The U.S Social Security disability benefits (SSDI) are a lifesaver for millions of Americans who are disabled and cannot work. The program distributes benefits to eligible beneficiaries on the basis of a comprehensive medical records review to establish the disability. Changes made in the program have notable impact on those already receiving benefits as well as fresh applicants. Recent changes introduced in how the SSA (Social Security Administration) processes SSDI claims could be of concern to group disability plans and for the financial professionals who sell, service, and administer the plans. Employers, consultants, brokers, plan administrators, and insurers need to take note of the new changes and the effect it could have on them.
The two major changes are:
- A new set of final SSA regulations that affect claim representatives who help some SSDI claimants successfully navigate the long drawn-out, complex claim determination process. The SSA has revised their rules of conduct and standards of responsibility for claim representatives, and also updated and clarified the procedures they use when they bring charges against a representative for violating those rules and standards. They clarified that the changes are necessary to better protect the integrity of their administrative process and also to further spell out representatives’ existing responsibilities in their conduct with the SSA. These rules will be effective August 1, 2018.
- The second major change is the new executive order calling for the president to be responsible for hiring SSDI judges and other federal administrative law judges (ALJ) outside of the regular civil service hiring rules. This order was issued by President Donald Trump following a 6-3 ruling the Supreme Court issued in June in connection with Lucia v. SEC. The court majority had found that the process the federal government had been using to hire many kinds of administrative law judges, including the judges who handle SSDI claim determinations was unconstitutional.
The SSDI program metes out an average benefit of approximately $1200 a month to around 8.7 million disabled workers. The program also pays an average benefit of $366 a month to the families of 1.6 million children of workers who are receiving SSDI benefits. Let us see how the new final rules of the SSA will affect group disability plans.
- When a worker with group disability coverage files for private plan benefits, the group disability plan may hire a claim representative to apply for SSDI benefits for the worker.
- A worker who qualifies for SSDI benefits gets a chance to sign up for Medicare coverage after 2 years of becoming eligible for SSDI benefits.
- Most group disability plans are designed to wrap around SSDI benefits. Once the worker starts receiving disability benefits, the private group disability plan deducts the SSDI amount from the monthly amount the plan pays the worker. For private disability insurers, and employers with self-insured disability plans, changes in the social disability insurance program that reduce the percentage of workers qualifying for SSDI benefits, could increase claim costs by reducing the SSDI benefits offsets.
What are the obvious concerns presented by these changes?
The possible concerns were voiced by Lisa Ekman, a staff member at the National Organization of Social Security Claimants’ Representatives, who said in her written testimony at a hearing organized by the House Ways and Means Social Security subcommittee, that the new claim reps’ orders as well as the executive order could have a major impact.
- Claim representatives could feel hurt that their integrity is being questioned. One provision could limit the representative’s ability to advise claimants about getting medical treatment. Many claimants rely on their representatives for guidance regarding medical clinics or treatments. The new rules require claim representatives to reveal to the SSA that they advised the claimant to seek a particular treatment, and this could result in tainting that evidence in the eyes of the adjudicator. Moreover, the new regulations could also present vague, new, and unnecessary liability exposure for claim representatives.
- The new executive order that changed the hiring process for ALJs from a merit-based system to a political one, threatened the qualified judicial independence of these judges as is envisioned in the Administrative Procedures Act. Ekman expressed the concern that new ALJs without much SSDI experience may feel compelled to decide matters before them in a manner preferred by their appointing agency instead of in a neutral way that would best apply the relevant provisions of the Social Security Act.
Various programs of the SSA are designed to provide maximum benefits and succour to eligible applicants. The Agency grants approval only after rigorous processes of scrutiny including medical chart review. This ensures fair award of disability benefits. It is important that impartiality and fairness of judgment are ensured when determining eligibility for social security disability benefits. Therefore, any kind of changes made to the program will be viewed with great interest and concern by all stakeholders.