The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Congressional research reportJan 19, 2016
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The Social Security Disability Insurance (DI)
Trust Fund: Background and Current Status
(name redacted)
Analyst in Income Security
January 19, 2016
Congressional Research Service
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www.crs.gov
R43318
The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Summary
Social Security Disability Insurance (SSDI) provides benefits to nonelderly workers and their
eligible dependents if the worker paid Social Security taxes for a certain number of years and is
unable to perform substantial work due to a qualifying impairment. As in Old-Age and Survivors
Insurance (OASI)—the retirement component of Social Security—benefits are based on a
worker’s past earnings in covered employment. In December 2014, SSDI provided disability
insurance coverage to more than 151 million people and paid benefits to about 9 million disabled
workers and 2 million of their spouses and children.
Benefits and administrative costs for SSDI and OASI are financed primarily by dedicated payroll
and self-employment taxes levied on the earnings of covered workers, which are deposited in the
Federal Disability Insurance (DI) Trust Fund and the Federal Old-Age and Survivors Insurance
(OASI) Trust Fund, respectively. The combined Social Security tax on earnings is 12.40%, which
is split equally between workers and employers (6.20% each). Of that amount, 2.37% is allocated
to the DI trust fund and 10.03% is allocated to the OASI trust fund. Each trust fund is a legally
distinct account in the U.S. Treasury, and under current law, the two trust funds may not borrow
from one another.
Over the past few years, Congress has grown increasingly concerned with the financial outlook of
the DI trust fund. Cost has exceeded total income since 2009, causing the balance of the DI trust
fund to shrink. In their July 2015 report, the Social Security trustees projected that the DI trust
fund would be depleted in the fourth quarter of calendar year 2016. Upon depletion of its asset
reserves, the DI trust fund was projected to have enough ongoing revenues to pay only about 80%
of scheduled benefits. The trustees projected that the OASI trust fund would be depleted in 2035.
The Social Security Act provides no guidance on the payment of benefits once a trust fund’s asset
reserves have been depleted and current tax revenues are insufficient to meet current cost.
Although individuals who meet Social Security’s eligibility requirements are legally entitled to
disability benefits, a provision in the Antideficiency Act prohibits a federal agency from spending
in excess of available funds. Because the Social Security Act stipulates that SSDI benefit
payments shall be made only from the DI trust fund, without a change in the law, monthly cash
payments to beneficiaries could be delayed or reduced if the DI trust fund were depleted.
The decreasing solvency of the DI trust fund is the result of an increasing imbalance between the
fund’s income and cost. Over the past 20 years, tax revenues to the DI trust fund have remained
relatively flat as a percentage of taxable payroll, whereas cost as a share of taxable payroll has
grown markedly. The increase in cost stems largely from the growth in the number of
beneficiaries in the program. Between 1995 and 2014, the number of disabled workers and their
dependents in receipt of SSDI grew 85%, from 5.9 million to 10.9 million. Because benefit
payments account for nearly all program spending, the growth in the SSDI rolls has contributed
heavily to the financial difficulties of the DI trust fund.
On November 2, 2015, President Barack Obama signed into law the Bipartisan Budget Act of
2015 (H.R. 1314; P.L. 114-74). Among its many provisions, the act authorized a temporary
reallocation of the Social Security payroll tax rate between the OASI and DI trust funds to
provide DI with a larger share for 2016 through 2018. Specifically, the DI trust fund’s share of the
combined tax rate increased by 0.57 percentage point at the beginning of 2016, from 1.80% to
2.37%. Because the act did not change the combined payroll tax rate of 12.40%, the portion of the
tax rate allocated to OASI decreased by a corresponding amount. This means that OASI’s share
of the combined tax rate declined by 0.57 percentage point at the start of 2016, from 10.60% to
Congressional Research Service
The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
10.03%. For 2019 and later, the shares allocated to the DI and OASI trust funds are scheduled to
return to their 2015 levels (i.e., 1.80% to the DI trust fund and 10.60% to the OASI trust fund).
The Social Security Administration’s Office of the Chief Actuary (OACT) projects that the
reallocation will extend the solvency of the DI trust fund from the fourth quarter of 2016 to the
third quarter of 2022. Although the reallocation will reduce the solvency of the OASI trust fund
slightly, OACT estimates that the depletion year for OASI will remain unchanged at 2035.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Contents
Introduction ..................................................................................................................................... 1
Background on SSDI ....................................................................................................................... 1
Eligibility .................................................................................................................................. 2
Benefits ..................................................................................................................................... 2
The Social Security Trust Funds...................................................................................................... 3
Financing ................................................................................................................................... 4
Financial Status of the DI Trust Fund.............................................................................................. 6
DI Financial Operations in 2014 ............................................................................................... 6
Recent Experience of the DI Trust Fund ................................................................................... 8
Causes of the DI Trust Fund’s Financial Imbalance ...................................................................... 12
Projected Status of the DI Trust Fund ........................................................................................... 14
Under Prior Law...................................................................................................................... 15
Under the Bipartisan Budget Act of 2015 ............................................................................... 17
Use of Reallocations by Congress in the Past ............................................................................... 19
House Rules Change in the 114th Congress Concerning Reallocations Between the Social
Security Trust Funds................................................................................................................... 22
Long-Term Policy Options ............................................................................................................ 23
Figures
Figure 1. DI Income and Cost in 2014, by Source .......................................................................... 8
Figure 2. Operations of the DI Trust Fund, 1995-2014 ................................................................... 9
Figure 3. Annual DI Income and Cost Rates, 1995-2014 .............................................................. 12
Figure 4. Actual and Projected OASI, DI, and Combined OASDI Trust Fund Ratios
Under Prior Law, 1975-2036 ...................................................................................................... 15
Figure 5. The Projected Share of SSDI Benefits Payable Under Prior Law, 2015-2089 .............. 16
Figure 6. Actual and Projected DI Trust Fund Ratios Under Prior Law and Under the
Bipartisan Budget Act of 2015, 1995-2023 ................................................................................ 18
Tables
Table 1. Social Security Payroll Tax Rates Under Current Law ..................................................... 4
Table 2. Summary of the Financial Operations of the DI Trust Fund in 2014 ................................ 7
Table 3. Operations of the DI Trust Fund, 1995-2014................................................................... 10
Table 4. Social Security Payroll Tax Rates Under Prior Law and Under the Bipartisan
Budget Act of 2015 .................................................................................................................... 17
Table 5. Projected Depletion Years for the OASI, DI, and Combined OASDI Trust Funds
Under Prior Law and Under the Bipartisan Budget Act of 2015, by Agency ............................ 18
Table 6. Legislation Reallocating the Social Security Payroll Tax Rate ....................................... 20
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Table B-1. Key Dates Projected for the Social Security Trust Funds as Shown Under the
Intermediate Assumptions in Trustees Reports from 1983 to 2015............................................ 27
Appendixes
Appendix A. Congressional Rationale for the Creation of a Separate DI Trust Fund ................... 24
Appendix B. Key Dates Projected for the Social Security Trust Funds ........................................ 27
Contacts
Author Contact Information .......................................................................................................... 28
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Introduction
Lawmakers and the public have expressed increasing concern over the solvency of the Disability
Insurance (DI) trust fund, from which Social Security Disability Insurance (SSDI) benefits are
paid.1 Until recently, the DI trust fund was projected to be depleted in the fourth quarter of
calendar year 2016, at which time ongoing revenues to the DI trust fund were projected to be
sufficient to pay only about 80% of scheduled benefits.2 In November 2015, the Bipartisan
Budget Act of 2015 (H.R. 1314; P.L. 114-74) extended the projected solvency of the DI trust fund
by authorizing a reallocation of the Social Security payroll tax rate between the DI and the OldAge and Survivors Insurance (OASI) trust funds to provide DI with a larger share. Although the
reallocation averted a potential benefit cut in late 2016, without additional legislation action (i.e.,
revenue increases, cost reductions, or some combination thereof), the DI trust fund is projected to
be unable to pay scheduled benefits in full and on a timely basis by the early 2020s.
This report provides an overview of the DI trust fund and its current financial outlook. It begins
with background information on the SSDI program and the financing of the Social Security trust
funds. Next, the report examines the financial status of the DI trust fund over the past 20 years
and the causes of the DI trust fund’s financial imbalance. It then discusses the projected status of
the DI trust fund under prior law and under the Bipartisan Budget Act of 2015. Lastly, the report
provides background information on the use of reallocations by Congress in the past, as well as
on a House rules change in the 114th Congress concerning payroll tax reallocations. The appendix
of the report provides a congressional rationale for the creation of a separate DI trust fund as part
of the Social Security Amendments of 1956 (P.L. 84-880).
Background on SSDI
Enacted in 1956 under Title II of the Social Security Act, SSDI is part of the Old-Age, Survivors,
and Disability Insurance (OASDI) program, more commonly known as Social Security. As in
OASI—the retirement component of Social Security—SSDI is a form of social insurance that
replaces a portion of a worker’s income based on the individual’s work history and career-average
earnings in covered employment.3 Specifically, SSDI provides benefits to nonelderly insured
workers who meet the statutory definition of disability and to their eligible dependents. In
November 2015, the Social Security Administration (SSA) paid benefits to more than 10.8
1
For example, see U.S. Congress, House Committee on Ways and Means, Subcommittee on Social Security, First in a
Hearing Series on Securing the Future of the Social Security Disability Insurance Program, 112th Cong., 1st sess.,
December 2, 2011, H.Hrg. 112-SS11 (Washington: GPO, 2012), pp. 4-5, http://www.gpo.gov/fdsys/pkg/CHRG112hhrg76319/pdf/CHRG-112hhrg76319.pdf. See also U.S. Congress, Senate Committee on Finance, Social Security:
A Fresh Look at Workers’ Disability Insurance, 113th Cong., 2nd sess., July 24, 2014, S.Hrg. 113-532 (Washington:
GPO, 2015), p. 3, http://www.gpo.gov/fdsys/pkg/CHRG-113shrg92646/pdf/CHRG-113shrg92646.pdf. In addition, see
U.S. Congress, Senate Committee on the Budget, The Coming Crisis: Social Security Disability Trust Fund Insolvency,
114th Cong., 1st sess., February 11, 2015, http://www.budget.senate.gov/republican/public/index.cfm/hearing-schedule?
ID=ffb8d0f9-c572-47ee-9165-f5ae4317e82c.
2
U.S. Congress, House Committee on Ways and Means, The 2015 Annual Report of the Board of Trustees of the
Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, 114th Cong., 1st sess., July
22, 2015, H.Doc. 114-51 (Washington: GPO, 2015), http://www.ssa.gov/oact/tr/2015/index.html (hereinafter “2015
Social Security Trustees Report”). Projections based on the trustees’ 2015 intermediate assumptions.
3
For more information on Old-Age and Survivors Insurance (OASI), see CRS Report R42035, Social Security Primer,
by (name redacted). For more information on the concept of social insurance, see Larry DeWitt, “The Development of
Social Security in America,” Social Security Bulletin, vol. 70, no. 3 (August 2010), http://www.ssa.gov/policy/docs/
ssb/v70n3/v70n3p1.html.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
million SSDI recipients, including 8.9 million disabled workers, 142,000 spouses of disabled
workers, and 1.8 million children of disabled workers.4
Eligibility
To qualify for SSDI, workers must be (1) under the full retirement age (FRA), (2) insured in the
event of disability, and (3) statutorily disabled. The FRA is the age at which unreduced Social
Security retirement benefits are first payable, which is currently 66.5 To achieve insured status,
individuals must have worked in covered employment for about a quarter of their adult lives
before they became disabled and for at least 5 years of the 10 years immediately before the onset
of disability.6 However, younger workers may qualify with less work experience based on their
age. In 2014, SSDI provided disability insurance coverage to more than 151 million nonelderly
workers.7
To meet the statutory definition of disability, an insured worker must be unable to engage in any
substantial gainful activity (SGA) by reason of any medically determinable physical or mental
impairment that is expected to last for at least one year or result in death.8 In 2016, the SGA
earnings limit is $1,130 per month for most workers and $1,820 per month for statutorily blind
workers.9 Disability determinations are based on a five-step sequential evaluation process that
takes into account a worker’s medical records, age, education, and work experience. In general,
workers must have a severe impairment (or combination of impairments) that prevents them from
performing any kind of substantial work that exists in the national economy in significant
numbers.10
Benefits
Cash benefits begin five full months after a beneficiary’s disability onset date.11 Initial benefits
are based on a worker’s career-average earnings, indexed to reflect changes in national wage
levels.12 Benefits are subsequently adjusted to account for inflation through cost-of-living
adjustments (COLAs), as measured by the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W).13 Monthly benefits payable to the worker and family members are
4
Social Security Administration (SSA), “Monthly Statistical Snapshot, November 2015,” December 2015, Table 2,
http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/ (hereinafter “SSA Monthly Statistical Snapshot”).
5
See CRS Report R41962, The Social Security Retirement Age: In Brief, by (name redacted)
.
6
For more information on Social Security Disability Insurance (SSDI), see CRS Report RL32279, Primer on Disability
Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), by (name redacted) .
7
SSA, Office of the Chief Actuary (OACT), “Disabled Insured Workers,” http://www.ssa.gov/OACT/STATS/
table4c2DI.html.
8
42 U.S.C. §423(d)(1). See also 20 C.F.R. §§404.1504-1511.
9
SSA, OACT, “Substantial Gainful Activity,” http://www.ssa.gov/oact/cola/sga.html.
10
An impairment (or combination of impairments) is considered severe if it significantly limits an individual’s physical
or mental ability to do basic work activities. For more information, see SSA, Program Operations Manual System
(POMS), “DI 24505.001 Individual Must Have a Medically Determinable Severe Impairment,” August 9, 2012,
http://policy.ssa.gov/poms.nsf/lnx/0424505001.
11
For additional information on the five-month waiting period, see CRS Report RS22220, Social Security Disability
Insurance (SSDI): The Five-Month Waiting Period for Benefits, by (name redacted) .
12
See CRS Report R43542, How Social Security Benefits Are Computed: In Brief, by (name redacted) .
13
See CRS Report 94-803, Social Security: Cost-of-Living Adjustments, by (name redacted)
.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
subject to a maximum family benefit amount.14 Benefits may be offset if the disabled worker also
receives workers’ compensation or certain other public disability benefits.15 In November 2015,
the average monthly benefit was $1,166 for disabled workers, $318 for spouses of disabled
workers, and $350 for children of disabled workers.16
In addition to cash benefits, disabled workers and certain dependents are eligible for health care
coverage under Medicare after 24 months of entitlement to cash benefits (typically 29 months
after the onset of disability).17 In 2012, Medicare spending per disabled beneficiary averaged
about $9,900.18 Generally, disabled workers retain their benefits as long as they (1) are under the
FRA, (2) exhibit no substantial medical improvement, and (3) have average monthly earnings at
or below the SGA limit.
The Social Security Trust Funds
Although Social Security is often viewed as a single program, its financing comes from two
legally distinct sources known as trust funds. A trust fund is an accounting mechanism that
“records the revenues, offsetting receipts, or offsetting collections earmarked for the purpose of
the fund, as well as budget authority and outlays of the fund that are financed by those revenues
or receipts.”19 The Federal Disability Insurance Trust Fund finances the benefits of disabled
workers and their dependents, and the Federal Old-Age and Survivors Insurance Trust Fund pays
for the benefits of retired workers and their dependents as well as survivors of deceased
workers.20 Administrative costs are also drawn from the trust funds. Each trust fund is a separate
account in the U.S. Treasury, and under current law, the two trust funds may not borrow from one
another. 21
The OASI trust fund was created under the Social Security Amendments of 1939 (P.L. 76-379),
and superseded the Old-Age Reserve Account established under the original Social Security Act
in 1935 (P.L.74-271).22 The DI trust fund was established as part of the Social Security
14
SSA, OACT, “Maximum Benefit for a Disabled-Worker Family,” http://www.ssa.gov/oact/cola/dibfamilymax.html.
For more information, see SSA, How Workers’ Compensation and Other Disability Payments May Affect Your
Benefits, No. 05-10018, June 2015, http://www.ssa.gov/pubs/EN-05-10018.pdf.
16
SSA, Monthly Statistical Snapshot, Table 2.
17
For more information, see SSA, “Medicare Information,” http://www.ssa.gov/disabilityresearch/wi/medicare.htm.
See also CRS Report R40425, Medicare Primer, coordinated by (name redacted) and (name redacted) .
18
U.S. Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS),
Medicare & Medicaid Statistical Supplement, 2013 edition, Table 3.4, https://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-and-Reports/MedicareMedicaidStatSupp/Downloads/2013_Section3.pdf#Table3.4.
Figure is per enrollee and includes disabled workers, disabled widow(er)s, disabled adult children, and individuals
entitled to Medicare because of end-stage renal disease (ESRD) only.
19
See U.S. Congressional Budget Office (CBO), Glossary, January 31, 2012, pp. 18-19, https://www.cbo.gov/
publication/42904. See also U.S. General Accounting Office (GAO; now the Government Accountability Office),
Federal Trust and Other Earmarked Funds: Answers to Frequently Asked Questions, GAO-01-199SP, January 1, 2001,
http://www.gao.gov/products/GAO-01-199SP.
20
42 U.S.C. §401. For more information on the Federal Disability Insurance (DI) Trust Fund, see SSA, OACT,
“Disability Insurance Trust Fund,” http://www.ssa.gov/oact/progdata/describedi.html. For more information on the
Federal Old-Age and Survivors Insurance (OASI) Trust Fund, see SSA, OACT, “Old-Age & Survivors Insurance Trust
Fund,” http://www.ssa.gov/oact/ProgData/describeoasi.html.
21
See also SSA, OACT, “Trust Fund FAQs,” http://www.ssa.gov/oact/ProgData/fundFAQ.html.
22
The OASI trust fund became effective on January 1, 1940. For more information on the origins of the OASI trust
fund and the Old-Age Reserve Account, see Board of Trustees of the Federal Old-Age and Survivors Insurance Trust
Fund, First Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund, January 3,
(continued...)
15
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Amendments of 1956 (P.L. 84-880)—the same legislation that created SSDI.23 The creation of a
separate DI trust fund appears to have been a compromise to address concerns of some
lawmakers at the time about SSDI’s potential cost and potential negative impact on the OASI
trust fund and its beneficiaries. For more information on the congressional rationale for the
creation of a separate DI trust fund, see Appendix A.
Financing
SSDI and OASI are financed primarily by dedicated payroll and self-employment taxes levied on
the earnings of covered workers under the Federal Insurance Contributions Act (FICA) 24 and the
Self-Employment Contributions Act (SECA).25 FICA taxes are split evenly between employees
and employers, whereas SECA taxes are borne fully by self-employed individuals. As shown in
Table 1, the Social Security FICA tax rate for employees and employers, each is 6.200%, with
1.185% allocated to the DI trust fund and 5.015% to the OASI trust fund. On a combined basis,
the FICA tax rate is 12.400%, with 2.370% allocated to the DI trust fund and 10.030% to the
OASI trust fund. The Social Security SECA tax rate is the same as the combined FICA tax rate.
Social Security taxes are levied on covered earnings up to a maximum annual amount, which is
$118,500 in 2016.26
Table 1. Social Security Payroll Tax Rates Under Current Law
(as a percentage of taxable earnings)
FICA
Trust Fund
SECA
Employees and Employers, Each
Combined
Self Employed
OASI
5.015
10.030
10.030
DI
1.185
2.370
2.370
OASDI (Total)
6.200
12.400
12.400
Source: Congressional Research Service (CRS), based on Social Security Administration (SSA), Office of the
Chief Actuary (OACT), “Social Security Tax Rates,” https://www.ssa.gov/oact/progdata/oasdiRates.html.
Notes: The allocation of the Social Security payroll tax rate between the OASI and DI trust funds is scheduled
to change in calendar year 2019. For more information, see the “Under the Bipartisan Budget Act of 2015”
section of this report.
(...continued)
1941, https://www.ssa.gov/history/reports/trust/tf1941.html.
23
The DI trust fund was established on August 1, 1956.
24
Social Security payroll taxes on employees and employers were established under Title VIII of the Social Security
Act in 1935 (P.L. 74-271). In 1939, the internal revenue laws of the United States were consolidated and codified under
the Internal Revenue Code (IRC; P.L. 76-1). Title VI of the Social Security Amendments of 1939 (P.L. 76-379)
amended Subchapter A of Chapter 9 of the IRC to read “Federal Insurance Contributions Act” (FICA). See 26 U.S.C.
§3128.
25
Section 208 of the Social Security Act Amendments of 1950 (P.L. 81-734) established Social Security payroll taxes
on self-employed individuals under Subchapter E of Chapter 1 of the IRC. The 1950 amendments also coined the term
“Self-Employment Contributions Act” (SECA). See 26 U.S.C. §1403.
26
See SSA, OACT, “Contribution and Benefit Base,” https://www.ssa.gov/oact/COLA/cbb.html. The taxable
maximum is adjusted to reflect changes in average earnings levels in the United States for years in which a cost-ofliving adjustment (COLA) is payable. See 42 U.S.C. §430.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
The FICA rates for employees and employers are prescribed in Sections 3101 and 3111 of the
Internal Revenue Code (IRC), respectively; the SECA rate is specified in Section 1401 of the
IRC.27 The allocation of the tax rates between the OASI and DI trust funds, however, is set in
Section 201(b) of the Social Security Act.28 Section 201(b) specifies the combined share of the
Social Security tax rate allocated to the DI trust fund for both wages (FICA) and self-employment
income (SECA), which, as noted above, is 2.370% (1.185% for employees and employers, each).
Section 201(a) states that the combined allocation to the OASI trust fund for both wages and selfemployment income is the combined Social Security payroll tax rate set in the IRC less the
combined share prescribed in Section 201(b).29 Therefore, the combined allocation to the OASI
trust fund is 12.400% minus 2.370%, which equals 10.030% (5.015% for employees and
employers, each).
In addition to payroll taxes, the OASI and DI trust funds are credited with income from the
taxation of some Social Security benefits.30 The share of Social Security benefits that is taxable
depends on whether the individual’s provisional income exceeds certain thresholds.31 Provisional
income equals adjusted gross income plus otherwise tax-exempt interest income (i.e., interest
from tax-exempt bonds), plus 50% of Social Security benefits. Income derived from the taxation
of up to the first 50% of Social Security benefits is credited to the OASI and DI trust funds based
on the source of the benefits taxed.32 In other words, up to a certain rate, taxes paid on OASI
benefits are deposited in the OASI trust fund and taxes paid on SSDI benefits are deposited in the
DI trust fund.
Occasionally, the two trust funds receive reimbursements from the General Fund of the U.S.
Treasury for various costs imposed on the Social Security program.33 For example, the OASI and
DI trust funds received reimbursements from the General Fund to compensate for the loss of
revenues from a temporary payroll tax reduction in 2011 and 2012.
27
26 U.S.C. §§3101, 3111, and 1401. These sections of the IRC also prescribe the payroll tax rates for Medicare’s
Hospital Insurance (HI) trust fund. The total Medicare payroll tax rate, which applies to all covered earnings, is 2.90%
(1.45% for employees and employers, each). The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as
amended) imposes an additional 0.90% tax on high-income workers with wages and self-employment income over
$200,000 for single filers and $250,000 for joint filers effective for taxable years beginning after December 31, 2012.
The revenues from the 0.90% tax are credited to the HI trust fund. For more information, see CRS Report R43122,
Medicare Financial Status: In Brief, by (name redacted) . See also Internal Revenue Service (IRS), “Questions and
Answers for the Additional Medicare Tax,” http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/
Questions-and-Answers-for-the-Additional-Medicare-Tax.
28
42 U.S.C. §401(b).
29
42 U.S.C. §401(a).
30
26 U.S.C. §86. For more information on the taxation of Social Security benefits, see CRS Report RL32552, Social
Security: Calculation and History of Taxing Benefits, by (name redacted) and (name redacted) .
31
For more information on these thresholds, see U.S. Congress, Senate Committee on the Budget, Tax Expenditures:
Compendium of Background Material on Individual Provisions, committee print, prepared by CRS, 113th Cong., 2nd
sess., December 2014, S.Prt. 113-32 (Washington: GPO, 2014), pp. 989-990, http://www.gpo.gov/fdsys/pkg/CPRT113SPRT91950/pdf/CPRT-113SPRT91950.pdf.
32
The HI trust fund is credited with the remainder of income from the taxation of up to 85% of OASI and SSDI
benefits.
33
The DI trust fund is reimbursed for the following costs: (1) the cost of noncontributory wage credits for military
service before 1957; (2) the cost of payroll tax credits provided to employees in 1984 and self-employed persons in
1984-89 by P.L. 98-21; (3) the cost in 2009-17 of excluding certain self-employment earnings from SECA taxes under
P.L. 110-246; and (4) payroll tax revenue forgone under the provisions of P.L. 111-147, P.L. 111-312, P.L. 112-78, and
P.L. 112-96. See 2015 Social Security Trustees Report, Table IV.A2.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
The final source of income to the trust funds is from the interest earned on investments held by
the trust funds. When income exceeds cost in a given year, the surplus is credited to the trust
funds in the form of special-issue (non-marketable) securities, which are backed by the full faith
and credit of the U.S. government.34 These securities earn interest, which the Department of the
Treasury credits to the trust funds semiannually in the form of additional government securities.
The accumulated securities held by a trust fund represent its balance.35A trust fund can use its
balance, or asset reserves, to pay benefits whenever total program cost exceeds income.
Financial Status of the DI Trust Fund
The Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability
Insurance Trust Funds presents an annual report to Congress on the current and projected
financial status of the Social Security trust funds.36 The board is composed of six members: the
Secretary of the Treasury, who is the Managing Trustee; the Secretary of Labor; the Secretary of
Health and Human Services; the Commissioner of Social Security; and two public
representatives, who are nominated by the President for a term of four years and subject to
confirmation by the Senate.37 The Board of Trustees (hereinafter “trustees”) specifies the
assumptions about future demographic and economic trends used in the projections; however,
SSA’s Office of the Chief Actuary advises the trustees on the assumptions as well as develops and
runs the computer models that produce the forecasts. The trustees’ latest report was released on
July 22, 2015, and is available at http://www.ssa.gov/oact/tr/2015/index.html.38
DI Financial Operations in 2014
Table 2 shows the income, cost, and asset reserves of the DI trust fund in 2014. Of the $114.9
billion in total income credited to the DI trust fund, $109.7 billion (about 95%) came from net
payroll tax contributions. The interest earned on the investments held by the DI trust fund
amounted to $3.4 billion or 3% of total income.39 Income from the taxation of SSDI benefits and
reimbursements from the General Fund totaled $1.8 billion or 2% of total trust fund income.
Total cost for the year was $145.1 billion. About 98% of the DI trust fund’s cost stemmed from
benefit payments totaling $141.7 billion. Disbursements from the DI trust fund for administrative
expenses and the financial interchange with the Railroad Retirement Board (RRB) amounted to
$3.3 billion or 2% of total cost. According to the trustees, “the Railroad Retirement Act requires
an annual financial interchange between the Railroad Retirement program and the OASDI
34
In the past, the trust funds held publicly available securities. For more information on Social Security trust fund
holdings, see CRS Report RS20607, Social Security: Trust Fund Investment Practices, by (name redacted).
35
Although government securities held by the trust funds represent assets to Social Security, they are also liabilities to
the rest of the federal government. For more information, see CBO, The Budget and Economic Outlook: 2015 to 2025,
January 26, 2015, p. 145, https://www.cbo.gov/publication/49892.
36
42 U.S.C. §401(c).
37
The Deputy Commissioner of SSA serves as the Secretary of the Board of Trustees. The two public representatives
may not be from the same political party.
38
For information about the trust funds on a combined basis, see CRS Report RL33028, Social Security: The Trust
Funds, by (name redacted).
39
In 2014, the asset reserves of the DI trust fund earned an effective annual interest rate of 4.5%. For more information,
see SSA, OACT, “Effective Interest Rates,” http://www.ssa.gov/OACT/ProgData/effectiveRates.html. For data on
OASI and DI investment transactions, see SSA, OACT, “Investment Transactions,” http://www.ssa.gov/OACT/
ProgData/transactions.html.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
program. The purpose of the interchange is to put the OASI and DI trust funds in the same
financial position they would have been in had railroad employment always been covered directly
by Social Security.”40
To make up for the shortfall between total income and cost in 2014, the DI trust fund redeemed a
net total of $30.2 billion in government bonds. Consequently, the asset reserves held by the DI
trust fund decreased from $90.4 billion at the end of 2013 to $60.2 billion at the end of 2014.
Table 2. Summary of the Financial Operations of the DI Trust Fund in 2014
($ in billions)
Item
DI Trust Fund
Asset reserves at the end of the 2013
$90.4
Total income in 2014
114.9
Net payroll tax contributions
109.7
Reimbursements from the General Fund of the Treasury
0.1
Taxation of SSDI benefits
1.7
Interest on asset reserves
3.4
Total expenditures in 2014
Benefit Payments
145.1
141.7
Railroad Retirement financial interchange
0.4
Administrative expenses
2.9
Net change in asset reserves in 2014
-30.2
Asset reserves at the end of 2014
60.2
Source: CRS, adapted from U.S. Congress, House Committee on Ways and Means, The 2015 Annual Report of
the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, 114th
Cong., 1st sess., July 22, 2015, H.Doc. 114-51 (Washington: GPO, 2015), Table II.B1, http://www.ssa.gov/oact/tr/
2015/II_B_cyoper.html#96807 (hereinafter “2015 Social Security Trustees Report”).
Note: Totals may not equal the sum of components due to rounding.
40
2015 Social Security Trustees Report, p. 30. For more information on the Railroad Retirement Board (RRB), see
CRS Report RS22350, Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness
Benefits, by (name redacted)
.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Figure 1. DI Income and Cost in 2014, by Source
Payroll
Taxes
95%
Income:
$114.9
Billion
Interest
3%
Taxation of
Benefits
2%
Benefits
98%
Cost:
$145.1
Billion
Admin.
Costs
98%
Source: CRS, based on data from the 2015 the Social Security Trustees Report, Table II.B1.
Notes: “Interest” refers to net interest earned on securities held by the DI trust fund. “Taxation of Benefits”
includes reimbursements from the General Fund, which accounted for less than 0.1% of trust fund income.
“Admin. Costs” include net expenses related to the administration of SSDI, as well as payments under the
financial interchange with the Railroad Retirement Board (RRB), which accounted for less than 0.3% of trust fund
cost.
Recent Experience of the DI Trust Fund
Between 1995 and 2004, non-interest income to the DI trust fund exceeded total cost, generating
annual surpluses and increasing the fund’s balance (Figure 2). Non-interest income includes net
payroll tax contributions, revenues from the taxation of SSDI benefits, and General Fund
reimbursements. In 2005, total cost started to exceed non-interest income; however, because total
income—tax revenues plus net interest on asset reserves—was greater than total cost, the balance
of the DI trust fund continued to grow. In 2009, total cost began to exceed total income, requiring
the DI trust fund to use some of its asset reserves to cover benefit payments (Table 3). As a result,
the balance of the DI trust fund has been declining. At the end of November 2015, the amount of
asset reserves held by the DI trust fund was $35.2 billion.41
41
See SSA, OACT, “Times Series For Selected Financial Items,” https://www.ssa.gov/oact/ProgData/tsOps.html.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Figure 2. Operations of the DI Trust Fund, 1995-2014
($ in billions)
$250
Asset Reserves
$200
Total Cost
$150
Total Income
(including interest)
$100
Non-Interest Income
$50
$0
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Source: CRS, based on data from the 2015 Social Security Trustees Report, Table VI.A2, at http://www.ssa.gov/
oact/tr/2015/VI_A_cyoper_hist.html#288797.
Notes: “Total Income” includes interest earned on the asset reserves held by the DI trust fund. The amount of
asset reserves held by a trust fund represents its balance.
Congressional Research Service
9
Table 3. Operations of the DI Trust Fund, 1995-2014
($ in billions)
Income
Cost
Asset Reserves
Year
Total
Income
Non-Interest
Incomea
Net
Interestb
Total
Cost
Benefit
Paymentsc
Administrative
Expenses
RRB
Interchanged
Change During
the Year
Amount at the
End of the Year
1995
$56.7
$54.5
$2.2
$42.1
$40.9
$1.1
$0.1
$14.6
$37.6
1996
60.7
57.7
3.0
45.4
44.2
1.2
e
15.4
52.9
1997
60.5
56.5
4.0
47.0
45.7
1.3
0.1
13.5
66.4
1998
64.4
59.6
4.8
49.9
48.2
1.6
0.2
14.4
80.8
1999
69.5
63.9
5.7
53.0
51.4
1.5
0.1
16.5
97.3
2000
77.9
71.0
6.9
56.8
55.0
1.6
0.2
21.1
118.5
2001
83.9
75.7
8.2
61.4
59.6
1.7
e
22.5
141.0
2002
87.4
78.2
9.2
67.9
65.7
2.0
0.2
19.5
160.5
2003
88.1
78.3
9.7
73.1
70.9
2.0
0.2
15.0
175.4
2004
91.4
81.4
10.0
80.6
78.2
2.2
0.2
10.8
186.2
2005
97.4
87.2
10.3
88.0
85.4
2.3
0.3
9.4
195.6
2006
102.6
92.0
10.6
94.5
91.7
2.3
0.4
8.2
203.8
2007
109.9
96.6
13.2
98.8
95.9
2.5
0.4
11.1
214.9
2008
109.8
98.9
11.0
109.0
106.0
2.5
0.4
0.9
215.8
2009
109.3
98.9
10.5
121.5
118.3
2.7
0.4
-12.2
203.5
2010
104.0
94.8
9.3
127.7
124.2
3.0
0.5
-23.6
179.9
2011
106.3
98.4
7.9
132.3
128.9
2.9
0.5
-26.1
153.9
2012
109.1
102.7
6.4
140.3
136.9
2.9
0.5
-31.2
122.7
2013
111.2
106.5
4.7
143.4
140.1
2.8
0.6
-32.2
90.4
2014
114.9
111.5
3.4
145.1
141.7
2.9
0.4
-30.2
60.2
Source: CRS, based on data from the 2015 Social Security Trustees Report, Table VI.A2, at http://www.ssa.gov/oact/tr/2015/VI_A_cyoper_hist.html#288797.
CRS-10
Notes: Totals may not equal the sum of components due to rounding.
a. “Non-Interest Income” includes net payroll tax contributions, General Fund reimbursements, and revenues from the taxation of benefits.
b. “Net Interest” includes (1) interests earned on the investments (asset reserves) held by the trust fund, (2) interest on adjustments in the allocation of administration
expenses between the trust fund and the General Fund for the Supplemental Security Income (SSI) program, (3) interest arising from the revised allocation of
administrative expenses among the trust funds, and (4) interest on certain reimbursements to the trust fund.
c. Includes payments for vocational rehabilitation services furnished to disabled beneficiaries and reimbursements from the General Fund for unnegotiated benefit
checks.
d.
“RRB Interchange” refers to the financial interchange with the Railroad Retirement Board (RRB). For more information, see CRS Report RS22350, Railroad
Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits, by (name redacted)
.
e. Between -$50 million and $50 million.
CRS-11
The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Causes of the DI Trust Fund’s Financial Imbalance
The declining solvency of the DI trust fund is the result of an increasing imbalance between its
income and cost. Figure 3 shows income and cost to the DI trust fund expressed as a percentage
of taxable payroll. Taxable payroll is the total amount of earnings in the economy that is subject
to Social Security taxes (with some adjustments).42 The ratio of non-interest income to taxable
payroll for the year is known as the annual income rate; the ratio of cost to taxable payroll for the
year is known as the annual cost rate. Over the past 20 years, the annual DI income rate has
remained relatively flat at about 1.81% of taxable payroll, which is roughly the combined share of
the tax rate allocated to the DI trust fund for that period plus a small amount of other income. At
the same time, the annual DI cost rate has grown markedly, from 1.44% in 1995 to 2.36% in
2014.
Figure 3. Annual DI Income and Cost Rates, 1995-2014
(non-interest income and cost as a share of taxable payroll for the year)
3.0%
Cost
2.5%
2.0%
Income
1.5%
1.0%
0.5%
0.0%
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Source: CRS, based on data from the 2015 Social Security Trustees Report, Table IV.B1, Single-Year Tables, at
http://www.ssa.gov/oact/tr/2015/lr4b1.html.
Notes: The “Income Rate” is the ratio of non-interest DI income to taxable payroll. Non-interest income
includes payroll taxes, taxes paid on scheduled benefits, and reimbursements from the General Fund. The “Cost
Rate” is the ratio of DI cost to taxable payroll. Cost includes scheduled benefits, administrative expenses, and
the net interchange with the RRB. “Taxable payroll” is the total amount of earnings in the economy that is
subject to Social Security taxes (with some adjustments).
The increase in the annual DI cost rate stems largely from the growth in the number of
beneficiaries on SSDI. Between 1995 and 2014, the total number of disabled workers and their
42
2015 Social Security Trustees Report, Table VI.G5. In 2014, taxable payroll was slightly more than one-third of
gross domestic product (GDP).
Congressional Research Service
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
dependents in receipt of SSDI increased 85%, from 5.9 million to 10.9 million.43 Because benefit
payments account for nearly all spending, the increase in the number of SSDI beneficiaries drove
the annual DI cost rate upward.
The rise in disability rolls can be attributed to a number of factors.44 First, the overall growth in
the working-age population increased the number of workers insured for disability.45 Between
1995 and 2014, the insured-worker population increased 19%, from 127 million to 151 million.46
Second, demographic changes in the composition of the insured-worker population contributed to
the increase in the number of beneficiaries on SSDI.47 Most importantly, the aging of the babyboomer generation increased the number of older workers, who are more likely to become
disabled than are younger workers. In addition, growth in the labor force participation rate of
women in the latter half of the 20th century led to more women being insured for disability.48 As
the size of the female insured-worker population increased, the enrollment rate of women into the
SSDI program grew to near parity with men.49
Third, changes in opportunities for work and compensation induced more individuals to apply for
SSDI. For example, according to SSA’s chief actuary, economic downturns are associated with a
temporary increase in the enrollment rate of insured workers into the program.50 During the last
recession, the number of SSDI awards per 1,000 insured workers increased 25%, from 5.6 in
2007 to 7.0 in 2010.51 In addition, the value of benefits has made applying for SSDI more
desirable than work for some low-wage workers, because such individuals have experienced
slower real earnings growth over the past three decades compared with medium- and high-wage
workers.52
Fourth, various amendments to the Social Security program played a role in increasing the
number of people on SSDI. For example, the Social Security Amendments of 1983 (P.L. 98-21)
raised the full retirement age (FRA) for Social Security retirement benefits, thereby increasing
both the number of insured workers in their older and more disability-prone years and the
duration of benefit receipt for older SSDI beneficiaries close to the FRA. The increase in the FRA
43
Ibid., pp. 55-56.
Jeffrey B. Liebman, “Understanding the Increase in Disability Insurance Benefit Receipt in the United States,”
Journal of Economic Perspective, vol. 29, no. 2 (Spring 2015), https://www.aeaweb.org/jep/app/2902/
29020123_corr.pdf. See also Mary C. Daly, Brian Lucking, and Jonathan A. Schwabish, The Future of Social Security
Disability Insurance, Federal Reserve Bank of San Francisco, Economic Letter 2013-17, June 24, 2013,
http://www.frbsf.org/economic-research/files/el2013-17.pdf.
45
See David Pattison and Hilary Waldron, “Growth in New Disabled-Worker Entitlements, 1970–2008,” Social
Security Bulletin, vol. 73, no. 4 (November 2013), http://www.ssa.gov/policy/docs/ssb/v73n4/v73n4p25.html.
46
SSA, OACT, “Disability Insured Workers,” https://www.ssa.gov/oact/STATS/table4c2DI.html.
47
2015 Social Security Trustees Report, pp. 137-140.
48
See Kathy Ruffing, How Much of the Growth in Disability Insurance Stems From Demographic Changes?, Center
on Budget and Policy Priorities (CBPP), January 27, 2014, Table 1, p. 5, http://www.cbpp.org/research/how-much-ofthe-growth-in-disability-insurance-stems-from-demographic-changes?fa=view&id=4080.
49
Tim Zayatz, Social Security Disability Insurance Program Work Experience, SSA, OACT, Actuarial Study No. 123,
Table 4, August 2015, p. 22, http://www.ssa.gov/oact/NOTES/pdf_studies/study123.pdf.
50
Testimony of SSA Chief Actuary Stephen C. Goss, in U.S. Congress, House Committee on Ways and Means,
Subcommittee on Social Security, The Financing Challenges Facing the Social Security Disability Insurance Program,
113th Cong., 1st sess., March 14, 2013, http://www.ssa.gov/legislation/testimony_031413a.html.
51
SSA, Annual Statistical Supplement, 2014, April 2015, Table 6.C7, http://www.ssa.gov/policy/docs/statcomps/
supplement/2014/6c.html#table6.c7.
52
See David H. Autor and Mark G. Duggan, “The Rise in the Disability Rolls and the Decline in Unemployment,” The
Quarterly Journal of Economics (February 2003), pp. 158-205, http://economics.mit.edu/files/579.
44
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
also raised the value of disability benefits relative to early retirement benefits, which likely
impelled more individuals between the ages of 62 and FRA to apply for SSDI.
Furthermore, the Social Security Disability Benefits Reform Act of 1984 (P.L. 98-460), which
changed the evaluative criteria used in making disability determinations, contributed to the
growth in the number of SSDI beneficiaries with mental and musculoskeletal disorders.53 Because
such disorders are less likely to result in death compared with other qualifying impairments, the
growth in the share of beneficiaries with mental and musculoskeletal disorders likely increased
the average duration of benefit receipt and thus SSDI caseloads.54
Although most researchers agree that changes in the demographic characteristics of the workingage population account for a large share of the growth in the number of beneficiaries on SSDI,
there is considerable disagreement among researchers over how more “difficult to quantify
factors”—such as changes in opportunities for work and compensation or changes to federal
policy—have contributed to the growth in the program.55
The trustees project that the share of the insured population in receipt of SSDI will stabilize in the
future, because some of the principal drivers of past growth—namely, the aging of the insured
population and the increase in female enrollment rates—have come to pass and are not likely to
occur again.56 The 2015 Technical Panel on Assumptions and Methods—a panel of expert
actuaries, economists, and demographers convened by the Social Security Advisory Board
(SSAB) to review the assumptions and methods used by the trustees—recently concurred with
this assessment.57
Projected Status of the DI Trust Fund
This section examines the financial outlook of the DI trust fund under prior law and under the
Bipartisan Budget Act of 2015 (H.R. 1314; P.L. 114-74). Specifically, it discusses the projected
depletion year of the DI trust fund, that is, the year in which the balance of the trust fund falls to
zero. When a trust fund is depleted, it no longer has any asset reserves; however, it continues to
receive income from payroll taxes and the taxation of benefits.
The Social Security Act provides no guidance on the payment of benefits once a trust fund’s asset
reserves have been depleted and current tax revenues are insufficient to meet current cost.
Although individuals who meet Social Security’s eligibility requirements are legally entitled to
disability benefits,58 a provision in the Antideficiency Act prohibits a federal agency from
53
David H. Autor, The Unsustainable Rise of the Disability Rolls in the United States: Causes, Consequences, and
Policy Options, National Bureau of Economic Research, NBER Working Paper no. 17697, December 2011, p. 5,
http://www.nber.org/papers/w17697. See also L. Scott Muller et al., Trends in the Social Security and Supplemental
Security Income Disability Programs, SSA, August 2006, p. 44, http://www.ssa.gov/policy/docs/chartbooks/
disability_trends/index.html.
54
See Kalman Rupp and Charles G. Scott, “Trends in the Characteristics of DI and SSI Disability Awardees and
Duration of Program Participation,” Social Security Bulletin, vol. 59, no. 1 (January 1996), p. 3, http://www.ssa.gov/
policy/docs/ssb/v59n1/.
55
Gina Livermore, David Wittenburg, and David Neumark, “Finding alternatives to disability benefit receipt,” IZA
Journal of Labor Policy, 2014, p. 2. http://www.izajolp.com/content/pdf/2193-9004-3-14.pdf.
56
2015 Social Security Trustees Report, p. 140.
57
2015 Technical Panel on Assumptions and Methods, Report to the Social Security Advisory Board, September 2015,
p. 44, http://ssab.gov/Portals/0/Technical%20Panel/2015_TPAM_Final_Report.pdf?ver=2015-09-24-113145-693.
58
42 U.S.C. §423.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
spending in excess of available funds.59 Because the Social Security Act stipulates that SSDI
benefit payments shall be made only from the DI trust fund, without a change in the law, monthly
cash payments to beneficiaries could be delayed or reduced if the DI trust fund were depleted.60
Under Prior Law
The trustees estimate the future financial condition of the OASI and DI trust funds individually as
well as on a theoretical combined basis (i.e., as if the two trust funds were a single fund). In their
2015 report, which was released prior to the enactment of the Bipartisan Budget Act of 2015, the
trustees projected that the DI trust fund would be depleted in the fourth quarter of calendar year
2016. The trustees also projected that the OASI trust fund would be depleted in 2035 and the
theoretical combined OASDI trust funds would be depleted in 2034. Figure 4 shows the actual
and projected trust fund ratios of the OASI, DI, and combined OASDI trust funds under prior law.
A trust fund ratio is a measure of a trust fund’s asset reserves at the beginning of a year expressed
as a percentage of total cost for the year.61
Figure 4. Actual and Projected OASI, DI, and Combined OASDI Trust Fund Ratios
Under Prior Law, 1975-2036
(asset reserves at the beginning of the year as a share of annual cost)
450%
Actual
Projected
400%
350%
300%
250%
Estimated Depletion Year
Under Prior Law
DI:
OASI:
OASDI:
OASI
2016
2035
2034
200%
DI
150%
OASDI
(combined)
100%
50%
0%
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
Source: CRS, based on data from the 2015 Social Security Trustees Report, Table IV.B4, Single-Year Tables, at
https://www.ssa.gov/oact/tr/2015/lr4b4.html.
Note: Projections based on the intermediate assumptions of the 2015 trustees report.
59
31 U.S.C. §1341.
42 U.S.C. §401(h). See CRS Report RL33514, Social Security: What Would Happen If the Trust Funds Ran Out?, by
(name redacted) and (name redacted) , and CRS Report RL32822, Social Security Reform: Legal Analysis of Social
Security Benefit Entitlement Issues, by (name redacted) and (name redacted) .
61
2015 Social Security Trustees Report, p. 40.
60
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
In its June 2015 long-term budget outlook, the Congressional Budget Office (CBO) estimated that
the balance of the DI trust fund would be depleted sometime in FY2017.62 CBO projected that the
OASI trust fund would be depleted in calendar year 2031 and the theoretical combined OASDI
trust funds would be depleted in calendar year 2029. The Social Security trustees and CBO
sometimes project different depletion dates because the two organizations base their forecasts on
different demographic and economic assumptions.
Upon depletion of its asset reserves in late 2016, the trustees projected that continuing tax
revenues to the DI trust fund would have been sufficient to pay 81% of SSDI benefits.63 That
percentage was projected to rise to about 90% in the 2030s and then decline, returning to 81% in
2089 (Figure 5).64 A recent SSA study examined the characteristics of disabled-worker
beneficiaries in 2013.65 After accounting for SSDI benefits, the study’s authors estimated that
18.5% of disabled workers had family income below the poverty threshold.66 However, if only
81% of benefits had been payable that year, the authors estimated that the poverty rate for
disabled-worker beneficiaries would have been 25.5%.
Figure 5. The Projected Share of SSDI Benefits Payable Under Prior Law, 2015-2089
(prior law DI income expressed as a share of the cost of providing scheduled benefits)
Scheduled SSDI Benefits
100%
Benefit Reduction
80%
Payable SSDI Benefits Under Prior Law
60%
40%
20%
0%
2015
2025
2035
2045
2055
2065
2075
2085
Source: CRS, based on data provided by SSA’s OACT in Memorandum from Chris Chaplain, supervisory
actuary, and Daniel Nickerson, actuary, to Alice H. Wade, deputy chief actuary, “Present-Law OASDI Payable
62
Congressional Budget Office (CBO), The 2015 Long-Term Budget Outlook, June 2015, p. 55, https://www.cbo.gov/
publication/50250.
63
2015 Social Security Trustees Report, p.13.
64
Ibid.
65
Michelle Stegman Bailey and Jeffrey Hemmeter, “Characteristics of Noninstitutionalized DI and SSI Program
Participants, 2013 Update,” Research and Statistics Note no. 2015-2, September 2015, http://www.ssa.gov/policy/docs/
rsnotes/rsn2015-02.html.
66
Ibid., Table 6B.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Percentages: Present-Law Revenue as a Percent of the Cost of Providing Scheduled Benefits through Year 2089,”
August 27, 2015.
Note: Projections based on the intermediate assumptions of the 2015 trustees report.
Under the Bipartisan Budget Act of 2015
On November 2, 2015, President Barack Obama signed into law the Bipartisan Budget Act of
2015 (H.R. 1314; P.L. 114-74). Among its many provisions, the act authorized a temporary
reallocation of the Social Security payroll tax rate between the OASI and DI trust funds to
provide DI with a larger share for 2016 through 2018. Specifically, the DI trust fund’s share of the
tax rate for employees and employers, each, increased by 0.285 percentage point at the beginning
of 2016, from 0.900% to 1.185% (Table 4). On a combined basis, DI’s share of the tax rate
increased by 0.570 percentage point, from 1.800% to 2.370%. The change in the SECA rate
mirrors the change in the combined FICA rate.
Table 4. Social Security Payroll Tax Rates Under Prior Law and Under the Bipartisan
Budget Act of 2015
(as a percentage of taxable earnings)
Employees and Employers, Each (FICA)
Year
OASDI
OASI
DI
Self-Employed (SECA)
OASDI
OASI
DI
Rates Scheduled Under the Social Security Domestic Employment Reform Act of 1994 (P.L. 103-387)
2015+
6.200
5.300
0.900
12.400
10.600
1.800
Rates Scheduled Under the Bipartisan Budget Act of 2015 (P.L. 114-74)
2015
6.200
5.300
0.900
12.400
10.600
1.800
2016-2018
6.200
5.015
1.185
12.400
10.030
2.370
2019+
6.200
5.300
0.900
12.400
10.600
1.800
Source: CRS.
Because the act did not change the Social Security payroll tax rate, the portion of the tax rate
allocated to OASI decreased by a corresponding amount. This means that OASI’s share of the
6.200% tax rate for employees and employers, each, declined by 0.285 percentage point at the
start of 2016, from 5.300% to 5.015%. On a combined basis, OASI’s share of the 12.400% tax
rate declined by 0.570 percentage point, from 10.600% to 10.030%. Again, the change in the
SECA rate mirrors the change in the combined FICA rate. For 2019 and later, the shares allocated
to the DI and OASI trust funds are scheduled to return to their 2015 levels.
SSA’s Office of the Chief Actuary (OACT) projects that the reallocation schedule in the
Bipartisan Budget Act of 2015 will extend the solvency of the DI trust fund from the fourth
quarter of 2016 to approximately the third quarter of 2022 (Figure 6).67 Although the reallocation
is projected to reduce the solvency of the OASI trust fund by a number of months, OACT
estimates that the depletion year for OASI will remain unchanged at 2035.68 Because the
67
Letter from Stephen C. Goss, chief actuary, to the Honorable John Boehner, Speaker of the House of
Representatives, October 27, 2015, https://www.ssa.gov/oact/solvency/JBoehner_20151027.pdf (hereinafter “OACT
Letter to Speaker Boehner, October 2015”).
68
OACT’s projections for the OASI trust fund and the theoretical combined OASDI trust funds account for the effects
of several other provisions in the Bipartisan Budget Act of 2015 in addition to the payroll tax reallocation.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
reallocation does not change the total amount of Social Security tax revenues, OACT projects that
the depletion year for the theoretical combined OASDI trust funds will remain unchanged at
2034.
Figure 6. Actual and Projected DI Trust Fund Ratios Under Prior Law and Under the
Bipartisan Budget Act of 2015, 1995-2023
(asset reserves at the beginning of the year as a share of annual cost)
250%
Actual
Projected
200%
150%
100%
Under the Bipartisan
Budget Act of 2015
50%
0%
1995
Under Prior Law
1998
2001
2004
2007
2010
2013
2016
2019
2022
Source: CRS, based on the Social Security Advisory Board (SSAB), “Did You Know? The Bipartisan Budget Act
of 2015 extended the expected date of the DI trust fund reserve depletion by 6 years to 2022 from 2016,”
Chart 1, http://www.ssab.gov/Facts-and-Figures/Did-You-Know-Charts/Disability-Trust-Fund-Solvency.
Note: Projections based on the intermediate assumptions of the 2015 trustees report.
CBO projects that the reallocation will extend the solvency of the DI trust fund from FY2017 to
FY2021.69 The agency estimates that the reallocation will reduce the solvency of the OASI trust
fund slightly, shifting the depletion year from calendar year 2031 to calendar year 2030. The
depletion year for the theoretical combined OASDI trust funds is projected to remain unchanged
at calendar year 2029 under CBO’s extended baseline projections (see Table 5).
Table 5. Projected Depletion Years for the OASI, DI, and Combined OASDI Trust
Funds Under Prior Law and Under the Bipartisan Budget Act of 2015, by Agency
OACT
CBO
Depletion Year Projections—
OASDI
OASI
DI
OASDI
OASI
DI
Under Prior Law
2034
2035
2016
2029
2031
FY2017
Under the Bipartisan Budget Act of 2015a
2034
2035
2022
2029
2030
FY2021
69
CBO, CBO’s 2015 Long-Term Projections for Social Security: Additional Information, December 2015, p. 2,
https://www.cbo.gov/publication/51047.
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Source: CRS, based on the following sources: the 2015 Social Security Trustees Report; Letter from Stephen C.
Goss, chief actuary, to the Honorable John Boehner, Speaker of the House of Representatives, October 27,
2015, https://www.ssa.gov/oact/solvency/JBoehner_20151027.pdf; U.S. Congressional Budget Office (CBO), The
2015 Long-Term Budget Outlook, June 2015, p. 55, https://www.cbo.gov/publication/50250; and CBO, CBO’s 2015
Long-Term Projections for Social Security: Additional Information, December 2015, p. 2, https://www.cbo.gov/
publication/51047.
Notes: Unless otherwise stated, years presented in the table are calendar years. The “depletion year” is the
year in which the balance of the trust fund falls to zero.
a. OACT’s projections for the OASI trust fund and the theoretical combined OASDI trust funds account for
the effects of several other provisions in the Bipartisan Budget Act of 2015 in addition to the temporary
payroll tax reallocation. CBO’s projections do not account for these effects.
Use of Reallocations by Congress in the Past
As shown in Table 6, Congress has authorized the reallocation of the payroll tax rate multiple
times in the past. For the purposes of this report, a reallocation occurs when (1) the overall tax
rate remains the same but the shares allocated to the trust funds change proportionally or (2) the
overall tax rate changes and the shares allocated to the trust funds change in opposite directions.70
In other words, a reallocation increases tax revenues to one trust fund and decreases revenues to
the other regardless of whether the overall Social Security tax rate increases, decreases, or stays
the same.
Lawmakers have historically included payroll tax reallocations in major amendments to the
Social Security Act in order to put the OASI and DI trust funds on a more or less equal financial
footing. However, reallocations have been used at times to extend the solvency of nearly depleted
trust funds. Payroll tax reallocations have sometimes benefited the DI trust fund and at other
times have favored the OASI trust fund. Reallocation legislation may contain a rate schedule that
changes the allocation between the trust funds multiple times and in different directions.
With respect to the “number of times” the payroll tax rate has been reallocated, some people tally
pieces of legislation authorizing either a single reallocation or a reallocation schedule, whereas
others count each instance in which a reallocation occurred. Because FICA taxes account for
nearly all payroll tax revenues to the Social Security trust funds, people generally count
reallocations affecting the FICA rate.71
70
See Kathy A. Ruffing and Paul N. Van de Water, Congress Needs to Boost Disability Insurance Share of Payroll Tax
by 2016: Traditional Step Would Avert Trust Fund Depletion, Benefit Cuts, Center on Budget and Policy Priorities,
July 31, 2014, http://www.cbpp.org//sites/default/files/atoms/files/7-16-14socsec.pdf. See also Virginia P. Reno, Elisa
A. Walker, and Thomas N. Bethell, Social Security Disability Insurance: Action Needed to Address Finances, National
Academy of Social Insurance, Brief no. 41, June 2013, https://www.nasi.org/sites/default/files/research/
SS_Brief_041.pdf.
71
In 2014, FICA taxes accounted for 94% of all payroll tax revenues to the Social Security trust funds on a combined
basis. See SSA, OACT, “Social Security & Medicare Tax Data,” https://www.ssa.gov/oact/ProgData/taxquery.html.
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Table 6. Legislation Reallocating the Social Security Payroll Tax Rate
Public Law
Number
Name
Date of
Enactment
Reallocation
Direction
Reallocated the FICA
Rate?a
Reallocated the SECA
Rate?a
P.L. 90-248
Social Security Amendments of 1967
January 2, 1968
OASI to DI
Yes (once)
Yes (once)
P.L. 91-172
Tax Reform Act of 1969
December 30,
1969
OASI to DI
Yes (once)
Yes (once)
P.L. 92-603
Social Security Amendments of 1972b
October 30, 1972
DI to OASI
No
Yes (once)
P.L. 93-233
“Social Security Benefits Increase Act of
1973"c
December 31,
1973
OASI to DI
No
Yes (once)
P.L. 95-216
Social Security Amendments of 1977
December 20,
1977
Both Directionsd
Yes (twice)
Yes (once)
P.L. 96-403
“Reallocation of Social Security Tax Receipts
Act of 1980"e
October 9, 1980
Both Directionsf
Yes (twice)
Yes (twice)
P.L. 98-21
Social Security Amendments of 1983
April 20, 1983
DI to OASIg
Yes (twice)
Yes (once)
P.L. 103-387
Social Security Domestic Employment
Reform Act of 1994
October 22, 1994
Both Directionsh
Yes (3 times)
Yes (3 times)
P.L. 114-74
Bipartisan Budget Act of 2015
November 2, 2015
Both Directionsi
Yes (twice)
Yes (twice)
Source: Compiled by CRS from the following sources: SSA, OACT, “Social Security Tax Rates,” https://www.ssa.gov/oact/progdata/oasdiRates.html; SSA, “Social
Security History: Legislative Histories 1935-2004,” Downey Books, https://www.ssa.gov/history/legislativehistory.html; and SSA, OACT, “Reports from the Board of
Trustees,” various years, https://www.ssa.gov/oact/tr/.
Notes: A reallocation occurs when (1) the overall tax rate remains the same but the shares allocated to the trust funds change proportionally or (2) the overall tax rate
changes and the shares allocated to the trust funds change in opposite directions.
a. This column refers to reallocations that were implemented (or are scheduled to be implemented) under each law specified in the table; it does not refer to
reallocations that were scheduled and then superseded by subsequent law.
b. P.L. 92-603 amended the rate schedule enacted earlier that year under P.L. 92-336, “An Act to provide for a four-month extension of the present temporary level in
the public debt limitation, and for other purposes.”
c. P.L. 93-233 is titled “An Act to provide a 7-percent increase in social security benefits beginning with March 1974 and an additional 4-percent increase beginning
with June 1974, to provide increases in supplemental security income benefits, and for other purposes.”
d. The 1977 amendments reallocated the FICA and SECA rates to improve the balance of the DI trust fund in 1978 and reallocated the FICA rate to improve the
balance of the OASI trust fund in 1979.
e. P.L. 96-403 is titled “An Act to amend title II of the Social Security Act to make necessary adjustments in the allocation of social security tax receipts between the
Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund.”
CRS-20
f.
g.
h.
i.
CRS-21
The 1980 amendments provided for a temporary reallocation of the total tax rate to improve the balance of the OASI trust fund in 1980. In 1982, the change in the
tax rates expired and more revenues were directed back to the DI trust fund.
The 1983 amendments reallocated the FICA and SECA rates to improve the balance of the OASI trust fund in 1983. In 1984, the total tax rate increased and the
FICA rate was reallocated again to give additional revenues to the OASI trust fund.
The 1994 reallocation, which was enacted to improve the balance of the DI trust fund, occurred in three stages. The first and third stages reallocated the payroll tax
rate from the OASI trust fund to the DI trust fund, while the second stage reallocated the tax rate from the DI trust fund to the OASI trust fund.
In 2016, the share of the payroll tax rate allocated to the DI trust fund increased and the share allocated to the OASI trust fund decreased. In 2019, the share
allocated to the OASI trust fund is scheduled to increase and the share allocated to the DI trust fund is scheduled to decrease.
The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
House Rules Change in the 114th Congress
Concerning Reallocations Between the Social
Security Trust Funds
At the start of the 114th Congress, the House adopted a rule sponsored by Representative Sam
Johnson intended to engender structural changes to SSDI.72 Known as the “Johnson Rule,”
Section 3(q) of H.Res. 5 allows a point of order to be raised against legislation that would reduce
the actuarial balance of the OASI trust fund by at least 0.01% of the present value of projected
future taxable payroll over the 75-year period used in the most recent Social Security trustees
report.73 However, the point of order would not apply if the legislation, as a whole, were projected
to improve the long-term actuarial balance of the OASI and DI trust funds on a combined basis.
Therefore, a short-term financing measure (such as a reallocation) could be considered if it also
included revenue increases, cost reductions, or both, even if those changes were projected to have
very small positive effects on the theoretical combined OASDI trust funds.
In their 2015 report, the trustees project that the present value of future taxable payroll from 2015
through 2089 will be nearly $421 trillion.74 The current threshold, therefore, is $42.1 billion
(0.01% of $421 trillion).75 CBO projects that the reallocation schedule enacted in the Bipartisan
Budget Act of 2015 (H.R. 1314; P.L. 114-74) will increase income from payroll taxes to the DI
trust fund by $117 billion and reduce income from payroll taxes to the OASI trust fund by the
same amount.76
If the reallocation provision in the Bipartisan Budget Act of 2015 had been proposed as a
standalone piece of legislation, it could have been vulnerable to a point of order under the new
rule because it would have reduced the actuarial balance of the OASI trust fund by more than
72
Office of Rep. Sam Johnson, “House Passes Johnson Measure to Protect Social Security,” press release, January 6,
2015, http://samjohnson.house.gov/news/documentsingle.aspx?DocumentID=397616. The House rule was also
included in the FY2016 budget resolution (see Section 3301 of S.Con.Res. 11).
73
For general information on points of order, see CRS Report 98-307, Points of Order, Rulings, and Appeals in the
House of Representatives, by (name redacted) . Actuarial balance is the difference between a trust fund’s
summarized income and cost rates. The summarized income rate is the sum of the present value of non-interest income
and the balance of the trust fund at the beginning of the 75-year period, expressed as a share of the present value of
taxable payroll for the period. The summarized cost rate is the sum of the present value of cost over the 75-year period
and the present value of the cost of reaching a trust fund ratio of 100% at the end of the period, expressed as a
percentage of the present value of taxable payroll for the same period. Present value is “a single number that expresses
a flow of past and future income (in taxes) or payments (in benefits) in terms of an equivalent lump sum received or
paid at a specific time. The value depends on the rate of interest, known as the discount rate, used to translate past and
future cash flows into current dollars at that time.” See CBO, Social Security Policy Options, 2015, December 2015, p.
91, https://www.cbo.gov/publication/51011.
74
2015 Social Security Trustees Report, Table IV.B6.
75
SSA’s Chief Actuary, Stephen C. Goss, told Politico in January 2015 that the threshold under H.Res. 5 was $38.6
billion. That threshold was based on the present value of projected future taxable payroll in the 2014 trustees report
(0.01% of $386.884 trillion is $38.6884 billion). See David Rogers, “Republicans target Social Security disability,”
Politico, January 20, 2015, http://www.politico.com/story/2015/01/republicans-target-social-security-114382. See also
U.S. Congress, House Committee on Ways and Means, The 2014 Annual Report of the Board of Trustees of the
Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, 113th Cong., 2nd sess., July
28, 2014, H.Doc. 113-139 (Washington: GPO, 2015), Table IV.B5, https://www.ssa.gov/oact/tr/2014/
IV_B_LRest.html#493472.
76
CBO, Estimate of the Budgetary Effects of H.R. 1314, the Bipartisan Budget Act of 2015, as reported by the House
Committee on Rules on October 27, 2015, p. 5, footnote 2, https://www.cbo.gov/publication/50938.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
$42.1 billion. However, because the budget agreement also contained several provisions that are
projected to improve the long-term actuarial balance of the theoretical combined OASDI trust
funds by 0.04% of taxable payroll, the point of order under Section 3(q) of H.Res. 5 was not
applicable during House consideration of the Bipartisan Budget Act of 2015.77
Long-Term Policy Options
To improve the financial outlook of the DI trust fund over the long term, Congress could consider
a variety of legislative changes to increase tax revenues, reduce program cost (i.e., alter benefit
levels or program eligibility requirements), or some combination of those approaches. The last
major congressional effort to address the financial condition of one of the Social Security trust
funds occurred in the early 1980s with the passage of the Social Security Amendments of 1983
(P.L. 98-21). Under the 1983 amendments, Congress used a combination of revenue increases and
cost reductions to stabilize and eventually improve the solvency of the OASI trust fund.78
Congress could enact similar legislation to improve the long-term solvency of either the DI trust
fund only or both trust funds.
For information on reform proposals that would affect the solvency of the DI trust fund (or both
trust funds), see the following resources:
CRS Report R43054, Social Security Disability Insurance (SSDI) Reform: An
Overview of Proposals to Manage the Growth in the SSDI Rolls, by (name redac
ted) ;
CBO’s 2012 report, Policy Options for the Social Security Disability Insurance
Program, at http://www.cbo.gov/publication/43421;
CBO’s 2015 report, Social Security Policy Options, 2015, at
https://www.cbo.gov/publication/51011;
OACT’s Summary of Provisions That Would Change the Social Security
Program, at https://www.ssa.gov/oact/solvency/provisions/summary.pdf;
OACT’s collection of cost estimates for various proposals affecting the solvency
of the trust funds at https://www.ssa.gov/oact/solvency/index.html; and
the Government Accountability Office’s (GAO) 2015 report, Social Security’s
Future: Answers to Key Questions, at http://www.gao.gov/products/GAO-1675SP.
77
For more information on the effects of other provisions in the Bipartisan Budget Act of 2015 on the solvency of the
Social Security trust funds, see OACT Letter to Speaker Boehner, October 2015.
78
See John A. Svahn and Mary Ross, “Social Security Amendments of 1983: Legislative History and Summary of
Provisions,” Social Security Bulletin, vol. 46, no. 7 (July 1983), https://socialsecurity.gov/policy/docs/ssb/v46n7/
v46n7p3.pdf.
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Appendix A. Congressional Rationale for the
Creation of a Separate DI Trust Fund
The creation of a separate DI trust fund came about during the debate over the establishment of
SSDI as part of the Social Security Amendments of 1956 (P.L. 84-880).79 Since the late 1930s,
policymakers had discussed proposals to amend the Social Security Act to provide covered
workers with disability insurance.80 However, persistent disagreements among policymakers over
how to implement a disability insurance program or whether such a program should be enacted at
all derailed most proposals early in the deliberative process.81 Nevertheless, by the 1950s, there
was enough support for the creation of a federal disability insurance program for Congress to
consider the matter.82
Origins of Social Security (OASDI)
On July 11, 1955, Representative Jere Cooper
(D-TN), the chair of the House Committee on
1935 (Old-Age Insurance): The Social Security Act
(P.L. 74-271) created a national old-age benefits program,
Ways and Means, introduced a bill to amend
covering nearly all workers in commerce and industry
Title II of the Social Security Act to provide
and providing monthly pensions at age 65 for insured
monthly benefits to insured workers aged 50
workers.
to 64 with qualifying impairments, among
1939 (Survivors Insurance): The Social Security
other provisions (H.R. 7225). Under the bill,
Amendments of 1939 (P.L. 76-379) amended Title II of
disability benefits would have been paid from
the Social Security Act to provide monthly benefits to
eligible dependents and survivors of insured workers.
the OASI trust fund and payroll tax rates
The 1939 amendments also established the OASI trust
would have been increased to cover the
fund.83
associated costs. The House report
1956 (Disability Insurance): The Social Security
accompanying H.R. 7225 did not discuss the
Amendments of 1956 (P.L. 84-880) amended Title II to
creation of a separate trust fund for the
provide monthly benefits to insured workers aged 50 to
84
proposed disability insurance program. The
64 with qualifying impairments. The 1956 amendments
also created the DI trust fund.
House passed H.R. 7225, with amendments,
by a vote of 372 (169-R, 203-D) to 31 (23-R,
8-D) on July 18, 1955 (R = Republican, D = Democrat).85
79
See Charles I. Schottland, “Social Security Amendments of 1956: A Summary and Legislative History,” Social
Security Bulletin, vol. 19, no. 9 (September 1956), https://www.ssa.gov/policy/docs/ssb/v19n9/.
80
Edward D. Berkowitz, Disabled Policy: American’s Programs for the Handicapped (New York: Cambridge
University Press, 1987), pp. 41-78 (hereinafter “Berkowitz 1987”).
81
Ibid. See also U.S. Congress, House Committee on Ways and Means, Committee Staff Report on the Disability
Insurance Program, prepared by the Staff of the Committee of on Ways and Means, 93 rd Cong., 2nd sess., July 1974
(Washington: GPO, 1974), pp. 107-113, http://www.ssa.gov/history/reports/dibhistory.html.
82
Ibid. See also John R. Kearney, “Social Security and the ‘D’ in OASDI: The History of a Federal Program Insuring
Earners Against Disability,” Social Security Bulletin, vol. 66, no. 3 (August 2006), https://www.ssa.gov/policy/docs/
ssb/v66n3/v66n3p1.html.
83
The OASI trust fund superseded the Old-Age Reserve Account created under the Social Security Act in 1935
(P.L.74-271). The OASI trust fund became effective on January 1, 1940. For more information on the origins of the
OASI trust fund and Old-Age Reserve Account, see Board of Trustees of the Federal Old-Age and Survivors Insurance
Trust Fund, First Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund, January
3, 1941, https://www.ssa.gov/history/reports/trust/tf1941.html.
84
U.S. Congress, House Committee on Ways and Means, Social Security Amendments of 1955, report to accompany
H.R. 7225, 84th Cong., 1st sess., July 14, 1955, H.Rept. 1189.
85
“Social Security Amendments of 1955,” Congressional Record, vol. 101, part 8 (July 18, 1955), Roll call no. 119,
not voting 29, pp. 10798-10799. See also SSA, “Vote Tallies: 1956 Social Security Amendments,”
(continued...)
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Although H.R. 7225 passed overwhelmingly in the House, the bill faced marked opposition in the
Senate. One of the main concerns among Members who opposed the bill was the uncertainty over
its potential cost. Some lawmakers worried that economic downturns would impel unemployed
workers to apply to the disability insurance program, affecting the solvency of the OASI trust
fund. Given these concerns, the Senate Committee on Finance removed the disability insurance
provisions from H.R. 7225. The Senate report accompanying the 1956 amendments stated,
Difficulties in determining eligibility, and other factors, lead to uncertainty as to the
future costs of a cash disability program. Cost estimates in the field of disability benefits,
as pointed out by the Chief Actuary of the Social Security Administration, are subject to a
wider range of variation than are estimates for other types of benefits. The basic cost
estimates which have been presented to the committee were based on high employment
conditions; under low employment conditions, the cost would be significantly higher.
The old-age and survivors insurance system is on a sound financial basis; your committee
strongly believes that it must be kept so and should not be altered by adding a benefit
feature that could involve substantially higher costs than can be estimated.86
During Senate floor debate on H.R. 7225, Senator Walter F. George (D-GA) offered an
amendment reinstating the disability insurance program along with the tax increase to finance it.
To address concerns that a disability insurance program would pose a risk to the solvency of the
OASI trust fund, the George amendment provided for a separate trust fund from which disability
benefits would be paid. Supporters of the George amendment argued that a separate DI trust fund
would isolate the OASI trust fund from any cost increases stemming from the new disability
insurance program. For instance, during floor debate, Senator Thomas C. Hennings, Jr. (D-MO)
remarked,
The pending proposal, which the senior Senator from Georgia has submitted for himself
... proposes to set aside a separate trust fund for disability, and consequently does not go
so far as to include it within the social-security framework. I believe this to be an
extremely workable compromise—one which will eliminate any fear that the old-age and
survivors insurance fund will be endangered, although I for one never shared this
concern.87
Opponents of the George amendment argued that the creation of a separate DI trust fund would
not sufficiently address their concerns about the potential cost of the program. Senator Wallace F.
Bennett (R-UT) noted,
The supporters of this amendment tell us that by setting up a separate trust fund they are
not going to jeopardize the actuarial balance of the program of social security. I think it is
rather obvious that once this amendment is enacted, there is small chance that the
program would be discontinued because of lack of funds. The pressure to provide the
necessary funds, either through direct Government grant or through increased taxes on
the social security taxpayers, would demand the employment of one of those
alternatives.88
(...continued)
https://www.ssa.gov/history/tally56.html. CRS was unable to find any discussion of a separate DI trust fund during the
House floor debate on H.R. 7225.
86
U.S. Congress, Senate Committee on Finance, Social Security Amendments of 1956, 84th Cong., 2nd sess., June 5,
1956, S.Rept. 2133, p. 4, http://www.finance.senate.gov/imo/media/doc/Rpt84-2133.pdf.
87
Sen. Thomas C. Hennings, Jr., “Social Security Amendments of 1956,” Senate debate, Congressional Record, vol.
102, part 10 (July 17, 1956), p. 13043.
88
Sen. Wallace F. Bennett, “Social Security Amendments of 1956,” Senate debate, Congressional Record, vol. 102,
part 10 (July 17, 1956), p. 13035.
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The Senate narrowly passed the George amendment by a vote of 47 (6-R, 41-D) to 45 (38-R, 7D).89 The Senate went on to pass its version of H.R. 7225 by a vote of 90 (45-R, 45-D) to 0 on
July 17, 1956.90
In conference, the House adopted the Senate provision establishing a separate DI trust fund.91 The
conference report on H.R. 7225 was cleared, without amendments, by voice votes in the House
on July 26, 1956,92 and in the Senate on July 27, 1956.93 Following consideration of the
conference report, Senator George stated in support of his amendment:
Another feature of our proposal is that the funds for disability payments are earmarked in
a wholly separate fund. These moneys will not be commingled in any way with the funds
for old age insurance or for widows and orphans. The contribution income and the
disbursements for disability payments will be kept completely distinct and separate. In
this way the cost of disability benefits always will be definitely known and the costs
always will be shown separately.
The disability program is limited to a total of one-quarter of 1 percent of payroll from
employers, one-quarter of 1 percent from employees’ and three-eighths of 1 percent from
the self-employed and disbursements cannot exceed the amount available for this
purpose. Thus, the argument that has been made against the original proposal as
considered by the Finance Committee, namely, that the cost of the proposal cannot be
determined, is met by our amendment. Moreover, another argument that was made
against the original proposal that the program eventually may cost more than originally
estimated and may thus divert some of the funds from old-age or survivors insurance is
also met by our proposal. Senators who have had any doubts about the financial aspects
of the proposal can vote for the amendment with complete assurance as to its financial
soundness.94
The DI trust fund was established on August 1, 1956—the day President Dwight D. Eisenhower
signed into law the Social Security Amendments of 1956 (P.L. 84-880).95
89
“Social Security Amendments of 1956,” Congressional Record, vol. 102, part 10 (July 17, 1956), not voting 4, p.
13056. For background information on the George amendment, see SSA, “Legislative History: 1993 Disability Forum,”
https://www.ssa.gov/history/dibforum93.html. See also Berkowitz 1987, pp. 73-77.
90
“Social Security Amendments of 1956,” Congressional Record, vol. 102, part 10 (July 17, 1956), p. 13103.
91
U.S. Congress, Conference Committee, Social Security Amendments Act of 1956, report to accompany H.R. 7225,
84th Cong., 2nd sess., July 26, 1956, H.Rept. 2936, pp. 25-26, http://www.finance.senate.gov/imo/media/doc/
ConfRpt84-2936.pdf.
92
“Amending Title II of Social Security Act,” House, Congressional Record, vol. 102, part 11 (July 26, 1956), p.
14828.
93
“Social Security Act Amendments of 1956—Conference Report,” Congressional Record, vol. 102, part 11 (July 27,
1956), p. 15107.
94
Sen. Walter F. George, “Social Security Act Amendments of 1956—Conference Report,” remarks in the Senate,
Congressional Record, vol. 102, part 11 (July 27, 1956), p. 15108.
95
U.S. Department of Health, Education, and Welfare, SSA, Social Security Amendments of 1956 Volume 1, 84th
Congress, Downey Books, https://www.ssa.gov/history/legislativehistory.html.
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The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Appendix B. Key Dates Projected for the Social
Security Trust Funds
Table B-1. Key Dates Projected for the Social Security Trust Funds as Shown Under
the Intermediate Assumptions in Trustees Reports from 1983 to 2015
Year of
Report
Year of Projected
Depletion
OASI
DI
Year That Cost First Exceeds
Non-Interest Income
Year That Cost First
Exceeds Total Income
OASDI
OASI
DI
OASDI
OASI
DI
OASDI
Intermediate II-B Projectionsa
1983
b
b
b
c
c
2021
c
c
2047
1984
b
2050
b
2021
2012
2021
2045
2038
2044
1985
2050
2034
2049
2019
2010
2019
2032
2020
2032
1986
2054
2026
2051
2020
2009
2019
2035
2017
2033
1987
2055
2023
2051
2020
2008
2019
2036
2013
2033
1988
2050
2027
2048
2019
2009
2019
2033
2016
2032
1989
2049
2025
2046
2019
2009
2018
2032
2014
2030
1990
2046
2020
2043
2019
2008
2017
2030
2011
2028
Intermediate Projections
1991
2045
2015
2041
2018
1998
2017
2030
2011
2028
1992
2042
1997
2036
2018
1992
2016
2028
1992
2024
1993
2044
1995
2036
2019
1993
2017
2030
1993
2025
1994
2036
1995
2029
2016
1994
2013
2024
1994
2019
1995
2031
2016
2030
2014
2003
2013
2021
2007
2020
1996
2031
2015
2029
2014
2003
2012
2021
2007
2019
1997
2031
2015
2029
2014
2004
2012
2021
2007
2019
1998
2034
2019
2032
2015
2006
2013
2023
2009
2021
1999
2036
2020
2034
2015
2006
2014
2024
2009
2022
2000
2039
2023
2037
2016
2007
2015
2026
2012
2025
2001
2040
2026
2038
2016
2008
2016
2027
2015
2027
2002
2043
2028
2041
2018
2009
2017
2028
2018
2027
2003
2044
2028
2042
2018
2008
2018
2030
2018
2028
2004
2044
2029
2042
2018
2008
2018
2029
2017
2028
2005
2043
2027
2041
2018
2005
2017
2028
2014
2027
2006
2042
2025
2040
2018
2005
2017
2028
2013
2027
2007
2042
2026
2041
2018
2005
2017
2028
2013
2027
2008
2042
2025
2041
2018
2005
2017
2028
2012
2027
2009
2039
2020
2037
2017
2005
2016
2025
2009
2024
Congressional Research Service
27
The Social Security Disability Insurance (DI) Trust Fund: Background and Current Status
Year of Projected
Depletion
Year That Cost First Exceeds
Non-Interest Income
Year That Cost First
Exceeds Total Income
Year of
Report
OASI
DI
OASDI
OASI
DI
OASDI
OASI
DI
OASDI
2010
2040
2018
2037
2018
2005
2015
2026
2009
2025
2011
2038
2018
2036
2017
2005
2010
2025
2009
2023
2012
2035
2016
2033
2010
2005
2010
2023
2009
2021
2013
2035
2016
2033
2010
2005
2010
2022
2009
2021
2014
2034
2016
2033
2010
2005
2010
2022
2009
2020
2015d
2035
2016
2034
2010
2005
2010
2022
2009
2020
Source: CRS, based on data from the 1983 to 2015 Social Security trustees reports and information provided
by SSA.
a. From 1983 to 1990, two intermediate forecasts were prepared (II-A and II-B). The intermediate II-B
forecast corresponds more closely to the intermediate forecast in subsequent years.
b. Trust fund expected to remain solvent throughout the long-range projection period.
c. Not available.
d. The depletion dates in the 2015 trustees report were projected before the enactment of the Bipartisan
Budget Act of 2015 (P.L. 114-74).
Author Contact Information
(name redacted)
Analyst in Income Security
[redacted]@crs.loc.gov , 7-....
Congressional Research Service
28
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