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HSFPP Weekly Update # 27

Message from Flashman: Disability insurance is not a hot topic that most high school students think about or associate with Social Security; so this might be a good time to talk about the history of Social Security and its potential importance to young people who could become disabled at a young age and find themselves unable to work. All the talk in the media is about Social Security and whether it will still be around when today’s young people reach retirement age. However, Social Security does more than provide for people’s retirement needs, as the following article in the September 2, 2002 New York Times points out:

Student Activity:

Topic: Social Security Disability Insurance

Source of information that follow: Laid-Off Workers Swelling the Cost of Disability Pay
By LOUIS UCHITELLE:

http://www.nytimes.com/2002/09/02/business/02INSU.html

Millions of workers have turned to Social Security disability insurance over the years, doubling the benefit's cost to taxpayers and, with surprisingly little attention from politicians and the general public, making it easily the federal government's biggest income-support program.

According to the N.Y. Times (September 2, 2002), the number of people receiving Social Security disability insurance has “grown to 5.42 million today from 3 million in 1990, swelling the program's costs to $60 billion last year. That far surpasses unemployment insurance or food stamps or any other entitlement programs.”

Disability insurance this year will cost $69 billion, according to the Social Security Administration. “By comparison, the agency expects to pay out $382 billion in traditional old-age pensions.”

Three quarters of all people on disability pay have at most a high school diploma. The New York Times article discusses Gregory Jordan, a 51-year-old former dockworker in Long Beach, California, who, five years ago, suffered a disabling injury that ended his career.

"In telling his story to a reporter, Mr. Jordan recounted the case he made to disability officials to justify his claim: six back operations, constant use of pain killers, nerve damage affecting his arms, hands and legs. With only a high school education, his opportunities away from the docks in work that did not require physical exertion were limited. Still, disability evaluators, following Social Security guidelines, at first determined that jobs were available commensurate with his skills.

“‘They told me I could work at telemarketing or sitting at a desk all day answering telephones,’ Mr. Jordan
said…. ‘No employer is going to hire me and take on the liability that I represent … I can't stand very long, I
can't sit very long. If I go anywhere I have to use a wheelchair.’”

“Mr. Jordan took his case to an administrative law judge,” who reversed the previous decision denying his claim for disability pay. “About 40 percent of all disability awards come on appeal, actuarial studies have found.” Seventy percent who file for Social Security disability are denied.

“Sitting or standing: those are crucial in judging whether a claimant, particularly one with little education, can ‘engage in a substantial gainful activity.’ If the person can demonstrate that because of an ailment or the pain it produces, he or she can no longer sit for six hours in an eight-hour day or stand for at least two, then that person is deemed disabled.”

Class discussion items:

1. Did you realize that Social Security also pays disability benefits for millions of Americans? What else does Social Security pay for?
2. Should we make Social Security only a retirement plan and eliminate other benefits, such as disability payments for those who can no longer work, and benefits for spouses and children whose spouse/parent dies at a young age, as well as supplemental security income? Why or why not?
3. Should the criteria for disability be raised or lowered? Why or why not?

Web Site of the Week:

http://www.ssa.gov/

This is the official Web site of the Social Security Administration. The information on this site will assist students in understanding what Social Security is all about. The following page on their Web site gives comprehensive information on the history of Social Security:

http://www.ssa.gov/history/history.html

Kentucky High School Financial Planning Website:

http://www.ca.uky.edu/fcs/hsfp

The purpose of this Web site is to assist county extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers
in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.