Baltimore, MD
• May 7-10 2007, NADE Regional Conference, Atlanta, GA
  
• May 20-23, 2007, National Association of Disability Examiners Meeting, Stowe, VE
• October 17-20, 2007, NOSSCR CLE, St. Louis, MO
• April 8-11, 2008 NADE Regional Conference, Austin, TX

If you know of one that I have missed, please e-mail me at charles[@]charleshallfirm.com.