Aging in America News

| Proposed Changes Could Cut Off Half a Million Older Workers

| Liz Seegert

| The Social Security Administration is proposing regulatory changes that could dramatically restrict access to disability benefits for hundreds of thousands of Americans, particularly workers over age 50 who develop serious health conditions late in their careers.

A September report from the Urban Institute found that the forthcoming rule could reduce eligibility for Social Security Disability Insurance by as much as 20% overall, and up to 30%  among older age groups. Even under a more moderate model that reduces eligibility by just 10%, roughly 500,000 people would lose SSDI benefits over the next decade, including 80,000 widows and children who depend on those benefits. 

Social Security Disability Insurance is designed to help older workers with significant physical or mental impairments before they reach full retirement age. Age has long been considered a limiting factor when considering eligibility. Supplemental Security Income (SSI) provides crucial income support to retirees, and children and adults with severe disabilities who earn little or no income, and have no assets.

“This is the most significant change to the SSDI and SSI programs to date,” said report author Jack Smalligan, senior policy fellow at the Urban Institute. The changes would result in approximately $82 billion in denied benefits over 10 years, along with reduced access to Medicare and Medicaid coverage. Loss of health insurance is a particularly troubling prospect for a population with serious medical challenges.

The regulatory overhaul centers on three key elements: replacing outdated occupational data from the 1990s, establishing new thresholds for determining disability eligibility, and reducing the emphasis given to age in eligibility decisions.

While there’s bipartisan agreement on modernizing the Dictionary of Occupational Titles with current Bureau of Labor Statistics data, it’s the implementation of eligibility that’s raising red flags. The proposed changes would substantially alter how Social Security evaluates whether older workers with disabilities can find alternative employment, according to Tracey Gronniger, managing director of economic security and housing at Justice in Aging.

“We shouldn’t be making it more difficult for people who are eligible to get benefits,” she said. “This really feels like an older adult issue in a very specific way. The target here is older people.”

“The target here is older people.”

–Tracey Gronniger, Justice in Aging

The timing is particularly concerning given existing challenges in the disability system. According to the Urban Institute analysis, two-thirds of initial claims are currently denied, though roughly 44% of people who appeal ultimately receive benefits. However, that can often take months or even years of waiting. There’s currently a backlog of nearly 1 million claims at the initial review stage, roughly double pre-pandemic levels.

Lifelong benefit cuts

Research shows that denied applicants rarely return to work and experience devastating economic consequences. Among people age 50 and older denied at later stages of review, only 10 to 20% are working five years later, compared to 85 to 95% who worked before their disability. Disability approval reduces bankruptcy risk by 20%, foreclosure by 33%, and forced home sales by 15%, said Smalligan. For older workers denied benefits, the consequences extend beyond immediate financial hardship.

Unable to work but ineligible for disability benefits, many are forced to claim Social Security retirement benefits at age 62—the earliest eligibility age—resulting in permanently reduced monthly payments 30% lower than they would have received had they waited until full benefit age. But, without SSDI, there are few, if any, other options. Denial of SSDI can also impact eligibility for Medicaid, SNAP, and other safety-net programs, he added.

Smalligan noted that the changes would hit already-vulnerable populations hardest.  Among workers age 62 to 65, 27% of non-Hispanic Blacks, and 26% of Hispanics  reported health-related work limitations, compared with 19% of non-Hispanic whites. Lower-wage workers who perform manual labor face particular risk.

“It’s discriminatory,” Gronniger said. “The rules benefit a more affluent, educated workforce who have savings and assets, or who can work certain jobs for longer. They’re not thinking about the firefighter, the nurse, the stock person—people in our economy doing really important jobs that are not easy and may result in legitimate need for SSDI.”

The policy push reflects arguments by former Trump administration officials like Mark Warshawsky, who contends that increased longevity justifies reduced disability eligibility. However, gains in life expectancy are uneven and concentrated among higher-income workers, while lower-wage workers continue to face high disability rates.

“Social Security is set up as social insurance, not just for retirement, but for disability,” Smalligan emphasized. “This is as fundamental an entitlement as a person’s retirement benefit.”

During the 1980s, the Reagan administration made a similar attempt to restrict disability eligibility. Court decisions and congressional action ultimately reversed the changes and expanded program protections. Whether today’s political climate will produce similar pushback remains uncertain, according to the Smalligan.

The proposed rule is expected in the coming months, followed by a public comment period. Smalligan noted he released his analysis early, specifically to allow stakeholders time to weigh in before the regulation is finalized.

Liz Seegert is an independent journalist covering aging, women’s health, policy, and related issues. She is based in New York’s Hudson Valley.