Congress Addresses DI Trust Fund Exhaustion - Benefit Cuts Averted

Congress has resolved the looming 19-percent benefit cut for nearly 9 million disabled workers and 1.9 million dependents by passing the Bipartisan Budget Act of 2015 early Friday, Oct. 30. President Obama is expected to sign the legislation that fixes the funding problem for Disability Insurance (DI) Trust Fund, which was set to exhaust reserves by fourth quarter 2016.

It reallocates 0.57 percentage points of the payroll tax to the DI fund from Old-Age and Survivors Insurance (OASI) Trust Fund, adding about $124 billion in funds. The reallocation over three years— 2016, 2017 and 2018—would extend the fund’s solvency about six years to the third quarter of 2022. The FICA tax rate of 12.4 percent remains unchanged.

Under this provision, there would be no impact on the long-term solvency of the trust funds, according to a preliminary statement by Stephen Goss, the Social Security Administration’s chief actuary. He reported the estimated depletion date for the OASI fund is still 2035, and 2034 for the combined OASI-DI funds.

The measure addresses near-term urgency for Social Security disability beneficiaries, but doesn’t address long-term solvency issues that legislators raised during Congressional hearings on the SSDI program last year.

Goss stated additional measures in the Bipartisan Budget Act will reduce program costs by $5 billion to $9 billion through the next 10 years.

Those measures include:

• Expansion of Cooperative Disability Investigation (CDI) units; expected to reduce overpayments.
• Requiring that a qualified physician, psychiatrist or psychologist has completed the medical portion of the case review (starting in one year); expected to reduce the long-range OASDI actuarial deficit by 0.02 percent of taxable payroll.
• Requiring the SSA to report on fraud prevention activities, overpayment waivers and work Continuing Disability Reviews (CDRs).