Disability benefit coverage and program interactions in the working-age population

Over three-fourths of the working-age population in the United States is insured for Disability Insurance (DI); this group is protected against a total loss of earned income typically associated with severe disability. However, little is known about the role the Supplemental Security Income (SSI) program plays in protecting against the financial consequences of severe disability for this population. We find that over one-third (36 percent) of the working-age population is covered by SSI in the event of a severe disability. Three important implications follow, which we discuss in sequence below: (1) SSI increases the overall coverage of the working-age population; (2) SSI enhances the bundle of cash benefits available to disabled individuals; and (3) interactions with other programs also enhance the safety net, most notably in the area of health insurance coverage. Ignoring these implications could lead to inaccurate inferences about disability program coverage, health insurance coverage, and the well-being of working-age individuals with disabilities. The first major finding is that SSI substantially increases overall cash benefit coverage. Thus SSI dramatically increases protection against the financial risk of disablement in the working-age population. While roughly 23 percent of the U.S. working-age population was not insured for DI in November 1996, SSI provides coverage for more than half of this seemingly "uncovered" population. An important innovation of our analysis is that we account for the possibility that many of those who appear ineligible for SSI based on current income could become eligible as a result of a disability shock that causes their earnings to drop. Thus the estimated proportion that is protected by SSI increases when the possibility of earnings loss because of disability is considered. Considering DI and SSI together, roughly 90 percent of the working-age population would be potentially covered for benefits in the event of a disability. Those who are covered by SSI--as opposed to those covered by DI alone-tend to be relatively young, less educated, and in relatively poor health. The remaining 10 percent or so are not covered by either DI or SSI. This group is economically vulnerable in some sense (they are poorer, older, and more likely to be women than those covered only by DI), but they are not as economically vulnerable in terms of income, resource holdings, and private health insurance coverage as those who are eligible for SSI. A disproportionate share of those who are not covered by either DI or SSI consists of married women. The second major finding is that SSI substantially enhances the bundle of available cash benefits. Roughly one-third of those covered by DI are initially covered by SSI as well. SSI enhances the bundle of available cash benefits through two mechanisms: (1) SSI provides cash payments during the 5-month DI waiting period, and (2) SSI supplements the DI benefit after the DI waiting period for people whose initial SSI payment is larger than the DI benefit. We find that the role of SSI cash payments is temporary for most of those who are initially covered by both SSI and DI: They would receive SSI during the DI waiting period, but would lose SSI eligibility afterwards because the higher DI benefit completely offsets the SSI benefit. However, a smaller group of DI beneficiaries with low DI benefit levels would continue to be covered by both SSI and DI after the DI waiting period because the relatively low DI benefit would not completely offset the SSI benefit. The third major finding is that interactions with other programs also substantially enhance the safety net. The most important interactions involve health insurance coverage. In the working-age population, Medicare is available to DI beneficiaries, but only after a 24-month waiting period. By contrast, SSI is an important pathway to Medicaid benefits for severely disabled adults with limited income and resources and has no waiting period. SSI can provide a pathway to health insurance coverage during the 24-month Medicare waiting period for some DI beneficiaries through providing access to Medicaid. Interactions with other programs, such as Temporary Assistance for Needy Families (TANF), Food Stamp, Unemployment Insurance (UI), workers' compensation (WC), and veterans' disability programs, modify the role of DI and SSI in protecting people against the adverse financial effects of disablement. The nature of the interactions with other programs differs depending on individual circumstances. Employment-related programs (including UI, WC, and veteran's disability programs) are particularly important for those who are covered by DI. By contrast, the means-tested programs (including TANF and Food Stamp) are more important for those who would be eligible for SSI. In conclusion, SSI plays a substantial role in protecting working-age people against the adverse financial consequences of disablement through three mechanisms: (1) providing coverage to many who are not DI insured; (2) providing additional cash benefits to many who are DI insured and also covered by SSI; and (3) enhancing the social safety net by interacting with other programs, most notably Medicaid. Through these mechanisms, the role of SSI is substantial enough that it cannot be safely ignored in econometric and policy research on DI.     

Early retirees under Social Security: health status and economic resources

Some proposals to change the Social Security program to ensure long-run solvency would reduce or eliminate benefits for early retirees. This article documents the health and financial resources of Old-Age and Survivors Insurance (OASI) beneficiaries aged 62-64. It identifies a substantial minority of early retirees who might be economically vulnerable if either the early eligibility age or normal retirement age was raised. Attention is directed at the extent to which poor health limits work in this age group and the extent to which curtailment of early OASI benefits might lead to increases in the Disability Insurance (DI) program rolls. Using a set of comprehensive health measures, we estimate that over 20 percent of OASI beneficiaries aged 62-64 have health problems that substantially impair their ability to work. This finding implies that in this age range, as many severely disabled persons receive OASI benefits as disability benefits. In fact, 12 percent of early beneficiaries would meet a more stringent criterion for being classified "disabled"--SSA's medical standard for disability benefits. The evidence therefore indicates that OASI functions as a substantial, albeit unofficial, disability program for early retirees. Compared with those who have no health problems or are less severely impaired, early OASI beneficiaries who meet the medical criteria for disability benefits are more likely to be living alone and more likely to be poor or "near poor." The great majority of the group--almost 80 percent--are women. Analysis of their earnings histories suggests that most of these beneficiaries do not satisfy the insured-status requirements for Disability Insurance benefits. The article considers the different roles of the OASI program and the DI program for health-impaired individuals aged 62-64. Disability modelers sometimes overlook an important aspect of program administration. Under customary screening procedures implemented in Social Security field offices, applicants for early OASI benefits who appear to be severely impaired simultaneously apply for DI benefits if they are disability insured. If they are found eligible for DI benefits, those applicants become DI beneficiaries. The implication is that raising the earliest entitlement age would have little impact on the DI rolls. Unless there are changes in eligibility criteria, the DI program would not serve as a safety net for many of the most severely disabled early retirees.     

Income of the population aged 55 and older, 1976.

This article inaugurates a biennial series of reports on the income of persons aged 55 and older. The survey on which it is based updates information on the broad economic picture for a cross-section of this population and forms the basis for an analysis of trends in the financial status of the group as a whole. In 1976, persons aged 55--61 were generally working full-time, not receiving income from pensions, and married. Those aged 73 and older were predominantly not working, mostly recipients of retirement pensions, and likely to be widows. Most persons aged 65 and older were receiving social security benefits; those with neither earnings nor a second pension constituted the largest subgroup and had the lowest median income. Married couples, as a group, were substantially better off financially than nonmarried persons because they were younger, two-person rather than one-person units, and had one member who was a man. Blacks were less likely than whites to receive pension income other than social security benefits, and their median benefits and earnings were both lower.     

The net effects of the Project NetWork return-to-work case management experiment on participant earnings, benefit receipt, and other outcomes

The Social Security Administration (SSA) initiated Project NetWork in 1991 to test case management as a means of promoting employment among persons with disabilities. The demonstration, which targeted Social Security Disability Insurance (DI) beneficiaries and Supplemental Security Income (SSI) applicants and recipients, offered intensive outreach, work-incentive waivers, and case management/referral services. Participation in Project NetWork was voluntary. Volunteers were randomly assigned to the "treatment" group or the "control" group. Those assigned to the treatment group met individually with a case or referral manager who arranged for rehabilitation and employment services, helped clients develop an individual employment plan, and provided direct employment counseling services. Volunteers assigned to the control group could not receive services from Project NetWork but remained eligible for any employment assistance already available in their communities. For both treatment and control groups, the demonstration waived specific DI and SSI program rules considered to be work disincentives. The experimental impact study thus measures the incremental effects of case and referral management services. The eight demonstration sites were successful in implementing the experimental design roughly as planned. Project NetWork staff were able to recruit large numbers of participants and to provide rehabilitation and employment services on a substantial scale. Most of the sites easily reached their enrollment targets and were able to attract volunteers with demographic characteristics similar to those of the entire SSI and DI caseload and a broad range of moderate and severe disabilities. However, by many measures, volunteers were generally more "work-ready" than project eligible in the demonstration areas who did not volunteer to receive NetWork services. Project NetWork case management increased average annual earnings by $220 per year over the first 2 years following random assignment. This statistically significant impact, an approximate 11-percent increase in earnings, is based on administrative data on earnings. For about 70 percent of sample members, a third year of followup data was available. For this limited sample, the estimated effect of Project NetWork on annual earnings declined to roughly zero in the third followup year. The findings suggest that the increase in earnings may have been short-lived and may have disappeared by the time Project NetWork services ended. Project NetWork did not reduce reliance on SSI or DI benefits by statistically significant amounts over the 30-42 month followup period. The services provided by Project NetWork thus did not reduce overall SSI and DI caseloads or benefits by substantial amounts, especially given that only about 5 percent of the eligible caseload volunteered to participate in Project NetWork. Project NetWork produced modest net benefits to persons with disabilities and net costs to taxpayers. Persons with disabilities gained mainly because the increases in their earnings easily outweighed the small (if any) reduction in average SSI and DI benefits. For SSA and the federal government as a whole, the costs of Project NetWork were not sufficiently offset by increases in tax receipts resulting from increased earnings or reductions in average SSI and DI benefits. The modest net benefits of Project NetWork to persons with disabilities are encouraging. How such benefits of an experimental intervention should be weighed against costs of taxpayers depends on value judgments of policymakers. Because different case management projects involve different kinds of services, these results cannot be directly generalized to other case management interventions. They are nevertheless instructive for planning new initiatives. Combining case and referral management services with various other interventions, such as longer term financial support for work or altered provider incentives, could produc     

Social Security's special minimum benefit

Social Security's special minimum primary insurance amount (PIA) provision was enacted in 1972 to increase the adequacy of benefits for regular long-term, low-earning covered workers and their dependents or survivors. At the time, Social Security also had a regular minimum benefit provision for persons with low lifetime average earnings and their families. Concerns were rising that the low lifetime average earnings of many regular minimum beneficiaries resulted from sporadic attachment to the covered workforce rather than from low wages. The special minimum benefit was seen as a way to reward regular, low-earning workers without providing the windfalls that would have resulted from raising the regular minimum benefit to a much higher level. The regular minimum benefit was subsequently eliminated for workers reaching age 62, becoming disabled, or dying after 1981. Under current law, the special minimum benefit will phase out over time, although it is not clear from the legislative history that this was Congress's explicit intent. The phaseout results from two factors: (1) special minimum benefits are paid only if they are higher than benefits payable under the regular PIA formula, and (2) the value of the regular PIA formula, which is indexed to wages before benefit eligibility, has increased faster than that of the special minimum PIA, which is indexed to inflation. Under the Social Security Trustees' 2000 intermediate assumptions, the special minimum benefit will cease to be payable to retired workers attaining eligibility in 2013 and later. Their benefits will always be larger under the regular benefit formula. As policymakers consider Social Security solvency initiatives--particularly proposals that would reduce benefits or introduce investment risk--interest may increase in restoring some type of special minimum benefit as a targeted protection for long-term low earners. Two of the three reform proposals offered by the President's Commission to Strengthen Social Security would modify and strengthen the current-law special minimum benefit. Interest in the special minimum benefit may also increase because of labor force participation and marital trends that suggest that enhancing workers' benefits may be a more effective means of reducing older women's poverty rates than enhancing spousal or widow's benefits. By understanding the Social Security program's experience with the special minimum benefit, policymakers will be able to better anticipate the effectiveness of other initiatives to enhance benefits for long-term low earners. This article presents the most recent and comprehensive information available about the special minimum benefit in order to help policymakers make informed decisions about the provision's future. Highlights of the current special minimum benefit include the following: Very few persons receive the special minimum benefit. As of December 2001, about 134,000 workers and their dependents and survivors were entitled to a benefit based on the special minimum. Of those, only about 79,000 received a higher total benefit because of the special minimum; the other 55,000 were dually entitled. (In effect, when persons are eligible for more than one type of benefit--that is, they are dually eligible--the highest benefit payable determines total benefits. If the special minimum benefit is not the highest benefit payable, it does not increase total benefits paid.) As of February 2000, retired workers who were special minimum beneficiaries with unreduced benefits and were not dually entitled were receiving, on average, a monthly benefit of $510 per month. That amount is approximately $2,000 less than the annual poverty threshold for an aged individual. Special minimum benefits provide small increases in total benefits. For special minimum beneficiaries who were not dually entitled as of December 2001, the average special minimum monthly PIA was just $39 higher than the regular PIA. Most special minimum beneficiaries are female retired workers. About 90 percent of special minimum beneficiaries are retired workers, and 77 percent of those retired workers are women. The special minimum benefit has never provided poverty-level benefits. Maximum payable special minimum benefits (unreduced for early retirement) equal 85 percent of the poverty level for aged persons, down from 96 percent at the provision's inception. Major public policy considerations raised by this analysis include the following: Social Security benefits alone do not protect all long-term low earners from poverty. Low earners with 30 years of earnings equal to the annual full-time minimum wage who retired in selected years from 1982 to 2000 received benefits that were 3.9 percent to 20.1 percent below the poverty threshold, depending on the year they retired. For 40-year earners, the range was 3.9 percent to 15.3 percent below poverty. Furthermore, in 1993, 29.2 percent of retired-worker beneficiaries who were poor had 30 or more years of coverage. The size of the universe of persistently low earners with significant attachment to the covered workforce is unknown. Available research that examines two 28-month periods suggests that only 4 percent to 6 percent of full-time, full-period earners had below-minimum wages for more than 12 consecutive months. Targeting enhanced benefits only toward long-term, regular workers who are low earners is difficult under the current Social Security program. All else being equal, if total wage-indexed lifetime covered earnings are the same for both a full-career low earner and for a high earner who has worked only occasionally, then their Social Security benefits will be identical. Social Security has no information on number of hours worked, hourly wages, or other information that could distinguish between two such persons.     

Trends in the economic status of the elderly, 1976-2000

The economic well-being of elderly Americans (aged 65 or older) improved between 1976 and 2000. Overall, poverty rates fell during this period, median real income rose, and median income relative to the working-age population was relatively stable. Most population subgroups shared in the reduced poverty rates; however, the economic status of elderly Hispanics did not improve. This article attempts to explain those economic trends by identifying changes in five sources of income for the elderly and analyzing the changes in the context of demographic changes in the elderly populations over the past 25 years. As a result of increased longevity, for example, larger proportions of elderly men and women are now 80 or older, and smaller proportions are 65 to 69. Hispanics and Asian Americans make up a larger share of the elderly population and whites a smaller share. The fraction of women who are married has increased, the fraction who are widowed has fallen, and the fraction who are divorced has grown. Such demographic changes can greatly affect the economic status of subgroups as well as the overall elderly population. Of the five sources of income for the elderly, Social Security remains the most prevalent and important. While both the rate of receipt and the share of aggregate income from Social Security benefits stayed relatively steady over the past 25 years, the average real Social Security benefit increased because of rising wages. Income from assets, the second most important source of income for the elderly, fluctuated. Because the elderly are more likely to hold interest-bearing assets such as bonds rather than stocks, their asset income is responsive to changes in nominal interest rates and bond yields. Receipt of pension income increased during this period, although it leveled off during the 1990s. Factors contributing to this pattern include enactment of the Employee Retirement Income Security Act of 1974, which increased protections of pension benefits for spouses, and improved labor market opportunities for blacks and women. In recent years, defined contribution pension plans have become more prevalent than defined benefit plans, but the full effect of this change on pension income may not yet be apparent. After decades of decline, labor force participation rates of older men leveled out in the mid-1980s and then increased. For older women, the trend before the mid-1980s was flat, but since then rates have risen substantially. The increased use of part-time jobs or self-employment to ease the transition into retirement, the economic expansion of the 1990s, and the liberalization of the Social Security earnings test may all have contributed to those trends. Although the percentage of elderly people with earnings has increased only modestly in the past few years, the share of income from earnings has grown substantially--from 16 percent of income in 1984 to 23 percent in 2000. Finally, Supplemental Security Income (SSI) benefits are indexed for inflation but not for growth in real wages. As real incomes of the elderly rose, therefore, fewer elderly persons were eligible to receive SSI or, for those receiving SSI, were eligible for smaller benefits. The proportion of elderly persons receiving public assistance, primarily SSI, declined from 11 percent in 1976 to 5 percent in 2000.     

The increasing labor force participation of older workers and its effect on the income of the aged

The labor force participation rates of men and women aged 62-79 have notably increased since the mid-1990s. The result is a dramatic increase in the share of total money income attributable to earnings. For persons aged 65-69, the earnings share of total income increased from 28 percent in 1980 to 42 percent in 2009. For this age group in the late 1980s and early 1990s, Social Security benefits and earnings were roughly equal shares of total money income (about 30 percent); the earnings share is now more than 12 percentage points larger. When we focus on aged persons who receive Social Security benefits, earnings shares have increased markedly throughout the 62-79 age range since the early 1990s. We show that for aged persons with labor market earnings, those earnings have a large effect on their relative position in the distribution of annual money income of older Americans.     

Comparing replacement rates under private and federal retirement systems

One measure of the adequacy of retirement income is replacement rate - the percentage of pre-retirement salary that is available to a worker in retirement. This article compares salary replacement rates for private-sector employees of medium and large private establishments with those for federal employees under the Civil Service Retirement System and the Federal Employees Retirement System. Because there is no standard benefit formula to represent the variety of formulas available in the private sector, a composite defined benefit formula was developed using the characteristics of plans summarized in the Bureau of Labor Statistics Medium and Large Employer Plan Survey. The resulting "typical" private-sector defined benefit plan, with an accompanying defined contribution plan, was then compared with the two federal systems. The Civil Service Retirement System (CSRS) is a stand-alone defined benefit plan whose participants are not covered by Social Security. Until passage of the 1983 Amendments to Social Security Act, it was the only retirement plan for most federal civilian employees. Provisions of the 1983 Amendments were designed to restore long-term financial stability to the Social Security trust funds. One provision created the Federal Employees Retirement System (FERS), which covers federal employees hired after 1983. It was one of the provisions designed to restore long-term financial stability to the Social Security trust funds. FERS employees contribute to and are covered by Social Security. FERS, which is a defined benefit plan, also includes a basic benefit and a 401(k)-type plan known as the Thrift Savings Plan (TSP). To compare how retirees would fare under the three different retirement systems, benefits of employees retiring at age 65 with 35 years of service were calculated using hypothetical workers with steady earnings. Workers were classified according to a percentage of the average wage in the economy: low earners (45 percent), average earners (100 percent) high earners (160 percent), and maximum earners (earnings at the taxable maximum amount). Overall, this analysis found that: Excluding Social Security benefits and TSP and defined contribution annuities, CSRS retirees have a higher pre-retirement salary replacement rate than either FERS or private-sector retirees. Private-sector retirees, however, have higher replacement rate than their FERS counterparts. Including Social Security benefits but not TSP and defined contribution plan annuities, CSRS retirees who are maximum earners have a higher pre-retirement salary replacement rate (despite receiving no Social Security benefits) than FERS retirees with the same earnings. Private-sector retirees in all earnings categories have a higher replacement rate than federal retirees with the same earnings. Including Social Security and TSP and defined contribution plan annuities, private-sector retirees in all earnings categories have a higher replacement rate than federal retirees, but their rate is close to that of FERS retirees. The rate is higher for FERS retirees than for CSRS retirees in all earnings categories. This analysis shows that replacement creates could exceed 100 percent for FERS employees who contribute who contribute 6 percent of earnings to the TSP over full working career. Private-sector replacement rates were quite similar for those with both a defined benefit and a defined contribution pension plan. Social Security replacement rates make up the highest proportion of benefits for th private sector's lowest income quartile group. The replacement rate for 401(k) plans and the TSP account for a higher proportion of benefits than does Social Security for all other income groups, assuming the absence of a defined benefit plan.     

Income of new disabled-worker beneficiaries and their families: findings from the New Beneficiary Survey

In 1982, disabled workers who came on the social security disability insurance rolls from mid-1980 to mid-1981 had median monthly incomes of less than $500 if they were unmarried and less than $1,300 if they were married. These median monthly income levels, which include the income of a spouse and minor children if present, are roughly half those of the noninstitutionalized population aged 25-64. Social security benefits are the most important source of income for disabled workers and their families: They account for 40 percent of the total family income of married disabled workers and 65 percent of the total income of unmarried disabled workers. Social security benefits provide at least half of all income for more than 80 percent of unmarried disabled-worker beneficiaries and for 50 percent of the married beneficiaries. For married disabled-worker beneficiaries, earnings of the spouse are the second most important income source. Spousal earnings account for 28 percent of total income. Pensions and asset income each account for about 10 percent of total income for these married beneficiaries. Earnings are not an important source of income for unmarried disabled-worker beneficiaries for whom they amount to only about 3 percent of total income. Pensions, asset income, and public transfers each account for about 10 percent of total income of the unmarried beneficiaries.     

Testing a Financial Incentive to Promote Re‐employment among Displaced Workers: The Canadian Earnings Supplement Project (ESP)

This article presents findings from a randomized experiment conducted in four Canadian provinces to measure the effects of a generous financial incentive that was designed to promote rapid re‐employment among workers who were displaced from their jobs by changing economic conditions. The incentive tested was an earnings supplement which, for as long as 2 years and as much as $250 weekly, would replace 75 percent of the earnings loss incurred by displaced workers who took a new lower‐paying full‐time job within six months of receiving a supplement offer. Findings from the experiment indicate that although persons offered the supplement understood its terms and conditions, only 2 out of 10 actually received supplement payments. Furthermore, the supplement offer had little effect on job‐search behavior, employment prospects, or receipt of unemployment insurance. Nevertheless, persons who received supplement payments benefited from them substantially. On average, they received payments for 64 weeks, totaling $8,705. © 2001 by the Association for Public Policy Analysis and Management.     

How policy variables influence the timing of applications for Social Security Disability Insurance

This article analyzes the impact of policy variables--employer accommodations, state Social Security Disability Insurance (DI) allowance rates, and DI benefits--on the timing of an application for DI benefits by workers with a work-limiting health condition starting when their health condition first begins to bother them. The analysis uses a rich mixture of personal and employer characteristics from the Health and Retirement Study linked to Social Security administrative records. We find that most workers do not apply immediately for DI benefits when they are first bothered by a health condition. On the contrary, the median working-age man with a work-limiting condition waits 7 years after that time before applying, and the median working-age woman waits 8 years. Although the risk of applying for benefits is greatest in the year following onset, only 16 percent of men and 13 percent of women in our sample apply within the first year, and the risk of application falls thereafter. That finding suggests that institutional factors, in addition to health factors, may play a role in the timing of DI applications. Using kernel density estimates of the distribution of application and nonapplication ordered by state allowance rates (the rate of acceptance per DI determination in each state), we find that both men and women who live in states with high allowance rates are disproportionately more likely to apply for benefits in the first year after their condition begins to bother them than are those in states with low allowance rates. Using life-table analysis, we also find that men and women who are accommodated by their employers are significantly less likely to apply for DI benefits in each of the first few years after their condition begins to bother them than are those who are not accommodated. On the basis of this evidence, we include these policy variables in a model of the timing of DI application that controls for other socioeconomic variables as well as health. Using a hazard model, we find that workers who live in states with higher allowance rates apply for DI benefits significantly sooner than those living in states with lower allowance rates following the onset of a work-limiting health condition. Workers who are accommodated following the onset of a work-limiting health condition, however, are significantly slower to apply for DI benefits. Using the mean values of all explanatory variables, we estimate the relative importance of changes in these policy variables on the speed with which workers apply for benefits after onset. We find that the mean time until application for men is 10.22 years. Universal accommodations following onset would delay application by 4.36 years. In contrast, a 20 percent decrease in state allowance rates would delay application by only 0.88 years. For working-age women, the average expected time until application once a condition begins to bother them is 10.58 years. Universal accommodations would delay that by 3.76 years, and a 20 percent decrease in allowance rates would delay it by 1.47 years. A complication in this analysis is that the policy variables are to some degree endogenous. Accommodation is probably offered more often to workers who want to continue working. Allowance rates are chosen by states on the basis of federal policy and local choices and probably in part on the health condition of workers in the state. Therefore, our estimates are upper bounds of these policy effects. Still, we believe we provide evidence that the social environment faced by workers with work-limiting health conditions can significantly influence their decision to apply for DI benefits, holding their specific health conditions constant.     

Recent trends in the Social Security Disability Insurance Program

Earlier analysis documented the rapid growth of the Disability Insurance (DI) program from 1966 to 1975; this article discusses trends since 1975. Over the decade of the 1970's, the population insured for disability increased by 34 percent, and women as a proportion of the insured population rose from 32.4 percent in 1970 to 39.1 percent in 1980, reflecting the increase in female labor-force participation. Of disabled workers receiving benefits, the proportion that were women rose from 28.4 percent in 1970 to 32.4 percent in 1979. Although inflation caused total benefit costs to rise over the entire period, the number of DI beneficiaries began to decline in 1978. Disabled-worker awards reached a peak in 1975 and fell subsequently so that the 1969 and 1981 figures are approximately equal. Relative to 1970, the fraction of awards going to women increased, the share for persons aged 50-54 rose, and the proportion received by those aged 60-64 declined. Decreased in total awards, and hence recipients, stemmed primarily from higher rates of denial at both the initial application and the reconsideration stages. Higher denials were countered by substantial rises in the number of hearings and reversals by administrative law judges (ALJ's). in 1980, only 65 percent of all awards came from initial applications, while over a fourth resulted from ALJ reversals. In future years, recent legislative changes may be expected to curtail program expansion further.     

The U.S. study of work incapacity and reintegration

In many countries, including the United States, the number of persons being awarded long-term or permanent disability benefits has risen dramatically in recent years. Government agencies, advocates for the disabled, and others are looking for ways to help persons with disabilities return to the labor force. The Work Incapacity and Reintegration (WIR) Study was developed to address that issue. The United States and five other countries--Germany, Denmark, Sweden, Israel, and the Netherlands--have participated in a cross-national study of work incapacity under the auspices of the International Social Security Association. The study had two objectives: to examine the factors that influence the pattern of work resumption among persons disabled by a back condition and to identify the medical and nonmedical interventions that are most effective in helping such persons reenter the labor force. Samples for the U.S. national study were drawn from four cohorts: Social Security Disability Insurance (DI) beneficiaries, Supplemental Security Income (SSI) beneficiaries, and recipients of temporary disability insurance (TDI) benefits from the states of California and New Jersey. Only the TDI recipients were included in the comparative study. This article discusses the study design and methodology and summarizes the findings of the U.S. national study. Findings from the U.S. study show significant differences between the two cohorts in terms of work resumption and other characteristics. The proportions of respondents from the TDI cohorts who were working at the third and final study contact ranged from 53 percent to 65 percent, compared with less than 5 percent of the DI and SSI respondents. Respondents from the DI and SSI cohorts were on average about 10 years older than the TDI respondents, were less well educated, and reported more physical demands in their usual work. They also reported lower levels of functional capacity, higher levels of pain, and a much greater tendency to have other chronic illnesses. The types of medical treatments provided were remarkably uniform across cohorts and, within cohorts, between those who did and did not resume working. Thus, no medical intervention was identified that showed a significantly higher success rate in terms of facilitating a return to work. However, changes made in the work environment by the employer were an important factor in work reintegration; about 80 percent of respondents who resumed working did so with the help of workplace accommodations. In addition, since respondents with fewer physical demands in their job were more likely to return to work, there appears to be some potential for job retraining as a means of promoting a return to work. The Social Security Administration should consider these findings in developing strategies to help disabled workers reenter the labor force.     

Actuarial status of the OASI and DI Trust Funds

This article summarizes the current financial and actuarial status of the old-age, survivors, and disability insurance (OASDI) program, as shown in the 1985 Annual Report of the Board of Trustees. The Trustees note that the combined assets of the OASI and DI programs will be sufficient to pay OASDI benefits on time well into the next century based on all four sets of economic and demographic assumptions. Based on the pessimistic assumptions, the DI program could become unable to pay benefits on time by the end of 1987, but this problem could be prevented by a reallocation of contribution rates between the OASI and DI programs. For the long range--the next 75 years--the Trustees estimate that the OASDI program is in close actuarial balance based on intermediate assumptions--that is, the average annual income rate is estimated to be between 95 percent and 105 percent of the average annual cost rate during that period. The long-range actuarial deficit based on the intermediate (Alternative II-B) assumptions represents about 3 percent of the average annual cost rate for the program.     

Income of new retired workers by age at first benefit receipt: findings from the New Beneficiary Survey

Using data from the New Beneficiary Survey (NBS) of the Social Security Administration (SSA), this article examines how income sources and total monthly income received by newly retired social security beneficiaries vary with the age at which the first benefit check was received. The NBS respondents who received a first benefit at age 65 or older were better off economically than were those who received a first benefit at ages 62-64. At the time of the interview, 18-30 months after receiving a first benefit, these older beneficiaries had higher levels of total income and were more likely to have income from earnings and assets. Pension receipt rates did not vary by the age at which the first social security benefit was received except for married women retired workers, for whom the rate was higher at the older ages. The largest proportion of aggregate income (slightly more than one-third) was derived from social security benefits. More than 90 percent of the NBS Medicare-only respondents--a sample of nonbeneficiaries who were eligible for monthly cash benefits but had established their entitlement only for the purpose of enrolling in the Medicare program--reported earnings income. They had lower rates of pension receipt and higher rates of asset income receipt than the retired workers. The Medicare-only respondents had substantially higher incomes than did retired workers, and most of their aggregate income was from earnings. The NBS retirees were generally in better financial condition than a group of social security beneficiaries aged 65 or older from all benefit categories in the Current Population Survey Income Supplement with whom they were compared.     

The earnings test and the short-run work response to its elimination

Eliminating the earnings test will have different effects on the work effort of persons aged 65-69, depending on whether or not they are currently working or currently receiving Social Security benefits. This article reviews the development of the earnings test and examines the theoretical implications on work effort of removing the test for members of this age group. It looks at the Current Population Survey (CPS) data to determine how many persons aged 65-69 have characteristics that can be identified with groups that would theoretically increase, decrease, or not change their work effort should they no longer be subject to the earnings test. This analysis suggests that at least 80 percent, and perhaps more than 90 percent, of the 9.7 million persons aged 65-69 will not change their level of work effort if the earnings test is eliminated. Individuals who would modify their hours worked and earnings are fairly evenly split among those who would increase, decrease, or have an undetermined direction of change in their work effort.     

Social Security Disability Benefits Reform Act of 1984: legislative history and summary of provisions

This article describes the legislative history of the Social Security Disability Benefits Reform Act of 1984 (Public Law 98-460), and contains a summary of the provisions in the new law. Major provisions include: standards for continuing disability reviews (CDR's) of disability insurance (DI) beneficiaries and supplemental security income (SSI) recipients who get payments based on disability or blindness; the right of a DI beneficiary or an SSI recipient to have payments continued during appeal of a CDR decision to an administrative law judge that disability or blindness has ceased; and suspension of CDR's of mentally impaired persons until the evaluation criteria for mental impairments are revised. The new law was enacted in response to problems that arose as a result of the implementation by the Social Security Administration (SSA) of a provision in the 1980 disability amendments that required periodic CDR's. In enacting the new law, Congress intended to assure more accurate, consistent, and uniform disability decisions at all levels and equitable and humane treatment not only to beneficiaries who must undergo CDR's but also to new applicants for DI benefits or SSI payments based on disability or blindness.     

Longitudinal statistics on work activity and use of employment supports for new Social Security Disability Insurance beneficiaries

We present longitudinal employment and work-incentive statistics for individuals who began receiving Social Security Disability Insurance (DI) benefits from 1996 through 2006. For the longest-observed cohort, 28 percent returned to work, 6.5 percent had their benefits suspended for work in at least 1 month, and 3.7 percent had their benefits terminated for work. The corresponding percentages are much higher for those who were younger than age 40 when they entered the DI program. Most first suspensions occurred within 5 years after entry. Cross-state variation in outcomes is high, and, to the extent observed, statistics for more recent cohorts are lower.     

Earnings histories of SSI beneficiaries working in December 1997.

Disabling conditions previously considered to be permanent and total are no longer viewed as automatic barriers to work. Medical advances, improved accommodations in the workplace, and changes in the nature of work for the working disabled have allowed many disabled people to rejoin the workforce. The Social Security Administration (SSA) has followed those developments with a view toward encouraging people receiving disability benefits to consider returning to work. To effectively target SSA's efforts and evaluate their success, information about previous work histories of the Supplemental Security Income (SSI) beneficiary population is used to provide baseline data. This article examines the earnings histories of 300,000 disabled SSI beneficiaries--one of the populations targeted by the expanded work-incentive measure under Public Law 106-70--who were working in December 1997. The article also investigates whether beneficiaries who are working have significant lifetime earnings and whether earnings patterns exist that might assist with SSA's work-support activities. SSI program records were matched to data in the Master Earnings File to explore the characteristics and earnings patterns before and after a person applies for benefits. The article addresses several questions: What are the general characteristics of disabled SSI beneficiaries? What are their earnings histories? Did they have an earnings record when they applied for SSI? Of the SSI beneficiaries working in December 1997, most tended to be younger than other disabled beneficiaries, to have some sort of mental disability, and to have earnings well below levels that would suggest their eventual, complete independence from the SSI cash benefits program. A look at past covered earnings revealed that the vast majority of SSI workers had a history of earnings before they applied for SSI benefits. Despite their severe impairments and age at the time of first eligibility, nearly 40 percent had earnings in 11 years or more. The amounts of those earnings were quite low, however, and were usually not high enough to preclude SSI eligibility. Examining the years immediately before and after the point of application indicated whether recent pre-application earnings were consistent with post-application return to work. Results were a bit surprising. They revealed that one-third of the 1997 SSI workers had no earnings, and another 28 percent returned to work despite having no earnings in the 4-year period before application. Persons receiving SSI because of mental retardation seemed to have poorer earnings histories than other workers but were more likely to return to work after application. That may be explained by their younger ages or may reflect the outside assistance they received in responding to SSA work incentives.     

How common is "parking" among Social Security Disability Insurance beneficiaries? Evidence from the 1999 change in the earnings level of substantial gainful activity

Fewer Social Security Disability Insurance (DI) beneficiaries have their earnings suspended or terminated because of work than those who are actually working, partly because beneficiaries "park" earnings at a level below substantial gainful activity (SGA) to retain benefits. We assess the extent of parking by exploiting the 1999 change in the SGA earnings level from $500 to $700 monthly for nonblind beneficiaries using a difference-indifference analysis that compares two annual cohorts of beneficiaries who completed their trial work period, one that was affected by the SGA change and one that was not. Our impact estimates, along with results from other sources, suggest that from 0.2 to 0.4 percent of all DI beneficiaries were parked below the SGA level in the typical month from 2002 through 2006. The SGA change did not yield any difference in mean earnings, although it did result in a small reduction in months spent off of the rolls because of work.