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New congressional rule could lead to cuts in SSDI benefits

For many Americans, including some in Missouri, a permanent disability, however or wherever suffered, can make life extremely difficult in many ways, including financially if the person cannot work. Fortunately, one Social Security program has been able to help these people pay their bills for decades, and otherwise live without sinking deeply into poverty.

However, a new provision that will govern any proposals to fix the pending insolvency of the Social Security Disability Insurance program could actually hurt beneficiaries in 2016. With the Republican takeover of the House of Representatives, proposals to fix SSDI funding for the next two years might not ever get out of committee. Unlike in 1994, when the fund was close to exhaustion, the new rule will not allow Congress to shift money from the Old Age and Survivors Insurance fund into SSDI without a plan that will either fix the two systems at the same time by cutting benefits or raising revenue. Democrats are likely to balk at cutting benefits, and Republicans are unlikely to agree to revenue increases. If the SSDI fund is exhausted by 2016, benefits will likely be cut by 20 percent.

Reallocating funding would significantly extend the life of the SSDI trust fund without seriously affecting the OASI fund, which is far larger. The new provision that is going to govern the House of Representatives for the next two years makes it difficult, but not impossible, to reallocate revenues from the OASI trust fund to the SSDI trust fund. Some observers think much of the problem is geared toward political maneuvers for the 2016 elections and that the House rule would likely be ignored or overruled by House leaders.

If a fix cannot be agreed on, however, many vulnerable Americans who are currently completely dependent on SSDI benefits would face some tough adjustments.

Source: MarketWatch.com, "Social Security disability finances just got harder to fix," Alicia H. Munnell, Jan. 21, 2015

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Alan E. DeWoskin, P.C.
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