As has been well reflected in recent news, an atmosphere of mistrust and uncertainty has taken root in the halls of the United States Congress as our county continues to face tough political, social, and economic problems. This atmosphere has further escalated fears about whether long-term solutions can be reached to sustain many important government-sponsored programs including Medicare, Medicaid, and Social Security, and Social Security Disability.
According to this Wall Street Journal Article, there is plenty of bad news and a little good news. The good news: Overall growth in medical costs and Medicare spending is down, while covering more individuals and full hospital benefits through 2030 – four more years than initially projected. Overall, the baby-boomer generation is in better health than previous generations moving into retirement age. The bad news: current estimates now project Social Security Disability Insurance will be able to pay only 81% of benefits starting in late 2016 unless Congress intervenes. In order to establish a short-term fix for this shortfall, a greater percentage of payroll taxes may be diverted away from the main Social Security benefits program and into the Disability benefits program. However, combined reserves for both programs are estimated to become depleted by 2033, leading to across the board benefits cuts unless a long-term funding solution is reached.
The individuals who rely upon these programs are often uniquely vulnerable to the consequences of benefits reduction or loss. For example, what if monthly disability payments get temporarily suspended due to shut down of government services? As a disabled individual with health-related limitations, you may be unable to negotiate the same kind of short-term adaptations to this situation available to fit individuals, such as working more or longer hours, or taking on a new or secondary income source. Worse yet, benefits cuts may persist for years.
Based on the recent experience of government shutdowns and failure to reach budgetary compromises, it would therefore be prudent to do some planning for future shortfalls. To cushion yourself against future income loss of any kind, it is always wise to establish a “nest egg” by putting as much money into savings as you can reasonably afford; saving at least 20% of your income for this purpose has been the recommended target. While some individuals use this money to act as a bridge between job loss and new employment, it can also be used to fill in the gap for benefits cuts which may occur due to the projected 19% shortfall in funding.
So what can a medically disabled individual receiving SSDI benefits do right now? Say, for example, that you are currently able to make it on your existing disability check (an extraordinary feat in and of itself, I might note.) After everything is taken out for monthly expenses, it is probably unlikely that you have much – if anything – left over to put towards savings. However, the Social Security Administration has special rules which allow individuals to continue receiving full SSDI benefits while working for a specified period of time if their earnings are within certain limits.
Here’s how it works: During a 9-month “Trial Work Period” you may earn an unlimited amount of money while still receiving full SSDI benefits; for 2014, a “TWP month” is one in which you earn at least $770. You may accumulate no more than 9 “TWP months” within 60 months (5 years.) Once TWP eligibility is exhausted you then enter a period of “extended eligibility” where you may work for up to 36 months while earning less than $1070 per month and still retain benefit eligibility. Disability-related work expenses (for example, special transportation arrangements or assistive devices) are deducted from this limit, so they do not count against you. (For SSI, the work rules are a little more complicated but know that a parallel system exists.)
In this situation I would recommend that individuals who are able to do so establish some kind of job which allows them the flexibility to work a few days per month to compensate for the potential cut in benefits until a sustainable political and budgetary solution is reached. Remember 2016 is the critical year according to the latest calculations.
It is interesting to note that these calculations keep changing as is demonstrated by the unexpected good news about the Medicare program. For those disabled who cannot do even supplemental work because of their exertional and non-exertional limitations, let us hope next years’ calculations of the solvency of the Social Security trust fund for disability and retirement yield good news for all those who depend upon these benefits as a critical lifeline.