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Firm Overview The ADAAA's Unintended Consequence On The Federal Budget
July 2011
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Serious disagreements exist as to how to “solve” the “debt crisis” prior to the August 2nd deadline. Actually, the debt is simply the result of budget deficits, so the real challenge involves a mismatch between spending and taxes. Most recognize that entitlement programs such as Medicare, Medicaid and Social Security must be changed for any sustainable solution. Changing these programs is highly unpopular among certain segments of our society. Despite repeated and consistent studies that indicate putting this problem off merely makes matters worse, it is understandably easier to delay the inevitable.
The federal entitlement program that will go broke first is getting almost no press – namely Social Security Disability Insurance (SSDI). Unfortunately, the projections that show this program going broke first (shown below) do NOT take into account a significant announcement from the Equal Employment Opportunity Commission (EEOC).
SSDI is a payroll tax-funded federal insurance program of the United States government. It is managed by the Social Security Administration and is designed to provide income supplements to people who are physically restricted in their ability to be employed because of a notable disability, usually a physical disability. SSDI can be supplied on either a temporary or permanent basis. Unlike Supplemental Security Income (SSI), SSDI does not depend on the income of the disabled individual receiving it. SSDI is also called Disability Insurance Benefits (DIB) and Title II benefits, named for the chapter title of the governing section of the Social Security Act.
SSDI’s Status before the EEOC’s
The following chart shows that according to the Social Security Administration, SSDI will run out of cash in approximately 5 years (2019). Assuming no change, Medicare and Social Security will follow. In the following graphic, 2011 and later years represent projections by the Social Security Administration.
Since 2008, the SSDI fund has distributed more benefits than it obtained in tax receipts. The number of Social Security beneficiaries in 2010 was 489,488, the highest one-year increase in history. The following charts summarize SSDI’s situation:
The EEOC Makes the Above Worse
The Social Security Administration projections, as shown above, do not take into account the EEOC’s changes. On March 25, 2011, the EEOC announced its “final revised Americans with Disabilities Act (ADA) regulations and accompanying interpretive guidance” to implement the ADA Amendments Act of 2008 (ADAAA). The EEOC enforces Title I of the ADA, as amended in the ADAAA, which prohibits employment discrimination on the basis of disability. These new regulations are effective on May 24, 2011. According to the EEOC,
“In enacting the ADAAA, Congress made it easier for an individual seeking protection under the ADA to establish that he or she had a disability within the meaning of the statute…The EEOC regulations implement the ADAAA – in particular, Congress’s mandate that the definition of disability be construed broadly.”
Employers are the ones that initially appear to be the worst off with the ADAAA. The Federal Registrar’s publication (The Daily Journal of the U.S. Government) on March 25, 2011 provides the following insights on some of the employer cost effects of the new regulations:
“For those employers that have 15 or more employees and are therefore covered by the proposed regulations, the potential costs of the rule stem from the likelihood that, due to Congress's mandate that the definition of disability be applied in a less restrictive manner, more individuals will qualify for coverage under the portion of the definition of disability that entitles them to request and receive reasonable accommodations.”
Additionally, the ADAAA shifts the burden of proof in disability claims to employers. Employers need to show why a worker does not require special accommodations, rather than employees proving that the measures are merited.
This will likely have the following consequences on the SDDI program:
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The more friendly burden-of-proof for claimants against employers could impact the legal standard used to evaluate SSDI claims, and
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Any time disability claims become a bigger challenge for business, the would-be protected group may be treated more cautiously by potentially employers. Those with disabilities will likely file greater SDDI claims once they face unemployment.
A separate article describes common statistical tests used in litigation to test whether employment discrimination related to disability occurred or not occurred.
Fulcrum Inquiry performs statistical analyses in litigation.