Citation
Weathers, R., & Hemmeter, J. (2011). The impact of changing financial work incentives on the earnings of Social Security Disability Insurance (SSDI) beneficiaries. Journal of Policy Analysis and Management, 30(4), 708-728.
Highlights
- The study’s objective was to examine the impact of the Benefit Offset Pilot Demonstration (BOPD), which provided a more-generous work incentive for Social Security Disability Insurance (SSDI) recipients, on recipients’ employment status, earnings, and reliance on benefits.
- The analysis used data from the Master Earnings File (MEF) and Master Beneficiary Record (MBR). The authors reported unadjusted and regression-adjusted program impacts.
- The study found that the BOPD had no earnings impacts but increased the probability of earning above the annualized SGA amount one and two years after baseline. The intervention also increased the average SSDI benefit payment to participants.
- The quality of the evidence presented in this study is high because it is based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to the BOPD, and not to other factors.
Intervention Examined
The Benefit Offset Pilot Demonstration
Features of the Intervention
Administered by the Social Security Administration (SSA), the BOPD was a pilot test of the later Benefit Offset National Demonstration, which tested variants of SSDI program rules designed to increase the incentive for SSDI recipients to work and reduce their reliance on benefits. The primary intervention is a benefit offset that replaces the so-called cash cliff SSDI recipients who work eventually experience. The cash cliff refers to the fact that SSDI recipients who have completed a nine-month trial work period followed by a three-month grace period have all their SSDI benefits suspended or terminated if they earn more than the substantial gainful activity (SGA) amount. The benefit offset replaces the complete loss of all benefits for working SSDI recipients, instead gradually withdrawing the SSDI benefit by $1 for every $2 earned above the SGA amount.
BOPD was implemented in four states: Connecticut, Utah, Vermont, and Wisconsin. Apart from recruiting SSDI recipients who received benefits solely based on their own earnings records, had completed a trial work period within the past 72 months, and were not concurrently receiving Supplemental Security Income benefits, the states were free to select their own program eligibility criteria. This study examined employment and earnings impacts across all four BOPD states.
Features of the Study
The BOPD was a randomized controlled trial. Eligible SSDI recipients who volunteered for the program were randomly assigned to either the treatment or control group. The treatment group was offered the benefit offset policy, whereas the control group faced current SSDI program rules. The analysis relied primarily on SSA administrative data. Evaluation data sources included the MEF for annual earnings data and MBR for SSDI program participation information. State-specific data were used to gather the identifiers needed to identify BOPD participants in SSA administrative records.
Study Sites
- Connecticut
- Utah
- Vermont
- Wisconsin
Findings
- The study found no statistically significant impacts on employment rates or earnings during the study period.
- The benefit offset significantly increased the probability of having annual earnings above the annualized SGA amount both one and two years after random assignment by approximately 4 percentage points.
- BOPD increased the overall dollar amount of SSDI benefits paid to participants. The treatment group received $519 and $544 more in SSDI benefits in the first and second years after random assignment, respectively. There was no statistically significant difference in benefits received between the treatment and control groups during the year of random assignment.
Considerations for Interpreting the Findings
The volunteers who participated in the BOPD are not likely to be representative of the larger SSDI recipient population because they were typically recruited from organizations that helped clients obtain employment, and are therefore likely to be representative of the 20 percent of SSDI recipients who report an expectation of returning to work. In addition, the decision by SSA to restrict eligibility to SSDI recipients who completed their trial work period within the past 72 months disqualified potential participants with longer work histories; these people might have benefited the most from the program.
Causal Evidence Rating
The quality of the evidence presented in this study is high because it is based on a well-implemented randomized controlled trial. This means that we are confident that the estimated effects are attributable to the BOPD, and not to other factors.