What You Need to Know about SSDI’s Predicted 2016 Expiration Date
What is SSDI?
Social Security Disability Insurance (SSDI) is an insurance program run by the Social Security Administration, a federal government institution. It is funded through payroll tax contributions from employees and their employers. This insurance program is essential for Americans that have been disabled and can no longer work, meaning they are unable to provide an income for themselves or their families.
Dealing with a disability alone is both painful and stressful on its own. Couple that stress with having to worry about paying for rent, mortgage or even food can be very overwhelming. SSDI was implemented to help cover the basic needs of all Americans who, for various reasons, are no longer able to be a part of the workforce. The program went into effect in the mid-1950s and to this day, continues to serve our disabled population — some 14 million people.
For many recipients, these modest benefits are what keeps them hovering just above the poverty line, making SSDI an essential program. However, the Trustees of the Social Security trust funds have predicted a grim future for SSDI: the pool of funding is expected to run out in 2016 if benefits continue to be offered at the level they are today. In order to avoid this scenario, drastic measures and reallocations of monies are necessary.
Why are Disability Benefits in Danger of Expiring?
There are several reasons for the anticipated expiration of SSDI funding. To begin, it has to do with the large population of baby boomers that are expected to begin using it. Statistically, disability is most likely to occur around age 50 – an age of which all 77 million baby boomers have now hit. In addition to this, the reality of a struggling economy means a lot of people are out of work, which significantly lowers the amount of financial contributions being put into the fund. If that weren’t enough, there are presently more people than ever enrolled into the SSDI program.
What Will Happen if Nothing Changes Before 2016?
In 2016, the program is expected to run out of its reserve funds. True, American workers will still be there to continue to pay into the fund; but these contributions are estimated to only account for about 79% of the money needed. SSDI is banned from running a deficit, which means it cannot go into debt paying out the extra 21% not covered by American workers. Thus, benefits will have to be cut. Since 2009, the funds going into the program have not entirely covered the actual amount paid out each year; however, a surplus that was built up in the 1990s has been able to keep the program afloat for the time being. This surplus is what is expected to run out in 2016. After that, unemployed folks with disabilities will begin to feel the repercussions of the SSDI program being unable to make monthly payments to beneficiaries.
Why You Should Still Apply for SSDI Benefits
While the situation certainly looks dire, there is still time for something to be done. When the surplus runs out, it doesn’t mean all payments will need to be stopped — only that they either need to be lowered, taxes need to be increased, or money needs to be allocated from another revenue source within the government. Each of these solutions is potentially viable, and currently being explored by lawmakers to prevent an SSDI crisis in 2016. In fact, a similar situation arose in the 1994 where contributions were not meeting the costs. Then, a reallocation of funding was created to prevent disrupting regular SSDI payments.
While the news of a 2016 SSDI expiration is certainly not good, it is not as desperate as some news outlets would have us believe. Yes, it will be a difficult matter for Congress to sort, but it is not an impossible feat. News of these troubles should not deter you for applying for SSDI benefits if you have become disabled and are unable to work. Don’t waste another minute waiting to apply for disability benefits. The time to act is now.
If you have any questions about filing for disability benefits, call us at (800)-248-1100 or click here for more information.