Recent Changes in Social Security
There is a partisan attack on Social Security Disability recipients in this country and it is having fallout for our clients. There is a perceptible chill running through the Social Security Administration. The federal government sequester resulted in the laying off of personnel in the fall of 2013. Judges who have paid a higher percentage of cases than others have been called to testify before congress. (We note that judges who pay a substantially lower percentage do not get called to testify.) The Associated Press reported on June 10, 2014 that in 2013 judges approved 56 percent of the cases they decided, down from 72 percent in 2005, a decrease of 16 percent.
An even more dramatic change has been that the Social Security Administration has reassigned legal advisers who were reviewing cases to see if they could be paid without a hearing to writing post-hearing decisions. The result has been that, at least temporarily, the payment of cases without a hearing has ground to a halt in this region. We are seeing cases that never would have gone to hearing in past years go in front of a judge. We can still get compassionate allowance cases (a list of diseases – primarily cancers) reviewed early, but nearly everything else is going to hearing.
There may be some good come from this. In the January 2014 Newsletter we wrote about unethical practices by companies who purported to represent claimants who solicit “easy” Social Security cases over the internet. They abandon claimants that have cases that need a hearing or worse, assign cases to unprepared attorneys. These companies will not be able to survive in this environment. We have already heard of such internet groups laying people off. Our office has never done these things.
Our results are significantly higher than the 56 percent cited above, but that is not surprising. Everyone who comes to see us meets in person with an attorney first thing. We advise people who shouldn’t apply; not to apply, or to withdraw their application if they have already applied. An example of this would be people who are working. Some people think they can work until Social Security deems them disabled!
We also prepare people for hearings. Sometimes we do advise people not to proceed with their hearing. The reason for this is because if we know the case is going to be lost, it can make things more difficult for clients down the road. In the law, we apply the principle of Res Judicata which is just Latin for “the matter has been decided.” A person can be barred from raising an issue that has been previously adjudicated. Many of our clients have chronic problems that are going to get worse. It is best not to make the future road more difficult. This is not to say that we only take cases to hearing that we are certain to win, but when a denial is a foregone conclusion, we must give the client our best advice.
If you are a health care professional or social worker, please let your clients know that these changes in Social Security are real. No matter how sick or injured they are, they are probably going to have to go to a hearing. The judge they are going to appear in front of has his decisions monitored in a statistical fashion. It is crazy, but if a judge has 100 cases in a row of claimants with advanced cancers, the judge is going to be pressured to deny some of them. The odds of having to appeal a case to the federal district court is much higher. No one wants fraudulent claims paid, but the fact is good people are suffering in the over-reaction to political attacks.
The Self-Employment / Pay No Taxes Trap
A week doesn’t go by that we don’t see clients with questions about Social Security Disability Insurance (SSDI) who do not qualify because they have not paid into the Social Security system. Self-employed farmers, construction workers, truck drivers, or other small business owners are seldom advised about what it takes to build up credits with the Social Security Administration for disability. Social Security Disability Insurance is like every other type of insurance – you must have paid the premium!
Whether a person prepares his or her own tax returns, or has a CPA or other tax preparer complete them, the primary goal of most people is to pay as little or no tax at all. But income tax and self-employment tax are two very different things. At the time this was written (July 2014) a person must show earnings of at least $1200 per quarter to earn one credit, or $4,800 for the year to earn the maximum of four credits. Currently, self-employment tax (for Social Security and Medicare) is at 15.3 percent. Depending on filing status, single, married or with children, there may be little or no income tax on profit of $4,800. But by paying in a few hundred dollars of self-employment tax, a person establishes some very important rights with the federal government.
To be insured for SSDI, you must have earned and paid in self-employment taxes or FICA in five of those 10 years, or more specifically 20 out of 40 quarters. (For young people, the number of credits is reduced to 6 before age 24, and 12 for those between 24 and 31.) However, no matter how sick you are, if you have not paid in the appropriate number of credits, you will not be eligible to draw SSDI or Medicare.
Another issue we see frequently is spouses who have operated a farm or business together, but have only attributed the income to one spouse (typically the husband.) Thus a wife who has worked for years, and becomes ill, may not be eligible for disability simply because of the way the couple’s taxes were prepared. It is possible to amend and re-file tax returns going back 3, or possibly 5 years to cure some of these problems, but it can be an accounting nightmare. The best thing to do is think about these issues before someone gets sick and pay in the taxes before it becomes necessary to draw benefits. When you think of Social Security Disability, remember it is a form of insurance. You need to pay the premium.