Monthly Newsletter
Disability Benefits Protected with Budget Deal
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A proposed two year budget agreement reached between the White House and the House of Representatives at the end of October protects disability benefits for millions of disabled Americans. It also contained agreements that will help better fund the operations of the Social Security Administration.
On the other hand, low inflation calculations mean no COLA increase for people receiving Social Security disability, retirement and survivor benefits.
BUDGET AGREEMENT
As had been projected more than a decade ago by Social Security actuaries, beneficiaries of Social Security disability benefits in 2016 faced a reduction in benefits as the disability trust fund would have been unable to pay all of the benefits owed. The budget agreement provides that for the next three years, a greater percentage of FICA payments to the Social Security trust funds will be directed to the disability trust fund assuring the payment of full benefits through at least 2022. This is certainly welcome news.
The agreement ends the “file and suspend” strategy that had been used by some Americans to enhance retirement benefits. While it will cost some people the chance to use this technique to increase their benefits, it will help a bit to enhance the long term solvency of the retirement trust fund. The Administration had been focused on ending this retirement benefit tool.
The deal also includes a test program which will allow people on SSDI to return to work and, after the end of their Trial Work Period, be able to continue working without the total loss of the monthly benefit. Instead there will be a $1 reduction for every $2 earned over the substantial gainful activity limit. Finally, there is also funding for an expansion of the fraud investigation units into all 50 states over the next several years.
NO COLA INCREASE FOR 2016
Annual COLA increases are based upon inflationary changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers during the third quarter of the current year versus the same time period of the previous year. The minimal difference this year means benefits will not increase for 2016. This is a serious hardship on the disabled and retired seniors.
The definition of “substantial gainful activity” will increase to $1,130 from $1,090. The definition of a “trial work period” month will increase from $780 per month in earnings to $810.
The lack of a COLA increase would have meant a large increase in Medicare Part B premiums for Medicare recipients with income over $85,000 ($170,000 if filing jointly). The budget agreement minimizes, but does not eliminate, the Medicare Part B increase for this group.
Protecting the benefits relied upon by millions of disabled, retired and survivor Americans was a critical move by Congress and the administration. While the loss of the file and suspend strategy impacts some retirees, and the expansion of the investigation units is of some concern, overall this budget package positive long term implications.