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Article on SSD Calls Disability Benefits a Bedrock For the Disabled, Part 1

Center for American Progress published an important article about Social Security Disability (SSD) last June. We missed it then, but it provides such great information that we summarize it here and urge readers of this blog to read the entire piece. What follows is part one of the summary.

For eight out of 10 workers who become disabled because of injury or illness and can no longer work, the modest benefits provided by Social Security Disability are their primary source of income. For one-third, SSD provides their only source of income. However, SSD is no giveaway: The Organisation for Economic Co-operation and Development (OECD) reports that eligibility criteria for beneficiaries are among the strictest in the world, even though benefits put many recipients barely above or below the U.S. poverty level. The average benefit is $1,165 per month, which is about half of an average worker's earnings.

Because of the strict eligibility requirements, only four in 10 applicants are approved for benefits even after all levels of appeal are exhausted. Some people die while waiting for a determination. The system is supposed to protect nine out of 10 American workers, all of whom pay into the system with every paycheck. More than 8.9 million workers receive SSD benefits, and that number includes about 1 million veterans.

Interestingly, the average amount of benefits is the equivalent of a $580,000 insurance policy for the average worker with a spouse and two children. Some experts estimate that the value is even higher. Although this sounds impressive, actual benefits leave about one-third of recipients in poverty.

Even more SSD beneficiaries will live in poverty if some members of Congress have their way. Because of demographic changes over the years, especially the aging of the population and the growing number of women in the workforce, demands on the system have left it fiscally unsound. This has happened numerous times before, and the solution has always been to rebalance the two Social Security trust funds - the disability fund and the retirement fund.

Congressional Republicans are opposed to automatic rebalancing, however, and they have passed a law prohibiting such action without implementing what they call "reforms." These reforms, which would almost certainly make it even harder to obtain disability benefits, are not popular with Democrats. The result of this impasse could force the Social Security Administration to reduce disability benefits by up to 20 percent, forcing even more recipients into poverty.

SSD, even at the modest levels of coverage it now provides, is a lifeline for recipients, providing disability insurance that few receive from employers and could ever afford on the private market. Low-wage workers and those in the construction and hospitality industries are unlikely to have employer-subsidized insurance available to them. Moreover, because their wages are so low, they are almost certainly unable to afford private disability insurance. Even workers who could afford private insurance find that the insurance available to them does not cover many impairments and conditions covered by Social Security Disability. Additionally, workers in high-risk occupations such as construction and mining may not be covered at all. Social Security Disability does not discriminate based on occupation.

Eligibility requirements for SSD benefits are not limited to paying into the system and passing the stringent threshold for disability. A worker must have paid in for a number of years; the number varies depending on age. Moreover, not being able to perform one's previous job because of disability is not the only criterion. A worker must be unable to perform any other job after considering his or her education, training and experience. A worker who is able to work at a different job that pays at least $270 per week is then expected to take such a job. Besides the U.S., stringent requirements such as these are found only in countries such as South Korea, Japan and Canada. Most European counties have far more welcoming policies, providing benefits at higher levels and to a wider number of disabled workers.

Our next blog will focus on exactly who receives benefits and the types of disabilities they have as described in the Center for American Progress article.

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