How Will the Bowles-Simpson Deficit Plan Affect Disability?

The National Commission on Fiscal Responsibility published the Bowles-Simpson deficit plan in December 2010. The plan is a result of a bipartisan committee task force assembled to help reduce federal debt as well as to make recommendations on proposed changes to federally funded and managed programs, including Social Security.

The Bowles-Simpson deficit plan is also known by the title of the official report, "The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform". Republican Alan Simpson and Democrat Erskine Bowles created the plan.

The report, 66 pages in length, proposed reforms and or cuts in specific areas, including Social Security, however only 11 of the 18 members of the commission task force voted in its favor, with 14 needed to formally present the plan to the president.

Bottom Lines

The bottom line is that the Bowles-Simpson plan addresses debates on Social Security reform, including a near total redesign of the SSDI program. Recommendations within the original plan focused mostly on the retirement plans as well as SSI or Supplemental Security Income for individuals.

Several key points in the plan emphasized reducing expenditures. This was proposed by freezing the reimbursement rate for physicians paid through Medicare services, designed to encourage recipients to have identical coinsurance and deductible rates. The plan also proposes that between 2010 and 2050, payroll tax through taxable maximum earnings be increased, which would increase funding for Social Security Disability Insurance payouts.

As of 2012, Social Security Disability recipients won't see any reduction in their benefits, but this doesn't mean that the situation may not change in later years. Most analysts agree that if changes aren't made to the Social Security Administration, the system will no longer be able to support itself in the future.

While monthly payments to Social Security Disability Insurance beneficiaries have not been reduced, changes may affect the medical insurance that such recipients receive within the next few years.

Proposed Social Security cuts include raising the retirement age to age 69 by the year 2075. Plans propose indexing Social Security increases on a yearly basis to lower inflation rates, which translate to lower cost-of-living increases and resulting in reduced monthly benefits to beneficiaries. Proposals to increase the Social Security contribution ceiling are also on the table.

While Bowles and Simpson suggest their plan is a mere beginning point for analysis, debate continues on exactly how to revamp the Social Security Administration so that the truly needy continue to receive Social Security Disability, as well as supplemental security income and that Medicaid and Medicare beneficiaries continue to benefit from healthcare services.

Proposed changes suggest increases for some of the poorest of Social Security beneficiaries though such changes will also reduce the disability benefits available to others. Regardless, even medium earners who retired as of 2010 receive Social Security benefits averaging $1,400 a month, or just over $16,000 a year, with most not benefiting from significant income from any other resources.