Social Security, SSD, SSI

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Social Security, SSD, SSI

• Law Poverty

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Importance of 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
• 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

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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?)
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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 1956

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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 todays taxes are used to cover payments
to todays retirees
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What kind of law is it?

• Federal - OASDI
• OASI Old Age and Survivors Insurance
• DI Disability Insurance

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How is a person eligible?

• Working a sufficient of quarters
• and paying FICA for those quarters
• A worker with 40 quarters of coverage is fully
  insured for life.

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What is the benefit conferred?

• Cash monthly benefits

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Who administers it?

• SSA Social Security Administration

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

• Employee Employer

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What is its constituency?

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

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What is its history?
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In 1928 only 6 states had old-age pensions
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History

• 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?

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What size is it?

• 46m direct beneficiaries
• 388 billion OASI
• 56 billion - DI

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Survivors Benefits

• 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
  spouses death)
• Childs benefit
• monthly benefit
• child of fully or currently insured deceased (or
  grandchild if parents dead)
• under 18 (longer if in school)

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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.
• 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

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Older People in Poverty in N.O.

• 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

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Where did 65 come from?
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Where did age 65 come from?

• 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
  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

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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. (1-11)

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Easy Corrections to SS Problem

• 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

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Growth in Size of SS

• year total OASI DI
• 1940 35million
• 1960 11billion 10b .5b
• 1970 31b 28b 3b
• 1980 120b 105b 15b
• 1990 247b 222b 24b
• 2002 453b 388 57

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Growing Payroll Bite from SS

• date w/h maxsalSS maxanncontri
• 2004 7.65 87,900 13,448
• 1990 7.51 48,000 6,249
• 1980 6.13 22,900 1,854
• 1970 4.80 7,800 538
• 1960 2.50 4,800 432
• 1950 1.00 3,000 45

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• 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

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Fewer Men Working at Age 65
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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

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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
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People Over 65 Living Longer Life expectancy at
age 65 1-64 year male female 1940 12
13 1960 13 16 1980 14 18 2000 16 19 2010
16 19 2020 17 20 2030 17.5 20.4 2040 18.3 2
1.1
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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
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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
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Growth in Financial Size of SS
Average Life Expectancy of People in US
Declining Percentages in Work Force
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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.
• For those retiring at age 65 in 1996, it will
  take more than 14 years to recoup all their taxes
  and employers taxes and interest on SS
• For those retiring in 2025 it will take 23
  years.

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With Planning SS Can Be
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SS - Without Planning
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Social Security Disability
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What is SSD?

• Monthly benefits to covered disabled workers,
  their dependents, and survivors
• Coverage extends to spouses, widows(ers),
  dependent children

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Eligibility?

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

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Definition of Disability

• 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
• Medically determinable
• Expected to last for not less than 12 months, or
  result in death
• C. and currently insured (adequate of quarters)

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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
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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
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Lankford Facts

• 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
• OTHER HISTORY hit wife jailed for fight with
  neighbor
• SSA found that Lankford "was only slightly
  limited in his daily life by this impairment.

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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)

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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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Supplemental Security Income SSI

• Program for the UNINSURED INDIGENT aged and
  disabled

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Basics of SSI

• 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

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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.

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Who Receives SSI?

• Of the 6.7 million recips
• 1.9 million are over 65
• 915,000 are under 18
• 3.9 million between 18-64

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Have a Good Weekend and Be Careful!