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Social Security, SSD, SSI Law & Poverty. Importance of Social Security *Poorest 40% of people over 65 get 82% of their income from Social Security *Poorest.

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Presentation on theme: "Social Security, SSD, SSI Law & Poverty. Importance of Social Security *Poorest 40% of people over 65 get 82% of their income from Social Security *Poorest."— Presentation transcript:

1 Social Security, SSD, SSI Law & Poverty

2 Importance of Social Security *Poorest 40% of people over 65 get 82% of their income from Social Security *Poorest 40% of people over 65 get 82% of their income from Social Security *Middle 20% get 64% 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, more than 20% of widows over 75 live in poverty *Even after SS, women over 65 never married have 27% poverty rate *Even after SS, women over 65 never married have 27% poverty rate Source: Century Foundation: Minimum SS Benefit Brief, January 2000 Source: Century Foundation: Minimum SS Benefit Brief, January 2000

3 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?)

4 What is it? Social Security is actually several laws/programs: Old-age benefits, started in 1935 Old-age benefits, started in 1935 Survivors and dependents benefits, started in 1939 Survivors and dependents benefits, started in 1939 Disability benefits, started in 1956 Disability benefits, started in 1956

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7 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 Social Insurance

8 What kind of law is it? Federal - OASDI Federal - OASDI OASI – Old Age and Survivors Insurance OASI – Old Age and Survivors Insurance DI – Disability Insurance DI – Disability Insurance

9 How is a person eligible? Working a sufficient # of quarters Working a sufficient # of quarters and paying FICA for those quarters and paying FICA for those quarters A worker with 40 quarters of coverage is fully insured for life. A worker with 40 quarters of coverage is fully insured for life.

10 What is the benefit conferred? Cash monthly benefits Cash monthly benefits

11 Who administers it? SSA Social Security Administration SSA Social Security Administration

12 Who pays for it? FICA – Federal Insurance Contributions Act

13 Who pays for it? Employee Employer Employee Employer

14 What is its constituency? 46+ million beneficiaries (1-45) 46+ million beneficiaries (1-45) Most powerful non-corporate constituency in DC Most powerful non-corporate constituency in DC 29m retirees (62% of SS recips) 29m retirees (62% of SS recips) 2.6m wives & husbands of retired workers 2.6m wives & husbands of retired workers.5m children of retired workers.5m children of retired workers 5+m disabled 5+m disabled 6+m surviving widows & children 6+m surviving widows & children 159+ million workers covered (1-42) 159+ million workers covered (1-42)

15 What is its history?

16 In 1928 only 6 states had old-age pensions

17 History Started 1935 Started 1935 Disabled workers added 1956 Disabled workers added 1956 Benefits indexed for inflation since 1972 (1-3) Benefits indexed for inflation since 1972 (1-3) COLAs started in 1972, INDEXED COLAS began in 1975 COLAs started in 1972, INDEXED COLAS began in 1975 Why is that important? Why is that important?

18 What size is it? 46m direct beneficiaries $388 billion – OASI $56 billion - DI

19 Survivors Benefits Widow Benefit Widow of fully insured worker is paid a monthly benefit Widow of fully insured worker is paid a monthly benefit If unmarried, over 60 If unmarried, over 60 or over 50 and disabled (within 7 years of spouse’s death) or over 50 and disabled (within 7 years of spouse’s death) Child’s benefit Child’s benefit monthly benefit monthly benefit child of fully or currently insured deceased (or grandchild if parents dead) child of fully or currently insured deceased (or grandchild if parents dead) under 18 (longer if in school) under 18 (longer if in school)

20 Divorce and SS 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. 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. 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. 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 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

21 Older People in Poverty in N.O. people in poverty over 65 years of age in metro area:25,040 people in poverty over 65 years of age in metro area:25,040 Male6,645 Male6,645 Female18,395 Female18,395 White12,121 White12,121 Black12,434 Black12,434

22 Where did 65 come from?

23 Where did age 65 come from? In Germany in 1883, under Bismarck, 65 was adopted as presumptive age of incapacity to work. 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.” 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 old- age pensions, and, like Massachusetts in 1910, began marking 65 as the age of retirement Turn of the century states started enacting old- age 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 In 1920, US Post Office made employees over 65 eligible for civil service retirement

24 Financing Social Security Crisis of Social Security? By 2028 the DI fund will be exhausted (1-11) By 2028 the DI fund will be exhausted (1-11) By 2044 the OASI 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. (1- 11) On a combined basis, the two trust funds will be exhausted by 2042. (1- 11)

25 Easy Corrections to SS Problem Raise retirement age Raise retirement age Decrease retirement benefits Decrease retirement benefits Increase FICA Increase FICA Make this a “needs based” program Make this a “needs based” program Or just do away with trust fund concept and use general federal funds Or just do away with trust fund concept and use general federal funds

26 Growth in Size % $ of SS yeartotalOASI DI yeartotalOASI DI 1940$35million 1940$35million 196011billion10b.5b 196011billion10b.5b 197031b28b3b 197031b28b3b 1980120b105b15b 1980120b105b15b 1990247b222b24b 1990247b222b24b 2002453b38857 2002453b38857

27 Growing Payroll Bite from SS datew/hmaxsalSS%maxanncontri datew/hmaxsalSS%maxanncontri 20047.65%87,900$13,448 20047.65%87,900$13,448 19907.5148,000 6,249 19907.5148,000 6,249 19806.1322,900 1,854 19806.1322,900 1,854 19704.80 7,800 538 19704.80 7,800 538 19602.50 4,800 432 19602.50 4,800 432 19501.00 3,000 45 19501.00 3,000 45

28 Number of Years of Retirement to Recover SS Taxes of Employer and Employee plus Interest (from year of retirement for average worker) 19400.2 19400.2 19601.6 19601.6 19803.9 19803.9 200025.5 200025.5 201034.2 201034.2 202038.7 202038.7 203038.0 203038.0

29 Fewer Men Working at Age 65

30 Declining % of Males over 65 working Declining % of Males over 65 working In 1880, about 75% of men over 65 were still working In 1880, about 75% of men over 65 were still working By 1900, it was about 60% By 1900, it was about 60% By 1950, it was 47% By 1950, it was 47% By 1960, it was below 35% By 1960, it was below 35% Today, fewer than 20% are in the labor force Today, fewer than 20% are in the labor force

31 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

32 People Over 65 Living Longer Life expectancy at age 65 1-64 yearmalefemale 19401213 19601316 19801418 20001619 20101619 20201720 203017.520.4 204018.321.1

33 Ratio of workers to Social Security recipients Source: Congressional Budget Office yearworkersrecipientsratio of workers/recipients 196073m145.1 1980112353.2 2000153383.4 2010 162 44 3.04 2020167592.3 2030169731.9 2040169801.8

34 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

35 Growth in Financial Size of SS Declining Percentages in Work Force Average Life Expectancy of People in US

36 Contest Between Young & Old 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. 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 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. For those retiring in 2025 it will take 23+ years.

37 With Planning SS Can Be:

38 SS - Without Planning

39 Social Security Disability

40 What is SSD? Monthly benefits to covered disabled workers, their dependents, and survivors Monthly benefits to covered disabled workers, their dependents, and survivors Coverage extends to spouses, widows(ers), dependent children Coverage extends to spouses, widows(ers), dependent children

41 Eligibility? Must be a covered worker Must be a covered worker Worked and paid FICA 10 years (less if younger worker) Must be disabled Must be disabled

42 Definition of Disability A. inability to engage in substantial gainful work (SGA) 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 B. by reason of physical or mental impairment B. by reason of physical or mental impairment Medically determinable Expected to last for not less than 12 months, or result in deathExpected to last for not less than 12 months, or result in death C. and currently insured (adequate # of quarters) C. and currently insured (adequate # of quarters)

43 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 Special Disability Provisions

44 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

45 Lankford Facts WORK HISTORY; worked as dairy worker and maint man; could not perform nurse's aide work; had not worked since 1979 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 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 OTHER HISTORY: hit wife; jailed for fight with neighbor; OTHER HISTORY: hit wife; jailed for fight with neighbor; SSA found that Lankford "was only slightly limited in his daily life by this impairment.“ SSA found that Lankford "was only slightly limited in his daily life by this impairment.“

46 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)

47 Lankford Holding: "To characterize the unequivocal plethora of evidence in the record as resulting in only a "slight" impairment is simply a travesty."

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49 Supplemental Security Income – SSI Program for the UNINSURED INDIGENT aged and disabled Program for the UNINSURED INDIGENT aged and disabled

50 Basics of SSI Federal Law Federal Law Disabled – same definition as SSD (except also kids) Disabled – same definition as SSD (except also kids) Indigent Indigent Paying Monthly Benefits – Less than SSD Paying Monthly Benefits – Less than SSD Federal Administration Federal Administration 6.7 million recips in 2004 6.7 million recips in 2004 $34 billion $34 billion

51 SSI Disability Definition for Kids: Must have medically determinable physical or mental impairment which results in marked and severe functional limitations, which results in marked and severe functional limitations, and which can be expected to result in death or 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. which has lasted and which can be expected to last for a continuous period of not less than 12 months.

52 Who Receives SSI? Of the 6.7 million recips: Of the 6.7 million recips: 1.9 million are over 65 1.9 million are over 65 915,000 are under 18 915,000 are under 18 3.9 million between 18-64 3.9 million between 18-64

53 Have a Good Weekend and Be Careful!


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