Those who depend on Social Security disability benefits for their survival will be faced with a challenge over the next year if Congress doesn’t act fast.
A percentage of the tax revenue from the Federal Insurance Contributions Act (also known as FICA) and the Self-Employment Contributions Act contributes to the Disability Insurance Trust Fund. The amount of money in this fund currently exceeds the amount of money needed to pay those who are receiving disability benefits. However, if the funds were to fall below that threshold, a mandatory 19 percent reduction in disability benefits would go into effect in order to compensate.
And because less money is coming into the fund than is going out, that threshold may be hit as early as next year.
So what does that mean for the eleven million people who receive these benefits?
Fortunately the issue is receiving attention relatively early, and many are calling for changes in the disability program to make sure people can depend on it. According to an article on from the Associated Press, the CEO of the American Association of Retired Persons (AARP) commented on the issue, calling for “meaningful” changes to be made to protect the people who would be affected, now and in the future.
Today’s report shows that we must seek meaningful, in some instances even urgent, changes to ensure the program is on stable ground for future generations
Others are not so optimistic about our government’s ability to appropriately and timely resolve the problem. In an article from the Los Angeles Times, reporter David Lauter described the situation as one that doesn’t get resolved until the last minute, if at all.
The pending cash crunch in the disability fund is one of those slow-motion — and largely self-created — crises that Congress usually fails to resolve until a deadline hits.
If Congress cannot come up with a solution, the monthly disability benefit check will be reduced to approximately $824, down from $1,017. The millions of others who depend on Medicare will likely also face a premium hike of over $50.
One of the fund’s trustees, Robert Reischauer, described Social Security and Medicare as being on a “fiscally unsustainable path,” due to the projected increase of beneficiaries entering retirement.
The Obama administration has proposed a shift in the budget that would allocate slightly more tax revenue to the fund. However, they admit that the amount proposed would only act as a temporary bandaid solution that would delay the budget crisis, but not prevent it in the long term.