Since the Great Recession of 2008, there has been a spike in claims for Social Security disability income (“SSDI”) benefits and unemployment
Since the Great Recession of 2008, there has been a spike in claims for Social Security disability income (“SSDI”) benefits and unemployment benefits, as unemployed workers searched for alternate sources of income. Not only were injured workers filing claims for SSDI benefits for wage loss, it also provided them with an avenue for entitlement to Medicare, since a person is entitled to Medicare benefits after receiving SSDI benefits for twenty-four (24) months. Therefore, a claim for SSDI benefits can provide an injured worker with a source of income, as well as entitlement to health care benefits in the form of Medicare. Even with more recent unemployment numbers leveling off, many people believe this reflects workers leaving the work force and funneling into other programs, such as SSDI benefits, rather than a true decline in unemployment numbers. According to an article in the Wall Street Journal on April 8, 2013, between December 2007 and June 2009, the number of Americans receiving Federal disability benefits grew from 7.1 million to 7.6 million. In March 2013, these numbers reached 8.9 million, which represents 5.4% of the civilian workforce ages 25-64, as compared to 1.7% of the U.S. workforce in 1970.
Several factors can account for the drastic rise in SSDI claims. Specifically, as more people were unemployed, they were looking for alternative sources of income. It also provides an avenue for eventually obtaining Medicare benefits after receiving SSDI benefits for two years. Many people attribute an aging workforce, such as the Baby Boomers, for the spike in SSDI claims. However, it should be noted that other factors are a relaxation of the eligible criteria for SSDI benefits, which occurred when the Social Security Disability Benefits Reform Act was enacted in 1984. Specifically, the SSDRA instructed the government to place greater weight on an applicant’s subjective complaints of disability, including pain. It enabled applicants to prevail on a claim for SSDI benefits with essentially subjective complaints. According to one NPR investigation, in 1961, mental illness and back pain accounted for 9.6% and 8.3% of the share of the SSDI claims, respectively. By contrast, in 2011, back pain and musculoskeletal problems accounted for 33.8% of disabled workers’ diagnoses, and mental illness claims accounted for 19.2% of the SSDI claims. Both musculoskeletal conditions and mental illness claims are diagnoses which can be greatly influenced by subjective complaints. Further, according to the Department of Health and Human Services, the estimated number of people without health insurance in 2011 was 48.61 million, with 84.3% of those being over the age of 19. Without a job or health insurance, an injured worker can look to SSDI as a path to receive Medicare, and therefore, medical treatment, in the future.
Despite the fact that the unemployment rate has been remaining relatively steady in 2013, in the range of 7.4% to 7.7%, it is quite possible that we could continue to see a rise of SSDI claims as more people opt out of the workforce entirely. In addition, in July 2013, the American Medical Association officially declared obesity to be a disease. The CDC estimates that one-third of all American adults (35.7%) are obese. With obesity now being officially characterized as a disease, this could certainly increase the number of people who are approved for SSDI benefits, based on obesity alone, as well as other co-morbidities which accompany obesity, such as hypertension, diabetes, and osteoarthritis.
What Impact Does This Have On Georgia Workers’ Compensation Claims?
In Georgia, a catastrophic designation is defined by statute. Specifically, O.C.G.A. § 34-9-200.1(6)(A) states that an injury may be deemed catastrophic if it is of a nature and severity that prevents the employee from being able to perform his or her prior work and any work available in substantial numbers within the national economy for which the other employees otherwise qualify. The Administrative Law Judge is permitted to give consideration to all relevant factors, including whether the claimant has been granted or denied SSDI benefits, but no presumption is created by any decision granting or denying SSDI benefits. Clearly, if more people are approved for SSDI benefits, the more evidence claimants will have in arguing that their claims are appropriate for catastrophic designations. Of course, if a claim is deemed catastrophic, the employer/insurer’s costs and exposure rise significantly.
Additionally, an application for SSDI can have a very complicated and adverse impact on the settlement of a workers’ compensation claim. Medicare’s interests must always be considered when discussing settlement of a workers’ compensation claim. Pursuant to CMS policy memos, a Medicare Set-Aside (“MSA”) arrangement and CMS approval are necessary if a claimant is Medicare-eligible at the time of settlement and the total settlement value is $25,000 or greater. A MSA is also needed if there is a “reasonable expectation” that the claimant will be Medicare-eligible within thirty months of settlement and CMS approval is needed if the anticipated total settlement value for future medical expenses and disability/lost wages over the life of the settlement are expected to exceed $250,000. If a person has applied for SSDI benefits and a decision is anticipated relatively quickly, there is the possibility that the claimant could be Medicare-eligible within thirty months of settlement, as the person would be entitled to Medicare after receiving SSDI benefits for two years. Further, SSDI decisions are often back-dated for the date of eligibility to be the date of the work injury. Therefore, frequently, when a decision regarding SSDI eligibility is made, the claimant will already be entitled to Medicare benefits based on a retroactive start date. This will then trigger the need for the MSA to be submitted to CMS for approval, which can frequently complicate or preclude settlement, depending on the future medical treatment recommendations. Additionally, the need for a MSA can also delay settlement unless the parties have agreed to submit the settlement to the State Board of Workers’ Compensation for approval prior to CMS approval of the MSA. Even though CMS has sped up the process for approving MSAs, obtaining the necessary documentation and submitted the MSA for approval to CMS will extend the life of the claim by at least several months. One way to avoid this situation is to use an “opt out” provision in the Stipulation And Agreement, allowing the employer/insurer to keep medical care open if the amount recommended by CMS is prohibitively high, although not all injured workers will agree to this scenario.
The Great Recession prompted many injured workers to seek alternative sources of income, including applying for Social Security disability income benefits. Even with a return to a lower level of unemployment, we are still likely going to see an increase in SSDI claims due to the aging working population, as well as other factors, such as an increase in the scope of diagnoses to support a determination of SSDI. Further, the AMA’s characterization of obesity as an official disease will likely result in an increase of approval of SSDI claims, which, in turn, could complicate the workers’ compensation claims process. As we see additional claimants being approved for SSDI benefits, we will see an increase in the need for MSAs and submission of MSAs to CMS for approval. We will also see more claims requesting a catastrophic designation using the SSDI award as evidence of same. This will result in additional claims expense and files remaining open for a longer period of time.
Of course, a claimant’s attorney does not receive any attorney’s fees out of any portion of a settlement which is set aside in a formal MSA or informally allocated in settlement documents. This is also money that is not “put in the claimant’s pocket.” Since an application for SSDI benefits can delay or even prohibit settlement of a claim, it is advantageous for all parties if an injured worker does not plan to apply for Social Security disability income benefits until several years after the workers’ compensation claim is resolved.