SOCIAL SECURITY ADMINISTRATION BALTIMORE, MD 21235-0001

SOCIAL SECURITY

Office of the Chief Actuary

April 4, 2016

The Honorable Jim McCrery and The Honorable Earl Pomeroy, Co-chairs

SSDI Solutions Initiative

Dear Mr. McCrery and Mr. Pomeroy:

I am writing in response to the request for estimates of the financial effects on Social Security of 

a number of potential proposals that may be considered for addressing financial shortfalls of the 

Social Security Disability Insurance (DI) program. All estimates provided in the enclosed table 

are based on the intermediate assumptions of the 2015 Trustees report. We have enjoyed 

working with Marc Goldwein and Ed Lorenzen and others of the staff of the Committee for a 

Responsible Federal Budget (CRFB) on these proposals for inclusion in the SSDI Solutions 

Initiative report. I have also personally enjoyed working with you both as a member of the 

Advisory Council for this Initiative and as the Chief Actuary during years you were both in 

Congress on the Ways and Means Committee addressing Social Security issues. 

Given the breadth of the proposals addressed in the attached table, we have involved almost 

every member of our Office of the Chief Actuary in developing the specifications and the 

estimates for them. Please note that due to having many competing work loads, and the number 

of proposals included here, many of these estimates represent preliminary estimates that, given 

more time and careful focus, would be done in more detail with possibly somewhat different 

results. However, for the purpose of gaining an understanding of the order of magnitude of the 

effects of these proposals, we believe this table will be useful to you and the readers of the SSDI 

Solutions Initiative report. While most of our office worked on these proposals, principal 

contributors include Chris Chaplain, Mary Kemp, Jacqueline Walsh, Dan Nickerson, Michael 

Clingman, William Jimenez, Kyle Burkhalter, Eli Donkar, and Karen Glenn. 

We look forward to response by policymakers and the public to your Initiative report, and to 

continuing to work with you and others to evolve and strengthen the Social Security program in 

the future. Please let us know if we can be of assistance in any way.

Sincerely,

Stephen C. Goss

Chief Actuary

cc: Marc Goldwein and Ed Lorenzen

Enclosure
SSDI Reform Options for "SSDI Solutions Initiative"

PRELIMINARY Estimates (b) Effect is less than 0.005 percent of payroll.

All estimates based on intermediate assumptions of 2015 Trustees Report

Proposal DI OASDI DI OASDI

Revenue Options

1 Raise DI Payroll tax by 0.35%, starting 2016 0.33 0.34 0.33 0.34

2 Reallocate 0.35% of payroll tax from OASI to DI, starting 2016 0.35 (b) 0.35 (b)

3 Eliminate Tax Max for DI (1.8%) payroll tax (no additional benefit credit) 0.34 0.34 0.34 0.34

4 Same as 3) with 5% PIA factor for DI bens (new BP at Tax Max) 0.33 0.33 0.33 0.33

5 Eliminate Employer Tax Max for DI (0.9%) payroll tax 0.17 0.17 0.17 0.17

6 Cover All Newly Hired State & Local Workers starting 2016 0.01 0.15 -0.01 -0.16

7 Same as 6), but only for DI (1.8% pyrl tax) and not for OASI tax or benefits 0.01 0.01 -0.01 -0.01

8 Tax cafeteria plan (Sec. 125) deductions as wages 0.03 0.20 0.03 0.12

9 Re-allocate Medicare-dedicated taxation of DI benefits to DI 0.04 0.04 0.05 0.05

Benefit Offset — affecting new entitlements only, starting 2016

10 Offset $1 benefit for $2 earnings above SGA -0.04 -0.04 -0.04 -0.04

11 Offset $1 for $2 of earnings (starts at first dollar of earnings) (b) (b) (b) (b)

12 Offset $1 for $3 starting at 2015 SGA indexed to price inflation -0.04 -0.04 -0.03 -0.03

13 Offset $1 for $3 starting at $780 indexed to price inflation -0.03 -0.03 -0.03 -0.03

14 Offset $1 benefit for $3 earnings above SGA -0.06 -0.06 -0.06 -0.06

15 Offset $1 for $3 of earnings (starts at first dollar of earnings) -0.01 -0.01 -0.01 -0.01

16 Offset $1 for $3 earnings below SGA, and $1 for $2 earnings above SGA -0.01 -0.01 -0.01 -0.01

Eligibility 

17 Only count "quarters of coverage" with above-SGA earnings (3x SGA) toward 

eligibility determinations for disabled worker benefits (both fully insured and recency 

tests)

0.13 0.13 0.14 0.14

18 Change recency of work requirement to 5 of the last 8 years 0.12 0.12 0.13 0.13

19 Change recency of work requirement to 4 of the last 6 years 0.16 0.16 0.17 0.17

20 Increase waiting period from 5 to 6 months 0.02 0.02 0.02 0.02

21 Increase waiting period from 5 to 12 months 0.13 0.13 0.14 0.14

22 Change SGA (for initial determination and continued eligibility) to the lesser of 

current law amount or individual's AIME. 0.01 0.01 0.01 0.01

Determination

23 Increase ages in vocational grids by 1 year immediately, another year as NRA 

increases from 66 to 67, then index to life expectency at age 65 by one month for 

every month life expectency goes up after that

0.01 0.01 0.02 0.02

24a Require that any evidence the claimant wants considered at ALJ hearing be submitted 

5 days before hearing; good-cause exception to be interpreted narrowly; evidentiary 

record established at the time of the initial ALJ determination remains closed through 

rest of appellate process

0.01 0.01 0.01 0.01

24b Require that any evidence the claimant wants considered at ALJ hearing be submitted 

5 days before hearing

(b) (b) (b) (b)

25 Require Government Representative at ALJ Hearings~~ (Not adversarial) (b) (b) (b) (b)

26 Eliminate "reconsideration" step in all states -0.02 -0.02 -0.02 -0.02

27 Require prototype states to restore "reconsideration" step 0.01 0.01 0.01 0.01

28 Limit DI retroactivity to 6 months; make retroactive payments in next regular monthly 

benefit payment 0.02 0.02 0.02 0.02

29 Eliminate controlling weight for treating physicians 0.02 0.02 0.02 0.02

Interactions w/ Other Programs

30 Consider receipt of any UI payment to constitute SGA for DI Benefits (H.R.1502) 0.01 0.01 0.01 0.01

Change in Actuarial Balance Change in 75th Yr Ann Balance

For all the following variants, TWP and EPE are eliminated; benefits are terminated, 

provided that earnings >SGA, after 36 consecutive months with average benefits < 20% 

of full benefits; EXR is available after such termination.

(% of taxable payroll) (% of taxable payroll)
SSDI Reform Options for "SSDI Solutions Initiative"

PRELIMINARY Estimates (b) Effect is less than 0.005 percent of payroll.

All estimates based on intermediate assumptions of 2015 Trustees Report

Proposal DI OASDI DI OASDI

Change in Actuarial Balance Change in 75th Yr Ann Balance

(% of taxable payroll) (% of taxable payroll)

31 Suspend DI benefit for any month in which a UI payment is received (S. 1099) 0.01 0.01 0.01 0.01

32 Offset DI benefits $1 for each $1 of UI payment (POTUS FY16 Budget) 0.01 0.01 0.01 0.01

33 Replace workers compensation offset with simplified offset, that is, at uniform one 

third reduction in combined workers' comp/DI benefits. Cap offset at total WC/PDB 

benefit and end offset after 60 months. 

0.01 0.01 0.01 0.01

34 Reduce veterans' DI benefits by 1/3 of the total disability benefits they would 

otherwise receive from DI, VA, and DOD combined, except that the DI benefit is not 

to be reduced below zero, and the reduction is not to exceed the combined disability 

benefits from VA and DOD; end the offset after 60 months.

0.03 0.03 0.03 0.03

35 Offset SSDI benefits $1 for each $1 of disability compensation from the Veterans 

Administration. 0.09 0.09 0.09 0.09

Relationship between DI and NRA; Reductions to DI benefits are retained after conversion to retirement benefits

36 Pay DI benefits with reduced percent of PIA as for worker retiring at EEA+4 years (age 

66) after NRA increases above 66. 0.11 0.18 0.12 0.19

37 Same as 36), but reduce as for worker retiring at EEA+3 (equivalent to age 65) 0.20 0.32 0.21 0.34

38 No new DI benefit entitlement age 62 or above; gradually reduce initial DI benefits to 

EEA levels for applications between age 53 and 62, but continue conversion to 

retirement benefit at NRA

0.08 0.13 0.09 0.14

39 Same as 38 but with conversion to retirement benefit at EEA 0.45 0.13 0.47 0.14

40 Eliminate DI COLAs between the EEA and NRA, not allowing benefits to go below EEA 

retirement levels

0.06 0.26 0.06 0.28

41 Reduce DI COLAs between the EEA and NRA to CPI increase -1% (but not less than 

0%), not allowing benefits to go below EEA retirement levels 0.02 0.10 0.02 0.10

42 Offer applications between EEA and NRA a hybrid benefit proportionally based on the 

month they become eligible. For example, assume the NRA is 66, leaving 48 months 

between the EEA and NRA. Someone becoming eligible at age 62 and 0 months would 

receive 47/48 of their benefit from the DI trust fund at DI levels, and 1/48 from the 

old-age trust fund at actuarial reduced old age levels. 

0.01 0.02 0.01 0.02

43

Same as 42), assuming relationship between EEA and NRA is frozen at EEA+4 years 0.01 0.02 0.01 0.02

Program Integrity

44 Provide mandatory funding to perform CDRs. Replace discretionary 

CDR/redeterminations cap adjustments w/ mandatory funding paid out of general 

revenue and set at current levels, indexed to total SSDI benefit cost; appropriate an 

additional $5 billion to clear the CDR backlogs by 2020. 

(b) (b) (b) (b)

45 Reform CDR process. Clarify CDR rules to allow the agency to remove claiments who 

were wrongfully awarded benefits even without medical improvement, establish CDR 

waiver office with training and reviews as per SSAB recommendations, allow the riskbased CDR approach to take into account benefits awarded by red flag ALJs, require 

that CDRs incorporate a review of social media accounts, and require SSA to increase 

work-related CDRs. 

(b) (b) (b) (b)

46 Enact above two CDR changes together (b) (b) (b) (b)

47 Make civil monetary penalties mandatory and increase fines~ (b) (b) (b) (b)

48

Expand CDIs to all 50 states** (b) (b) (b) (b)

49 Enact various anti-fraud measures. Require all evidence (favorable and unfavorable) 

to be submitted, with violation subject to civil and/or criminal penalties. (^^) (b) (b) (b) (b)

50 Enact above three sets of anti-fraud changes together (b) (b) (b) (b)

51 Enact all CDR, fraud, and other program integrity changes above (b) (b) (b) (b)
SSDI Reform Options for "SSDI Solutions Initiative"

PRELIMINARY Estimates (b) Effect is less than 0.005 percent of payroll.

All estimates based on intermediate assumptions of 2015 Trustees Report

Proposal DI OASDI DI OASDI

Change in Actuarial Balance Change in 75th Yr Ann Balance

(% of taxable payroll) (% of taxable payroll)

52 Provide adequate funding to perform all scheduled medical CDRs on a timely basis 

(Trustees baseline assumes Title II medical CDRs current by end of 2016) (b) (b) (b) (b)

Benefit Increases -- all effective 2016

53 Eliminate waiting period -0.09 -0.09 -0.10 -0.10

54 Reduce waiting period from 5 months to 2 month -0.06 -0.06 -0.06 -0.06

55 Reduce recency of work requirement to 4 of the last 10 years -0.10 -0.10 -0.10 -0.10

56

Round up drop-out year determination (ie a 6 year lapse yields 2 drop-out years 

instead of 1, an 11 year lapse yields 3 drop-out years instead of 2, etc) (b) (b) (b) (b)

57 Allow SSDI beneficiaries to enroll in Medicare as soon as they are ruled SSDI-eligible 

(but not retroactively) -0.02 -0.02 -0.02 -0.02

58 Establish min. benefit at poverty line for all SSDI beneficiaries (CPI index poverty level 

after initial eligibility date) regardless of years worked/earnings levels. Would 

continue through conversion.

-0.03 -0.03 (b) (b)

59 Establish min. benefit at poverty line for all SSDI beneficiaries (wage index poverty 

level after initial eligibility date) regardless of years worked/earnings levels. Would 

continue through conversion.

-0.07 -0.07 -0.07 -0.07

60 Eliminate DI (1.8%) payroll tax for disabled worker beneficiaries with earnings, and for 

5 years after termination of DI benefits

-0.01 -0.01 -0.01 -0.01

Additional Options 

61 Eliminate reverse offset for workers' comp and replace with the standard offset 

offset.

(b) (b) (b) (b)

62 Close WC offset loopholes by establishing an actuarially neutral offset for “lump sum” 

WC benefits, applying the offset to “salary continuation payments,” and applying the 

offset to those below age 67 who switch from the SSDI program to the old age 

program.

0.01 0.01 0.01 0.01

63 Modify vocational grid guidelines: Apply current-law age 45-49 requirements to 47-

51, 50-54 reqs to 52-56, 55 and over reqs to 57 up to NRA. No grid for ages 45-46.

0.01 0.01 0.01 0.01

64

Increase vocational grid ages as suggested by Sen Coburn (OCACT 7/18/2011 memo): 

increase 50-54 category to 58-60, 55 and over category to 61 - EEA.

0.04 0.04 0.05 0.05

65 Require claimant reps to submit all evidence both favorable and unfavorable, with 

penalties for non-compliance

(b) (b) (b) (b)

66 Fill ALJ vacancies with AJs (administrative judges) (b) (b) (b) (b)

67 Disallow SSDI applications from individuals who have reached the NRA (b) (b) (b) (b)

68 Disallow simultaneous DI and OASI applications to individuals above age 621⁄2; in 

particular, disallow individuals who have received retirement benefits from 

subsequently receiving disability benefits, and eliminate the present-law benefit 

increase that occurs at FRA based on months in which a beneficiary elected to receive 

retirement benefits rather than disability benefits.

0.01 (b) 0.02 (b)

69 Provide retroactive benefits at 50% of full benefit for months of entitlement before 

application; at 100% of full benefit for months between application and award

0.02 0.02 0.02 0.02

70 Time limit benefits to 2 years for beneficiaries with medical improvement expected 

(MIE); reapplication required if disability continues 0.01 0.01 0.01 0.01

71 Allow disabled individuals at age 60 to waive the “recency of work” requirement in 

exchange for accepting an EEA-level benefit if awarded -0.01 -0.01 -0.01 -0.01

72 Require private disability insurers to rebate 10% of their DI benefit offset to the DI 

trust fund, for all policyholders whose disability begins under a policy issued or 

renewed after enactment of this proposal

0.02 0.02 0.02 0.02
SSDI Reform Options for "SSDI Solutions Initiative"

PRELIMINARY Estimates (b) Effect is less than 0.005 percent of payroll.

All estimates based on intermediate assumptions of 2015 Trustees Report

Proposal DI OASDI DI OASDI

Change in Actuarial Balance Change in 75th Yr Ann Balance

(% of taxable payroll) (% of taxable payroll)

73a

Reform ALJ process: Require that any evidence the claimant wants considered at ALJ 

hearing be submitted 5 days before hearing (good-cause exception to be interpreted 

narrowly); evidentiary record established at time of initial ALJ determination remains 

closed through rest of appellate process; require claimant reps to submit all evidence 

incl. unfavorable (penalty for non-compliance); end reimbursements for attorney 

travel; fill ALJ vacancies with AJs

0.01 0.01 0.01 0.01

73b

Reform ALJ process: Require that any evidence the claimant wants considered at ALJ 

hearing be submitted 5 days before hearing; require claimant reps to submit all 

evidence incl. unfavorable (penalty for non-compliance); end reimbursements for 

attorney travel; fill ALJ vacancies with AJs

(b) (b) (b) (b)

74 CCD benefit offset: $1 for $2 earnings over TWP trigger, no TWP, no EPE, no 

termination for work; for those newly eligible 2017 and later.

(http://www.c-c-d.org/fichiers/CCD_Final_Benefit_Offset_Proposal.pdf) 

-0.04 -0.04 -0.04 -0.04

Office of the Chief Actuary, SSA April 4, 2016

~~Create staff attorney positions that will immediately be assigned case files from DDS appeals and can fast-track worthy cases, gather evidence, communicate with 

claimants or their representatives, ensure that case files are complete before hearing and request continuances of the hearing date, if necessary. The staff attorney will also 

appear in the hearing on behalf of the government and be permitted to cross-examine the witnesses. To avoid higher costs, also revise the representative payment rules to 

make clear that the hearing before an ALJ is not subject to the Equal Access to Justice Act, which prescribes higher fees for a victorious representative in an adversarial 

setting such as federal court.

~Adjust all civil monetary penalty maximums for inflation by increasing them w/ price growth from the last time each was adjusted and indexing them annually going 

forward; create a new specific felony for conspiracy to commit Social Security fraud, punishable by up to 5 years in prison , fines generally up to $250,000, or both; 

Increases the maximum Civil Monetary Penalty (CMP) that the SSA can levy against individuals in a position of trust from $5,000 to $7,500 for each false statement, 

representation, conversion, or omission the individual makes or causes to be made and increase the maximum felony penalty from 5 to 10 years; Establishes a new CMP, up 

to $7,500, for claimant representatives who knowingly charge or collect from claimants fees in excess of allowable amounts. Representatives who do so are also subject to 

an assessment of up to twice the amount of benefits received.

**Require the IG to increase number of CDI units to 54 (one in each state and territory) by 2016, provide mandatory CDI funding of $50 million in 2016 and index to benefit 

costs.

^^Enact Section 102, 103, and Title II of the "Stop Disability Fraud Act" (http://waysandmeans.house.gov/uploadedfiles/stop_disability_fraud_act_of_2014_provisions.pdf). 

Clarify in the Social Security Act that all evidence that is relevant to a determination of whether or not a claimant is disabled must be submitted to an ALJ, whether 

unfavorable or favorable. Require claimant and/or representative to certify prior to hearing that all known relevant medical evidence has been submitted to the ALJ. Make 

clear that any violation of this provision is subject to the civil (fine and assessment of benefits) and criminal (up to 5 years imprisonment) penalties prescribed in the Social 

Security Act, 42 U.S.C. §§ 1320a-8 and 408 for omission of material facts. Further clarify the Social Security Act to clearly include loss of privilege to practice before SSA for 

claimant representatives found to have violated this provision. Permit ALJs to request SVTs and institute training for reading, interpreting and applying the test results.