It seems inappropriate to require the taxpayer to pay for a public assistance benefit where a person has private insurance and may not even qualify for Social Security. Thus far, the states have shown little interest or have been ineffective at combatting this practice. This leaves the Social Security Act or the Employee Retirement Income Security Act of 1974 (ERISA), which most employees derive their benefits from, to be amended and updated to curb this practice. Here are three suggested reforms that could be added to those statutes:

A disability insurer could not require a disabled employee to file a claim for Social Security Disability benefits any earlier that the first 36 months of continuous disability unless the employee wishes to do so voluntarily.
A disability insurance company would not be permitted take an offset for Social Security for any period where the insurer denied a claim for disability benefits; and
If a private disability claim in “approved” status is later terminated and then reinstated, no Social Security offset could be claimed for any period where the private contract benefits were not paid.

The savings are real

Over time, the savings from these reforms could be considerable. The latest Social Security disability program statistics are reported using the year 2023. According to the SSA, in 2023, there were 8.7 million people collecting some form of disability payment (i.e., disabled workers, spouses, and children). Not counting the payment of supplemental benefits, the SSA was paying out $12.7 billion (the equivalent of about $39 per person in the U.S.) in benefits annually. Also, this figure did not include any payments of Medicare medical benefits which are awarded following a finding of total disability. A mere 3% decrease in forced early applications might save as much as $381 million a year; a 5% decrease, $635 million a year.

Instant Insights /

Serious about cutting federal spending? Here’s an easy one—no chainsaw needed

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