What Will Happen to My Social Security if the Government Shuts Down?
Every time a government shutdown is in the news, I get calls asking "Is Social Security affected by a government shutdown?"
The current big question is "How will Social Security be affected if the government defaults?"
Many Social Security Disability claimants and recipients are wondering what happens to social security and their benefit checks, application, and/or hearing if the government shuts down.
Social Security can be affected by a government shutdown depending on your situation.
Are Social Security Checks Affected by a Shutdown?
Are Social Security Offices Closed During a Government Shutdown?
Will my Scheduled Social Security Disability Hearing be Held during a Government Shutdown?
What Happens to My Social Security Disability Application During a Government Shutdown?
What Happens to Social Security Disability Benefits if the Government Defaults on Its Debt?
Are Social Security Checks Affected by a Shutdown?
The first thing most people want to know is "Will I Still Receive my Social Security Disability Benefits in a Government Shutdown?"
When the federal government shut down in 1995 and again in 2013, all Social Security payments continued to be sent out on time. This included Social Security Disability.
During the 1995 shutdown, which lasted about a month, the Social Security Administration mailed checks throughout the shutdown.
Social Security was able to continue mailing benefits due to the fact that doesn’t need Congress to authorize funds for it each year.
Instead, Social Security benefits are considered mandatory spending and are paid from the program’s trust fund, and therefore, the agency has the funds to continue paying benefits. A law passed by Congress in 1996 provides special protections for Social Security benefits.
In 1995, Social Security maintained enough employees to continue mailing checks without delay.
Since payments are now direct deposited and/or loaded onto debit cards, Social Security continued processing payments during the 2013 shutdown with fewer employees than were needed to mail benefit checks during the 1995 shutdowns.
Unfortunately, there is an additional reason to worry about a government shutdown and social security checks in 2021.
While payments can continue to be processed during a government shutdown, it is possible that there would not be sufficient funds to pay for benefits if the debt ceiling is not raised. Unlike previous shutdowns, this battle is not just about passing a spending bill to fund the government, but also about raising the debt ceiling.
At this time is it uncertain where the government would make spending cuts if it is unable to borrow the money needed to continue spending at its current pace.
Social Security beneficiaries could be at risk of not receiving their benefits for the first time since the program was established in 1935.
Are Social Security Offices Open During a Shutdown?
Currently, most local Social Security offices are already closed to in-person visits due to COVID-19 precautions.
The Social Security Administration is asking the public to first try to use their online services before calling them.
During a government shutdown, many SSA employees will be furloughed and staffing will be limited. Using online services before calling is still the best course of action.
If you cannot use these online services, you can find the phone number for your local office by using the Field Office Locator.
What Happens to my Scheduled Social Security Disability Hearing in a Government Shutdown?
Most likely, hearing offices will continue to hold Social Security Disability and SSI hearings if a shutdown occurs.
During the 2013 government shutdown, the Office of Disability Adjudication and Review (ODAR) still held previously scheduled hearings, but staffing was limited to Administrative Law Judges (ALJs), medical experts, vocational experts, and security personnel.
New hearings were not scheduled.
Lack of support personnel caused delays in exhibiting files and decisions were not written during the shutdown.
So, if a claimant was waiting for an already scheduled hearing, it in most cases proceeded and was decided.
But, the writing of the decision did not take place, so if benefits were granted, there was a further delay before benefits were paid since the decision was not actually formally written until the shutdown ended.
What Happens to My Social Security Disability Application in a Government Shutdown?
During the Clinton-era shutdown, new Social Security claims were not being processed because the agency furloughed 61,415 employees. As the shutdown wore on, the agency adjusted its plan and recalled workers to start processing new claims. Whether new claims are processed at all or with a delay due to fewer workers will depend on how many employees the SSA decides to maintain and how many they decide to furlough.
The SSA’s 2013 government shutdown contingency plan stated that new and pending Social Security applications would continue to be processed as well as requests for appeals.
However, because these functions are carried out by the state Disability Determination Offices, each state will decide whether to continue these operations or stop them.
The most likely scenario is that applications will be processed but with some delay.
The delay will be dependent on how many employees are retained and how long the shutdown lasts.
What Happens to Social Security Disability Benefits if the Government Defaults on Its Debt?
Crossing the debt limit “X Date” and a government shutdown are separate events, and because of that, they have two substantially different sets of consequences.
The debt ceiling was first established in 1917 and sets the maximum amount of outstanding federal debt the U.S. government can incur. Since then, it has been suspended or increased more than 100 times, frequently accompanied by political theatrics. However, the 2011 debt ceiling crisis resulted in Standard and Poor's lowering the US debt rating for the first time in history. Additionally, in 2013, the nation nearly defaulted with only a few days to spare.
In January 2023, the total national debt and the debt ceiling both stood at $31.4 trillion. Historically, the debt ceiling has been raised at the last minute before it was reached. However, in 2023, this was not the case. Without raising the amount that can be borrowed, the US risks defaulting on its financial obligations. Since January, the Treasury has staved off a default with a series of temporary actions it calls “extraordinary measures.” These include suspending payments to some government employee savings programs, underinvesting in certain government funds, and delaying auctions of securities. However, they have warned that they will run out of money by June 1, and at that point, if the debt ceiling has not been raised, the U.S. government will default on its loans and obligations.
Thanks to a law passed by Congress in 1996 (Section 1145, "Protection of Social Security and Medicare Trust Funds"), Social Security checks should keep flowing, even if the U.S. government begins defaulting on its other existing financial obligations. This law allows and effectively obligates, the circumvention of the debt ceiling by disinvesting Social Security's asset reserves to cover benefits.
Since Social Security's inception, the program has collected more revenue than it paid in benefits and other administrative expenses. This excess cash, known as Social Security's "asset reserves," is required by law to be invested in interest-bearing special-issue bonds and, to a lesser extent, certificates of indebtedness. As of March 31, 2023, the Old Age and Survivors Insurance Trust (OASI) and Disability Insurance Trust (DI) combined for $2.814 trillion in asset reserves.
Also of note, the program generates about 90% of its revenue from the 12.4% payroll tax on earned income (wages and salary, but not investment income). As long as Americans keep working and paying their taxes, Social Security will continue to have money to disburse to eligible beneficiaries.
Nonetheless, a potential problem could emerge if there are delays or disturbances in redeeming the bonds held by Social Security for its funds. Or if there are not enough Social Security Administration employees available to process the payments.
If the debt ceiling is not raised before funds run out, a default could affect many programs that are relied on to supplement Social Security payments like SNAP benefits causing further disruption to benefit recipients.
The Takeaway
The government briefly shut down fully twice in under a month in early 2018. On December 22, 2018, the government entered a partial government shutdown after President Trump would not sign the temporary spending bill passed by Congress. This shutdown was only a partial shutdown due to the fact that some departments had already been funded through September 2019. The Department of Health and Human Services which includes Social Security was included in this previous spending bill and therefore was not affected by this partial shutdown.
Unfortunately, due to the current trend of Congress only approving short-term stop-gap measures instead of long-term spending bills, the threat of a government shut down is now a common occurrence.
Whenever a threat of a shutdown looms, I monitor the situation by checking Social Security's contingency plan often.
If the government shuts down again and/or the debt ceiling is not raised, I will be in touch with all of my current clients to advise them on how this situation will affect them depending upon the current status of their claim.
Government shutdowns and defaults are often averted at the last minute. Hopefully, that will be the case again this time as well.
