Transcript Social Security, SSD, SSI - Loyola University New Orleans

Social Security, SSD,
SSI
Law & Poverty
Importance of Social Security
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*Poorest 40% of people over 65 get
82% of their income from Social
Security
*Middle 20% get 64% of their
income from SS
*Even after SS, more than 20% of
widows over 75 live in poverty
*Even after SS, women over 65
never married have 27% poverty
rate
What is it?
What kind of law is it?
How is a person eligible?
What is the benefit conferred?
Who administers it?
Who pays for it?
What is its constituency?
What is its history?
Who are collateral beneficiaries?
What size is it?
Is it an entitlement?
Public Policy issues
History of law (what was it supposed to do?)
Present Practice of Law (what is it in fact doing?)
Future of Law (what are the future issues?)
What is it?
Social Security is actually
several laws/programs:
 Old-age benefits, started in
1935
 Survivors and dependents
benefits, started in 1939
 Disability benefits, started in
Social Insurance
Part insurance
Earned protection
Paid without regard to economic need\
Part social program
Larger degree of earnings replacement for
low-paid v high-paid workers
Partly an anti-poverty program
Workers get more back than pay in
Social part of program:
Most, but not all of today’s taxes
are used to cover payments to today’s retirees
What kind of law is it?
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Federal - OASDI
OASI – Old Age and Survivors
Insurance
DI – Disability Insurance
How is a person eligible?
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Working a sufficient # of quarters
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and paying FICA for those quarters
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A worker with 40 quarters of
coverage is fully insured for life.
What is the benefit conferred?
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Cash monthly
benefits
Who administers it?
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SSA Social Security
Administration
Who pays for it?
FICA – Federal Insurance Contributions
Act
Who pays for it?
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Employee
Employer
What is its constituency?
46+ million beneficiaries (1-45)
Most powerful non-corporate constituency in DC
 29m retirees (62% of SS recips)
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2.6m wives & husbands of retired workers
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.5m children of retired workers
 5+m disabled
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6+m surviving widows & children
 159+ million workers covered (1-42)
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What is its history?
In 1928 only 6 states had old-age
pensions
History
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Started 1935
Disabled workers added 1956
Benefits indexed for inflation since
1972 (1-3)
COLAs started in 1972, INDEXED
COLAS began in 1975
Why is that important?
What size is it?
46m direct beneficiaries
$388 billion – OASI
$56 billion - DI
Survivors Benefits
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Widow Benefit
Widow of fully insured worker is paid a
monthly benefit
If unmarried, over 60
or over 50 and disabled (within 7 years of
spouse’s death)
Child’s benefit
monthly benefit
child of fully or currently insured deceased
(or grandchild if parents dead)
under 18 (longer if in school)
Divorce and SS
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Rule is 10 year rule. If married for 10 years or more, the
spouse is entitled to full spousal and survivor benefits
(spousal benefits are usually HALF what the worker gets).
Married less than 10 years? Nothing. Eligible for zip.
This is part of the way that SS is not fair to women.
Women who stay home and raise kids are penalized by SS
because they have a more modest working record than
their husbands.
Lots of material on internet about this and social security
reform. See for example, National Center for Policy
Analysis, briefing paper on Divorce and Social Security.
Www.ncpa.org
Older People in Poverty in N.O.
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people in poverty over 65 years of
age in metro area: 25,040
Male
6,645
Female
18,395
White
12,121
Black
12,434
Where did 65 come from?
Where did age 65 come from?
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In Germany in 1883, under Bismarck, 65 was
adopted as presumptive age of incapacity to
work.
1890, US Pension Bureau adopted 65 as age to
grant pensions to Civil War veterans unless
“unusually vigorous.”
Turn of the century states started enacting oldage pensions, and, like Massachusetts in 1910,
began marking 65 as the age of retirement
In 1920, US Post Office made employees over
65 eligible for civil service retirement
Financing Social Security
Crisis of Social Security?
 By 2028 the DI fund will be
exhausted (1-11)
 By 2044 the OASI fund will be
exhausted (1-11)
 On a combined basis, the two trust
funds will be exhausted by 2042. (111)
Easy Corrections to SS Problem
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Raise retirement age
Decrease retirement benefits
Increase FICA
Make this a “needs based” program
Or just do away with trust fund
concept and use general federal
funds
Growth in Size % $ of SS
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year
1940
1960
1970
1980
1990
2002
total
$35million
11billion
31b
120b
247b
453b
OASI
DI
10b
28b
105b
222b
388
.5b
3b
15b
24b
57
Growing Payroll Bite from SS
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date
w/h maxsalSS%
maxanncontri
2004
1990
1980
1970
1960
1950
7.65%
7.51
6.13
4.80
2.50
1.00
$13,448
6,249
1,854
538
432
45
87,900
48,000
22,900
7,800
4,800
3,000
Number of Years of Retirement to
Recover SS Taxes of Employer and
Employee plus Interest (from year of
retirement for average worker)
 1940
0.2
 1960
1.6
 1980
3.9
 2000
25.5
 2010
34.2
 2020
38.7
 2030
38.0
Fewer Men Working at Age 65
Fewer Men Working at Age 65
Declining % of Males over 65 working
 In 1880, about 75% of men over 65
were still working
 By 1900, it was about 60%
 By 1950, it was 47%
 By 1960, it was below 35%
 Today, fewer than 20% are in the
labor force
More People Living Beyond Age 65
Life expectations (Source: Costa, 188)
In 1850, less than 3% of the pop was over 65
By 1910, about 4% of the pop was over 65
By 1940, about 7 % of the pop was over 65
By 1990, about 13% of the pop was over 65
Projection is that by 2020, 15% will be over 65
And by 2050, 20% of the pop will be over 65
People Over 65 Living Longer
Life expectancy at age 65 1-64
year
male
female
1940
1960
1980
2000
2010
2020
2030
2040
12
13
14
16
16
17
17.5
18.3
13
16
18
19
19
20
20.4
21.1
Ratio of workers to Social Security recipients
Source: Congressional Budget Office
year workers
recipients
ratio of
workers/recipients
1960
73m
14
5.1
1980
112
35
3.2
2000
153
38
3.4
2010
162
44
3.04
2020
167
59
2.3
2030
169
73
1.9
2040
169
80
1.8
Importance of Social Security
*Poorest 40% of people over 65 get 82% of their income from SS
*Middle 20% get 64% of their income from SS
*Even after SS, more than 20% of widows over 75 live in poverty
*Even after SS, women over 65 never married
have 27% poverty rate
Source: Century Foundation: Minimum SS Benefit Brief, January 2000
Declining
Percentages in
Work Force
Contest Between Young & Old
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The Congressional Budget Office estimates that
the average retiree in 1980 recouped all their
taxes and their employer's taxes and interest in
SS benefits in three years.
For those retiring at age 65 in 1996, it will take
more than 14 years to recoup all their taxes
and employer’s taxes and interest on SS
For those retiring in 2025 it will take 23+
years.
With Planning SS Can Be:
SS - Without Planning
Social Security Disability
What is SSD?
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Monthly benefits to covered disabled
workers, their dependents, and
survivors
Coverage extends to spouses,
widows(ers), dependent children
Eligibility?
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Must be a covered worker
Worked and paid FICA 10 years
(less if younger worker)
Must be disabled
Definition of Disability
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A. inability to engage in substantial gainful work (SGA)
i. considering age education & work experience
ii. which exists in the national economy
(work need not exist in immediate area, nor must there be
specific job vacancy, nor, any showing that the worker
would get the job if s/he applied
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B. by reason of physical or mental impairment
Medically determinable
• Expected to last for not less than 12 months, or result in death
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C. and currently insured (adequate # of quarters)
Special Disability Provisions
Special exclusions in SS and SSI for
ACTIVE alcoholics and drug addicts
(also Medicare/Medicaid exclusion)
However if recip has other problems, eg cirrhosis,
they may be able to qualify on basis of other disability
People with AIDS are presumptively disabled;
HIV depends on severity of symptoms
What is the procedure for applying/litigating SSD?
atty fees are possible
claims and appeal process
i. Start with SSA
ii. When denied ask for reconsideration
iii. When denied, go to ALJ
iv. When denied, go to Appeals Council
v. When denied, go to USDC (magistrate)
vi. US Court of Appeal
vii. Supreme Court
Lankford Facts
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WORK HISTORY; worked as dairy worker and
maint man; could not perform nurse's aide
work; had not worked since 1979
MEDICAL HISTORY: since 1964 rec'd
treatment from VA; social maladaptive
behavior; inability to get along with others;
passive aggressive; depression; alcoholism 13
yrs of abuse; schizophrenia; paranoia; 2
overdoses; suicidal; repeated hospitalizations;
etc
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OTHER HISTORY: hit wife; jailed for fight with
neighbor;
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SSA found that Lankford "was only slightly
limited in his daily life by this impairment.“
Lankford Procedure
Filed for benefits April 10, 1985
ALJ denied after hearing Aug 16, 1986
Appeals Council remanded for addl medicals
ALJ again denies, Feb 14, 1989 (happy valentines
mr Lankford!)
Appeals Council denies request for review Aug 11,
1989
Suit filed in USDC, sep 7, 1989
Magistrate issues report and recc, march 30, 1990,
recommending reversal
Despite no objection by SSA being filed, USDC
rejects mag recc and affirms SSA, sep 27, 1990
Appealed and won in CA 1991 (6 years later)
Lankford Holding:
"To characterize the
unequivocal plethora of
evidence in the record as
resulting in only a "slight"
impairment is simply a
travesty."
Supplemental Security Income –
SSI
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Program for the
UNINSURED INDIGENT
aged and disabled
Basics of SSI
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Federal Law
Disabled – same definition as SSD (except
also kids)
Indigent
Paying Monthly Benefits – Less than SSD
Federal Administration
6.7 million recips in 2004
$34 billion
SSI Disability Definition for Kids:
Must have medically determinable
physical or mental impairment
 which results in marked and severe
functional limitations,
 and which can be expected to result
in death or
 which has lasted and which can be
expected to last for a continuous
period of not less than 12 months.
Who Receives SSI?
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Of the 6.7 million recips:
1.9 million are over 65
915,000 are under 18
3.9 million between 18-64
Have a Good Weekend
and Be Careful!