Disability claims surge

More apply because of weak economy, high unemployment

Even suffering from neuropathy, arthritis, bone spurs and diabetes, Brenda Raines was determined to keep working as a secretary for a Douglasville hospital. Then she got laid off in 2009, and after six months of job searching she listened to family and friends and applied for Social Security Disability Insurance.

“The economy helped me realize people are not going to hire me now,” said Raines, 59.

Claims for Social Security Disability Insurance in Georgia and in the U.S. surged in the last three years, and experts say the weak economy is a major reason.

Initial claims in Georgia jumped from 86,973 in the 2008 fiscal year to 104,251 in 2009, and to 119,946 in the 2011 fiscal year, according to the Social Security Administration.

Nationwide, the number of initial disability claims rose from about 2.6 million in the 2008 fiscal year to 3.16 million in the 2011 fiscal year. Claims had been basically flat at both state and national levels in the years just before the downturn.

“I do think the economy has had a dramatic impact,” said Charles Martin, partner in Martin and Jones, a disability law firm in Decatur. “From what it does to a [disabled] worker who doesn’t see as many prospects for a job, to employers being not as willing to take a chance hiring them.”

Filing for disability might now offer the best option for people who in better times would continue working, or continue looking for work, experts said. In better economic times, Martin said, some who might have qualified for Social Security disability work despite health problems because job income pays far better.

In the last three years, however, with unemployment rising, some people who lost their jobs may have viewed the insurance program as a potential financial backstop.

There is a pattern of disability claims rising during downturns in the economy, said Andrew Houtenville, associate professor of economics and research director of the Institute of Disability at the University of New Hampshire.

“You do always see a rise in claims during recessions,” he said. “This is nothing new.”

The aging population and an increase in workers covered under the Social Security Disability Insurance program — 153 million in 2011, up from 138 million in 2000 — also are pushing up claims.

In 2010, about $115 billion was paid to disabled workers, up from about $98 billion in 2008. The amount of benefits threatens the disability program which, with the retirement program, makes up Social Security. A proposal to take money from the struggling retirement program to prop up disability, which is running a deficit, is one potential short-term solution.

About two-thirds of those who file for disability are at first rejected, a rate that has stayed about the same over the years. Many applicants go on to try and prove that they meet the tough disability standard: They can’t work because they have a medical condition that is expected to last at least 12 months or result in death.

A disability payment is no gold mine, experts point out. Amounts depend on how much a person paid in over the years through the Social Security payroll tax. The average monthly payment in September was $1,070. Currently, about 8.5 million people receive Social Security disability benefits.

Mike Stein, assistant vice president of operations for Allsup, a national company that represents people in the claims process, said, “It takes a long time, and the monthly benefits are low.” On average, beneficiaries have annual income of less than $13,000, he said.

Raines, who was represented by Allsup, was awarded benefits in April and receives about $1,000 a month. Half goes for medical insurance.

“It’s not a walk in the park,” she said.

An individual can be employed and still collect disability, but the person would be allowed to earn only a small amount on the job or he’d be ineligible for benefits.

Allsup screens people considering filing for disability using Social Security eligibility guidelines, and represents those who clearly qualify for benefits. Allsup collects a one-time retroactive fee set by the Social Security Administration from those who eventually are awarded benefits. It does not collect a fee if the person filing a claim is not awarded benefits.

The number of people contacting the firm to inquire about their chances has soared. Stein said Allsup tries to dissuade those without a strong case, especially if they are still working.

“When they start by saying, ‘Well, I’m working right now,’ I stop them and tell them to do everything you can do to keep working.”

Advocates say the disabled generally do want to get back to work and that they will go back if the jobs return and their health allows.

“As the economy gets better, fewer people will apply,” Martin said. “And those on disability will go back to work simply because they can.”

A closer look at claims

FY 2008

FY 2011

Georgia

86,973

119,946

U.S.

2.6 million

3.16 million

● Payouts totaled $115 billionin 2010 vs. $98 billion in 2008.

● Average monthly payment is $1,070; average annual income of recipient is less than $13,000.

● About 8.5 million receive Social Security disability benefits.