Thursday, May 9, 2013
Social Security Disability Insurance (SSDI) Reform: An Overview of Proposals to Reduce the Growth in SSDI Rolls
William R. Morton
Social Security Disability Insurance (SSDI) program provides benefits to insured workers with disabilities under the full retirement age and their dependents based on an individual worker’s earnings and work history in covered employment. Recently, some Members of Congress and the public have expressed concern over the financial sustainability of the SSDI program. Between 1980 and 2011, the number of disabled-worker beneficiaries grew 196.6%, whereas the number of workers insured for disability increased 50.9%. This increase in the ratio of disabled-worker beneficiaries to insured workers, or prevalence rate, has placed pressure on the Disability Insurance (DI) trust fund, which the Social Security Board of Trustees projects will be exhausted in 2016.
Some of the increase in the SSDI prevalence rate stems from changes in the demographic characteristics of the insured-worker population. According to the Social Security Board of Trustees, the aging of the baby boom generation and a sharp rise in the number and incidence rate of female insured workers helped to propel the prevalence rate upward between 1980 and 2011. However, other factors may have also contributed to the growth in SSDI rolls. For example, instances of high unemployment and the increasing relative value of SSDI benefits to low-income workers may have induced more individuals to apply to the program. In addition, inconsistency in the determination and adjudication process might have increased the likelihood of denied claimants being awarded SSDI on appeal. Moreover, changes to federal policy that relaxed certain program eligibility criteria and increased the value of disability benefits relative to retirement benefits may have played a role in increasing the SSDI prevalence rate.
To assist lawmakers in addressing the sustainability of the program, this report provides an overview of reform proposals designed to mitigate the growth in SSDI rolls. Most of the proposals discussed in this report focus on reducing the inflow (incidence) of new beneficiaries into the program. These proposals include implementing stricter SSDI eligibility criteria, improving consistency in the disability determination and adjudication process, and incentivizing employers to provide supported-work services for employees following the onset of disability (i.e., rehabilitation, workplace accommodation, and a partial wage replacement). On the other hand, some of the proposals seek to increase the outflow (termination) of beneficiaries from the program. Proposals to reduce the current beneficiary population entail providing stronger incentives for beneficiaries with some residual functional capacity to return to the labor force, as well as increasing the number of continuing disability reviews (CDR) performed by the Social Security Administration (SSA).
Date of Report: April 29, 2013
Number of Pages: 51
Order Number: R43054
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