All Sections

Home | Health

State saves millions by shifting disability costs to feds

New Hampshire Union Leader

April 21. 2013 1:30AM

Four years ago, in the depths of the Great Recession, staffers in the state Division of Family Assistance started to notice that people were applying for disability income through the state, but not following through with their federal applications.

"In 2009, we began asking the question: Are we maximizing federal revenue in our state programs?" said Terry Smith, division director. "So I met with Social Security, and we did a case load analysis."

The analysis showed the state could save millions by making sure all federal options were exhausted before state assistance kicked in through Aid to the Permanently and Totally Disabled (APTD), which was intended to supplement, not replace, Social Security Disability Income (SSDI).

In March 2010, three staff members in the division were reassigned to a newly created Facilitated Social Security Unit, with impressive results.

"We began an initiative to make sure that everyone on our state disability program was required to apply for federal cash benefits because we count that as income and pay them less in state dollars," said Smith. "Right now we are saving the state about $7 million a year with that initiative, and we're proud of that."

The number of Granite State adults receiving Social Security disability checks has gone up over the past three years, while the dollars spent by New Hampshire on disability assistance have gone down.

Before the initiative began in December 2009, the average monthly state supplemental grant for disability was $203. By December 2012, the average had dropped to $131, a savings of 36 percent.

The state's case load is dropping as well. In 2011, the state reported 8,773 disability cases. That number declined to 8,468 in 2012 and to 7,893 in 2013, through March.

Meanwhile, the number of New Hampshire adults receiving Social Security disability checks increased from 39,678 in 2009 - the year the state initiative began - to 45,218 in 2011, the most recent year available from the Social Security Administration.

"We push clients into doing the Social Security applications and appeals," said Smith. "We don't actually do any of the work for them, but we require them to provide verifications to us that they have done their job."

A national trend

The increase in the number of working-age adults on Social Security disability is a trend that's playing out across the country and has been widely reported in national media, including the Wall Street Journal.

"Economists say relatively few people are likely to trade their disability checks for paychecks, in part, because the program doesn't give much incentive to leave," the newspaper reported on April 30.

"Payments, tied to a worker's wage history, average $1,130 a month, which totals about $13,560 a year. That's about $2,000 a year more than the federal poverty level for a single person and about $2,000 less than full-time work at the federal minimum of $7.25 an hour.

After two years, people on disability are eligible for Medicare health insurance - another government benefit that encourages people to stay put," the paper said.

According to the latest data available, fewer than 0.5 percent of disability beneficiaries returned to work in 2011. "Most leave the program by advancing to the Social Security retirement program (at age 65), or they die," the Journal reported.

The increasing number of workers on disability, combined with other economic and demographic changes, has led to a steady decline in what economists call work force participation - the percentage of Americans older than 16 who are in the work force, either working or looking for work.

The national labor force participation rate was close to 67 percent in 2003, which is high considering that a portion of the population is retired. It has been declining since then, however, and hit 63 percent in March.

In New Hampshire, however, work force participation has remained steady, even as the number of workers on disability continues to grow.

The state has historically had good worker participation rates when compared with the national average, with a high-water mark of 73.2 percent in 1999, when unemployment was 2.8 percent and basically anyone who wanted a job could get one.

The participation rate during the recession, from 2009 to 2010, was 70 percent, and for 2012 was 69.6 percent. The work force nationally is shrinking, "but we don't see that as much in New Hampshire," said Annette Nielsen, an economist with New Hampshire Employment Security.

The unemployment rate in New Hampshire during the recession was not as bad as elsewhere, which meant fewer discouraged workers, she said. The state is losing workers, but that loss has been offset by a larger than average number of aging boomers who are holding on to their jobs.

Disability chart

Business Health Labor Social issues Top Section Stories

Follow us on Twitter Follow us on Facebook Follow our RSS feed
Union Leader app for Apple iPad or Android *
Click to download from Apple Apps StoreClick to download from Android Marketplace
* e-Edition subscription required