For most workers, increasing the full retirement age, which currently is 66 (and will soon rise gradually to 67), 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 to 35 percent. But increasing that person’s full retirement age to 70, as some advocate, would result in a reduction in the benefit at age 62 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. Their remedy? File 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. Under Social Security, 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 leaving them 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 current Social Security data, these agencies make favorable decisions in little more than one-third of the cases they adjudicate. For the two-thirds who are denied, they must appeal the DDS’s decision.
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. Currently, there are about 1.2 million cases awaiting adjudication in the hearing offices. Average processing time for a decision continues to climb, rising to 540 days on average in 2016 and to 559 days in 2017.
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 well more than a year, on average, to get an Appeals Council review decision, and reportedly, longer delays 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 two out of three cases. Denial rates are even higher for certain impairments that affect older workers, such as injuries to the back, the joints or muscular ligaments.
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. 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.
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, May 2017