Individuals receiving Social Security Disability Insurance (SSDI) and Supplemental Security Insurance (SSI) benefits have serious, long-lasting disabilities that prevent them from doing substantial work. However, many beneficiaries have a desire and capacity to work. Both programs include special rules aimed at incentivizing work, and substantial resources have been dedicated to promoting, testing, and evaluating strategies to encourage work among beneficiaries. However, recent research shows that if beneficiaries attempt work, they are likely to be confronted with a large overpayment. According to one study, 71 percent of SSDI beneficiaries who exhaust available work incentives experienced an overpayment, with the median at $9,282. Analogous estimates for SSI beneficiaries are not available; however, it appears SSI beneficiaries experience smaller but more frequent overpayments.

In this paper, Urban Institute policy researchers Jack Smalligan and Chantel Boyens examine work-related overpayments in SSDI and SSI programs among beneficiaries who work, with a focus on the root causes of overpayments. Smalligan and Boyens begin with background on the role of work in both programs, the rules governing earnings, and an assessment of overpayments. They examine the frequency and causes of overpayments and the effectiveness of SSA’s current processes, and their impact on beneficiaries. They conclude with options for reform, including lessons from the Supplemental Nutrition Assistance Program (formerly known as food stamps), which has considerable overlap with the SSI population.

Commissioned as an independent report, this paper reflects the authors’ views, not necessarily those of the Social Security Advisory Board or any individual member.