Saturday, March 30, 2013

Eliminate the SSD Waiting Period

A person must be disabled for five full calendar months before he or she can receive Social Security Disability (“SSD”) benefits, and benefits are not retroactive for the waiting period. Since the waiting period does not begin until after the first day of the month following onset of disability, the waiting period may sometimes be closer to six months. The waiting period was enacted because disability insurance carriers used similar waiting periods before paying benefits, and to provide time for temporary medical conditions to be corrected or show definite signs of recovery. 

As reported in Newsday, Representative Steve Israel held a news conference yesterday during which he announced that he would introduce legislation to exempt the terminally ill from the waiting period. Perhaps the greater question is why should there be a waiting period for anybody? 

The five month waiting period creates hardship for disabled individuals at the worst possible time. It seems unfair that the Social Security laws only requires some claimants to endure a waiting period before becoming entitled to receive disability benefits. 

Disabled workers, disabled widows and widowers, and disabled surviving divorced spouses aged 50 to 65, are subject to a full five-month waiting period before receiving Social Security disability benefits. On the other hand, disabled adult children whose parents are disabled, retired or deceased as well as those who receive Supplemental Security Income benefits are not subject to a full five-month or any waiting period before receiving benefits. 

Time and time again, I have had clients ask, “What am I supposed to do until benefits begin?” The waiting period imposes a severe financial hardship for many, especially since the additional costs of medical care can quickly deplete any savings, which is even truer as many lose their health insurance when they stop working and cannot afford to pay the COBRA premiums. 

The original reasons for the waiting period are unsound. The insurance companies have used waiting periods because they are in the business of making money and reducing their payouts. Social Security is supposed to address the needs of the vulnerable as opposed to seeking profits for shareholders. Social Security recognizes the need to help the disabled by enacting various programs to expedite the possessing of claims. Expediting, but not paying, claims, fails to fully address the problem. 

To receive either SSD or SSI benefits, a person must prove the same medical disability, but the SSI disability program has no waiting period. That seems unfair because it effectively penalizes a person who has worked and paid FICA taxes. Eliminating the waiting period can be done in the same manner as increasing the retirement age. For example, the waiting period can be reduced by one month each year for five years. As people would still need to prove that their condition will be disabling for at least a year, the impact may be smaller than expected.

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