ROCKVILLE, Md. – One of the largest public policy experiments ever conducted shows that a potential national policy that pays partial disability benefits when earnings exceed SSA’s substantial gainful activity level would increase rather than decrease benefits paid under the Social Security Disability Insurance (SSDI) program.
The nine-year, $127 million Benefit Offset National Demonstration (BOND) study for the Social Security Administration (SSA) involved a sample of nearly one million disability beneficiaries. It examined whether the change in disability program rules would increase beneficiaries’ earnings and lead to reduced net outlays by the SSDI program. The study found no evidence of a change in beneficiaries’ earnings. The study also found that the rule change increased the average amount of SSDI benefits due to beneficiaries by $143 per year, a one percent increase. Under a national benefit offset policy, this increase would total between $1 and $2 billion per year. These results provide the evidence that policymakers need to make informed decisions about new laws. Findings were released today by the SSA and the lead contractor, Abt Associates.
BOND: A demonstration to test a work incentive
Under current law, beneficiaries lose all SSDI benefits after 12 months of substantial earnings ($1,180 per month in 2018). Researchers and policy makers have long presumed that this “cliff” discourages work. Congress asked the SSA to test whether replacing the “cliff” with a partial benefit “ramp” would increase beneficiary earnings and produce savings on a national level. The ramp reduced benefits by $1 for every $2 in earnings above an annualized substantial earnings threshold.
Abt and its study partner Mathematica Policy Research used a rigorous evaluation method to test the change to program rules, randomly assigning SSDI beneficiaries to either treatment or control groups. Besides the findings on the rule change, the study found no evidence that enhanced work-incentives counseling with proactive and consistent follow-up helped beneficiaries return to work more than the standard work-incentives counseling.
The study suggested possible explanations for the results. Many disability beneficiaries have limited work capacity so incentives will not change their behavior. The incentive may have been too small to motivate those who could earn more. Further, the benefit offset rules, much like current law rules, may have been too complex for beneficiaries to understand.
With the SSDI Trust Fund projected to be exhausted by 2032, reducing outlays is a critical Congressional concern. This study suggests other innovations should be examined in the future.
To read the full report, see: https://www.ssa.gov/disabilityresearch/offsetnational.htm
About Abt Associates
Abt Associates is an engine for social impact, dedicated to moving people from vulnerability to security. Harnessing the power of data and our experts’ insights, we provide research, consulting and technical services globally in the areas of health, environmental and social policy, technology and international development. AbtAssociates.com
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