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Mental Health Could Have Major Impact on Social Security Trust Fund

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What You Need to Know

  • Congress could move funds from the disability trust fund to the OASI trust fund to shore up the retirement benefit shortfall.
  • Financial hardship is often accompanied by a spike in disability claims.
  • Disability claims could increase and potentially eliminate the surplus.

In June, the trustees of the Social Security and Medicare trust funds released their annual report about the financial status of the programs. The future of the old age survivor insurance (OASI) fund looks bleak as the 2033 depletion date is rapidly approaching. In comparison, the trustees projected a surplus for the disability insurance trust fund. When considered together, the OASDI depletion projection is 2034.

Trustees Report Projections for the Disability Trust Fund

Following the recent trend, the report assumes disability claims will continue to decrease. Instead of the current 5 per 1,000 people claiming, the trustees estimate that 4.8 per 1,000 people will claim disability. That change alone represents 60% of the movement in the trust fund projections.

Historically, there have been more significant shortfalls in the disability insurance trust fund than in the old age survivor insurance trust fund. Congress allocated money from the OASI trust fund to address the funding issues and effectively blended the two. If the disability trust fund experience follows as projected, Congress could move funds from the disability trust fund to the OASI trust fund to help shore up the retirement benefit shortfall. But will the projected disability surplus materialize, or will disability claims increase and eliminate the surplus? 

Could Disability Claims Increase?

According to the World Health Organization, the COVID-19 pandemic has directly affected many people’s mental health. In 2020, there was a 27.6% increase in cases of major depressive disorder and a 25.6% increase in anxiety disorders. People are leaving the workforce due to mental health, and some of these mental health conditions, including anxiety and depression, are covered by Social Security disability.

Why are disability claims decreasing if the number of people with mental health disorders continues to increase? In the first years of the pandemic, the federal government offered financial assistance. The 2020 CARES Act paused federal student loan payments and stopped interest from accruing. In addition, individuals who earned less than $75,000 received tax rebates.