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Disability Fund Shows Strong Improvement—Twenty Years

The Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security trust funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) trust funds are projected to become depleted in 2035, one year later than projected last year, with 80% of benefits payable at that time.
The OASI trust fund is projected to become depleted in 2034, the same as last year’s estimate, with 77% of benefits payable at that time. The DI trust fund is estimated to become depleted in 2052, extended 20 years from last year’s estimate of 2032, with 91% of benefits still payable.
In the 2019 Annual Report to Congress, the trustees announced:

  • The asset reserves of the combined OASI and DI trust funds increased by $3 billion in 2018 to a total of $2.895 trillion.
  • The total annual cost of the program is projected to exceed total annual income, for the first time since 1982, in 2020 and remain higher throughout the 75-year projection period. As a result, asset reserves are expected to decline during 2020. Social Security’s cost has exceeded its non-interest income since 2010.
  • The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2035 – gaining one year from last year’s projection. At that time, there would be sufficient income coming in to pay 80% of scheduled benefits.

“The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them,” said Nancy A. Berryhill, acting commissioner of Social Security. “The large change in the reserve depletion date for the DI fund is mainly due to continuing favorable trends in the disability program. Disability applications have been declining since 2010, and the number of disabled-worker beneficiaries receiving payments has been falling since 2014.”
Other highlights of the trustees’ report include:

  • Total income, including interest, to the combined OASI and DI trust funds amounted to just over $1 trillion in 2018. ($885 billion from net payroll tax contributions, $35 billion from taxation of benefits and $83 billion in interest)
  • Total expenditures from the combined OASI and DI trust funds amounted to $1 trillion in 2018.
  • Social Security paid benefits of nearly $989 billion in calendar year 2018. There were about 63 million beneficiaries at the end of the calendar year.
  • The projected actuarial deficit over the 75-year long-range period is 2.78% of taxable payroll – lower than the 2.84% projected in last year’s report.
  • During 2018, an estimated 176 million people had earnings covered by Social Security and paid payroll taxes.
  • The cost of $6.7 billion to administer the Social Security program in 2018 was a very low 0.7% of total expenditures.
  • The combined trust fund asset reserves earned interest at an effective annual rate of 2.9% in 2018.

The board of trustees usually comprises six members. Four serve by virtue of their positions with the federal government: Steven T. Mnuchin, secretary of the treasury and managing trustee; Nancy A. Berryhill, acting commissioner of Social Security; Alex M. Azar II, secretary of health and human services; and R. Alexander Acosta, secretary of labor. The two public trustee positions are currently vacant.
View the 2019 Trustees Report at www.socialsecurity.gov/OACT/TR/2019/.

The Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security trust funds. The combined asset reserves of the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI), or OASDI, trust funds are projected to become depleted in 2034, the same as projected last year, with 79 percent of benefits payable at that time.
The OASI trust fund is projected to become depleted in late 2034, as compared to last year’s estimate of early 2035, with 77 percent of benefits payable at that time. The DI trust fund will become depleted in 2032, extended from last year’s estimate of 2028, with 96 percent of benefits still payable.
In the 2018 annual report to Congress, the trustees announced:

  • The asset reserves of the combined OASDI trust funds increased by $44 billion in 2017 to a total of $2.89 trillion.
  • The total annual cost of the program is projected to exceed total annual income in 2018 for the first time since 1982, and remain higher throughout the 75-year projection period. As a result, asset reserves are expected to decline during 2018. Social Security’s cost has exceeded its non-interest income since 2010.
  • The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2034 – the same as projected last year. At that time, there will be sufficient income coming in to pay 79 percent of scheduled benefits.

“The trustees’ projected depletion date of the combined Social Security trust funds has not changed, and slightly more than three-fourths of benefits would still be payable after depletion,” said Nancy A. Berryhill, acting commissioner of Social Security. “But the fact remains that Congress can keep Social Security strong by taking action to ensure the future of the program.”
Other highlights of the trustees’ report include:

  • Total income, including interest, to the combined OASDI trust funds amounted to $997 billion in 2017 ($874 billion from net payroll tax contributions, $38 billion from taxation of benefits and $85 billion in interest).
  • Total expenditures from the combined OASDI trust funds amounted to more than $952 billion in 2017.
  • Social Security paid benefits of more than $941 billion in 2017. There were about 62 million beneficiaries at the end of the calendar year.
  • The projected actuarial deficit over the 75-year long-range period is 2.84 percent of taxable payroll – slightly larger than the 2.83 percent projected in last year’s report.
  • During 2017, an estimated 174 million people had earnings covered by Social Security and paid payroll taxes.
  • The cost of $6.5 billion to administer the Social Security program in 2017 was a very low 0.7 percent of total expenditures.
  • The combined trust fund asset reserves earned interest at an effective annual rate of 3.0 percent in 2017.

The board of trustees usually comprises six members. Four serve by virtue of their positions with the federal government: Steven T. Mnuchin, secretary of the treasury and managing trustee; Nancy A. Berryhill, acting commissioner of Social Security; Alex M. Azar II, secretary of health and human services; and R. Alexander Acosta, secretary of labor. The two public trustee positions are currently vacant.
View the 2018 trustees report at www.socialsecurity.gov/OACT/TR/2018/.

The Board of Trustees is pleased to announce the following changes to the Voluntary Short Term Disability (VSTD) plans for bus and rail members, effective January 1, 2017:
 

VSTD changes for bus members

For Bus Members, the maximum weekly VSTD benefit will increase from $210 to $240.
The Elimination Period for Bus Members, which is the waiting period between the first day of a disability and the date benefits actually begin, will be reduced from 30 days to 21 days (benefits will begin on the 22nd day of disability).
Click here for additional information.
 

VSTD changes for rail members

For Rail Members, the maximum weekly VSTD benefit will increase from $400 to $450.
The Elimination Period for Rail Members, which is the waiting period between the first day of a disability and the date benefits actually begin, will be reduced from 30 days to 21 days (benefits will begin on the 22nd day of disability).
Click here for additional information.
 
Haven’t enrolled in VSTD? Click here for information on late enrollment options.

The UTU has selected Lincoln National Life Insurance Co., a member of the Lincoln Financial Group, to provide a national group voluntary short-term disability plan for all bus members.

Coverage is for off-duty accidents and illness, and is automatic unless bus members opt out.

The Lincoln National Life disability insurance plan provides a basic “safety net” of coverage for UTU bus members, and is designed to work in combination with state-mandated disability programs.

The Lincoln National Life plan pays up to $200 per week for up to 52 weeks a year, and provides coverage for off-the-job accidents and sickness.

The cost is $26.50 per month, and is collected through payroll deduction.

New UTU members will be enrolled automatically, unless they choose to opt-out of the plan by submitting a waiver form to the UTU International.

A disability-plan membership information kit will be mailed to all new members and will include a plan overview, as well as instructions for waiving coverage (opting-out of the plan) if they so choose.

Any member waiving coverage who desires to obtain coverage under the plan in the future, must make application to Lincoln at that later date. There will be no guarantee of acceptance.

Once enrolled, everyone is subject to a so-called 3/6 pre-existing condition provision. This provision excludes, for the first six months that a member is covered, any disability claims relating to treatment, diagnoses or existing condition that existed in the three months just prior to the enrollment date.

After the first six months that an enrollee is covered, the pre-existing condition limitation expires.

The member information kit describes the plan in greater detail, and also provides answers to frequently asked questions. Members are not required to complete any paperwork to enroll in the plan, but must complete a waiver form if they choose not to participate.

Members desiring additional disability insurance coverage may purchase an individual policy through the UTU Insurance Association. This individual coverage would pay in addition to the Lincoln plan, without any offset or reduction in benefits to either plan. Contact your Field Supervisor or call the UTUIA Sales Department at (216) 228-9400 for more information.