Disability Insurance Benefits Research Articles

Long term earnings and disability program participation outcomes of the Bridges transition program

BACKGROUND: The Bridges from School to Work (Bridges) program provides job placement and supports for youth with disabilities. Operating in nine sites across the country, over 18,000 youth have received job placement services through Bridges. OBJECTIVE: The paper presents long-term outcomes of youth who participate in the study to determine if previously documented short-term outcomes continue into adulthood. METHODS: We examine the earnings of Bridges participants up to age 30. We present longitudinal statistics on the earnings and Supplemental Security Income (SSI) and Social Security Disability Insurance (DI) program participation of youth placed by Bridges into a job. A comparison with similarly aged youths receiving SSI who did not participate in Bridges is also made. RESULTS: At age 30, almost three quarters of youth placed by Bridges have earnings. We also find that SSI participation declines through age 30 and DI participation increases. Among placed youth who received SSI at the time of Bridges enrollment, half have earnings at age 30 and less than half received SSI payments; however, over one quarter receive DI benefits. CONCLUSIONS: Bridges participation potentially helps create a higher earnings capacity for participants; however, more research is necessary to establish a causal effect.

Employers Opting Out of Public Disability Insurance: Selection or Incentive Effects?

This paper analyzes selection and incentive effects of opting out from public to private insurance on employer Disability Insurance (DI) inflow rates. We use administrative information on DI benefit costs and opting-out decisions of a balanced panel of about 140,000 employers that are observed between 2007 and 2011. We argue that the opting-out decision of employers was driven by current DI enrolment and anticipation effects that resulted from short-term expectations on DI costs. In particular, employers opted out when this was most rewarding for them in reducing DI premium rates. When controlling for these effects, our main finding is that there are no incentive effects due to opting out. Thus, publicly and privately insured employers show similar DI inflow rates.

Social Support Substitution and the Earnings Rebound: Evidence from a Regression Discontinuity in Disability Insurance Reform

We exploit a cohort discontinuity in the stringency of Dutch disability reforms to estimate the effects of decreased DI (disability insurance) generosity on behavior of existing recipients. We find evidence of social support substitution: individuals on average offset €1.00 of lost DI benefits by collecting €0.30 more from other social assistance programs, but this benefit-substitution effect declines over time. Individuals also exhibit a rebound in earnings: earnings increase by € 0.62 on average per euro of lost DI benefits and this effect remains roughly constant over time. This is strong evidence of substantial remaining earnings capacity among long-term claimants of DI. (JEL I38, J14, J22, J28, J31)

A life-cycle model of unemployment and disability insurance

A general equilibrium life-cycle model is developed, in which individuals choose a sequence of saving and labor supply faced with search frictions and uncertainty in longevity, health status and medical expenditures. Unemployed individuals decide whether to apply for disability insurance (DI) benefits if eligible. We investigate the effects of cash transfer and in-kind Medicare component of the DI system on the life-cycle employment. Without Medicare benefits, DI coverage could fall significantly. We also study how DI interacts with reforms of Social Security and Medicare and find that DI enrollment amplifies the effects of reforms.

Health, Homelessness, and Poverty: A Way Forward

Health, Homelessness, and Poverty: A Way Forward

Differential Mortality and Retirement Benefits in the Health and Retirement Study

This analysis uses data from the Health and Retirement Study (HRS) to examine the sources of variation in mortality for individuals of varying socioeconomic status. The use of the HRS allows a distinction between education and a measure of career earnings as primary determinants of socioeconomic status for men and women separately. We use those predictions of mortality to estimate the distribution of annual and lifetime Old Age, Survivors, and Disability Insurance benefits for different birth cohorts spanning the birth years from 1900 to 1950. We find differential rates of mortality have had substantial effects in altering the distribution of lifetime benefits in favor of higher income individuals.

Adding Employer Contributions to Health Insurance to Social Security's Earnings and Tax Base

The inclusion of employer-sponsored health insurance (ESI) in taxable income would increase income and payroll tax receipts, but would also increase Old Age, Survivors, and Disability Insurance (OASDI) benefits by adding ESI to the OASDI earnings base. This study uses the Urban Institute’s DYNASIM model to estimate the effects of including ESI premiums in taxable earnings on the level and distribution by age and income groups of income tax burdens, payroll tax burdens, and OASDI benefits. We find that the increased present value of OASDI benefits from including ESI in the wage base in 2014 offsets about 22 percent of increased income and payroll taxes, 57 percent of increased payroll taxes, and 72 percent of increased OASDI taxes. The overall distributions of taxes and benefits by income group follow the same pattern, with both taxes and benefits increasing as a share of income between the bottom and middle quintiles and then declining as a share of income for higher income taxpayers. But households in the bottom income quintiles receive a net benefit from including ESI in the tax base because their increase in OASDI benefits exceeds their increase in income and payroll taxes. Over a lifetime perspective, all earnings groups experience net tax increases, but workers in the middle of the earnings distribution experience the largest net tax increases as a share of lifetime earnings. Higher benefits offset a larger share of tax increases for lower than for higher income groups.

How do people with disabilities cope while waiting for disability insurance benefits?

Abstract Disability Insurance waiting time varies from a few months to several years. We estimate the causal effect of longer waiting times on the use of five financial coping strategies. We find that SNAP benefits are the most responsive to longer waiting times. Moreover, while spousal employment is not responsive to longer wait times, spousal employment leads to longer waiting times, presumably because these applicants are more able to appeal. Together, these results suggest that coping strategies are used to both help applicants during the wait time and to extend the waiting time and increase their probability of success. JEL Classification Code H53; J08; I3

Living on the edge: Assessing the economic impacts of potential disability benefit reductions for Social Security disability beneficiaries

BACKGROUND: Although Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits are an important source of support to many people with disabilities, modifications to programs are under consideration given current and projected governmental fiscal constraints. OBJECTIVE:To provide data about levels of safety net cross-participation among working age SSDI and SSI program participants and to estimate how changes to disability benefit levels might influence the economic security of beneficiaries. METHODS: Data from the 2012 Current Population Survey is used to describe income and resources, program participation, and the share of family income and supplemental poverty measure resources received through public disability benefits. Hypothetical benefit reductions are estimated to assess economic impacts on the beneficiary population. RESULTS:Cross-participation is high among beneficiaries. Reductions in disability benefit income would have the largest impact on those beneficiaries who are participating in other safety net programs, but may also influence the movement of a portion of the remaining beneficiaries onto additional programs. CONCLUSION: Any modification of SSA disability programs will require careful consideration of how other public programs and services, including those provided within the field of vocational rehabilitation, can best support the economic security of persons with disabilities.

Sick leave and absence from work due to restless legs syndrome

Introduction In order to assess the impact of RLS on their working life, members of RLS patient organizations were asked to provide information on the total time they had to spend at home due to their RLS symptoms – RLS only, no other illness. Materials and methods A detailed questionnaire was sent to 11,731 members of RLS patient organizations in Austria, Belgium, Finland, France, Great Britain, Italy, Norway, Spain, Sweden, The Netherlands, Canada and the USA. 4278 questionnaires were returned, of which 4107 (35.0%) could be analyzed. Questions were asked on a variety of topics, among which sick leave and disabllity benefit. Results Sick leave 165 respondents (4.0%) are/have been on sick leave due to RLS. Symptoms in sick leave respondents compared to 3942 respondents not on sick leave are more severe (range 0–40). Average without treatment 24.58 (21.27), SD 9.08 (8.75), p 0.000022. Average with treatment 12.96 (9.70), SD 8.50 (7.00), p 0.000028. Time from onset to diagnosis was shorter for sick leave respondents. Average 13.16 (15.61) years (SD 13.07 (15.74) p 0.0232). Treatment of sick leave respondents is not optimal. Dopamine agonists were given in only 68.5% (72.3%) of cases, antiepileptics in 16.4% (13.9%). Sick leave respondents showed a higher use of antidepressants: 23.0% (17.5%), p 0.00017. Disability insurance benefit – DIB 75 (1.8%) of all respondents receive DIB due to RLS. Symptoms in DIB respondents compared to 4032 respondents not on DIB are more severe (range 0–40). Average without treatment 25.90 (21.31), SD 9.39 (8.76), p 0.00018. Average with treatment 13.29 (9.77), SD 9.14 (7.05), p 0.0046. Time from onset to diagnosis was longer for DIB respondents: average 16.53 (15.49), SD 16.01 (15.64), p 0.592. Treatment of DIB respondents is not optimal: Dopamine agonists were given in 70.7% (72.2%) of cases, antiepileptics in 16.0 % (13.9%). DIB respondents showed a lower use of antidepressants: 9.3% (17.9%), p 0.00008. Despite treatment an overall 2–4% of patents report sick or are on disability benefits because of RLS. Conclusion The authors conclude that correct and early diagnosis and optimal medical treatment may lead to decreased sick leave as well as disability insurance benefits in severe RLS and thus reduce health care expenditure and increase quality of life for these patients. Acknowledgements The authors wish to acknowledge the dedication of the thousands of RLS patients worldwide who helped complete this questionnaire and provided us with detailed and accurate information not hitherto known.

Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt

We present the first causal estimates of the effect of Social Security Disability Insurance benefit receipt on labor supply using all program applicants. We use administrative data to match applications to disability examiners and exploit variation in examiners' allowance rates as an instrument for benefit receipt. We find that among the estimated 23 percent of applicants on the margin of program entry, employment would have been 28 percentage points higher had they not received benefits. The effect is heterogeneous, ranging from no effect for those with more severe impairments to 50 percentage points for entrants with relatively less severe impairments. (JEL H55, J14, J22)

Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution

This paper explores how extended unemployment insurance (UI) benefits targeted to older workers affect early retirement and social welfare. The trade-off of optimal UI between consumption smoothing and moral hazard requires accounting for the entire early retirement system, which often includes extended UI and relaxed access to disability insurance (DI). We argue that extended UI generates program complementarity (increased take-up of UI followed by DI and/or regular retirement benefits) and program substitution (increased take-up of UI instead of DI). Exploiting Austria's regional extended benefit program, which extended regular UI benefits to up to 4 years, we find: (i) program complementarity is quantitatively important for workers aged 50; and (ii) program substitution is quantitatively relevant for workers aged 55. We derive a simple rule for optimal UI that accounts for program complementarity and program substitution. Using the sufficient statistics approach, we conclude that UI for older workers was too generous and the regional extended benefit program was a suboptimal policy.

The Use of VA Disability Benefits and Social Security Disability Insurance Among Veterans

Although there is substantial functional limitation and disability among veterans of all ages, relatively little is known about veterans’ uptake of Department of Veterans Affairs (VA) Disability Benefits and Social Security Disability Insurance (DI). This project uses data from the 1992, 1993, 1996, 2001, 2004, and 2008 Survey of Income and Program Participation to examine veterans’ participation in VA and DI programs. The results indicate that the majority of veterans do not receive VA or DI benefits, but veterans’ use of these programs has been increasing over time. A higher percentage of veterans receive VA compensation only, which ranges from 4.9 percent in 1992 to 13.2 percent in 2008, than DI compensation only, which ranges from 2.9 percent in 1992 to 6.7 percent in 2008. Furthermore, the rate of joint participation in these two programs is low, ranging from less than 1 percent in 1992 to 3.6 percent in 2008. Veterans experience relatively few within-panel transitions between VA and DI programs. Overall, the likelihood of any disability program use is higher among veterans who served during multiple time periods, are older, black or Hispanic, currently married, and have less than a high school education. Among users, the likelihood of any VA use in contrast to only DI use is higher among veterans who served since 1990, are younger, Hispanic, highly educated, and currently married. Among users, variation in the likelihood of any DI use relative to only VA use generally mirrors variation in the likelihood of any VA use, although there are differences in associations with race/ethnicity, education, and marital status.

Pathways to Retirement and Mortality Risk in The Netherlands

The success of policies aimed at keeping older workers in employment until the statutory retirement age in part depends on the health of these workers. For this reason we examine to what extent pathways to statutory retirement other than employment are associated with adverse health conditions as measured by increased mortality risk during retirement. To do so, we estimate a mortality risk model using Dutch administrative data. We find, conditional on labor market status at the age of 58 and compared to individuals who are employed until the statutory retirement age of 65, no increased mortality risk among individuals who, between the ages of 58 and 65, have been in early retirement or unemployment and an increased mortality risk among individuals who have drawn disability insurance benefits. Our results suggest that older workers other than those who qualify for disability insurance benefits, may, on average, have no significant health conditions that could adversely impact the effectiveness of reforms that create stronger financial incentives for continued employment until age 65.

Striking while the iron is hot: The effect of vocational rehabilitation service wait times on employment outcomes for applicants receiving Social Security disability benefits

BACKGROUND: State vocational rehabilitation (VR) agencies play a significant role in supporting the employment goals of people with disabilities, but delays in the receipt of vocational services could adversely affect employment outcomes of applicants for services. OBJECTIVE: We explore how exogenous variation in the duration to service receipt for VR applicants receiving Social Security Disability Insurance (SSDI) benefits affects their employment outcomes. METHODS: We constructed a data set for an annual cohort of SSDI applicants for VR services and followed them for 48 months after their application month using VR and Social Security Administration (SSA) administrative records. We then estimated multivariate models to predict employment-related outcomes based on agency order of selection characteristics and a measure of the usual wait time experienced by all SSDI applicants to the same agency in the same month. RESULTS: Having wait lists for services and experiencing longer wait times for services are associated with lower employment outcomes at VR closure and employment outcomes observed through SSA administrative data. CONCLUSIONS: Longer wait times harm the economic well-being of SSDI VR applicants, reduce VR agency revenues, and increase SSA benefit costs. An experimental test of the effect of accelerating the pace of service delivery seems worthwhile.

Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution

This paper explores how extended unemployment insurance (UI) benefits targeted to older workers affect early retirement and social welfare. The trade-off of optimal UI between consumption smoothing and moral hazard requires accounting for the entire early retirement system, which often includes extended UI and relaxed access to disability insurance (DI). We argue that extended UI generates program complementarity (increased take-up of UI followed by DI and/or regular retirement benefits) and program substitution (increased take-up of UI instead of DI). Exploiting Austria’s regional extended benefit program, which extended regular UI benefits to up to 4 years, we find: (i) program complementarity is quantitatively important for workers aged 50+; and (ii) program substitution is quantitatively relevant for workers aged 55+. We derive a simple rule for optimal UI that accounts for program complementarity and program substitution. Using the sufficient statistics approach, we conclude that UI for older workers was too generous and the regional extended benefit program was a suboptimal policy.

Holding Out or Opting Out? Deciding between Retirement and Disability Applications in Recessions

Workers over age 55 with chronic health conditions must choose between applying for Social Security Disability Insurance (SSDI) benefits or continuing to work until their Social Security retirement benefits become available. Previous research has investigated the influence of macroeconomic conditions on disability application and, separately, on retirement claiming. This project uses data from the Survey of Income and Program Participation Gold Standard File to determine whether there is a relationship between national and state unemployment rates and disability applications, taking into account the current or future receipt of Social Security retirement benefits. First, reduced-form estimates indicate that retirement beneficiaries are more likely to apply for SSDI as unemployment increases – and, conversely, eligible individuals who have not yet claimed benefits are less likely to apply when unemployment rises. But after accounting for unobserved characteristics associated with both the decision to apply for disability insurance and Social Security benefits, individuals are no more likely to apply for disability benefits when unemployment is high. Second, we find that the probability of SSDI application among individuals age 55-61 is unrelated to macroeconomic conditions and unrelated to proximity to one’s 62nd birthday. These results suggest that, unlike prime-age adults, the decision among older individuals to apply for disability is based primarily on health, and not financial incentives.

Capturing the Elusive Working-Age Population With Disabilities

The purpose of this study is to examine the implications of using different approaches to estimating the U.S. working-age population with disabilities. The approaches compared are the traditional work-activity limitation question, the Census Bureau’s newer six-question sequence that does not include a work-activity limitation question, and the combination of the two. With data from the Current Population Survey and the American Community Survey, the authors demonstrate that using the work-limitation question or the six-question sequence alone results in an underestimate of the size of the working-age population with disabilities (assuming the International Classification of Disability, Health, and Functioning conceptualization of disabilities). Furthermore, the authors show that using the sample of the working-age population with disabilities identified by the six-question sequence will lead to biased estimates of key social policy success parameters; in particular, it will overestimate their employment rates and underestimate the share that are receiving Social Security Disability Insurance or Supplemental Security Income-Disabled Adults benefits relative to the broader sample that includes a work-limitation question and the six-question sequence.

Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt

We present the first causal estimates of the effect of Social Security Disability Insurance benefit receipt on labor supply using all program applicants. We use new administrative data to match applications to disability examiners, and exploit variation in examiners’ allowance rates as an instrument for benefit receipt. We find that among the estimated 23% of applicants on the margin of program entry, employment would have been 28 percentage points higher had they not received benefits. The effect is heterogeneous, ranging from no effect for those with more severe impairments to 50 percentage points for entrants with relatively less severe impairments.

The Importance of State Anti-Discrimination Laws on Employer Accommodation and the Movement of Their Employees Onto Social Security Disability Insurance

The rate of application for Social Security Disability Insurance (SSDI) benefits, as well as the number of beneficiaries has been increasing for the past several decades, threatening the solvency of the SSDI program. One possible remedy is to promote continued employment amongst those experiencing the onset of a work limiting disability through the provision of workplace accommodations. Using the Health and Retirement Study data linked to Social Security administrative we find that the provision of workplace accommodation reduces the probability of application for SSDI following disability onset. We estimate that receipt of an accommodation reduces a worker’s probability of applying for SSDI by 7.4 percentage points over five years and 5.7 percentage points over 10 years. We then attempt to control for the potential endogeneity of accommodation receipt by exploiting exogenous variation in the implementation of state and federal anti-discrimination laws to estimate the impact of workplace accommodation on SSDI application in an instrumental variables (IV) model. In contrast to our expectations, we find that the IV estimates are actually larger in magnitude than the standard estimates, implying a reduction in the probability of applying within five years of 26 percentage points, and applying within 10 years of 39 percentage points. Overall our results imply that increasing accommodation is a plausible strategy for reducing SSDI applications and the number of beneficiaries.