Working to find actionable solutions to the nation's key challenges.

Budget Agreement Includes Several BPC Recommendations on Disability Insurance

By Ben Ritz

Wednesday, October 28, 2015

The budget agreement reached by congressional leadership and the White House includes provisions that would increase spending caps on both defense and non-defense discretionary spending through Fiscal Year 2017, suspend the debt limit until March 16, 2017, and improve the Social Security Disability Insurance (DI) program, as well as several other provisions impacting programs throughout the federal government.

The DI trust fund is currently projected to be exhausted by the end of calendar year 2016, at which point dedicated program revenues would be insufficient to finance all scheduled benefits. The Bipartisan Policy Center convened a Disability Insurance Working Group, which published a consensus package of recommended changes to the program in August. The agreement between Congress and the administration, as proposed, includes several of the BPC working group’s recommendations, including:

  • Pilot a gradual benefit offset to replace the so-called cash cliff: Under current law, DI beneficiaries are at risk of precipitously losing all cash benefits if they earn even one dollar above the substantial gainful activity (SGA) threshold (in 2015, $1,090 per month). This legislation would require the Social Security Administration (SSA) to launch a pilot program, whereby cash benefits would be reduced one dollar for every two dollars of earnings above a certain threshold. SSA could test several thresholds at or below the trial work period level (in 2015, $780 per month). The pilot would be voluntary for beneficiaries. To enable this and other pilots, the legislation would extend SSA’s demonstration authority through Dec. 31, 2021, with all pilots to be completed by Dec. 31, 2022. BPC recently published a more detailed summary of how a benefit offset would work for dual beneficiaries (i.e., those eligible for both DI and Supplemental Security Income (SSI)).
  • Strengthen program integrity: The agreement provides funding and authority for SSA to strengthen the integrity of the DI program. One provision would increase the cap – set by the Budget Control Act of 2011 – on spending for continuing disability reviews (CDRs), which ensure that those receiving DI benefits remain eligible for the program. This change would help clear out a backlog of pending CDRs. The legislation also includes provisions to increase the maximum civil penalties for fraud and create a new felony for “conspiracy to commit Social Security fraud.” To enforce these and other laws, the agreement expands the use of cooperative disability investigation units (CDIs), which coordinate anti-fraud efforts among SSA, the Office of the Inspector General, Social Security Determination Services, and local law enforcement. Notwithstanding the fact that eliminating all fraud would not solve a significant amount of the current funding shortfall, cracking down on illegitimate behavior is critical to maintaining public confidence in the DI program.
  • Streamline reporting of earnings: Today, DI beneficiaries who work must report their earnings by visiting or calling a Social Security field office, a cumbersome process that leads to errors. The bipartisan agreement would change this process by requiring SSA to enable DI beneficiaries to report earnings electronically, such as by using a smartphone app. The legislation also includes a technical adjustment to the definition of earnings to align with that of SSI and reduce complexity for dually eligible beneficiaries. These changes will help simplify the program for beneficiaries who work and may reduce overpayments, which are costly for taxpayers and burdensome for beneficiaries who must repay large amounts to the government.
  • Reallocate tax revenue to the DI trust fund: The budget pact would reallocate revenue from payroll and self-employment taxes between the Social Security trust funds to ensure that DI benefits continue to be paid as scheduled until 2022. This would provide time for SSA to conduct pilot programs, such as the benefit offset, and assess their impact.

We are encouraged by the steps included to strengthen this critical program that serves over 10 million Americans with disabilities and their families. While substantial issues remain in DI, some of which will hopefully be addressed in future legislation, we applaud policymakers and the staff that worked so diligently on advancing these and other recommendations put forth by BPC’s DI working group.

KEYWORDS: SOCIAL SECURITY DISABILITY INSURANCE