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?

WEP And GPO Hopes And Dreams

     From Federal News Network:

Congress — at least the House side of it — is closer than ever to giving the green light to repeal or reform WEP [Windfall Elimination Provision] and GPO [Government Pension Offset], the so-called “Evil Twins” that eat into, or eliminate, the Social Security benefits of hundreds of thousands of former government employees or their widows. ...

For decades, many whose Social Security benefits have been reduced by WEP or Offset have been pushing Congress to fix them. Backers of WEP and Offset say they prevent former feds under the CSRS retirement plan, and state and local government employees whose jobs were not covered by Social Security for most or all of their careers, from collecting higher benefits based on relatively short employment in a Social Security job. Backers of the laws say they prevent people from using what they call a “welfare tilt” in Social Security toward people with lower lifetime earnings, protecting the program from being ripped off by preventing “excessive” payments to government retirees/survivors who spent the minimal time paying into Social Security. Opponents say it was a cruel way to save money by denying some or all benefits to people who need it most, and that the former government people are the ones being ripped off when their benefits are reduced or simply wiped out. ...

John Hatton, staff vice president for policy and programs at NARFE [National Active and Retired Federal Employees association] said “While NARFE and organizations representing state and local retirees have built significant support for repeal of WEP and GPO over the years, securing floor voters in either chamber of Congress has remained out of reach, perhaps due to the likely costs of the repeal bills and projected solvency challenges for Social Security. But a recent rule change in the House of Representatives allows bills to bypass committee consideration if they receive 290 cosponsors. H.R. 82, the Social Security Fairness Act, which would repeal both WEP and GPO is up to 276 cosponsors, just 14 short of that mark. So we continue to push representatives to cosponsor the bill, and hope for some long-awaited progress on these issues.” …

    In other words, it's extremely unlikely to happen in the House of Representatives. Also, although this article doesn't say so, it's out of the question in the current Senate.

You Can't Always Get What You Want

     From Federal News Network:

The Social Security Administration wants to hire 4,000 new frontline workers to address a growing backlog of cases.

But with many employees citing unreasonable workloads and one of every eight SSA workers leaving the agency, the process of increasing staff is a steep hill to climb.

The fiscal 2023 budget request includes funding for workers in both disability determination services and frontline operations, not only to improve customer service, but also to ease the burdensome and mounting work that current SSA employees face. ...

    Note that this says Social Security WANTS to hire 4,000 new employees. That would only happen in the NEXT fiscal year IF Social Security gets the entire appropriation requested by the Administration which is unlikely. In the CURRENT fiscal year Social Security's workforce is actually DECLINING.

Trustees Report Released

From the just released annual report of the Social Security trustees:

...  Considered separately, the OASI [Old Age and Survivors Insurance] Trust Fund reserves become depleted in 2034, and, for the first time since the 1983 Trustees Report, the DI [Disability Insurance] Trust Fund reserves do not become depleted within the 75-year long-range projection period. ...

[T]he projected hypothetical combined OASI and DI Trust Fund asset reserves become depleted and unable to pay scheduled benefits in full on a timely basis in 2035. ...

Investigation Ordered Of Inspector General

      From the Washington Post:

An independent watchdog this week opened a broad investigation into Social Security Inspector General Gail Ennis and her office following a Washington Post report that revealed how an anti-fraud program has imposed massive penalties on disabled and elderly people.
 

The inquiry by the Council of the Inspectors General on Integrity and Efficiency (CIGIE), a group that investigates misconduct allegations against inspectors general, comes as Ennis has been directed by the acting Social Security commissioner to suspend the program amid mounting political pressure.
In a letter, a senior White House official urged a quick response from the chairwoman of the inspectors general council, Allison Lerner, who took the unusual step of notifying Congress and the White House that she had opened the probe. On Thursday, congressional staffers will question Ennis’s deputies about the program. …

30 Million Americans With Undiagnosed Disorders

    From Duke University School of Medicine:

...  Some 30 million Americans ... experience significant health problems that defy diagnosis. Their symptoms range from mysterious heart attacks in teenagers to spine abnormalities, intellectual disabilities, low muscle mass, digestive troubles, and countless others. Their ailments don’t follow well-known disease patterns. 

In many such cases, doctors order batteries of tests: DNA sequencing tests to gather information about genetic changes that may cause disease, exome sequencing tests to examine the protein coding regions of the genes, and imaging scans like MRIs, PET scans and CAT scans to get a detailed look inside the body. 

But even then, diagnoses elude these patients. At a loss, they seek answers on the internet or in medical books. ...

[T]he Undiagnosed Diseases Network (UDN) ... works to help patients get diagnoses and advance our understanding of health and disease. ...

The UDN provides an avenue of hope. Difficult-to-diagnose patients typically reach the UDN through referrals from their primary care physicians. Patients or their parents complete a short online application that is reviewed by the UDN Coordinating Center at Harvard University. The Coordinating Center determines which patients to accept and which site to send them to. To date, the UDN has received 5,700 applications and accepted 2,246. “For those who are not accepted, we still try to provide a specific recommendation to help them” ...

    Why do I post this? It's  because a fair number of Social Security disability claimants have undiagnosed disorders. Social Security usually deals with these cases by denying them at the initial and reconsideration levels. Administrative Law Judges often deny them. If there's no label, the problem has to be imaginary, right?

Staffing Losses Have Varied Greatly From State To State

 

https://www.cbpp.org/research/social-security/social-security-administration-cuts-hurt-every-state

 

Memorial Day 2022