The Social Security Administration (SSA) is giving your clients who live in Missouri a new reason to consider buying individual disability insurance: an extra step in the already long, stressful Social Security Disability Insurance (SSDI) claim determination process.
Starting in January, the SSA intends to require an SSDI claimant in Missouri who objects to an initial claim rection to go through a reconsideration process before asking for a face-to-face appeal hearing.
The SSA has been requiring SSDI claimants in most states who want to appeal initial benefits request rejections to seek a determination reconsideration before applying for a face-to-face hearing.
The new change means that Missouri SSDI claimants will face the same kinds of appeal hassles that applicants in most other states face.
The SSA has also been exempting SSDI claimants in Alaska from the reconsideration step. The agency plans to bring the reconsideration step back in Alaska in March.
The agency has brought the reconsideration step back in eight other states since January: Alabama, California, Colorado, Louisiana, Michigan, New Hampshire, New York and Pennsylvania.
Mike Stein, an SSDI specialist at Allsup Inc., a Belleville, Illinois-based company that helps people with the SSDI application process, said in a commentary on the return of the SSDI determination reconsideration step that it could make many people facing serious disabilities wait an additional three months to six months to get through the full SSDI appeals process.
For people who are eligible for the benefits, and really need the benefits, the additional waiting time could be extra painful, because the average amount of time people need to get through the full review process is already about 500 days, Stein said.
The SSDI Disability Redesign Prototype Program
Workers pay for SSDI coverage through payroll taxes.
The program is paying disability benefits to about 8.5 million disabled workers, and to about 1.6 million spouses and children of disabled workers.
The program is of keen interest to insurers that sell disability insurance, and to employers that offer disability benefits, because most group disability plans have benefits that wrap around any SSDI benefits that workers are getting. The plans promise eligible workers will end up with a a certain amount of public and private benefits. Those plans subtract the SSDI monthly benefits payments from the private plan benefits amounts.
Some disability insurance issuers and plan sponsors hire Allsup or other companies to help workers through the SSDI claim determination process, in part because qualifying for SSDI helps workers get Medicare coverage, and in part to minimize the plans’ own net spending on benefits payments.
SSDI is also of keen interest to agents who help people buy individual disability insurance, because many clients have a vague sense that the government provides disability benefits. Financial professionals need to educate those clients about the limitations of the SSDI program, and about the long, complicated SSDI claims process.
The reconsideration process was part of the SSDI appeals process before 1997.
In 1997, SSA officials decided to try testing the effects of eliminating that step, as part of the agency’s Disability Redesign Prototype Model program.
The SSA began eliminating the reconsideration step for SSDI claimants in 10 prototype states starting in 1998. The change meant that, in the 10 prototype states, claimants who wanted to appeal benefits claim rejections could simply jump to the face-to-face hearing process.
The Return of Reconsideration
Kathryn Olson, a Democratic staffer on the House Ways and Means Social Security subcommittee, argued in November 2018, at an SSA National Disability Forum, that the reconsideration step is a seriously flawed step in the SSDI appeals process.
“Only 12% of prior decisions are overturned at reconsideration,” Olson said in a presentation slidedeck.
She reported that, once cases get to the face-to-face hearing level, administrative law judges overturn about half of the claim rejections.
SSA officials aren’t defending the idea that the reconsideration step adds much value to the claim determination process.
SSA officials say, in an explanation of the phaseout of the 10-state reconsideration reprieve, they’re bringing the reconsideration step back in the 10 prototype states because Section 832 of the Bipartisan Budget Act of 2015 requires the SSA commissioner to include qualified physicians, or qualified psychiatrists or psychologists, when behavioral claims are involved, in all initial disability determinations.
In the prototype states, the disability examiners who provided the initial determinations have been making many of the determinations without help from doctors, psychiatrists or psychologists, officials said.
That means, to meet the statutory claim review requirements, the SSA has to bring back the reconsideration step, officials said.
— Read The Early Retirement Your Clients Didn’t Plan For, on ThinkAdvisor.