Disability Determination and the Claims Process
[from the 2000 "Green Book", House Ways and Means Comm.]

The claims process

The Social Security claims process is a complex multilayered structure that is inextricably linked with the disability determination process. Application for disability benefits is made at the Social Security field office where the applicant is interviewed and the sources of medical evidence are recorded. After determining whether the applicant meets the insured status requirements, the SSA field office sends the case to the State Disability Determination Service (DDS), which makes the initial determination of disability. If an applicant or beneficiary is dissatisfied with an initial denial or termination of disability benefits by the DDS, she can request a reconsideration within 60 days of receipt of the notice of denial. The reconsideration on the disability claim is carried out by the DDS by personnel other than those who made the initial determination.

An applicant denied benefits at the reconsideration stage may request a hearing before an administrative law judge (ALJ) in SSA's Office of Hearings and Appeals, provided he files a request for a hearing within 60 days of receipt of the notice of denial. If the claim is denied by the ALJ, the applicant has 60 days to request review by the appeals council. The appeals council is a 24-member body located in the Office of Hearings and Appeals. The appeals council may also, on its own motion, review a decision within 60 days of the ALJ's decision. The 1980 disability amendments required the appeals council to review a percentage of ALJ hearing decisions.

The appeals council may affirm, modify, or reverse the decision of the ALJ, or may remand it to the ALJ for further development. The applicant is notified in writing of the final action of the appeals council, and is informed of his right to obtain further review by commencing a civil action within 60 days in a U.S. District Court.

Under current law, as amended by the 1984 Disability Benefits Reform Act, disability insurance (DI) beneficiaries whose benefits have been terminated because of recovery or improvement in the medical condition that was the basis for the disability have the opportunity to receive a hearing at the reconsideration stage and can elect to continue to receive disability and Medicare benefits through the ALJ hearing stage of the appeals process, subject to recovery.

Chart 1-2 shows the number of cases allowed and appealed at various levels of appeal for application decisions and continuing disability reviews (CDRs) processed by State agencies. Table 1-45 presents information for fiscal years 1980-99 on the number of cases that were reviewed and reversed at the ALJ level. Table 1-46 presents information on the number of CDRs that were conducted in fiscal years 1977-99 on DI cases. Due to an unprecedented increase in initial claims, the number of CDRs processed declined sharply in the early 1990s. National implementation of a new review process in 1993 has enabled the Social Security Administration to increase the number of CDRs significantly.

Public Law 104-121 authorized significant additional administrative funding exempt from the discretionary spending cap to enable SSA to clear its CDR backlog of roughly 3.4 million cases more quickly. Total fiscal year authorizations for these reviews are: 1996, $260 million; 1997, $360 million; 1998, $570 million; and 1999-2002, $720 million each year.

Disability determination

Disability determinations are generally made by State agencies, which are 100 percent federally funded. These agencies agree to make such determinations and in doing so to substantially comply with the regulations of the Commissioner, which specify performance standards, administrative requirements, and procedures to be followed in performing the disability determination function.

The law authorizes the Commissioner to terminate State administration and assume responsibility for making disability determinations when a State DDS is substantially failing to make determinations consistent with regulations. The law also allows for termination by the State.

   CHART 1-2. DISABILITY DETERMINATIONS AND APPEALS, FISCAL YEAR 1999

TITLE II, TITLE XVI AND CONCURRENT TITLE II AND TITLE XVI DECISIONS FOR 
 DISABILITY CLAIMS BY WORKERS, WIDOWS, AND DISABLED ADULT CHILDREN \1\ 

Claims are determined on a sequential basis. The first step is to determine whether the individual is engaging in SGA. Under current regulations, in most cases if a nonblind person is earning more than $700 a month (net of impairment-related work expenses), he will be considered to be engaging in SGA. In the case of blind individuals, SGA is $1,170 a month in 2000, indexed annually to average wage growth. If it is determined that the individual is engaging in SGA, a decision is made that she is not disabled without considering medical factors. If an individual is found not to be engaging in SGA, the severity and duration of the impairment are explored. If the impairment is determined to be ``not severe'' (i.e., it does not significantly limit the individual's capacity to perform basic work activities), the individual's disability claim is denied. If the impairment is ``severe,'' a determination is made as to whether the impairment ``meets'' or ``equals'' the medical listings published in regulations by SSA,\4\ and whether it will last for 12 months. If the impairment neither ``meets'' nor ``equals'' the listing (which would result in an allowance), but meets the 12-month duration rule, the individual's residual functional capacity (what an individual still can do despite his limitations) and the physical and mental demands of past relevant work must be evaluated. If the impairment does not prevent the individual from meeting the demands of past relevant work, benefits are denied. If the impairment does, then it must be determined whether the impairment prevents other work.


\4\ The listing of impairments contains over 100 examples of medical conditions that are considered significant enough to prevent an individual from engaging in SGA. Each listing describes a degree of severity such that an individual who is not working, and has such an impairment, is considered unable to work by reason of the medical impairment. The listing describes specific medically acceptable clinical and laboratory findings and signs which establish the severity of the impairments. An impairment or combination of impairments is said to ``equal the listings'' if the medical findings for the impairment are at least equivalent in severity and duration to the findings of a listed impairment.


At this stage in the adjudication process, because of a court decision and subsequent administrative and legislative ratification of this decision, the burden of proof switches to the government to show that the individual can, considering her impairment, age, education, and work experience, engage in some other kind of SGA that exists in the national economy. Such work does not have to exist in the immediate area in which he lives, and a specific job vacancy does not have to be available to him. Work in the national economy is defined in statute as work which exists in significant numbers either in the region where such individual lives or in several regions of the country.

SSA has developed a vocational ``grid'' designed to reduce the subjectivity and lack of uniformity in applying the vocational factor. Through a formula, the grid regulations relate certain worker characteristics such as age, education, and past work experience to the individual's residual functional capacity to perform work-related physical and mental activities. If the applicant has a particular level of residual work capability--characterized by the terms sedentary, light, medium, heavy and very heavy--an automatic finding of ``disabled'' or ``not disabled'' is required when such capability is applied to various combinations of age, education, and work experience.

The Commissioner must review 50 percent of the disability allowances and a sufficient number of other determinations to ensure a high degree of accuracy. The Commissioner may also, on her own initiative, review any determination by a DDS.

The 1980 disability amendments required that, at least once every 3 years, the Social Security Administration reexamine every individual on the rolls who is determined to be nonpermanently disabled. Where there is a finding of permanent disability, the Commissioner may reexamine at such times as are determined to be appropriate. These reviews are in addition to the administrative eligibility review procedures existing before the 1980 amendments. Effective in 2001, these reviews cannot begin while an individual is ``using a ticket'' as defined by the Commissioner (see ``Changes in the 106th Congress'' below).

The 1984 Disability Benefits Reform Act required that in continuing eligibility review cases, benefits may be terminated only if the Commissioner finds that there has been medical improvement in the person's condition and that the individual is now able to engage in SGA.

Individuals are not considered to be disabled unless they furnish such medical and other evidence as the Commissioner may require. The Commissioner will generally reimburse physicians or hospitals for supplying medical evidence in support of claims for DI benefits. The Commissioner also pays for medical examinations that are needed to adjudicate the claim.

Representation and attorneys' fees.--Claimants may appoint an attorney or any other qualified person to serve as their representative in proceedings before SSA. The representative may submit evidence, make statements about facts and law, and make any request or give any notice concerning the proceedings. The representative may not sign an application on behalf of a claimant for rights or benefits, or testify on the claimant's behalf in any administrative proceeding.

The amount of any fee that an attorney or other person may charge and collect from the claimant for services performed as a representative must be authorized by SSA. SSA has two methods of authorizing fees for representation: fee petition and fee agreement.

Under the fee petition process, representatives must promptly file a fee petition with SSA after completing their services on a claim and send a copy of the fee petition to the claimant. SSA determines the amount of the fee authorized under the fee petition process based on several factors, including, but not limited to, the extent and type of services the representative performed, the complexity of the case, and the amount of time the representative spent on the case.

Under the fee agreement process, the claimant and representative must file a written agreement with SSA before the date SSA makes a favorable determination or decision on the claim. SSA usually will approve the fee agreement if: (1) it is signed by both the claimant and representative; (2) the fee specified in the agreement does not exceed the lesser of 25 percent of the past-due benefits or $4,000; (3) SSA's determination or decision in the claim is fully or partially favorable; and (4) the claim results in past-due benefits. If the claimant is represented by an attorney and the claim is for Social Security benefits, SSA withholds 25 percent of past-due benefits owed the claimant and any auxiliary beneficiary or beneficiaries, and certifies for direct payment to the attorney the lesser of the amount of the authorized fee or 25 percent of past-due benefits. SSA assumes no responsibility for the payment of any fees if the representative is not an attorney or the claim is for SSI benefits.

The Ticket to Work and Work Incentives Improvement Act of 1999 (Public Law 106-170, signed December 17, 1999) requires the Commissioner to impose an assessment on the attorney's fee to cover SSA's costs of determining and certifying these fees. Effective January 31, 2000, the assessment is set at 6.3 percent of the attorney's fee. For years after 2000, the percentage rate will be set at a level determined by the Commissioner to achieve full recovery of the costs of calculating, withholding, and paying fees from the claimant's past-due benefits, but not in excess of 6.3 percent. The attorney is prohibited from recovering this assessment from the claimant.

Work incentives

The law provides a 45-month period for disabled beneficiaries to test their ability to work without losing their entitlement to all benefits. The period consists of: (1) a ``trial work period'' (TWP), which allows disabled beneficiaries to work for up to 9 months (within a 5-year period) \5\ with no effect on their disability or Medicare benefits; followed by (2) a 36-month ``extended period of eligibility,'' during the last 33 of which cash disability benefits are suspended for any month in which the individual is engaged in SGA. Medicare coverage continues so long as the individual remains entitled to disability benefits and, depending on when the last month of SGA occurs, may continue for 3-24 months after entitlement to disability benefits ends. When Medicare entitlement ends because of the individual's work activity, if he is still medically disabled, he may purchase Medicare protection.


\5\ Only one TWP is allowed in any one period of disability. By regulation, earnings of more than $200 a month constitute ``trial work.''


If beneficiaries medically recover to the extent that they no longer meet the definition of disability, both disability and Medicare benefits are terminated after 3 months, regardless of the status of the TWP or extended period of eligibility. However, a person who contests this determination may elect to continue to receive disability benefits (subject to recovery) and Medicare while the appeal is being reviewed.

Return to work and rehabilitation

Public Law 106-170 created a Ticket to Work and Self- Sufficiency Program to help disability beneficiaries access a broader pool of vocational rehabilitation providers to enable them to achieve self-sufficiency. Under this legislation, the Commissioner of Social Security provides tickets to work to disability beneficiaries that can be used as vouchers to obtain employment services, case management, vocational rehabilitation, and support services under an individual work plan from the provider of their choice, including the State vocational rehabilitation agencies. Payments to the providers entering agreements with SSA are based on employment outcomes and long-term results or on a combination of milestones and outcomes and come from a portion of the benefits forgone by beneficiaries when they return to work. The program is being implemented in selected sites beginning 1 year after enactment, with services available in every State within 4 years of enactment.

Until the Ticket to Work and Self-Sufficiency Program is fully implemented and for States that elect to not participate in this program, provisions remain in effect that allow for reimbursement from the DI Trust Funds to the State vocational rehabilitation agencies for rehabilitation services that result in the beneficiary's performance of SGA for a continuous period of at least 9 months. Such a 9-month period could begin while the individual is under a vocational rehabilitation program and may coincide with the TWP or the individual's waiting period for benefits. The services must be performed under a State plan for vocational rehabilitation services under title I of the Vocational Rehabilitation Act. In 1996, SSA established by regulations an Alternative Rehabilitation Provider Program which allows SSA to refer beneficiaries to private vocational rehabilitation providers and public non-State vocational rehabilitation providers if SSA does not receive notification within a specified period that the State agency has accepted a beneficiary for services or extended evaluation.

The ticket to work law provides for extended health care coverage under Medicare up to an additional 54 months effective October 1, 2000 for beneficiaries who return to work, for a total of 102 months of health coverage once work activity begins. In addition, beneficiaries participating in the Ticket to Work and Self-Sufficiency Program will not be subject to unscheduled CDRs triggered by their work activities. For certain former beneficiaries whose entitlement to benefits ended solely because of their earnings from work, the ticket to work law provides for swift reinstatement of benefits without the requirement for a new application. (For more information on the Ticket to Work and Self-Sufficiency Program, refer to Section 3: Supplemental Security Income.)

Enrollment and applicant backlogs

Over the past 20 years, the DI Program experienced a period of declining enrollment followed by a rebound in growth. The number of DI beneficiaries (disabled workers and their dependents) receiving benefits first peaked at 4.9 million in May 1978. The beneficiary population then declined sharply to 3.8 million by July 1984. Thereafter, the number of beneficiaries has risen steadily, reaching 6.5 million in December 1999 (table 1-41).

Similarly, the number of new DI benefit awards declined from 592,000 in 1975 to approximately 299,000 in 1982. As shown in table 1-44, awards then rose almost steadily, reaching 646,000 in 1995 before declining by 1997 to 587,000. In 1999 there were nearly 621,000 new DI benefit awards. (The large 1992 increase is partially attributable to SSA's short-term measures for dealing with increased DI applications. Increasing the volume of applications processed resulted in increases in both awards and denials.)

The incidence of disability (number of awards per 1,000 insured workers) fell from an all-time high of 7.1 in 1975 to an all-time low of 2.9 in 1982. In 1999, the rate was 4.8 percent (table 1-44).

Pending claims at DDS, hearings and appeals levels.--Until fiscal year 1991, disability claims (including initial claims, reconsiderations, hearings and appeals) remained relatively constant at about 2.5 million cases per year. In fiscal year 1991, claims began to increase significantly each year and reached 3.7 million in fiscal year 1996. In fiscal year 1999, there were over 3.2 million disability claims. During the period of fiscal years 1988-94, the number of cases pending at the State DDS also increased as the ability to hire and train DDS staff did not keep pace with the increases in claims. However, in fiscal year 1995 pending cases were significantly reduced to 590,000 due largely to increased productivity in the State DDSs and the additional budgetary resources directed to disability case processing which enabled an aggressive hiring effort in the States. In fiscal year 1996, pending cases again increased significantly. The major cause of this increase was that Congress increased SSA's workload by requiring additional drug addiction and alcoholism reviews. These reviews have now been completed but pending cases have risen again due to workloads mandated by welfare reform legislation (table 1-47).

[For DI tables from the 2003 Greenbook click here.]