Colvin Nomination Moving Forward

     The Senate Finance Committee has scheduled an "Open Executive Session" for September 18 to consider reporting out the nomination of Carolyn Colvin to be confirmed as Commissioner of Social Security. Although it appears that there is no opposition to the Colvin nomination, it is far from clear that she will be confirmed. There may not be enough time for full Senate to confirm her before it adjourns for the election. If Republicans win a majority in the election, they will almost certainly try to run out the clock on all nominations in the lame duck session after the election. It's judicial nominations they'll be aiming at but she may get caught in the crossfire.

Why Are So Many Student Loans Being Collected From People On Social Security Disability Benefits?

     The Government Accountability Office (GAO) did a recent study on the collecting of student loan debts from Social Security benefits. The chart below is from that study.

     Obviously, most of the student loan debt that the Social Security Administration collects comes from disability benefits. Under the Department of Education's own regulations, these student loan debts are supposed to be discharged if the debtor is "permanently impaired." The Department of Education has interpreted "permanently impaired" to include anyone found disabled by the Social Security Administration who has a five to seven year review date, a group that Social Security classifies as Medical Improvement Not Expected (MINE). That's a fair number of younger disabled people. It would be easy for Social Security to identify student loan debtors who are in the MINE category and notify the Department of Education so that no more money would be improperly withheld from the Social Security disability benefits of these disabled people and, indeed, so that all other collection efforts would be ended for this group of people. I'm pretty sure this isn't being done. Why not? If data matches can be done to collect debts, why can't data matches be done to stop inappropriate debt collection?

Women And Social Security Disability

     The National Women's Law Center has produced a fine fact sheet on women and Social Security disability benefits. This chart is from that fact sheet.

Phased Retirement For SSA Employees In Doubt

     From the Federal Times:

Federal employees at the Social Security Administration may have to wait longer for phased retirement — if the agency decides to implement it at all.

Dorothy Clark, SSA spokeswoman, told Federal Times that the agency was still deciding if it was going to implement the program.

“We are currently evaluating OPM’s [Office of Personnel Management's] regulations and what would be required if the agency decides to implement a phased retirement program,” Clark said. “If SSA decides to implement a program, it will not be implemented until calendar year 2015 or later.”

Student Loans A Growing Problem For Social Security Recipients

     From the New York Times:

Janet Lee Dupree, 72, was surprised when she received her first Social Security benefits seven years ago. About one-fifth of her monthly payment was being withheld and she called the federal government to find out why.

The woman, who is from Citra, Fla., discovered that the deduction from her benefits was to repay $3,000 in loans she took out in the early 1970s to pay for her undergraduate degree. ...

She is among an estimated two million Americans age 60 and older who are in debt from unpaid student loans, according to data from the Federal Reserve Bank of New York. Its August “Household Debt and Credit Report” said the number of aging Americans with outstanding student loans had almost tripled from about 700,000 in 2005, whether from long-ago loans for their own educations or more recent borrowing to pay for college degrees for family members.

The debt among older people is up substantially, to $43 billion from $8 billion in 2005, according to the report, which is based on data from Equifax, the credit reporting agency. Currently about 155,000 people, according to federal data, have money deducted from their Social Security payments to pay down their outstanding student loans. ...

Attorney Fees Down 19% In Last Four Years

     I have written that attorneys and others representing Social Security disability claimants are under considerable economic stress. It's a simple matter to demonstrate what's happening. Social Security posts the totals on fees paid. These numbers are available through August of this year. Let's compare the total fees paid to attorneys and others for representing Social Security claimants for this year and each of the preceding four years through August of each year:

• 2010 $977 million
• 2011 $941 million, a reduction of $36 million or 4% from 2010
• 2012 $935 million, a reduction of $6 million or 1% from 2011; a reduction of $42 million or 4% from 2010
• 2013 $876 million, a reduction of $59 million or 6% from 2013; a reduction of $101 million or 10% from 2010
• 2014 $792 million, a reduction of $84 million or 10% from 2013, a reduction of $185 million or 19% from 2010

     If there had been essentially no change in representation, these numbers should have gone up modestly due to inflation. Instead, they went down by 19% over five years, with most of that change happening in the last two years.

     What happened? There's been a generalized slowdown in processing disability claims at Social Security. It just takes longer to get a case through every stage of the process. Naive people might think that slower processing would mean higher fees but the reality is that it just means lower total fees as the cases pile up at every level. Even more important, it has become more difficult to get a favorable decision from an Administrative Law Judge. That's had the direct effect of reducing the fees paid because fewer claimants are winning. It's had the secondary effect of changing the standards used by attorneys and others in selecting cases. Because a fee is paid only if the claimants wins, everyone tries to avoid cases they regard as unlikely to succeed. The "unlikely to succeed" category has gotten considerably larger over the last five years. More prospective clients are turned away. It's also had the effect of reducing the advertising that attorneys and others do seeking Social Security clients. Many people who were advertising in the past just can't afford it now. Even if they do advertise, the advertising is less effective because more prospective clients are turned away because of increased selectivity. This means that advertising has a lower yield, making it less cost effective. Less advertising means that fewer claimants learn that they can try to hire an attorney. "Try" is the right word here since it's clear at ground level that there are many claimants desperately seeking an Social Security attorney and not finding one willing to take on their case.

     If you're not in the business of representing Social Security claimants, your reaction to this is probably, "Who cares? That's your problem, not mine." However, Social Security has offloaded a considerable part of its workload to those who represent Social Security claimants. We have to do a lot of the filing of appeals, gathering of medical evidence and advising claimants. The agency is in no position to pick up that workload.

Controversial Pay-Fors In ABLE

     Support has been growing in Congress for the ABLE Act of 2014 (H.R. 647). ABLE stands for Achieving a Better Life Experience. Under ABLE, individuals receiving Supplemental Security Income (SSI) and Medicaid could establish tax favored accounts to cover qualified expenses for medical care, housing and transportation. The accounts would not count against SSI and Medicaid resource limits. There is a chance that ABLE will become law this year.

     The ABLE bill, apart from its "pay-fors", is certainly worthy of passage. However, I would prefer that ABLE be a part of a comprehensive effort to update the income and resource provisions of SSI and Medicaid. I'm not sure about Medicaid but the SSI income and resources provisions in SSI haven't been updated since SSI became law more than 40 years ago. They are ridiculously out of date. As it stands, ABLE is primarily a bill to help the disabled children of middle class and wealthy parents. Those parents could use ABLE accounts to transfer funds to their disabled children. Those who are on SSI and Medicaid seldom have the ability on their own to accumulate assets in an ABLE account.

     The big problem with ABLE is that it would cost money and the House of Representatives is proposing "pay-fors" that would:

• Eliminate the percentage and dollar cap on the user fee that those representing Social Security claimants pay for processing direct payment of fees for representing Social Security claimants.
• End the Single Decisionmaker pilot currently used in twenty states.
• End the Reconsideration elimination pilot currently used in ten states.

     Ending the single decisionmaker and reconsideration elimination pilots would make it more difficult to be approved for disability benefits in the affected states. I don't think there is any substantive opposition to those pilots. Instead of eliminating them, they should be extended to all states. Why should ABLE be used to help middle class and wealthy families at the expense of disability claimants generally?

     Eliminating the percentage and dollar caps on the user fee is a big deal. Already, attorneys and others pay hefty fees to Social Security for the processing of their fees. This would increase those fees to preposterous levels that bear no relationship to Social Security's actual costs. Why would it cost Social Security almost $400 to compute 25% of a claimant's back benefits and authorize a direct deposit?
     I will write more about this later but those who represent Social Security claimants are already under considerable economic stress. Although no statistics have been released, it seems clear to me that fewer claimants are represented now than was the case a few years ago. Representing Social Security claimants is a high overhead, low profit margin business. Reducing the gross income of those who represent Social Security claimants by, perhaps 5%, would reduce their net income by a much higher percentage. Should ABLE be adopted with the elimination of the user fee caps, I expect a downward spiral of Social Security representation. At some point, it's just not worth it any more and we're rapidly approaching that point even without this proposal.
     The "pay-for" in the current House proposal will undoubtedly generate some opposition in the Senate which would endanger ABLE. As difficult as it is to pass any legislation in Washington, I would have thought that House Republicans would have tried harder to find less controversial "pay-fors" assuming they really want to pass ABLE. There aren't many legislative days left in this Congress. It may not take much of a dispute to kill ABLE in this Congress.

Three Confirmed To SSAB

     From The Hill:

The Senate voted Monday to clear three nominations to the Social Security Advisory Board.

Henry Aaron’s nomination was confirmed on a 54-43 vote. Shortly after, the Senate approved the nominations of Alan Cohen and Lanhee Chen by voice-votes. ...

President Obama is expected to make Aaron chairman of the board.

      Aaron was nominated to the SSAB in 2011. That's how long it took to get his noncontroversial nomination through the Senate.
     Chen was a campaign aide to Mitt Romney. He referred to President Obama's plans for Social Security as "laughable." Aaron and Cohen have a history of avoiding partisanship.