Disability Insurance Benefits Research Articles

Association between longest‐held occupation and Social Security Disability Insurance benefits receipt

The cost of the Social Security Disability Insurance (DI) program has increased over time though recent reports showed that disability incidence and prevalence rates have started declining. We explored whether occupation was one of the risk factors for the rising number of disabled workers who received DI benefits during 1992-2016. We used a cohort of 16 196 Health and Retirement Survey respondents between the age of 51 and 64 years who were followed from their date of entry until they received DI benefits, died, reached full retirement age, or reached the end of the follow-up period (2016). We used the extended stratified Cox proportional hazard model. Because one-third of the respondents in our cohort did not report their longest-held occupation, we used a multiple-imputation method. The hazard of receiving DI benefits was 51%, 78%, 81%, and 85% higher among workers with longest-held occupations in sales, mechanics and repair, protective services, and personal services, respectively than among workers with longest-held occupations in the reference managerial occupation. The hazard of receiving DI benefits was more than double among workers with longest-held occupations in the construction trade and extractors, transportation operation, machine operators, handlers, and food preparation than among workers with the longest-held occupation in the reference managerial occupation. Improving the overall working conditions in these occupations would help reduce worker suffering and the number of applicants for DI benefits, thereby reducing the burden of workplace injury and illness on the DI program.

Summer-born struggle: The effect of school starting age on health, education, and work.

Children starting school older consistently exhibit better educational outcomes. In this paper, we underscore child development as a mechanism driving this effect. Using unique administrative data on health examinations, we study the causal effect of school starting age (SSA) on a child's probability of being diagnosed with special educational needs in early grades. Results show that children with higher SSA are less likely to develop behavioral problems and speech impediments, whereas learning disabilities, ADHD, and dyslexia/dyscalculia remain unaffected. Importantly, these effects only arise after primary school entry and are not due to preexisting health conditions. We also find that teachers tend to over‐refer relatively young children to special needs services, but this over‐referring behavior is not driving the results, which are based on psychologists' diagnoses. The SSA effect persists throughout compulsory schooling, resulting in higher test scores and better quality vocational training contracts. However, SSA does not affect employment, earnings, or disability insurance benefits at labor market entry.

Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits?

We study the welfare effects of disability insurance (DI) and derive social-optimality conditions for the two main DI policy parameters: (i) DI eligibility rules and (ii) DI benefits. Causal evidence from two DI reforms in Austria generate fiscal multipliers (total over mechanical cost reductions) of 2.0-2.5 for stricter DI eligibility rules and of 1.3-1.4 for lower DI benefits. Stricter DI eligibility rules generate lower income losses (earnings + transfers), particularly at the lower end of the income distribution. Hence, to roll back the Austrian DI program, policy makers should implement tighter DI eligibility rules rather than lower DI benefits. An application of our framework to the DI system of the U.S. suggests that DI eligibility rules are too strict and DI benefits are too low.

Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits

We study the welfare effects of disability insurance (DI) and derive social-optimality conditions for the two main DI policy parameters: (i) DI eligibility rules and (ii) DI benefits. Causal evidence from two DI reforms in Austria generate fiscal multipliers (total over mechanical cost reductions) of 2.0-2.5 for stricter DI eligibility rules and of 1.3-1.4 for lower DI benefits. Stricter DI eligibility rules generate lower income losses (earnings + transfers), particularly at the lower end of the income distribution. Hence, to roll back the Austrian DI program, policy makers should implement tighter DI eligibility rules rather than lower DI benefits. An application of our framework to the DI system of the U.S. suggests that DI eligibility rules are too strict and DI benefits are too low.

Who’s at risk of entering Social Security Disability Insurance? A comparison of application and allowance rates for groups of at-risk individuals

BACKGROUND: The U.S. government has implemented several programs to reduce federal expenditures on Social Security Disability Insurance (DI) and help beneficiaries return to work, but the limited success of these efforts has raised interest in approaches that help workers with disabilities remain in the workforce. OBJECTIVE: This paper provides information on individuals at risk of applying for DI benefits to help build the evidence base for policies that provide workers with disabilities support to eliminate the need to apply for and receive DI benefits. METHODS: Using three panels of the Survey of Income and Program Participation matched to SSA administrative data, we describe the employment characteristics of seven groups at risk of applying for DI benefits before and after application, as well as the outcomes of their DI applications. RESULTS: New private disability insurance recipients were more likely to apply for and receive DI than members of other at-risk groups. However, individuals with high healthcare expenditures made up the largest proportion of successful applicants across the at-risk groups considered here. CONCLUSION: While it seems plausible that individuals within an at-risk group who are likely to apply for DI benefits can be identified and provided supports to help them maintain employment, focusing on a specific group to promote employment over DI benefits may have a limited effect on the DI program because applicants come from multiple groups.

Implementation and impacts of the Substantial Gainful Activity Project demonstration in Kentucky

BACKGROUND: The Substantial Gainful Activity (SGA) Project demonstration tested innovations to improve the employment of nonblind vocational rehabilitation (VR) clients receiving Social Security Disability Insurance (SSDI) benefits. OBJECTIVE: We describe the SGA Project model components, the implementation experience in Kentucky, and the impact of the innovations on VR service and employment outcomes. METHODS: The evaluation used information from site visits and VR administrative data. We estimated impacts by comparing the outcomes of SSDI-only clients who applied for services at randomly assigned offices that implemented the SGA Project innovations to those who applied at other offices. RESULTS: Participants did not consistently receive all components of the innovations. Nevertheless, the innovations led to a 17 percentage-point increase in clients with a signed individualized plan for employment within 30 days of application, an 8 percentage-point increase in closures with competitive employment, and nearly 6 percentage-point increase in the number of clients with earnings at or above the SGA level. CONCLUSIONS: The early, positive impacts on key outcomes suggest the SGA Project innovations could hold promise for other VR agencies and for a broader set of VR clients. The evaluation illustrates the potential for random assignment demonstrations to test innovations in VR service delivery.

Subsidizing Domestic Services as a Tool to Fight Unemployment: Effectiveness and Hidden Costs

European countries have increasingly adopted wage subsidies for the sector of domestic services to reduce low-skilled unemployment. Yet, empirical evidence on their effectiveness is scarce. In this paper, we use Belgian administrative data to estimate how participation in the subsidized domestic services sector impacts the labour market outcomes of program participants. Our identification strategy rests on a dynamic event study difference-in-differences model combined with coarsened exact matching. Our findings indicate that such subsidies can be effective in reducing unemployment and inactivity, but only by increasing employment within the subsidized domestic services sector. We also find that program participation deteriorates physical health, thus increasing the worker's probability of claiming disability insurance benefits.

Implementation and impacts of the Substantial Gainful Activity Project demonstration in Minnesota

BACKGROUND: In 2015, the state vocational rehabilitation (VR) agency in Minnesota was one of two agencies that implemented the Substantial Gainful Activity (SGA) Project demonstration, whose innovations were designed to improve employment outcomes of nonblind VR clients receiving Social Security Disability Insurance benefits. OBJECTIVE: To present findings on the implementation experiences and the impacts the innovations had on service and employment outcomes. METHODS: The evaluation involved qualitative and quantitative methods from an office-level randomization design. Using interview and administrative data, we assessed implementation and impacts on service pacing, client engagement, and employment. RESULTS: Clients at treatment sites experienced shorter times for developing an individualized plan for employment and were less likely to drop out of services early, but the intervention had no impacts on employment or earnings. As a result of the intervention, agency leadership and staff changed their perceptions of the initial plan for employment, the value of site-based job placement staff, and Social Security Administration benefits knowledge. CONCLUSIONS: The SGA Project innovations generated positive impacts on key service delivery and client outcomes. Evaluation findings and staff experiences in implementing the innovations suggest a number of implications for other VR agencies interested in adopting features of the SGA Project innovations.

Setting Expectations for Claimant Ability to Work: Investigating the Occupational Requirements and Functional Capacity of Workers with Early Onset Health Conditions

When determining a claimant’s eligibility for Social Security Disability Insurance (SSDI) benefits, the Social Security Administration (SSA) assesses whether his/her health condition (e.g., back/spine problems) sufficiently impairs his/her functional capacity (e.g., ability to lift/carry weight) so that the he/she is unable to meet the requirements (e.g., need to lift/carry 25 pounds) of his/her previous occupation and other possible occupations. Using data from the Survey of Income and Program Participation (SIPP) and Occupational Requirements Survey (ORS), we compare the occupational requirements of workers with and without a given health condition in order to understand what to expect from claimants with that health condition. Although sample sizes are limiting and ORS data collection is not yet complete, we find some evidence that workers’ occupational requirements accommodate their health conditions. This evidence suggests that claimants with these health conditions may be able to fulfill the requirements in these occupations. We do find some evidence of the opposite causality: Workers may experience health conditions later in life from occupational requirements that may have caused their health conditions. This evidence is a caution against using data without onset information to inform claimant-ability expectations. Overall, this report provides evidence that national surveys with occupation, health, and function questions have the potential to inform revisions to the SSA disability determination process by providing information on people with health conditions who are working and meeting the requirements of a variety of occupations.

THE ABILITY OF OLDER WORKERS WITH IMPAIRMENTS TO ADAPT TO NEW JOBS: CHANGING THE AGE CRITERIA FOR SOCIAL SECURITY DISABILITY INSURANCE

AbstractMany applications for Social Security Disability Insurance cannot be evaluated based on medical criteria alone. In specific cases, the current regulatory structure dictates that applicants who can no longer do past jobs are expected to adapt to new jobs up to the age of 55, but not after. As the proportion of these cases has grown and life expectancy among beneficiaries has increased, policymakers have considered whether expectations for adapting to new jobs above age 55 should be adjusted. Some recent reform proposals call for increasing the age cutoffs in the regulations. Although prior research predicts reduced program costs, the capacity of potentially affected applicants to continue working is unclear. Filling this gap, we evaluate the work capacity of applicants above age 55 using an instrumental variables strategy. Our estimates indicate that, for applicants on the margin of allowance, at most an additional 11.2 percent would work above the regulatory definition of meaningful employment (known as Substantial Gainful Activity) in the absence of Disability Insurance benefits. We explore the implications for adapting to new jobs above age 55 under the proposed policy regime.

Disability Benefits and Change in Prescription Opioid Dose.

Among chronic low back pain (CLBP) patients, workers' compensation is associated with longer term prescription opioid analgesic use (OAU). The aim was to study the association between receiving Social Security Disability Insurance (SSDI) benefits and course of OAU. This prospective cohort study utilized data from primary care patients diagnosed with non-cancer CLBP. The outcomes were morphine equivalent dose (MED) - categorized as no OAU, 1-50mg MED, or >50mg MED - and change in MED over time using mixed multinomial logistic regression models. Covariates included sociodemographics, pain severity, pain management characteristics, continuity of care with their physician, health-related quality of life, number of comorbid health conditions, obesity, depression, and anxiety. In adjusted analysis, SSDI vs. non-SSDI patients were more likely to be receiving >50mg MED vs. no OAU at baseline (OR = 10.19; 95% CI:1.51-68.83). Differences in OAU trajectory between SSDI groups were nonsignificant (P = 0.204). Collection of SSDI benefits was an independent predictor of higher MED at baseline and persistently higher MED during 2 years of follow-up. Providers should consider the risk of persistent, high-dose opioid use in patients receiving SSDI benefits.

Income and substitution effects of a disability insurance reform

Disability insurance (DI) systems are widely criticized for their inherent work disincentives. This paper evaluates the effects of a Swiss DI reform that aims to lower DI benefits for a group of existing DI beneficiaries and introduces an additional level to the DI benefit schedule. The reform has only modest effects on earnings and employment but increases the disability degree of those threatened by a DI benefit decline. We estimate bounds on the income and substitution effects by employing the principal stratification framework. The income effect is quantitatively important, whereas the substitution effect is smaller and has bounds that include zero. The evidence suggests that caseworkers helped the insured with low labor market attachment to maintain a full DI benefit.

Disability insurance benefits and labor supply decisions: evidence from a discontinuity in benefit awards

The effect of disability insurance (DI) benefits on the labor supply of individuals is a disputed topic in both academia and policy. We identify the impact of DI benefits on working full-time, working part-time or being out of the labor force by exploiting a discontinuity in the DI benefit award rate in Switzerland above the age of 56. Using rich survey data and a discrete endogenous switching model, we find that DI benefit receipt increases the probability of working part-time by approximately 32% points, decreases the probability of working full-time by approximately 35% points and has little effect on the probability of being out of the labor force for the average beneficiary. Looking at the treatment effect distribution, we find that male, middle- to high-income and relatively healthy DI beneficiaries are more likely to adjust their labor supply from full-time to part-time, whereas women, low-income and ill beneficiaries tend to drop out of the labor market. Our results shed new light on the mechanisms explaining low DI outflow rates and may help better target interventions.

The development of a common understanding regarding terms used in social insurance, disability and insurance medicine across Europe – the Babylon project

Each country in Europe has its own unique system for the assessment of claimants for social security, disability and other insurance benefits. This variability can make it difficult to understand the systems that other countries use and thus hinder research and study, particularly when comparing the different systems. When benchmarking across countries, misunderstandings may occur due to the fact that when a person wants to express something they will try to find the appropriate English technical term from the reference point of their country’s system. But the receiver of the information from another country may interpret the term from their understanding of their own country’s system. Therefore, technical terms used in this specialist area of medicine would benefit from an English written definition, to avoid such misunderstandings as far as possible. This paper describes a project, called the ‘Babylon Project’ which was devised and undertaken by EUMASS/UEMASS (European Union of Medicine in Assurance and Social Security/Union Europeenne de Medecine d’Assurance et de Securite Sociale), a group of specialist insurance physicians in Europe.

Credibility Determinations for Social Security Benefits

Ricky E. Brown sought appellate review of his denial of disability insurance benefits in Brown v. Commissioner Social Security Administration , 873 F.3d 251 (4th Cir. (2017)). Mr. Brown allegedly sustained injuries, including both physical and psychological sequelae, after a workplace accident on

Financial Incentives and Earnings of Disability Insurance Recipients: Evidence from a Notch Design

Most countries reduce disability insurance (DI ) benefits for beneficiaries earning above a specified threshold. Such an earnings threshold generates a discontinuous increase in tax liability—a notch—and creates an incentive to keep earnings below the threshold. Exploiting such a notch in Austria, we provide transparent and credible identification of the effect of financial incentives on DI beneficiaries’ earnings. Using rich administrative data, we document large and sharp bunching at the earnings threshold. However, the elasticity driving these responses is small. Our estimate suggests that relaxing the earnings threshold reduces fiscal cost only if program entry is very inelastic. (JEL H55, J14, J31)

Predictors of Earnings Enabling Likely Roll Departure for SSDI Beneficiaries With Visual Impairments in Vocational Rehabilitation

We examined individual, socioeconomic, disability, service, and state-level factors predicting vocational rehabilitation (VR) closure earnings exceeding substantial gainful activity for Social Security Disability Insurance (DI) beneficiaries in VR who were blind or visually impaired (BVI). We used 2011 RSA-911 (Rehabilitation Services Administration) data from 3,505 individuals exiting VR. Using multilevel modeling, we found positive relationships for beneficiaries who were male, younger, African American; held higher education levels; were without additional disabilities; had higher earnings and DI benefits at application; received services related to job placement and on-the-job supports; did not receive “work basics” (job-readiness) training; received training/support services in rehabilitation technology and other supports; and resided in states with lower unemployment rates. Interactions with VR agency structure revealed compensatory effects—negative relationships for being female and for being older were overcome by receiving services in a blind (rather than combined) agency. We concluded that prior work experience of a DI-beneficiary consumer contributes substantially to high earnings likely to lead to benefits termination due to work for the BVI consumer exiting VR and may serve to level race/ethnicity differences in outcome. Policy recommendations include retaining separate VR agencies for BVI consumers and strongly encouraging work experiences for consumers in VR.

Evaluation of a Placement Coaching Program for Recipients of Disability Insurance Benefits in Switzerland.

Purpose During 2009‒2013 a pilot project was carried out in Zurich which aimed to increase the income of disability insurance (DI) benefit recipients in order to reduce their entitlement to DI benefits. The project consisted of placement coaching carried out by a private company that specialized in this field. It was exceptional with respect to three aspects: firstly, it did not include any formal training and/or medical aid; secondly, the coaches did not have the possibility of providing additional financial incentives or sanctioning lack of effort; and thirdly due to performance bonuses, the company not only had incentives to bring the participants into (higher paid) work, but also to keep them there for 52 weeks. This paper estimates the medium-run effects of the pilot project and assesses the net benefit from the Swiss social security system. Methods Different propensity score matching estimators are applied to administrative longitudinal data in order to construct suitable control groups. Results The estimates indicate a reduction in DI benefits and an increase in income even in the medium-run. A simple cost-benefit analysis suggests that the pilot project was a profitable investment for the social security system. Conclusion Given a healthy labor market, it seems possible to enhance the employment prospects of disabled persons with a relatively inexpensive intervention, which does not include any explicit investments in human capital.

Household labor supply and the gains from social insurance

The marginal gains from social income insurance programs are captured by the gap in the marginal utility of consumption across states of nature. To identify this gap in the context of the household, this paper offers a new labor-supply based approach that leverages household-level economic interactions and optimality conditions. We demonstrate that, in frameworks of efficient household allocations, spousal labor supply responses to shocks have direct implications for the gains from more generous government benefits to households. We show that this holds for both intensive and extensive margin responses under fairly general conditions. Our analysis illustrates how labor market data can be used for assessing marginal welfare gains in a general class of social insurance schemes, including the large and important programs of disability insurance and survivors benefits. Hence, household labor supply behavior and responses to shocks, which are widely studied in theoretical and empirical work, hold valuable information for the optimal design of social insurance.

Do Firms with Low Disability Risks Opt Out from Public to Private Insurance?

Abstract In the Netherlands, firms may opt out from public to private disability insurance (DI). Opponents of this “mixed market” for insurance argue that it may trigger a segmentation between firms with high risks with public insurance and low disability risks with private insurance. This article tests the importance of such risk segmentation, using administrative information on DI benefits and opting-out decisions of a panel of about 250,000 Dutch firms between 2007 and 2011. We find strong selection into private insurance of firms with low recent DI inflow rates and low current sickness rates. Accordingly, private insurers succeeded in attracting firms with low anticipated DI benefit costs in the first years to come. Our results also suggest that these effects are transitory – that is, firms that opted out have DI risks that are not structurally lower.