Changes in how the Social Security Administration (SSA) processes claims for Social Security Disability Insurance (SSDI) could soon cause new headaches for group disability plans — and for the financial professionals who sell, service and administer the plans.
Witnesses talked about the looming SSDI claim determination changes Wednesday, at a hearing organized by the House Ways and Means Social Security subcommittee.
One big change is a new set of final SSA regulations affecting the claim representatives who help some SSDI claimants get through the long, complicated claim determination process. The new regulations were published in the Federal Register July 2 and are set to begin taking effect Wednesday.
The other change is a new executive order calling for the president to be responsible for hiring SSDI judges and other federal administrative law judges, outside of the regular civil service hiring rules. President Donald Trump issued the order because of a 6-3 ruling the Supreme Court issued in June, in connection with Lucia v. SEC. The court majority found that the process the federal government has been using to hire many kinds of administrative law judges, including the judges who handle SSDI claim determinations, was unconstitutional.
The changes are of interest to the employers, brokers, consultants, plan administrators and insurers in the U.S. group disability insurance market.
How SSDI Works
The SSDI program pays an average benefit of about $1,200 per month to about 8.7 million workers who are classified as disabled. It also pays an average benefit of $366 per month to the families of 1.6 million children of workers who are collecting SSDI benefits.
Once a worker with group disability coverage files for private plan benefits, the group disability plan may hire a claim representative to apply for SSDI benefits. Qualifying for SSDI benefits can give the worker access to another, critical benefit: a chance to sign up for Medicare coverage, after two years of becoming eligible to receive SSDI benefits.
Many group disability plans are designed to wrap around the SSDI benefits. After the worker begins collecting the SSDI benefits, the private group disability plan deducts the SSDI benefit amount from the monthly amount the private plan pays the worker.
From the perspective of private disability insurers, and employers with self-insured disability plans, any SSDI changes that cut down on the percentage of disabled workers who succeed at qualifying for SSDI benefits could drive up claim costs, by reducing the SSDI benefits offsets.
Witness: Executive Order Effects Could Be Modest
One witness, Patricia Jones, an SSA deputy commissioner, testified that SSA is still evaluating the implications of the Lucia and the new executive order.
Another witness, Ronald Cass, the former dean of the Boston University law school, who serves on the council of the Administrative Conference of the United States, focused on the effects the Lucia v. SEC order and on the Trump administration’s executive order.
Cass testified that the effects of the Lucia ruling are likely to be modest.
The Lucia ruling requires that “inferior officers” of the United States must be appointed by the president, by heads of federal departments, or by courts of law, Cass said, according to a written version of his testimony posted on the House Ways and Means website.
The new executive order will give department and agency heads, including the SSA head, the flexibility in pay and hiring procedures they need to hire good, efficient judges, Cass said.
Agencies have a wide range of options for insulating administrative law judges from other officials, Cass said.
Witness: Executive Order and Claim Rep Regs Could Hurt
Lisa Ekman, a staff member at the National Organization of Social Security Claimants’ Representatives, who testified on behalf of the Consortium for Citizens with Disabilities Social Security Task Force, testified that she believes the executive order and the new claim reps’ regulations could both have a big impact.
The new executive order “changed the hiring process for [administrative law judges] (ALJs) in agencies governmen-twide from a merit-based system to a political one, threatening the qualified judicial independence of these judges as is envisioned in the Administrative Procedures Act,” Ekman said in her written testimony.
Today, the only qualification an individual must have to become an SSDI administrative law judge is a license to practice law, Ekman said.
New administrative law judges with little SSDI experience “might feel compelled to decide matters before them in a manner preferred by the appointing agency, rather than in a neutral way that best applies the relevant provisions of the Social Security Act,” Ekman said.
SSA officials appear to be developing guidance for hiring new administrative law judges under the terms of the executive order, but it’s not clear whether any additional qualifications will be required, or whether the new ALJs will have to have much knowledge of the administrative process or experience with hearings, Ekman said.
Ekman said the tone of the new SSDI claim reps’ regulations could also cause problems.
The new regulations “treat representatives as untrustworthy adversaries in a process where both the claimant and SSA should be working together to ensure that the correct decision is reached as expeditiously as possible,” Ekman said.
One provision, for example, could limit reps’ ability to advise claimants about getting medical treatment, Ekman said.
“Many claimants have no information about available medical clinics or treatment and look to their representatives for guidance,” Ekman said. “Should that provider become a source of opinion evidence, the new rules require representatives to disclose to SSA that they suggested the claimant seek treatment, likely tainting that evidence in the eyes of the adjudicator.”
The new regulations also create vague, new and unnecessary liability exposure for the claim reps, Ekman said.
A collection of hearing resources, including a video recording of the hearing, and the written versions of the witnesses’ testimony, is available here.
— Read GAO: Public SSDI claim help mostly a mystery, on ThinkAdvisor.