For Congressional staff and now You: learn about SSA disability

On May 27, 2014, Congressional staff learned about the Social Security disability program when Carolyn W. Colvin, Acting Commissioner of Social Security, keynoted a Capitol Hill presentation by SSA executives.  

Now you can watch this presentation.

This was a teaching session, not a committee hearing.

Included were details about the growth, solvency and sustainability of the disability program by Stephen C. Goss, Chief Actuary, Social Security Administration.

Other sections were about who receives disability, basic eligibility requirements and the disability process including the initial claim and different levels of appeal.

You can watch the video of this teaching session or just see the slides used.

I urge you to take advantage of this opportunity. Information is easily understandable, without technical jargon. 

After introductions, Stephen Goss’s presentation begins at about 6:45 in the video. Other Social Security executives discussed program information after his portion until about 1:00:00 when audience questions began. The full video is about 1:17:34 in length with several guest introductions and comments included during the session.

Analysis of Proposals Affecting SSA Trust Fund Solvency

 

Upon occasion, the Chief Actuary of the Social Security Administration is asked to review a legislative or policy proposal and to provide an actuarial analysis showing the estimated effect of the item on the long-range financial status of the Social Security Retirement, Survivors and Disability programs.

Many of these proposals and options are intended to address Social Security long-range solvency problems directly while others involve Social Security indirectly. 

You can learn what proposals have been reviewed and read the analysis of each on the Social Security website at http://www.socialsecurity.gov/oact/solvency/index.html.  

From the proposal page, follow the “Individual Changes …” link to read about a broad range of policy options that would address Trust Fund solvency and other issues related to Social Security benefits and financing. Many of these options are part of comprehensive proposals intended to restore Trust Fund solvency.

Reach additional SSA actuarial information through the “Our Agency” links on the Social Security homepage, www.socialsecurity.gov.

Where does Social Security money come from?

Q: What are the sources of income to the Social Security Administration?

A: The Social Security Administration has three basic sources of income: payroll taxes, federal income taxes on a small portion of SSA benefits and interest paid to the SSA trust funds. 

Quoting from the Financing section of the recently published Fast Facts & Figures About Social Security, 2013:

 “Social Security is largely a pay-as-you-go program. Most of the payroll taxes collected from today’s workers are used to pay benefits to today’s recipients. In 2012, the Old-Age and Survivors Insurance and Disability Insurance Trust Funds collected $840.2 billion in revenues. Of that amount, 83.8% was from payroll tax contributions and reimbursements from the General Fund of the Treasury and 3.2% was from income taxes on Social Security benefits. Interest earned on the government bonds held by the trust funds provided the remaining 13.0% of income. Assets increased in 2012 because total income exceeded expenditures for benefit payments and administrative expenses.”

 Income to Social Security in 2012 totaled approximately $840.2 billion consisting of about 704.1 billion from payroll taxes and General Fund of the Treasury reimbursements, about 26.9 billion from income taxes on Social Security benefits, and about 109.2 billion in interest earned by the trust funds. More about each of these follows. 

Payroll taxes: Employers, employees and the self-employed pay Social  Security payroll tax up to a an annual yearly limit. This limit is $113,700 in 2013. The 2013 tax rate is set by statute at 6.2 percent for employees and employers, each. Thus, an individual with wages equal to or larger than $113,700 would contribute $7,049.40 to the Social Security program in 2013, and his or her employer would contribute the same amount. The 2013 payroll tax rate for self-employment income is 12.4 percent.

General Fund reimbursements in 2012 were largely due to the temporary payroll tax reduction for employees and the self-employed. Legislation establishing the 2 percent payroll tax reduction also provided for transfers from the General Fund of the Treasury to the Social Security trust funds to offset lost revenues that would have otherwise been received by Social Security.

Income taxes: Based on overall taxable income, some people have to pay federal income taxes on Social Security benefits. Most beneficiaries do not pay income tax on their benefits, some pay on up to 50 percent of benefits and some on up to 85 percent of benefits. No one pays federal income tax on more than 85 percent of his or her Social Security benefits. This income is designated for Social Security. 

Trust Funds: There are two Social Security Trust Funds, the Old Age & Survivors Trust Fund and the Disability Trust Fund. Find Trust Fund information, including transactions, holdings and interest rates, at the About Our Agency tab (solvency section) of www.socialsecurity.gov

In 2012, the combined income of about $840 billion exceeded total expenditures of about $786 billion so agency reserves grew by about $54 billion. Under intermediate assumptions, the Trustees Report anticipates growth until approximately 2021 for the combined SSA Trust Funds although the Disability Trust Fund is the weaker of the two. Overall expenditures will exceed overall income by about 2021. (See Highlights section of the 2013 Annual Trustees Report.)

 For more information:

Fast Facts & Figures About Social Security, 2013 (see financing section)

2013 Trustees Report (see Highlights Section for summary)

Fast Facts & Figures About Social Security, 2013

Fast Facts & Figures About Social Security, 2013 just became available and I suggest you look at it. This annual booklet is one of my favorites.

Using easy to understand tables and charts, Fast Facts & Figures answers frequently asked questions about the programs the Social Security Administration administers. It highlights basic program data for the Social Security (OASDI = Old-Age (Retirement), Survivors, and Disability Insurance) and Supplemental Security Income (SSI) programs.

Available in html or pdf format, basic topic areas are show here. Each topic is further divided. You will find information of interest to you.

Did You Know That… / General Information / Income of the Aged Population / OASDI Program / SSI Program / Cross-Program Beneficiaries / Social Security Financing 

 

Sources of Social Security income

Last week’s 2013 Social Security Board of Trustees report press release stated, “Income including interest to the combined OASDI Trust Funds amounted to $840 billion in 2012. ($590 billion in net contributions, $27 billion from taxation of benefits, $109 billion in interest, and $114 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2012 payroll tax legislation).”

Usually there are three main income streams into Social Security: payroll taxes, income from the Federal income taxes that some people pay on their Social Security benefits, and interest earned on government bonds held by the Social Security trust funds.

Why were General Funds a large part of 2012 income to Social Security?

Economic stimulus legislation (H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010) provided for a temporary reduction in the Social Security payroll tax rate in 2011 and 2012 and reduced payroll tax revenues to the Social Security funds by an estimated $222 billion in total.

That same legislation provided for transfers from the General Fund to the trust funds in order to “replicate to the extent possible” payments that would have occurred if the payroll tax reduction had not been enacted. Those General Fund reimbursements amounted to about 15 percent of the program’s non-interest income in 2011 and 2012. The temporary payroll tax reduction expired at the end of 2012.

2013 annual report of Social Security Board of Trustees

Last Friday, May 31, the Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security Trust Funds. The complete press release about it follows. 

You can read the actual 2013 Trustees report at http://www.socialsecurity.gov/OACT/TR/2013/.   A summary is also available there.

Social Security Board of Trustees: No Change in Projected Year of Trust Fund Reserve Depletion

The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033, unchanged from last year, with 77 percent of benefits still payable at that time. The DI Trust Fund will become depleted in 2016, also unchanged from last year’s estimate, with 80 percent of benefits still payable.

 In the 2013 Annual Report to Congress, the Trustees announced:

 • The combined trust fund reserves are still growing and will continue to do so through 2020. Beginning with 2021, the cost of the program is projected to exceed income.

 • The projected point at which the combined trust fund reserves will become depleted, if Congress does not act before then, comes in 2033 – the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits.

 • The projected actuarial deficit over the 75-year long-range period is 2.72 percent of taxable payroll — 0.05 percentage point larger than in last year’s report.

 “The Social Security Trust Funds’ projected depletion dates have not changed, and three-fourths of benefits would still be payable after depletion. But the fact remains that Congress needs to act to ensure the long-term solvency of this vital program,” said Carolyn W. Colvin, Acting Commissioner of Social Security. “The projected year for Disability Insurance Trust Fund depletion remains 2016, and legislative action is needed as soon as possible to address this financial imbalance.”

Other highlights of the Trustees Report include:

 • Income including interest to the combined OASDI Trust Funds amounted to $840 billion in 2012. ($590 billion in net contributions, $27 billion from taxation of benefits, $109 billion in interest, and $114 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2012 payroll tax legislation)

 • Total expenditures from the combined OASDI Trust Funds amounted to $786 billion in 2012.

• Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.

• The asset reserves of the combined OASDI Trust Funds increased by $54 billion in 2012 to a total of $2.73 trillion.

• During 2012, an estimated 161 million people had earnings covered by Social Security and paid payroll taxes.

 • Social Security paid benefits of $775 billion in calendar year 2012. There were about 57 million beneficiaries at the end of the calendar year.

 • The cost of $6.3 billion to administer the program in 2012 was a very low 0.8 percent of total expenditures.

 • The combined Trust Fund asset reserves earned interest at an effective annual rate of 4.1 percent in 2012.

The Board of Trustees is comprised of six members. Four serve by virtue of their positions with the federal government: Jacob J. Lew, Secretary of the Treasury and Managing Trustee; Carolyn W. Colvin, Acting Commissioner of Social Security; Kathleen Sebelius, Secretary of Health and Human Services; and Seth D. Harris, Acting Secretary of Labor. The two public trustees are Charles P. Blahous, III and Robert D. Reischauer.

The 2013 Trustees Report is posted at www.socialsecurity.gov/OACT/TR/2013/.

Financial challenges facing the SSA Disability Program

Stephen C. Goss, Chief Actuary of the Social Security Administration, testified before the House Committee on Ways and Means, Subcommittee on Social Security, on March 14, 2013.  

Speaking about financial challenges facing the Social Security Disability Insurance (SSDI) program, his full remarks covered these five topics:  

  1. An update on the projected financial status of the DI Trust Fund;
  2. The “drivers” of increasing costs over the past several decades;
  3. The Trustees’ assumptions for future trends in cost;
  4. Changes in the distribution of disabled workers by age and medical diagnosis; and
  5. Past and projected numbers of full medical continuing disability reviews (CDRs).

Using prose and charts, his testimony is easy to understand. While all of it is important, I think that most people will find his first two topics, the projected financial status of the Disability Insurance (DI) Trust Fund and the “drivers” of increasing costs of the DI program, the most useful.

 Read Mr. Goss’s full testimony at http://www.socialsecurity.gov/legislation/testimony_031413a.html.

Newest Annual Statistical Supplement now online

The Annual Statistical Supplement, 2012 just became available online at http://www.ssa.gov/policy/docs/statcomps/supplement/2012/index.html.  

There is a massive amount of interesting information here, not just concerning Social Security retirement (old-age), survivors and disability insurance (OASDI), but also about other programs including Supplemental Security Income (SSI), Medicare, Medicaid, Unemployment Insurance, Workers’ Compensation, Black Lung Benefits, and Veterans’ Disability Benefits. Each Table of Contents topic has a link to that section in html or pdf formats.

Specific information provided depends on the topic. At approximately 528 pages in length, you will find something in the Annual Statistical Supplement, 2012 to interest you. The Supplement includes more than 240 statistical tables of comprehensive data on Social Security and Supplemental Security Income. Using Social Security as an example, topics include:

From the Highlights and Trends section, here are two interesting tidbits for you:  

About 55.4 million persons received Social Security benefits for December 2011, an increase of 1,372,512 (2.5 percent) since December 2010. Sixty-nine percent were retired workers and their spouses and children, 11 percent were survivors of deceased workers, and 19 percent were disabled workers and their spouses and children.”

“OASDI benefit awards in calendar year 2011 totaled 5,567,020, including 2,577,647 to retired workers, 498,248 to their spouses and children, and 885,713 to survivors of insured workers. Benefits were awarded to 998,979 disabled workers and to 606,433 of their spouses and children.”

Again, more than just Social Security information is in the Annual Statistical Supplement, 2012. Enjoy.

Annual Social Security Trustees Report, 2012

The Social Security Board of Trustees released its annual report on the financial health of the Social Security Trust Funds on Monday, April 23rd

The report estimates that the combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI = Social Security) Trust Funds will be exhausted in 2033, three years sooner than projected last year. The DI Trust Fund will be exhausted in 2016, two years earlier than last year’s estimate. The Trustees also project that OASDI program costs will exceed non-interest income in 2012 and will remain higher throughout the remainder of the 75-year period.

In the 2012 Annual Report to Congress, the Trustees announced:

  • The projected point at which the combined Trust Funds will be exhausted comes in 2033 – three years sooner than projected last year.  At that time, there will be sufficient non-interest income coming in to pay about 75 percent of scheduled benefits.
  • The projected actuarial deficit over the 75-year long-range period is 2.67 percent of taxable payroll — 0.44 percentage point larger than in last year’s report.
  • Over the 75-year period, the Trust Funds would require additional revenue equivalent to $8.6 trillion in present value dollars to pay all scheduled benefits.

 “This year’s Trustees Report contains troubling, but not unexpected, projections about Social Security’s finances.  It once again emphasizes that Congress needs to act to ensure the long-term solvency of this important program, and needs to act within four years to avoid automatic cuts to people receiving disability benefits,” said Michael J. Astrue, Commissioner of Social Security.

 Other highlights of the Trustees Report include:

  • Income including interest to the combined OASDI Trust Funds amounted to $805 billion in 2011.  ($564 billion in net contributions, $24 billion from taxation of benefits, $114 billion in interest, and $103 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2011 payroll tax legislation.)
  • Total expenditures from the combined OASDI Trust Funds amounted to $736 billion in 2011. 
  • Non-interest income fell below program costs in 2010 for the first time since 1983.  Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.
  • The assets of the combined OASDI Trust Funds increased by $69 billion in 2011 to a total of $2.7 trillion.
  • During 2011, an estimated 158 million people had earnings covered by Social Security and paid payroll taxes.
  • Social Security paid benefits of $725 billion in calendar year 2011.  There were about 55 million beneficiaries at the end of the calendar year. 
  • The cost of $6.4 billion to administer the program in 2011 was a very low 0.9 percent of total expenditures.
  • The combined Trust Fund assets earned interest at an effective annual rate of 4.4 percent in 2011.

The Board of Trustees is comprised of six members.  Four serve by virtue of their positions with the federal government: Timothy F. Geithner, Secretary of the Treasury and Managing Trustee; Michael J. Astrue, Commissioner of Social Security; Kathleen Sebelius, Secretary of Health and Human Services; and Hilda L. Solis, Secretary of Labor.  The two public trustees are Charles P. Blahous, III and Robert D. Reischauer.

The annual Trustees Report always generates media attention and I urge you to read at least report Highlights and Conclusions. Both are short and mostly in plain English. The complete 2012 Trustees Report (officially the “The 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds“) is posted at http://www.socialsecurity.gov/OACT/TR/2012/.   

The 2012 Medicare Trustees Report was also released on April 23rd.