The Center's work on 'Disability' Issues

SSI Should Be Strengthened, Not Cut

March 27, 2014 at 11:22 am

House Budget Committee Chairman Paul Ryan’s misleading review of the safety net attacks Supplemental Security Income (SSI) — an important program that provides cash income to seniors, the blind, and people with severe and long-lasting disabilities who have little income and few assets.  This vital program aids some of the poorest and most vulnerable Americans and, rather than attack it, policymakers should strengthen it.

In December 2013, 8.4 million people collected SSI:  2.1 million seniors age 65 or older, 4.9 million disabled adults age 18-64, and 1.3 million disabled children under age 18.  Until the deep recession caused a modest uptick, SSI participation had generally been flat or falling as a share of the population since at least the mid-1990s (see graph).

SSI benefits alone don’t lift recipients living independently out of poverty; the maximum benefits for individuals ($721 a month) and couples ($1,082, if both spouses qualify) are about three-fourths of the poverty level.  But SSI greatly reduces the number of people in extreme poverty and lessens the burden on other family members.  A Social Security Administration study found that, in 2010, the poverty rate (based on family income) of recipients would be 65 percent without counting SSI payments; the actual rate, including SSI, was 43 percent.  Most families with an SSI recipient remained below 150 percent of the poverty threshold.  SSI benefits fall when recipients have other income (or live in a Medicaid facility or with relatives who provide support), so the average payment is just $529 a month.

Because SSI participants are elderly or have severe disabilities, it’s no surprise that relatively few of them work, even though program rules allow and encourage them to do so.  Nevertheless, nearly one-third of SSI recipients age 18-64, and three-fifths of elderly beneficiaries 65 or older, have worked enough — at least one-fourth of their adult lives — to qualify for Social Security benefits.  And two-thirds of children with disabilities who receive SSI and live in two-parent families — and one-third of those in single-parent families — have a working parent.

Severe disability in childhood — exacerbated by poverty — hampers adult outcomes (see here, here, and here), and about two-thirds of child beneficiaries reaching age 18 continue to qualify for SSI based on disability.  It’s not appropriate, as Ryan’s report implicitly does, to compare statistics like high school graduation rates and job-holding for young people who received SSI as children with statistics for those who didn’t.  The two groups differ in fundamental ways.  Similarly, there’s no basis for calling the adult struggles of those who received SSI as children an “effect” of their benefit receipt, as Ryan does.  Their underlying health problems coupled with their low incomes play an important role in their academic achievement and adult employment prospects, and at least one study suggests that childhood SSI benefits improve adult outcomes.

Special SSI program rules — like the Student Earned Income Exclusion — are designed to encourage a successful transition to adulthood for child beneficiaries, and the agency is rigorously testing even more targeted efforts.  Early results are mixed, but if the pilots are successful, such interventions would require more funding, not less, for this special group of young adults.

Just the Facts on Disability Insurance

March 17, 2014 at 2:29 pm

We’ve updated our primer on the Social Security Disability Insurance (DI) program, an integral part of Social Security that provides modest but vital benefits to workers who can no longer support themselves due to a severe and long-lasting medical impairment.  For an estimated 150 million insured workers, DI stands ready to protect them from destitution if a health catastrophe strikes and they meet DI’s stringent eligibility criteria.

Some highlights from our piece:

  • Some 8.9 million people received disabled-worker benefits from Social Security in December 2013, averaging $1,146 a month.
  • The typical beneficiary is in his or her late 50s or early 60s, with limited education and poor health.  Recipients’ death rates are at least three times as high as the general population’s.
  • Most recipients depend heavily on their DI benefits as their main source of income.  Beneficiaries are much likelier to be poor or near-poor than people who don’t collect DI.

DI rolls have risen steeply over the last few decades, chiefly because of demographic factors — overall population growth, the aging of the baby boomers into their 50s and 60s (the peak ages for DI receipt), the rise in women’s labor force participation (which means more women now qualify for DI benefits), and the rise in Social Security’s full retirement age from 65 to 66 (which delays by a year the reclassification of DI beneficiaries as retired workers).  Once you adjust for those factors, DI’s rate of receipt has grown modestly (see graph).

Find our primer here and check out our other posts on this important topic.

Decoding Demographics’ Role in Disability Program’s Growth

January 30, 2014 at 10:21 am

The number of disabled workers collecting Disability Insurance (DI) benefits tripled from 2.9 million in 1980 to 8.9 million the end of 2013.  Some see this growth as evidence that the program is out of control.  But most of that growth stems from five demographic factors, as our new paper explains:

  • Population growth.  The working-age population (conventionally defined as people aged 20 through 64) rose by 43 percent since 1980.  That increase, alone, would have generated an extra 1.25 million DI beneficiaries in 2013, compared with 1980.
  • Population aging.  The risk of disability rises steeply with age; people are twice as likely to receive DI at age 50 than at age 40, and twice as likely at age 60 than at age 50.  The baby-boom generation — the large cohort born between 1946 and 1964 — has aged into those high-risk years over the past few decades (see graph).  That added another 900,000 DI beneficiaries in 2013, compared with 1980.
  • Growth in women’s labor force participation.  Besides having a severe impairment, DI applicants must have a steady work history — and until women joined the work force in huge numbers, relatively few of them qualified.  The rise in women’s labor force participation explains why the number of insured workers grew much faster than overall population, especially among older workers.  It’s responsible for another 900,000 beneficiaries in 2013, compared with 1980.
  • Rise in retirement age.  When disabled workers reach Social Security’s full retirement age, they begin receiving Social Security retirement benefits rather than DI.  The rise in the full retirement age from 65 to 66 in the early 2000s delayed the conversion of disabled workers to retired workers.  In December 2013 more than 450,000 people between ages 65 and 66 collected DI benefits; under the former rules, they would’ve received retirement benefits instead.
  • Increase in women’s rate of receipt.  Until the mid-1990s, women who had worked enough to qualify for DI in the event of disability were only about three-fourths as likely as their male counterparts to receive DI benefits.  Now they’re equally likely to do so.  This development added another 650,000 beneficiaries in 2013, compared with 1980.

In sum, these five demographic factors alone account for over 4.1 million more DI beneficiaries by 2013 — expanding the DI rolls from 1980’s 2.9 million to 7 million.  Put another way, these five factors account for nearly 70 percent of DI’s enrollment growth since 1980 and four-fifths of DI’s total enrollment in 2013.

And we know many of the reasons for the remaining growth (which include changes to eligibility rules in the mid-1980s, the impact on the workplace of globalization and technological change, and lower death rates), even though we can’t readily quantify them.

A proper understanding of the contribution of demographic changes and other factors should help policymakers as they decide how to ensure Disability Insurance’s long-term solvency.

Portman Disability Proposal: Correcting the Record

January 13, 2014 at 1:20 pm

Senator Rob Portman (R-OH) has seriously mischaracterized his proposal to curtail the joint receipt of Social Security disability insurance (DI) and unemployment insurance (UI).  He says that it would merely “[end] double-dipping between unemployment and disability benefits,” but it would actually go far beyond that.  He also incorrectly says that it’s “in the President’s budget.”

Under the Portman proposal, as we have previously explained, any month that a person receives UI benefits would be considered a month in which he or she is engaged in “substantial gainful activity” (SGA).  That would not only prevent people from receiving both UI and DI benefits simultaneously — what Portman calls “double-dipping” — but would also delay the eligibility for both DI and Medicare for some people with serious disabilities and hasten the loss of benefits for others.

To receive DI benefits, an applicant must have a severe impairment that has prevented him or her from engaging in SGA, defined as earning more than $1,070 a month, for at least five months.  Medicare coverage begins only after an additional two-year wait.  Counting receipt of UI as a month of SGA, as Sen. Portman proposes, would therefore bar many disabled applicants from receiving DI until they endure a five-month wait without receiving benefits from either program.

The proposal in President Obama’s fiscal year 2014 budget is quite different from Portman’s — and far preferable.  It would eliminate “double-dipping” by reducing DI benefits dollar-for-dollar by the amount that a person receives in UI benefits.  In effect, a person who was legitimately eligible for both DI and UI benefits could receive the higher of the two — but not both.

The Congressional Budget Office cost estimates illustrate the sharp difference between the proposals.  CBO estimates that the Obama proposal would cut spending by $1.2 billion over ten years, whereas the Portman proposal would cut over four times that amount.

Senate Majority Leader Harry Reid (D-NV) has included the Obama proposal in his bill to extend federal UI benefits.  The Senate should not replace the Obama/Reid proposal with Sen. Portman’s much harsher alternative.

Limiting the Disability Insurance-Unemployment Insurance Overlap

January 10, 2014 at 3:30 pm

Senate Majority Leader Harry Reid (D-NV) has proposed curtailing the joint receipt of Social Security disability insurance (DI) and unemployment insurance (UI) to help pay for extending federal UI benefits.  Reid’s DI proposal — which is identical to a proposal in President Obama’s fiscal year 2014 budget — is far preferable to a harsher one by Senator Rob Portman (R-OH), although it raises concerns about some DI recipients who would lose UI.  Nonetheless, the Reid package is a step forward in the effort to continue vital benefits for the long-term unemployed.

The Reid proposal (S. Amdt. 2631) would reduce DI benefits dollar-for-dollar by the amount that a person receives in UI benefits.

Under the Portman proposal (S. Amdt. 2613), by contrast, any month that a person receives UI benefits would be considered a month in which he or she is engaged in “substantial gainful activity” (as explained below).  That would delay the eligibility for both DI and Medicare for some people with disabilities and hasten the loss of benefits for others.

DI beneficiaries are not only permitted, but encouraged to work.  The criterion for DI eligibility is not the complete inability to work, but rather the inability to perform “substantial gainful activity” (SGA).  SGA is now defined as earning no more than $1,070 a month, which is less than 40 percent of median earnings of a full-time worker with only a high-school diploma.  Recipients may earn up to the SGA level while collecting DI benefits.

The DI program also includes several other work incentives, including a nine-month trial work period during which recipients may earn larger amounts without jeopardizing their benefits.  The Portman proposal — unlike the Obama/Reid proposal — would undercut DI’s work incentives by effectively shortening the trial work period for some beneficiaries.

To receive DI benefits, an applicant must have a severe impairment that has prevented him or her from earning more than the SGA level for at least five months.  Counting receipt of UI as a month of SGA, as Portman proposes, would therefore bar many disabled applicants from receiving DI until they endure a five-month wait without benefits from either program.  The Obama/Reid proposal would neither change DI eligibility nor take away anyone’s benefits entirely; it would simply eliminate the DI-UI overlap.

The Social Security Administration’s actuary estimates that only 0.4 percent of DI beneficiaries also receive UI.  Receiving both DI and UI at the same time is sometimes appropriate.  Here’s why:

Studies show that a small, but significant, number of DI beneficiaries have earnings.  About 28 percent of beneficiaries who were tracked for ten years worked at some point after qualifying for DI, though generally episodically and at low earnings.  About 12 percent of DI recipients were employed in 2007, when the labor market was still strong.  Beneficiaries who work to supplement their modest DI benefits — which average $1,146 a month — may become eligible for UI if they lose that job.  Taking away those unemployment benefits, as the Obama/Reid proposal would do, would deprive them of that small cushion that other jobless workers have.