Proposed Social Security Budget of 2016

The solvency of the Social Security program remains a concern for both Democrats and Republicans alike. Both President Obama’s proposed 2016 budget and the GOP 2016 Budget proposal focus on the need to strengthen the program. According to the current forecast, the combined Social Security Trust Funds may only pay full benefits until 2033. In light of this, President Obama has proposed a reallocation of the existing payroll tax collections between the Old‐Age and Survivors Insurance (OASI) and the Social Security Disability (DI) Trust Funds until a long term solution is found to manage the deficit. The budget proposal also discusses initiatives to help people with disabilities remain in the workforce as well as enhanced scrutiny of those receiving benefits to ensure their ongoing eligibility for them.

The integrity of the Medicare, Medicaid and Social Security programs is also addressed in the GOP 2016 budget proposal. It opposes the shift of funds from the OASI program to the DI program funds, arguing that this short term fix would have no impact in the long run. The proposal instead recommends that a “bipartisan commission” study the funding problems with Social Security and provide a follow up report to the President.

The Social Security Administration Agency (SSA) describes itself in its proposed 2016 budget as “an economic lifeline” for the approximately 65 million beneficiaries it serves each month. Its request for full funding under the President’s budget notes its 2016 mission is to: “reduce backlog, ensure efficient service, reduce improper payments and combat fraud, waste and abuse”. It hopes to achieve these goals through the following measures:

  1. Early intervention demonstrations to help people with disabilities remain in the workforce thereby delaying or avoiding a need for disability benefits.
  2. Timely and accurate service in field offices with extended hours.
  3. Increased hiring of administrative law judges in order to provide expedited hearings.
  4. Improvements in the agency’s information and communication technologies in order to improve efficiency in the administration of benefits.
  5. Fraud prevention and the prevention of improper payments. Improper payments generally result from misrepresentations of eligibility for benefits.

The budget proposes to prevent improper payments by authorizing the SSA to conduct data matches with private commercial databases to verify its beneficiary’s wages in the means based Supplemental Security Income (SSI) program. Since the benefit may vary on a monthly basis due to changes in a beneficiary’s income from wages, monitoring of the databases should help to facilitate payment of the proper monthly benefit. Other proposed fraud prevention methods include allowing the SSA to verify financial information in any claims involving a waiver request involving benefit overpayment as well as holding fraud facilitators liable for overpayments.

According to the SSA budget proposal, improved efficiency in the administration of benefits will be achieved through improved collection of information about its beneficiaries. For example, beneficiaries receiving a pension from work that was not covered by Social Security are not entitled to receive the full amount of their Old‐Age and Survivors benefit. With the current system, SSA is often unaware of this offset since they do not have an arrangement with state and local governments to secure this information. The budget proposal seeks to have state and local government pension payers report the pension information through an automated data exchange. Similarly, individuals who are receiving workers’ compensation benefits or public disability benefits are not entitled to receive their full Social Security Disability benefit since current law requires an offset. Although beneficiaries are required to report their receipt of workers compensation or public disability benefits, many fail do so. The budget proposal seeks to require states, local governments and private insurers that administer these benefits to provide this information to SSA.

The SSA’s need for better data in order to preserve the fiscal integrity of its program is similar to that faced by Medicare in the past. Although it is unlikely that the current 2016 budget proposal will allow for the establishment of a sophisticated reporting system, we would expect to see this develop over the next several years. We will continue to keep you advised of further developments.

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