Social Security Disability Insurance Applications Research Articles

Induced Entry into the Social Security Disability Program: Using Past SGA Changes as a Natural Experiment

The number of American adults receiving benefits from the Social Security Disability Insurance (SSDI) program has increased dramatically over the past several decades. A proposed solution to rising program costs is to change program rules to encourage fully or partially recovered SSDI beneficiaries to return to work. One such option is a benefit offset policy, which would reduce SSDI benefits by $1 for every $2 of earned income. While a benefit offset could generate savings from increased labor supply and program exit among current beneficiaries, it could also generate unintended costs if the more generous work rules induce significant numbers of working individuals to apply for benefits. In this paper we examine how past changes in a closely related program parameter, the Substantial Gainful Activity (SGA) threshold, have affected SSDI applications. We exploit changes over time and across states in real relative SGA levels, relative to local average wages. We find that a 7 percentage point (30%) increase in the real relative SGA (on par with the 1999 increase from $500 to $700 per month) was associated with a 4.7% increase in applications.

What Explains State Variation in SSDI Application Rates?

Social Security Disability Insurance (SSDI) applications and receipts vary greatly by state. This paper investigates the extent to which this geographic variation in SSDI applications reflects differences in health, demographics, and employment characteristics, state policies, and politics. We find that demographic, health, and employment characteristics of the state have the greatest effect on state-level variations in SSDI application rates, explaining over 70 percent of the variation. State policy concerning mandated employer-sponsored disability insurance (also known as temporary disability insurance or TDI) has a small negative effect on overall SSDI applications. This finding supports the principle underlying many recent SSDI reform plans: temporary disability insurance coverage could save the SSDI program considerable funds in the long run. Further, when we look to explain variation within a state, we find that state changes in health insurance regulation are negatively correlated with the SSDI application rate. This could be an indication that the Affordable Care Act (ACA) may have spillovers to the SSDI program.

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.

Disability and Occupational Assessment: Objective Diagnosis and Quantitative Impairment Rating

Industrial insurance originated in Europe in the nineteenth century and replaced the old system of negligence liability in the United States between 1910 and 1940. Today psychiatric disability assessments are performed by psychiatrists in the context of Social Security Disability Insurance applications, workers' compensation claims, private disability insurance claims, and fitness for duty evaluations. Expertise in the performance of psychiatric disability evaluations is required, but general psychiatric residency programs provide experience only with treatment evaluations, which differ fundamentally from independent medical evaluations as to role boundaries and the focus of assessment. Psychiatrists offer opinions regarding psychiatric impairments, but administrative or judicial tribunals make the actual determinations of disability. Social Security Disability Insurance evaluations and workers' compensation evaluations are discussed, as is the distinction between diagnoses, which are categorical, and impairment ratings, which are dimensional. Inconsistency in impairment ratings has been problematic in the United States and elsewhere in the workers' compensation arena. A protocol for achieving more consistent impairment ratings is proposed, one that correlates three commonly used global rating scales in a 3 × 5 grid, supplemented by objective psychological test data.

Social Security Disability Application Experiences of People With Multiple Sclerosis in the United States

Studies suggest that more than half of working-age Americans with multiple sclerosis (MS) are unemployed because of their health. Many turn to public disability insurance for income support, applying through the Social Security Administration for either Social Security Disability Insurance (SSDI), which provides benefits to formerly employed people, or Supplemental Security Income (SSI), which supports impoverished individuals. Anecdotal reports suggest that many patients with MS face considerable problems when applying for federal disability benefits. To gather more systematic information about these experiences, we surveyed 983 working-age people with MS nationwide from May through November 2005. Most (60.2%) were unemployed; 36.4% had federal disability insurance, with 27.8% having SSDI alone. Almost one third (31.3%) had their initial SSDI application denied, and 31.9% used legal assistance when applying for this benefit. Although the time elapsed between SSDI application and approval was <12 months for 60.4% of applicants, 12–23 months passed for 19.8% and 24+ months for another 19.8%. Among people without SSDI, 15.4% had applied for this benefit at some time. Failure to meet disability criteria caused 60.3% of rejections, and inadequate documentation contributed to 32.1%. Neurologists must fully document the breadth of MS-related impairments in their patients' disability applications.

The Early Intervention Project

Efforts by the Social Security Administration (SSA) to help beneficiaries of Social Security Disability Insurance (SSDI) return to work have had limited success. The Early Intervention project represents the first initiative by SSA in which SSDI applicants will be provided temporary inducements and return-to-work services. Inducements will include a 1-year cash stipend and public health insurance for 3 years. Early Intervention is expected to be successful because it will focus on SSDI applicants who have not been detached from the labor force as long as persons already receiving benefits. The magnitude of this success, however, will depend on (a) the ability to screen for applicants who are likely to become SSDI beneficiaries and to go back to work and (b) the provision of adequate inducements and services. As the first return-to-work initiative targeted at SSDI applicants, the Early Intervention project is expected to provide valuable information to policymakers, researchers, and other interest groups.

A National Profile of SSDI Recipients and Applicants

Less than one half of 1% of Social Security Disability Insurance (SSDI) beneficiaries currently return to work. The 1999 Ticket-to-Work and Work Incentives Improvement Act (TWWIIA) charged the Social Security Administration with investigating early intervention strategies to divert some of the persons applying for benefits into work support programs before they enroll in SSDI. Any early intervention programming will require greater understanding of the claimant population. This analysis used data from the 1994 and 1995 National Health Interview Surveys to compare the estimated 3.3 million working-age SSDI claimants to the estimated 3.6 million beneficiaries. These comparisons showed substantial heterogeneity in both groups but found that claimants were less disabled, in better health, and more likely to be employed than beneficiaries. Both groups tended to have low incomes, and nearly 20% of claimants lacked health insurance. Approximately 70% of applicants (2.3 million) and beneficiaries (2.6 million) have not received vocational support services and do not believe that they need such services. These findings suggest that demand for vocational services vouchers may be low.

Dynamic programming model estimates of Social Security Disability Insurance application timing

AbstractThis paper develops a dynamic programming model of the Social Security Disability Insurance (SSDI) application timing decision. We estimate the time to application from the point at which a health condition first begins to affect the kind or amount of work that a currently employed person can do. We use Health and Retirement Study (HRS) and restricted access Social Security earnings data for estimation. Our results show that the type of work‐limiting health condition, presence of employer accommodation, and the relative value of income in the application state to income in the work state significantly affect the timing of SSDI application. Copyright © 2004 John Wiley & Sons, Ltd.

Using a Life-Cycle Model to Predict Induced Entry Effects of a $1 for $2 Benefit Offset in the SSDI Program

This paper describes an empirical life cycle model and uses it to predict the behavioral responses to a change in the Social Security Disability Insurance (SSDI) program known internally within the Social Security Administration as the “$1 for $2 benefit offset”. This policy has not been enacted yet, but has been actively supported by disability advocates as a way to provide greater incentives for SSDI beneficiaries who have fully or partially recovered from their disabilities to return to work. In contrast to the large predicted increase in return to work, the life-cycle model predicts that the $1 for $2 offset will not have a very significant induced entry effect. The number of SSDI applications increases by 2.2% in our simulations, and SSDI rolls increase by 3.2%. The mean duration on the program increases only slightly, from 12.7 years to 13.0 years.

Option Value and Dynamic Programming Model Estimates of Social Security Disability Insurance Application Timing

This paper develops dynamic structural models - an option value model and a dynamic programming model - of the Social Security Disability Insurance (SSDI) application timing decision. We estimate the time to application from the point at which a health condition first begins to affect the kind or amount of work that a currently employed person can do. We use Health and Retirement Study (HRS) and restricted access Social Security earnings data for estimation. Based on tests of both in-sample and out-of-sample predictive accuracy, our option value model performs better than both our dynamic programming model and our reduced form hazard model.

Dynamic Modeling of the Ssdi Application Timing Decision: The Importance of Policy Variables

This paper analyzes the importance of policy variables in the context of Social Security Disability Insurance (SSDI) application timing decision. Previously, we explicitly modeled the optimal timing of SSDI application using dynamic structural models. We estimated these models using data from the Health and Retirement Study (HRS). This paper uses option value model estimates to simulate application timing under alternative SSDI policy formulations. We consider changes in three policy variables: benefit levels, acceptance rates, and employer accommodation. Our simulations suggest all these changes would have substantial effects on expected spell lengths until application and on lifetime application rates, and hence on SSDI caseloads.

Tracking the Household Income of SSDI and SSI Applicants

Using panel data from the Survey of Income and Program Participation linked to Social Security Administration disability determination records we trace the pattern of household income and the sources of that income from 38 months prior to 39 months following application for Social Security Disability Insurance (SSDI) and Supplemental Security Insurance (SSI). We find that the average applicant’s labor earnings declines dramatically beginning six month before application but the average applicant’s household income drops much less dramatically both in the months just before or just after application and over the next three years, and does so even for those denied benefits. However, we also found substantial heterogeneity in household income outcomes in both the SSDI and SSI applicant population. Our quantile regressions suggest that higher income households experience greater percentage declines in their post-application income. Such results are consistent with the lower replacement rate for higher earners established in the SSDI program and the low absolute level of protection provided to all SSI applicants regardless of income prior to application.

Occupational impairment and disability among applicants for Social Security disability benefits in Pennsylvania.

The study goal was to assess the extent of workplace-related disease and injury among Social Security Disability Insurance applicants. A convenience sample of 240 consecutive applicants to the Pennsylvania Bureau of Disability Determination was studied to assess the prevalence of work-related disorders. An applicant had a work-related condition if there was a clear statement of a workplace illness or injury associated with the impairment, or if the applicant had worked at an occupation with a high likelihood of exposures known or suspected to contribute to the condition of interest. Of the 240 applicants, 166 (69%) were awarded disability insurance benefits; a total of 27 (11%) had work-related conditions, including 14 of the 166 (8%) who were found to be disabled. Forty percent of the 27 had a disorder that was musculoskeletal in origin. Of 59 applicants with cancer, 10.2% had some work-related etiological component. Of an estimated 71,680 adult disability insurance applicants in Pennsylvania in 1990, 5134 new insurance beneficiaries had a projected occupationally related disability. A substantial number of applicants for disability insurance benefits suffer from an impairment caused or exacerbated by prior workplace exposures. These individuals may serve as sentinel events for initiating follow-up surveillance and prevention activities.

The decline in SSDI applications

Shifts in the rate of applications for Social Security Disability Insurance (SSDI) caused rapid growth in the number of beneficiaries in the program in the early 1970s and was partially responsible for the reduction in the program's size in the 1980s. The more recent trend is especially interesting because applications fell despite high unemployment rates in the early 1980s. Regression analysis of monthly applications data shows that changes in the age composition of the insured and the rate of awards were primarily responsible for the decline in applications.