For Social Security Disability Insurance (SSDI) recipients, these benefits allow them to survive when they are unable to work because of a disability. However, the laws that provide these benefits are subject to change and beneficiaries need to stay up-to-date to make sure they are not at risk of losing their benefits.
Social Security Trustees Report 2020
Each year, the Social Security and Medicare trust fund trustees report on the financial status of the programs. The latest report provides a worse financial outlook compared to the 2019 report, with decreased revenue and increased costs.
What do Disability Beneficiaries Need to Know After the 2020 Report?
Social Security funds are primarily made up of the Old-Age and Survivors Insurance (OASI) and The Disability Insurance (DI) Trust Funds. The OASI Trust Fund will be able to pay full benefits on a timely basis until 2034. The DI Trust Fund is now projected to be able to pay full benefits until 2065. The current projection is that full benefits will only last until 2035.
The 75-year projected actuarial deficit increased to 3.21% from 2.78% based on two primary changes. First, the excise tax on employer-sponsored group health insurance premiums above a specified level (or “Cadillac plans”) was repealed, reducing payroll tax income. Second, the report made changes in assumptions including lower anticipated fertility rates, consumer inflation, and interest rates, which could reduce fund revenue.
After the trust funds run out of money, Social Security will be supported on payroll tax revenue. According to the report, Social Security will be 91% funded for 25 years, 85% funded for the next 50 years, and 82% funded for the next 75 years. Over the long-term, if things do not change, beneficiaries will see continually reduced benefits.
How Will COVID-19 Affect Social Security Benefits in 2020?
According to the report, “the projections and analysis in these reports do not reflect the potential effects of the COVID-19 pandemic on the Social Security and Medicare programs.”
The Trustees Report came out just last month in April 2020, when the country was just beginning to deal with the effects of the coronavirus pandemic. It may be too soon to know how much COVID-19 may affect Social Security benefits and to what extent. However, the current pandemic may have a negative impact on the fund.
With high unemployment, taxpayers will not be adding as much in payroll taxes to the Social Security system. Similarly, underemployment, reduced hours, and reduced wages will all result in lower contributions. Additionally, for those who become seriously ill because of COVID-19, there may be an increase in SSDI claims.
With more layoffs, furloughs, and businesses closed down, more people may file for early retirement benefit claims. A continued downturn in the market and slower economic growth could lower interest rates on trust fund reserves. Together, this would increase the demand on Social Security while decreasing the contributions to the fund.
Contact Lloyd King Law Firm for Help With Your Disability Benefits Case in North Carolina
Lloyd King has more than 40 years of legal experience, including almost ten years as a Social Security Administrative Law Judge in Raleigh, North Carolina. Lloyd King can help you get disability benefits and provides a free case review to answer your questions. With offices in Raleigh and Roanoke Rapids, North Carolina, contact Lloyd King Law Firm PLLC today for help with your disability claim.