Social Security Disability and the Debate over Raising the Retirement Age

According to the Social Security Trustees, the Social Security Trust Fund will be able to pay full benefits until 2037, and incoming payroll taxes will be sufficient to pay about 78 percent of benefits thereafter. Some are using this modest gap in long-term funding as a pretext to justify proposals for large cuts in Social Security benefits. One frequently-discussed change to Social Security is to increase the age at which a retiree receives full benefits.

For most workers, increasing the full retirement age, which currently is 66, will result in a cut in benefits. This is especially true for seniors who take early retirement at age 62. For these seniors, the Social Security benefit is currently reduced by 30 percent. But increasing that person's full retirement age to70, as some advocate, would result in a reduction in the benefit of about 45 percent.

Some of us have the means to retire on reduced Social Security benefits at age 62. But what about those who don't want to retire that soon, but are forced to do so? Those who advocate for a higher retirement age reluctantly agree that some workers won't be able to stay in the labor force until they are 70. They concede that workers who have physically-demanding jobs, or whose health worsens, might not be able to work until age 70. The remedy proposed by these advocates is to apply for Social Security disability benefits. This sounds like a workable solution, but is it? Let's consider how the disability program works today.

The Disability Program's definition of disability is very tough. In fact, it is one of the most restrictive definitions of disability among all of the government's disability programs. It's possible, for example, to qualify for disability benefits from the Department of Veterans Affairs or from Civil Service and still not qualify for Social Security disability.

Why is this? It's all in the program's definition of disability. To qualify for Social Security disability, a worker must be unable to perform any substantial work due to the worker's physical and/or medical condition. Not only must the disabling condition be severe, it must be long-lasting. Those with short-term disabilities cannot qualify.

Benefits can't be paid for a partial disability . A worker is either 100 percent disabled or is denied benefits. Only those with the most severe disabilities can qualify. That leaves out many people in their early to mid 60's who have health problems that limit their ability to work without being totally disabled.

The disability application process is cumbersome. Most people who apply for disability benefits are denied by the state agencies, or Disability Determination Services (DDS), that make initial disability decisions. According to recent Social Security data, these agencies make favorable decisions in little more than one-third of initial applications for disability benefits. To make matters worse, large backlogs have accumulated in the DDS's. Currently, the backlog is nearly 780,000 nationwide and is projected to reach 1 million cases by the end of the year.

The appeals process is complex and lengthy. If an individual appeals the decision made by the DDS, the next stage of review is a hearing before an administrative law judge. Individuals who request a hearing might have to plan on hiring an attorney in order to maximize chances for a successful outcome. Unfortunately, large backlogs have also accumulated in the hearing offices. In fact, the hearing offices have had significant backlogs for many years. And while the number of cases in the backlog has declined in recent months, there are still about 700,000 backlogged cases. Average processing time for a decision, although down from recent highs, is still high at about 450 days.

The next step in the appeals process is to ask for a review of the decision by the Appeals Council. This is just a case review, but like the other stages of the disability adjudication process, it is also heavily backlogged. It currently takes more than a year, on average, to get an Appeals Council review decision, and reportedly, delays of as long as 30 months are not uncommon. If the decision of the Appeals Council is unsatisfactory, the next step is to request a review by a federal court. This, too, is a lengthy process.

As the foregoing shows, qualifying for disability is not easy. The standard for disability benefits is very strict. Individuals with less severe impairments or impairments that are not easily documented are denied by the DDSs in most cases. For example, a recent report by the Social Security Administration's Inspector General, revealed that the DDSs deny 78 percent of all cases involving disorders of the back. They also deny 81 percent of cases involving diabetes and 80 percent of claims involving disorders of the muscles and ligaments. And these are just the kind of impairments that affect older workers.

If qualifying for disability is so difficult, where would increasing the retirement age leave older workers? They would remain in the workforce if possible. But what if these workers lose their jobs? Finding new employment is challenging for older workers in the best of times. It is even more difficult during economic downturns like the one we are experiencing today. The alternative simply would be for an individual to accept a massive reduction in Social Security benefits. That's bad for older workers and its bad for America.

Conclusion

Although economists and others have proposed raising Social Security's retirement age, such a dramatic change should not be made without considering what it will mean for millions of America's workers. It will mean especially deep cuts for those who can afford them least - lower income workers and those whose physically-demanding occupations make it impossible for them to work to age 70. It's easy to try to sidestep these problems by suggesting that affected workers can just apply for disability. But as the foregoing shows, that suggestion is easier said than done.

Government Relations and Policy, September 2010

The National Committee is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the board of directors and professional staff. The work of the National Committee is directed toward developing a secure retirement for all Americans.