Social Security Disability Insurance, which provides basic but essential protection from income loss due to life-changing disability or illness for more than nine in 10 American workers and their families, is one of the cornerstones of our Social Security system. But according to projections issued by the Social Security trustees in late July, the Social Security Disability Insurance trust fund will run dry in late 2016.
Unless Congress acts, the modest insurance benefits that Social Security Disability Insurance provides — an average of about $1,140 a month, just over the federal poverty level for an individual — will be cut. Those cuts would slash benefits by 20 percent, across the board.
So Social Security Disability Insurance must be broken, right, and in need of a radical overhaul? That's certainly what some conservative critics crave.
Wrong. The truth is, we've known for 20 years that this was coming. And a one-time, routine action is all that's needed to ensure that Social Security can pay all promised benefits for the next two decades.
To understand why, it's helpful to review the history of Social Security's financing. The Old Age and Survivors' Insurance trust fund, or OASI, is a reserve fund for Social Security benefits paid to retirees and their surviving spouses and children. The Disability Insurance trust fund remains technically separate. However, Congress has typically discussed, shaped, and regulated them together due to the close relationships between Social Security's disability and retirement programs. In particular, the two programs share a benefit formula, and beneficiaries regularly move between the two programs. Thus, changes to one program — such as raising the retirement age — affect both trust funds.