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Q: I’ve just heard on the news that Social Security Disability is going bankrupt! Is that why my application was denied?


Let’s first look at the matter of “bankruptcy.” The Social Security Disability Insurance (SSDI) program gets its funding from a payroll tax on every working American. Part of the tax money comes from the worker—you can see how it’s been deducted from each of your paychecks—and part comes from the employer. Your employer sends the tax money to the U.S. Treasury, usually making a payment every three months.

Many people believe that this money is locked away somewhere in a “trust fund” for Social Security recipients. It’s not. Government accountants keep track of how much money comes in, of course, and how much is allocated to various categories of benefits: disability, old age, and survivors. But the actual money is just mingled with other government revenue.

The amount of tax collected depends, of course, on how the labor market is performing. In broad terms, over the last several decades the number of people working has increased, and that’s boosted revenue collection. On the other hand, wages have been stagnant (when adjusted for inflation), and that means income-based taxes don’t always keep pace with the demand for government services. The recession of 2007 to 2009 sharply hurt employment rates, and that means Social Security collections sank too.

But even before the Great Recession, payments to SSDI beneficiaries had been outpacing the revenue coming in for several years. This has been due to increased demand for disability income. Compared with every earlier generation, people are now living longer lives—but the downside of a long life is a greater chance of a serious disability. More people want to draw benefits from an account that has been collecting less money, so there’s no wonder that projections say SSDI will run out of money by 2016.

No, you don’t have to worry about SSDI running out of money. As we explained earlier, the “trust fund” for SSDI is just a bookkeeping entry. Monthly benefits are paid out of general federal revenues, the same as Social Security Old Age and Survivors’ benefits. Even if that account shows a negative value in 2016, the federal government will still honor its obligation to pay the disabled what they are owed.

In the past, Congress has acted several times to redirect the flow of money between Social Security’s disability benefits and the retirement benefits programs. The last time such an adjustment was made—in 1994—actuaries said that the correction should solve problems until around 2016. Now, right on time, Social Security is ready for another adjustment.

So if bankruptcy isn’t the cause, why was your application denied? We can’t answer that question without looking at your paperwork. But you’re in good company: less than a third of SSDI applications are approved the first time around. As Social Security benefits lawyers, we’ve seen incomplete applications, illegible applications, failure to document work history or the nature of the disability, and all sorts of errors.

When you decide you need help—either in resubmitting an original application or appealing a decision against you—we’re here. Schmidt Kramer serves Harrisburg and Camp Hill, and other nearby communities in central Pennsylvania including Carlisle, York, Lancaster, and Lebanon.

Call us at 717-888-8888 or (717) 888-8888 toll-free to schedule a FREE review of your case. We cannot promise a successful outcome to your case; we can promise to put our years of experience to work for you.