The whole concept was new to me.
As a young, first-year associate over 20 years ago, I was given a file for a trial to be held later that day before a United States Administrative Law Judge. One of our clients had been injured and could not work any more. It was my job to convince the judge the man was disabled within the meaning of federal law. Thus was my introduction to the world of Social Security Disability.
We all know about Social Security, as in retirement and Medicare. Using its taxing authority, the federal government retains 15.3 percent of the self-employed’s income, or the same percentage split equally between an employer and employee, to fund these massive programs. But unless you are disabled, you may not know that a portion of these taxes also fund a program for the disabled. Currently, more than 5 million people receive Social Security Disability benefits.
Wonderful, say you. “If I become disabled before I reach retirement age, Uncle Sam will be there to provide for me.” Not necessarily. Consider the hoops you have to go through after being compelled to pay for disability coverage throughout your working life.
Jumping through Federal Hoops
The average monthly benefit is about $790. Even the maximum is only about $1,300, although children in the family can increase the amount paid somewhat. In order to receive that check you must be unable to do any type of substantial gainful employment. A university professor who suffers a brain aneurysm but retains the mental and physical ability to do repetitive light factory work would not qualify for benefits.
An ironworker, making $25 per hour, with a job-ending back injury but still physically capable of working full time at a parking garage taking tokens, or being a theater usher for minimum wage, will not qualify for Social Security disability benefits—even if the nearest parking garages or theaters that still use ushers are 150 miles away. Finally, if this extreme version of disability lasts less than 12 months, you are also out of luck.
Even if you are unfortunate enough to ultimately qualify medically, and even if you have paid enough into the system to qualify financially, you may have to wait years before you see one red cent. Approximately half of all people who apply for Social Security Disability at their local office will be turned down. They will then be forced to endure at least months, and sometimes years, of legal proceedings before getting a final answer. I have had cases that took two to four years before the disabled worker finally got his or her benefits. I am sure that some lost homes or vehicles because mortgages went unpaid.
Private Sector a Better Fit
Compare this with most private disability plans, where the customer can purchase the plan that best suits his or her needs. For example, I obtained disability insurance (which I purchased soon after discovering how Social Security Disability works) that pays after 60 days of disability. Disability is defined according to my specific sub-occupation, e.g., the need to be physically (and mentally) able to try cases in court.
I could have made my coverage effective after just 30 days of disability, if I had wanted to pay more for the coverage, and I could have accepted a less restricted definition of disability, e.g., simply the ability to practice some type of law, if I had wanted to pay less. Many employer-provided disability plans will also define disability based upon the employee’s specific job with that employer, at least for a limited period of time. Those plans will typically then require, after a period of years, that the employee satisfy criteria similar to, or the same as, Social Security’s.
The key difference is that the employee need not be disabled for a year or more, and the definition of disability is reasonably and rationally related to the actual work or job the employee was doing. Thus, the employee has a reasonable amount of time to make a transition to some other type of work, if possible. Under the present Social Security disability system, the employee is forced to pay for what may be described as an “all-or-nothing” plan. If, after paying his Social Security taxes, he does not have enough to pay for a supplemental private disability plan, he is stuck on the federal plantation.
Despite my criticisms of the present system, I would be remiss if I didn’t point out that most, if not all, private disability plans factor Social Security Disability into their programs. For example, most disability plans will offset the benefits they pay by whatever disability payments the insured may receive from Social Security. One company I was aware of simply based its decision entirely upon whatever Social Security decided.
Nevertheless, these plans were selected by the insureds (or their employers), and they knew what benefits they were supposed to get for their premium dollar. Under the present federal scheme, taxpayers have no say as to what type of disability coverage they have under Social Security . . . unless they can convince Congress and the President to modify the statutes and regulations. A “one-size-fits-all plan” is not exactly the wave of the future in this country.
Policing for Fraud
We cannot ignore, however, the fact that if Social Security Disability is replaced with private disability coverage there would still be a need to scrutinize claims. There will always be insureds trying to get something for nothing, and there will always be companies that will not pay out when they should. The huge infrastructure that Social Security Disability now has to process disputed claims cannot disappear without some increased burden on the local public sector.
However, each state already has to deal with disputes between private disability plans and their insureds. The only change would be in volume. Fortunately, local standards and practices could prevail, as opposed to the present nationwide practice that is inherent in a federal program.
Some states might prefer to keep any increases in case filings in their civil courts. Other states might prefer to place the burden on existing state or local administrative agencies, such as workers compensation, which already exist to make determinations for other benefits based upon full or partial disability. No matter how each state chose to deal with the problem, the net effect would be more local control over the process.
Ultimately, changes need to be made. Any privatization of the Social Security retirement plan should also include some form of privatization for the Disability component as well.
Dewey L. Crepeau is a private practice attorney in Columbia, Missouri focusing on workers’ compensation and Social Security Disability. He is the former assistant prosecuting attorney for Morgan County, Missouri and former assistant public defender for the state’s 13th Judicial Circuit. He has been an adjunct professor in the Political Science Department at Columbia College and in the Department of Management at the University of Missouri-Columbia. Dewey, who joins Health Care News as a contributing editor with this issue, can be reached by email at [email protected]