Social Security Current Situation and a Look to

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 Social Security – Current Situation and a Look to the Future Christopher Doherty,

Social Security – Current Situation and a Look to the Future Christopher Doherty, Esq. Partner, Doherty, Cella, Keane LLP Barbara Mountain, National Director of Business Development, Doherty, Cella, Keane LLP New England Claim Association - November 16, 2017

Social Security History The Past • • Signed into law in 1935 Truly Dynamic

Social Security History The Past • • Signed into law in 1935 Truly Dynamic program- continual changes over history – – • Dependent benefits Retirement changes Disability benefits Medicare 1980’s The First Social Security Financial Crisis – Reagan – Tip O’Niell = Greenspan Commission – Numerous “tweaks” • Taxation of SS benefits • Including taxation of Federal Employees • Increase in Retirement age in next century (those born 1938) • Children Benefits end at age 18 or 19 if still in high school • Allowed Inter-fund borrowing | 2

Who is Receiving Social Security? Social Security Beneficiaries 62 million beneficiaries in pay A

Who is Receiving Social Security? Social Security Beneficiaries 62 million beneficiaries in pay A record 9 million workers—over 5 percent of the U. S. workforce were receiving SSDI benefits at the conclusion of 2016. | 3

SSDI Awards by Diagnosis Category: Average age: 53. 9 Average Benefit Amount: $1171 |

SSDI Awards by Diagnosis Category: Average age: 53. 9 Average Benefit Amount: $1171 | 4

Then and Now: Growth in the SSDI Program • Over the past 40 years,

Then and Now: Growth in the SSDI Program • Over the past 40 years, the number of disabled workers who receive benefits from the SSDI program has increased more than six-fold. | 5

Then and Now: Growth in the SSDI Program | 6

Then and Now: Growth in the SSDI Program | 6

Then and Now: Growth in the SSDI Program | 7

Then and Now: Growth in the SSDI Program | 7

Then and Now: Growth in the SSDI Program | 8

Then and Now: Growth in the SSDI Program | 8

What Are the Drivers of SSDI Growth? • 5 Factors Account for the bulk

What Are the Drivers of SSDI Growth? • 5 Factors Account for the bulk of Growth in DI Rolls • • • Population Growth Population Aging Growth in women’s labor force participation Rise in retirement age Increase in women’s rate of receipt • Other Factors that have Contributed to DI Growth • • Legislative Changes Economic downturn Lower death rates (beneficiaries stay on the rolls longer) DI Recovery Rates (less funding for continuing disability reviews) | 9

Continuing Disability Reviews | 10

Continuing Disability Reviews | 10

Then and Now: Growth in the SSDI Program Social Security Employee #s June 2017

Then and Now: Growth in the SSDI Program Social Security Employee #s June 2017 61, 592 March 2017 62, 183 March 2016 64, 264 December 2015 65, 518 September 2015 65, 717 June 2015 65, 666 March 2015 64, 432 December 2014 65, 430 September 2014 64, 684 June 2014 62, 651 March 2014 60, 820 December 2013 61, 957 September 2013 62, 543 June 2013 62, 877 March 2013 63, 777 September 2012 65, 113 September 2011 67, 136 December 2010 70, 270 | 11

Then and Now: Growth in the SSDI Program | 12

Then and Now: Growth in the SSDI Program | 12

Social Security Disability Award Rates • The ratio of new SSDI awards to the

Social Security Disability Award Rates • The ratio of new SSDI awards to the new SSDI applications has been trending downward since the late 1990 s. The ratio Initial was 41% in 2001 and 33. 5% in 2013 Level SSA SSA Awd Awd Rates Rates 2016 2015 2014 2013 2012 2011 2010 33% 32% 33% 34% 35% Recon 12% • From 2001 to 2010 the number of applications for 46% new SSDI benefits rose ALJ by 92 percent, from 1. 5 Hearin million in 2001 to 2. 9 g million in 2010. Appeal 1% • Since 2011 applications s are decreasing falling to Council 2. 4 million in 2015 12% 11% 12% 13% 45% 48% 52% 58% 62% 1% 2% 2% 2% • >1. 1 million claims backlogged awaiting a | 13 hearing (average workday 19)

ALJ Dispositions 2010 to 2013 | 14

ALJ Dispositions 2010 to 2013 | 14

ALJ Award Rates by Experience | 15

ALJ Award Rates by Experience | 15

Current State of Affairs at SSA I 16

Current State of Affairs at SSA I 16

Current State of Affairs at SSA • No Social Security Commissioner Yet – Offered

Current State of Affairs at SSA • No Social Security Commissioner Yet – Offered and declined • Updated Compassionate and Responsive Services Plan (CARES) – Goal of Reducing the backlog to 270 days has been delayed from 2020 to 2022 • New Goal for 2020 is to improve wait times by 2 month and provide 120, 000 more people with a hearing decision by the end of FY 2020 – The Federal Hiring Freeze delayed progress: 30 ALJs started late Spring, 100 offers are out and hope to have them ready to start hearing cases 11/17 – Decisions waiting to be written is up to 70 K in June compared to the normal 25 -30 K – CARES 3 Drivers: Business Process Efficiencies, Decisional Capacity and Information Technology Innovations and Investments | 17

Current State of Affairs at SSA Recent SSA Initiatives are Adversarial to Claimants •

Current State of Affairs at SSA Recent SSA Initiatives are Adversarial to Claimants • Treating Physician Rule: per 20 CFR 404. 1520. c published 1/18/2017 – No longer in effect for new claims filed on or after 3/27/17 – Also in this regulation disability determinations made by other governmental agencies no longer are due any special weight. • All Evidence Rule: per 20 CFR 404. 1512 a – Effective 3/20/15 all reps just submit or inform SS about all evidence Social Security Ruling 17 -4 published on October 4, 2017 clarified this ruling – Before the attorney only had to inform SS about medical evidence or submit it. Now they must submit the evidence and if they do not absent good cause they could face sanctions. | 18

LTD Response • Time to Invest – Experienced Attorney Representation – Commitment to Claim

LTD Response • Time to Invest – Experienced Attorney Representation – Commitment to Claim Development – SSA Adversarial Federal Law Changes • No more weight towards the attending physician • All Evidence Rule • Importance of having a Federal District Court (FDC) Practice – Increased Hearing denials are forcing quality cases to be pursued to FDC – Only Attorneys can go to FDC – Holds ALJs Accountable – One FDC award can equal 200 K in retroactive benefits | 19

Trump Proposed Budget Reform Disability By Reducing SSDI and SSI by 5% by 2027

Trump Proposed Budget Reform Disability By Reducing SSDI and SSI by 5% by 2027 • Congress to establish and expert panel to identify specific program changes to meet this goal • Suggested strategies to be tested – Test "time limited benefits" for beneficiaries for a period when they would be more likely to return to work; – Require applicants to engage in job-seeking activities before their application is considered; – Push existing State vocational rehabilitation offices to intervene earlier with individuals on a track to end up on DI; – Replicate welfare-to-work strategies in State TANF offices to provide wellness care and vocational services to welfare applicants that cannot work due to a short-term or uncontrolled health condition; and – Mandate that lower back pain and arthritis sufferers engage in rehabilitation traditionally used in occupational health treatment | 20 services before receiving benefits.

Trump Proposed Budget • • Reduce 12 month retroactive DI benefits to six months

Trump Proposed Budget • • Reduce 12 month retroactive DI benefits to six months Create sliding scale for multi-recipient SSI families. Offset overlapping unemployment and disability payments. Reinstate the reconsideration review application stage in 10 States. • Eliminate Workers' Compensation (WC) Reverse Offset. • Create a probationary period for Administrative Law Judges • Require medical treatment if person is receiving certain medical conditions (no provision to pay for this treatment) | 21

Current State of Affairs at SSA | 22

Current State of Affairs at SSA | 22

Questions Regarding the Future of the SSDI Program • Is the SSDI program facing

Questions Regarding the Future of the SSDI Program • Is the SSDI program facing a crisis? • Will the Social Security Disability Insurance Trust Fund run out of money? • What if the Social Security Disability Insurance Trust Fund runs out of money? • What options are the Congress the President considering – or likely to consider? | 23

Social Security Trust Fund Key Dates KEY DATES FOR THE TRUST FUNDS First year

Social Security Trust Fund Key Dates KEY DATES FOR THE TRUST FUNDS First year cost exceeds income excluding interesta First year cost exceeds total incomea Year trust funds are depleted OASI DI OASDI HI 2010 2022 2010 2021 2022 2019 2022 2023 2035 2028 2034 2029 LONG-RANGE ACTUARIAL DEFICIT OF THE OASI, DI, AND HI TRUST FUNDS [Percent of taxable payroll] Actuarial deficit OASI DI OASDI HI 2. 59 0. 24 2. 83 0. 64 | 24

The Social Security System Needs Reform 10 Proposals for long term solvency 1. Raise

The Social Security System Needs Reform 10 Proposals for long term solvency 1. Raise Full Retirement age to 68 (13%) 2. Change to Chained CPI (21%) 3. Increase Payroll Tax Cap to cover 90% (31%) 4. Eliminate the Payroll Tax Cap (76%) 5. Increase Payroll Tax Rate by 1% (37%) by 2% (75%) 6. Tax Cafeteria Plans (10%) 7. Cover all new Government Workers (9%) 8. Increase # Years Used to Calculate Initial Benefit to 38 (10%) 9. Reduce Benefits for Higher Earners (13%) 10. Tighten SSDI Eligibility criteria (9%)

Sky is not falling National Academy of Social Insurance Study • 74% of Republicans

Sky is not falling National Academy of Social Insurance Study • 74% of Republicans and 88% of Democrats agree it is “critical to preserve Social Security - even if it means increasing taxes. ”

Too Big to Fail 62 Million Beneficiaries $955 Billion dollars per year $79. 5

Too Big to Fail 62 Million Beneficiaries $955 Billion dollars per year $79. 5 billion each month

Questions/Discussion bmountain@dcklaw. com 603 - 767 - 6945 www. dcklaw. com doherty@dcklaw. com 800

Questions/Discussion [email protected] com 603 - 767 - 6945 www. dcklaw. com [email protected] com 800 - 211 - 4736 www. dcklaw. com | 28