How does the Bipartisan Budget Bill change Social Security Disability Benefits?

By Emma Sandoe

On Tuesday, details of the new Bipartisan Budget Bill, a bill negotiated between Congress and the White House, were released. This bill funds the government for two years and extends the debt ceiling, two important budgetary moves Speaker Boehner promised to leave his successor with a clean slate. Less reported is that this bill makes some small but important changes to our nation’s two largest budgetary social programs, Medicare and Social Security. But the changes made to Social Security Disability Insurance eligibility extend beyond that program and will be important for state Medicaid agencies and for low-income people with disabilities.

What is the Social Security Disability Trust Fund?

Not part of the original Social Security Act, the Disability Insurance (SSDI) benefit was added in 1957. As of 2014 there were 10.9 million Americans receiving this benefit totaling $141 billion or 4% of the federal budget. In the last Trustees report for the projected future cost of the SSDI program, the trustees projected the exhaustion of the trust fund in 2016. This would mean that the nearly 11 million beneficiaries would see their benefits cut by 19% next year because incoming tax revenue would only be able to cover about 80% of the benefits.

How is Medicaid involved in SSDI?

In many states, the eligibility for SSDI qualifies a person for Medicaid disability benefits (with the addition of income and asset test requirements). Eleven states have more restrictive disability eligibility criteria and require a year of impairment (these are known as 209(b) states). Before this law, all states worked with the Social Security Administration to make eligibility determinations. The processed varied by state and didn’t always require medical review by a physician. The process is notoriously backlogged and unclear to beneficiaries about their rights to appeal or where their application is in the process at any given time. What’s more, a majority of the applications are rejected. According to the Center on Budget and Policy Priorities, only about 4 in 10 applicants are awarded benefits.

What this bill does:

This bill in Congress strengthens the medical requirement so that all states’ eligibility determinations make a reasonable effort to have a physician, psychiatrist or physiologist preform the medical review. This could mean that fewer individuals would qualify for the SSDI benefit and in turn fewer would qualify for benefits provided by state Medicaid programs. These people may be able to receive health insurance through the low-income categories in Medicaid or through the exchanges, but these benefits don’t usually cover the long-term care and home and community benefits that these individuals often require. While the Congressional Budget Office did not score significant savings for Medicaid from this change, fewer eligible individuals could show some minimal savings both for states and the federal government.

The bill also extends the life of the SSDI trust fund through 2022 by moving funds from the Social Security retirement trust fund to the SSDI fund.

2 thoughts to “How does the Bipartisan Budget Bill change Social Security Disability Benefits?”

  1. You talk about SSDI, but then you keep referencing Medicaid.

    Those who collect SSDI automatically get Medicare 24 months after first eligible for payments. Some MAY be eligible for Medicaid but that’s rare.

    Those who collect SSI get Medicaid. The income/asset test to collect SSI is all that’s needed for Medicaid.

    Please clarify what you mean.

  2. Wow, a 19% drop is huge. Everyone just seems to be okay with kicking the problem down the road to be dealt with by later generations. I wish there was a simple solution. I’m not planning on Social Security to help me out much when I finally retire. Thanks for the interesting read.

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