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Social Security, SSD, SSI

Social Security, SSD, SSI. Law & Poverty. 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

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Social Security, SSD, SSI

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  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 • *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

  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. 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 What is it?

  5. 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

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

  7. 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.

  8. What is the benefit conferred? • Cash monthly benefits

  9. Who administers it? • SSA Social Security Administration

  10. Who pays for it? FICA – Federal Insurance Contributions Act

  11. Who pays for it? • Employee Employer

  12. 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 5+m disabled 6+m surviving widows & children 159+ million workers covered (1-42) What is its constituency?

  13. What is its history?

  14. In 1928 only 6 states had old-age pensions

  15. 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?

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

  17. 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 spouse’s death) • Child’s benefit • monthly benefit • child of fully or currently insured deceased (or grandchild if parents dead) • under 18 (longer if in school)

  18. 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

  19. 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

  20. Where did 65 come from?

  21. 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

  22. 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)

  23. 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

  24. 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

  25. 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

  26. 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

  27. Fewer Men Working at Age 65

  28. 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

  29. 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

  30. 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 21.1

  31. 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

  32. 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

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

  34. 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 employer’s taxes and interest on SS For those retiring in 2025 it will take 23+ years.

  35. With Planning SS Can Be:

  36. SS - Without Planning

  37. Social Security Disability

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

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

  40. 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)

  41. 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

  42. 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

  43. 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.“

  44. 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)

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

  46. Supplemental Security Income – SSI • Program for the UNINSURED INDIGENT aged and disabled

  47. 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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