With all the seemingly constant turmoil within our government, it isn’t surprising that the topic of the Social Security budget is sometimes swept under the rug and not given the importance it deserves. The Social Security Disability Insurance, or SSDI, the fund is nearing depletion, and it remains to be seen how or when Congress will address the issue. Failing to address and come up with a new budget or debt ceiling may lead to up to a 19 percent cut in benefits for participants in 2016.
But while a dark cloud appears to be looming overhead, there is a reason to believe that the issue will not affect current beneficiaries or those who have applied or intend to apply. In the past, Congress has had to make changes to account for funding downfalls, including shifting funding from one pool to another. Currently, working employees and employers contribute 6.2 percent of their wages to Social Security to fund these programs.
From this total, 0.9 percent is allocated for SSDI benefits, and 5.3 percent comes from the old age and survivors’ benefit fund, or OASI, to cover Supplemental Security Income or SSI. Supplemental Security Income is a program designed to provide financial aid to disabled workers who have not, or could not, contribute to the fund, and for disabled children and those 65 years of age or older. So one solution could be to again shift money from, say the old age and survivor’s benefit fund to the SSDI program. Other solutions may include creating stronger work incentives, simplify administration, and crack down on fraud.
Currently, there are approximately nine million Americans who obtain Social Security Disability benefits. It remains to be seen how Congress will address this issue, but for the time being, it is important to note that the program is still running at full capacity, and there are viable alternatives for the Social Security Administration to keep funding the programs to help fellow Americans.
Source: Yahoo Finance, “8 Ideas for Saving Social Security Disability Insurance,” Eric Pianin, Oct. 12, 2016