Understanding Social Security Disability Programs: Diversity in Beneficiary Experiences and Needs
Social Security provides benefits to nearly 9 million disabled workers, a quarter of a million disabled widow(er)s, and about a million adults whose disabilities began in childhood.1 Social Security’s Disability Insurance program (DI) also provides benefits to many dependents of disabled workers, including more than 150,000 spouses and 1.7 million children who are age 18 and younger or full-time students.
Important policy issues face the program, including the adequacy of benefits and the sustainability of the Social Security trust fund, which funds program benefits. This brief describes how beneficiaries who receive Social Security on the basis of disability vary, the implications of these differences for beneficiaries’ incomes and service needs, and what this diversity means for proposals to change the DI program and Social Security more broadly. We focus on several aspects of beneficiary diversity, including gender, age at disability onset, type and severity of impairment, beneficiary needs for health care and long-term services and supports, and family circumstances.
What Are Key Aspects of Diversity among Those Receiving Social Security Disability Benefits?
More than 10.9 million workers with disabilities and their families received benefits through the DI program in 2013. Workers are eligible for DI worker benefits if they have a medical condition expected to last at least one year or to result in death, if they have worked a set number of years before the onset of their disability (dependent on the age of onset), and if they have paid Social Security taxes. DI benefit levels are determined relative to the insured worker’s earnings. Benefit receipt cannot begin until at least five months after the onset of disability.
Benefits through the Social Security program are also available to a deceased worker’s dependents, given they meet certain criteria. Disabled widow(er) benefits are provided to disabled widow(er)s of former Social Security beneficiaries or workers. These widow(er)s can receive benefits based on their deceased spouse’s earnings records if they are ages 50 through 59, and if their disabilities started no later than seven years after the worker’s death or after they were last caring for a child survivor. Disabled child benefits are available to disabled children of retired, disabled, or deceased workers. These children must be at least 18 with disabilities that began before 22.
Gender, Benefit Type, and Work History
In 2013, DI worker beneficiaries received an average monthly benefit of $1,146,2 just shy of $14,000 per year, or about $2,300 more than the federal poverty guideline for a family of one.3 After 24 months of receiving DI benefits, beneficiaries are eligible for health coverage through Medicare, receiving free Hospital Insurance (Part A). In some states, beneficiaries also receive total or partial premium coverage for Medicare’s Supplemental Medical Insurance (Part B).
However, average disabled worker benefits mask substantial variation that arises from beneficiaries’ diverse employment and earnings experiences. For example, monthly DI benefits in December 2013 for women entitled as disabled workers averaged $1,011, compared with $1,271 for men. This is not surprising given women’s lower average earnings and lower rates of labor force participation. Using Urban’s Social Security Data Tool—which presents the Social Security Administration’s Annual Statistical Supplement in a more visual, searchable way (see figure 1)—we can see the full distribution of monthly DI benefits for December 2013 separately for men and women. The tool reveals, for example, that in that month, most women beneficiaries (56.5 percent) had benefits of less than $1,000; over a quarter (26.7 percent) had benefits of less than $750 (see Social Security Administration 2015b, table 5.D2). Some beneficiaries with low benefits and low assets may receive benefit supplements through the means-tested Supplemental Security Income (SSI) program.4 (See Lindner, Loprest, and Schwabish  for a discussion of program interactions.)
Average benefits for disabled widow(er)s and disabled adult children are significantly lower than for disabled workers. Monthly benefits for disabled widow(er)s averaged $737 for widows and $536 for widowers in 2014 (Social Security Administration, forthcoming). This difference again reflects women’s lower average wage histories. For disabled adult children, benefits averaged $845 in 2014 (Social Security Administration, forthcoming).
Age at Disability Onset
A person’s age and the age at which the person’s disability began relate closely to a DI beneficiary’s economic well-being. This is perhaps most clearly seen in the average DI benefits received by disabled workers at different ages. For example, for disabled workers awarded benefits in 2014, monthly benefits averaged $756 for those under age 30. For those age 60 and older, benefits were nearly double ($1,446 per month) (Social Security Administration, forthcoming).5
Those who become disabled earlier in life often face a lifetime of disadvantages that cut across many domains. Research shows that disability onset age, even net of disability severity, is associated with a number of outcomes, including school completion and employment (Loprest and Maag 2007). DI beneficiaries with earlier disability onset are far more likely to be poor or near poor than those who become impaired later in life (Favreault, Johnson, and Smith 2013).
Older disabled workers are more likely to have had more attachment to the labor force, which helps push their benefits higher than their younger counterparts’. Further, a worker who becomes disabled in her mid-sixties is far more likely to have accumulated savings, including home equity and a retirement nest egg, than a worker whose disability started in childhood or early adulthood. However, the age of disability onset and disability duration are closely linked to disability recovery and mortality probabilities. Younger DI worker beneficiaries are much more likely to recover from their disabilities and leave the program, although same-age individuals whose disabilities started more recently have been shown to have higher death rates than those whose disabilities started less recently (Zayatz 2015).
Type and Severity of Disability and Type of Benefit
Another aspect of diversity among Social Security beneficiaries receiving benefits because of disabilities is the type of impairment for which they qualify.6 The Social Security Administration groups qualifying impairments into several broad categories which we further consolidate here: respiratory diseases; endocrine, nutritional, and metabolic diseases; diseases of the nervous system; injuries; musculoskeletal diseases; circulatory system diseases; neoplasms; mental disorders; intellectual disorders; and all others. Figure 2 depicts the number of Social Security beneficiaries qualifying because of disabilities in 2014 by impairment group and type of benefit: disabled worker, disabled widow(er), or disabled adult child. Disabled workers are the preponderance of Social Security beneficiaries who qualify on the basis of disability—numbering almost 9 million—and they receive benefits for a wide range of impairments. For both disabled workers and disabled widow(er)s, musculoskeletal impairments are the most common diagnoses, followed by mental disorders.7 For disabled adult children, in contrast, the single largest diagnostic group is intellectual disability, followed by the combination group that reflects other mental disorders.
Within the disabled worker group, we see differences in the distribution of impairments across age groups (figure 3). Among this disabled worker group, roughly one-third of all beneficiaries are younger than 50 and the remaining two-thirds are 50 and older. In the younger group, 48 percent receive DI benefits because of mental disorders (including intellectual disabilities) and 18 percent receive benefits on the basis of musculoskeletal diagnoses, compared with 25 and 36 percent, respectively, for the older group.
Whether an impairment begins suddenly—for example, a worker is injured in an accident or receives a first cancer diagnosis that requires immediate and aggressive treatment—or whether it increases gradually over time has implications for economic well-being. With sudden-onset impairments, one may be able to work steadily until becoming disabled. With gradual-onset impairments, one’s ability to work full time and earn at peak capacity may steadily erode. Thus, those who worked longer at lower average wages could have lower disability benefits than those who worked less time at higher wages. Intermittent work can be especially troublesome, as the worker could lose insured status—to be eligible for DI benefits, a person must have worked for a certain amount of time and for a share of recent years (for Social Security retirement benefits, in contrast, there is no recency of work requirement).
Variation across Disabilities
Average DI benefits differ depending on impairment, which is not surprising given how onset ages for various disabilities tend to differ (figure 4). For example, the average benefit in December 2014 for disabled workers diagnosed with autistic disorders was roughly $703, compared with $913 for disabled workers diagnosed with schizophrenia or other psychotic disorders, $1,245 for those reporting musculoskeletal impairments, $1,298 for those with diseases of the circulatory system, and $1,336 for those with neoplasms (Social Security Administration 2015a, table 7).
Beneficiaries with different impairments may also require different levels of health care, services, and supports. For example, a disability beneficiary who suffers from a psychiatric disorder like schizophrenia may require daily medication for the rest of his or her life. A beneficiary with severe physical impairments may require assistance from an aide for bathing and dressing. An individual with early onset dementia who is prone to wandering may require round-the-clock supervision to ensure his or her safety. Many benefit from assistive devices, like wheelchairs, hearing aids, text telephones, or telecommunications devices. For some with affective disorders, combinations of medication and therapy may stem the loss of function.
Beneficiaries’ needs and functional abilities can also be heterogeneous within diagnostic groups. Some may have an optimistic prognosis for recovery. Some may be unable to work until their condition goes into remission, and then they may return to their pre-disability level of function. Others’ conditions may remain stable for long periods. Others could expect a rapid decline in function over a very short period. Those with a combination of impairments, say heart disease combined with an affective disorder, may experience interactions between the conditions: they may do well managing their heart conditions with proper treatment of their mental health conditions, but their heart conditions may worsen without efficient treatment of the mental health conditions.
The Social Security Administration (SSA) recognizes heterogeneity in disability severity through many of its application and review procedures. SSA instituted compassionate allowances, for example, to quickly evaluate applications for those with very severe, obviously disabling conditions. Conditions on the list for compassionate allowances include certain cancers and early-onset dementia.8 Continuing disability reviews—regular reviews of beneficiaries’ disability status conducted by SSA to verify whether they remain qualified—tend to target DI beneficiaries with a high likelihood of recovery.9
Because of these diverse and sometimes varying beneficiary health needs, policymakers who seek to modify the program should be cautious and take into account how losing health care benefits could adversely affect beneficiaries, including their capacity to return to work or live independently.
Previous Urban Institute analyses have shown that married DI beneficiaries rely less on DI (i.e., they have more income from other sources to supplement DI) than those who are not married; they also tend to have significantly higher incomes (Favreault, Johnson, and Smith 2013). Poverty and near-poverty rates for those receiving DI are much higher for unmarried than for married people, even after taking age into account. But both groups face much higher poverty rates than their counterparts not receiving DI (figure 5). In 2010, for example, about 57 percent of those ages 31 to 49 who were unmarried and receiving DI benefits were poor or near poor (i.e., they had incomes of less than 125 percent of the federal poverty level), compared with 26 percent for their married counterparts. (Unmarried individuals not receiving DI in these age ranges had poverty and near-poverty rates of 32 percent; their married counterparts had rates of 13 percent, about half the rate for those receiving DI in both cases.) Those with dependent children also face higher risks of poverty and economic vulnerability. Other research confirms these findings (Livermore and Bardos 2014).
How Should Beneficiary Diversity Affect How We Think about Proposals to Change DI or Social Security More Broadly?
Several policymakers, analysts, and initiatives have sought to alter Social Security and improve its long-term fiscal balance. Such efforts fall into two groups: proposals that specifically address beneficiaries qualifying for Social Security because of their disabilities (particularly DI worker beneficiaries), and proposals that address Social Security adequacy, equity, or solvency more broadly and will thus affect DI.
Proposals that Specifically Address Beneficiaries with Disabilities
In separate studies, the Congressional Budget Office (2012) and the Congressional Research Service (Morton 2013) outlined proposals that would improve the DI program’s fiscal balance or address other concerns and goals, such as enhancing adequacy and promoting work and social inclusion. The McCrery-Pomeroy SSDI Solutions Initiative in 2015 commissioned 12 papers on improving various aspects of DI.10 The Social Security–financed Disability Research Consortia have also produced policy briefs that suggest strategies.11 Such proposals include the following:
- Changing the five-month waiting period;
- Changing eligibility between the early entitlement age and full retirement age so that late-onset DI beneficiaries are treated similarly to early retirees;
- Changing benefit indexing;
- Adjusting the age categories for vocational factors and updating the listing of impairments;12
- Changing the hearing level to an adversarial process;
- Increasing the number of continuing disability reviews SSA performs, with a focus on cases most likely to recover ability to work;
- Providing return-to-work incentives; and
- Supporting work.
Because Social Security beneficiaries with disabilities have such diverse needs and circumstances, the effects of these proposals could vary greatly for different classes of beneficiaries. For example, workers who have a severe terminal illness with just a few months or years to live could experience significant hardships if the DI waiting period were increased. Those individuals could die waiting for a decision or not survive the Medicare waiting period (though Medicaid coverage expansions under the Affordable Care Act may help some, at least in states that elected to expand Medicaid). Changes to the treatment of DI worker beneficiaries who qualify after the Social Security early eligibility age (currently 62) would only affect such workers and their dependents; about 12 percent of new awards now go to workers in this age range. Changes to the vocational grid—guidelines SSA uses to make certain eligibility determinations—would affect those who qualify for DI based on a combination of residual functional capacity, age, education, and work experience, but not those fully qualifying based on a listed impairment. In recent years, a bit more than half of initial awards at the state level used vocational factors (Social Security Advisory Board 2012). (See Mann, Stapleton, and de Richemond 2014 for discussion of SSA’s five-step disability determination process.)
Social Security Solvency and Adequacy Proposals
Social Security’s retirement program is closely linked to DI. The two programs have the same financing approach—a payroll tax capped at the maximum taxable earnings level ($118,500 in 2016)—and the same progressive benefit formula. DI beneficiaries move to the retirement program after reaching the full retirement age (66 for people born between 1943 and 1954, increasing gradually to 67 for those born 1960 and later). Thus, changes to one program may affect the benefit levels for, taxes paid for, and number of people on the other. In this section, we highlight aspects of selected proposed changes, first to the calculation of Social Security benefits and then to revenues that pay for those benefits. (Fuller descriptions of the cost and distributional effects of Social Security benefit and revenue changes are available elsewhere, for example, Congressional Budget Office 2015.)13
The Full Retirement Age. To help reduce long-run program costs, the Social Security Amendments of 1983 gradually increased the full retirement age (FRA) from 65 to 67. This change increased the penalty (i.e., lowered the benefit) for claiming Social Security retirement benefits before the FRA. Because no change was made to DI, the relative value of DI benefits increased for those age 62 and older. If Congress were to further increase Social Security’s FRA without making changes to DI, this gap could grow. As an alternative to retirement age increases, which have historically occurred in discrete jumps of two months, some have proposed indexing these changes to life expectancy. Although substantively similar to a retirement age increase, indexing to life expectancy imposes cohort-specific reductions on parameters in the benefit formula that track longevity. In contrast to FRA increases, longevity increases would not typically exempt DI beneficiaries (though, in theory, they could). Research has shown that older DI beneficiaries have more health needs and associated Medicare expenses than their same-age counterparts, an important consideration for policymakers weighing such tradeoffs (Bound, Levy, and Nicholas 2014).
Benefit Price Indexing. Like longevity indexing, price indexing would apply cohort-specific reductions in benefits relative to those scheduled under current law. The main difference from longevity indexing is that price indexing adjustments are not tied to life expectancy, and are instead based on the difference between wage growth and price growth. Such proposals could be especially devastating for those on DI if they do not exclude the lower half of the income distribution; progressive options would affect DI benefits proportionately less than others. Yet as a share of total income, price indexing could still affect DI beneficiaries greatly, as they are especially reliant on their benefits (Favreault, Johnson, and Smith 2013).
Cost-of-Living Adjustments. Each year, Social Security benefits are adjusted to account for inflation. Proposals that would change these cost-of-living adjustments—whether increasing them as in several recent proposals or decreasing them to line up with the chained consumer price index—would have disproportionate effects on long-term DI beneficiaries.
Benefit Formula. Social Security retirement benefits are based on a worker’s 35 years of highest earnings, while disability benefits depend on a prorated share of the career, depending on disability onset age. How proposals to change computation years (for example, to increase the years in the computation for retired worker benefits to 40) would affect DI beneficiaries would depend on how prorating was maintained. But generally speaking, DI beneficiaries are proportionately lower-income workers and have more intermittent careers, so their benefits could be affected more, even if computation years increased only proportionately.
Payroll Taxes. Payroll tax increases would affect disabled beneficiaries less than others on a lifetime basis because they pay tax for fewer years. In the cross-section, however, disabled beneficiaries could be particularly hard hit because of relatively lower incomes. Because the tax is proportional and capped, such a change would be regressive at a point in time and reflect a much larger share of future DI beneficiaries’ total incomes, since they are less likely to have investment income.
Taxable Maximum. Increasing the earnings and benefit base, sometimes referred to as the taxable maximum or maximum taxable earnings, would affect DI beneficiaries less than other taxpayers and beneficiaries. DI beneficiaries’ earnings histories are shorter, and they are less likely to exceed the maximum in any given year.
Tax Treatment of Benefits. Proposals that would change the tax treatment of Social Security benefits would similarly affect disabled beneficiaries less than other beneficiaries, given DI beneficiaries’ relatively low incomes. Though, again, for all these proposals, bear in mind that DI beneficiaries are diverse. Older DI beneficiaries would, on average, be more affected by income tax changes than younger beneficiaries.
If and when policymakers decide to tackle the long-run fiscal challenges of the nations’ large social insurance programs, they should recognize the diverse circumstances and needs of Social Security beneficiaries who receive benefits on the basis of disability. Especially important is the substantial economic vulnerability for these beneficiaries, relative to other Social Security beneficiaries and the nondisabled population at large. For example, DI beneficiaries are likely to be poor or near poor (Favreault, Johnson, and Smith 2013; Johnson, Favreault, and Mommaerts 2010), their poverty spells last longer (She and Livermore 2009), they report more material hardship (She and Livermore 2007), and they have higher than average medical expenses.
- Social Security Administration (2015b), table 5.A17 accessed February 10, 2016. Data extracted from the Urban Institute’s “Social Security Data Tool.”
- Social Security Administration (2015b), table 5.A17.
- US Department of Health and Human Services, “2013 Poverty Guidelines,” last modified December 1, 2013.
- About one-third of DI beneficiaries receive concurrent benefits from SSI; the maximum monthly SSI benefit is $733 in 2016. Those receiving DI who meet SSI’s eligibility criteria are likely to receive this benefit, given both programs use the same disability definition and determination process.
- Looking at all beneficiaries, including those newly awarded benefits and those continuing from a prior year, disabled workers ages 25 through 29 received average monthly benefits of $729 in December 2014, compared to $1,302 for those ages 60 to 64 (see Social Security Administration, forthcoming, table 5.A.1.2).
- Some may qualify for Social Security disability benefits because of a combination of impairments that are not severe enough to qualify on their own.
- This mental disorders group includes SSA’s categories for autistic disorders, developmental disorders, mood disorders, organic mental disorders, schizophrenic and other psychotic disorders, childhood and adolescent disorders not elsewhere classified, and an “other” category.
- The list of conditions that can qualify for compassionate allowances is available on Social Security’s website.
- The Social Security Administration (2014) notes that continuing disability reviews have been consistently found to be highly cost effective. The Social Security Advisory Board provides additional information (2014 Disability Policy Panel 2014).
- See McCrery-Pomeroy SSDI Solutions Initiative, “Selected Papers,” accessed January 26, 2016.
- For example, Mann and Stapleton (2015) consider the potential effects of increased employer responsibility for disability benefits.
- Age categories and criteria for vocational factors are found in 20 C.F.R. § 200.00.
- Also see “Policy Options Projections,” Social Security Administration, accessed February 10, 2016, and “Exploring Social Security Reform Options,” Urban Institute, accessed February 10, 2016.
2014 Disability Policy Panel. 2014. 2014 Disability Policy Panel: Continuing Disability Reviews. Report to the Social Security Advisory Board. Washington, DC: Social Security Advisory Board.
Bound, John, Helen Levy, and Lauren Hersch Nicholas. 2014. “Social Security Benefit Claiming and Medicare Utilization.” Working paper WP 2013-297. Ann Arbor, MI: University of Michigan Retirement Research Center.
Congressional Budget Office, Congress of the United States. 2012. Policy Options for the Social Security Disability Insurance Program. Report. Washington, DC: Congressional Budget Office.
———. 2015. Social Security Policy Options, 2015. Report. Washington, DC: Congressional Budget Office.
Favreault, Melissa M., Richard W. Johnson, and Karen E. Smith. 2013. “How Important is Social Security Disability Insurance to US Workers?” Program on Retirement Policy Brief 36. Washington, DC: Urban Institute.
Johnson, Richard W., Melissa M. Favreault, and Corina Mommaerts. 2010. “Work Ability and the Social Insurance Safety Net in the Years Prior to Retirement.” Retirement Policy Program Discussion Paper 10‐01. Washington, DC: Urban Institute.
Lindner, Stephan, Pamela Loprest, and Jonathan Schwabish. 2016. “Understanding Social Security Disability Insurance: Interactions with Other Programs.” Income and Benefits Policy Center Brief. Washington, DC: Urban Institute.
Livermore, Gina, and Maura Bardos. 2014. “Why Are Some SSDI-Only Beneficiaries Poor? Insights from the National Beneficiary Survey.” DRC Brief 2014-04. Princeton, NJ: Mathematica.
Loprest, Pamela, and Elaine Maag. 2007. “The Relationship between Early Disability Onset and Education and Employment.” Journal of Vocational Rehabilitation 26 (1): 49–62.
Mann David R., and David C. Stapleton. 2015. “Increasing Employer Responsibility for Disability Benefits: Analysis of an Approach to Social Security Disability Insurance Reform.” DRC Issue Brief 2015-02. Princeton, NJ: Mathematica.
Mann, David R., David C. Stapleton, and Jeanette de Richemond. 2014. “Vocational Factors in the Social Security Disability Determination Process: A Literature Review.” DRC Working Paper 2014-07. Princeton, NJ: Mathematica.
Morton, William R. 2013. “Social Security Disability Insurance (SSDI) Reform: An Overview of Proposals to Reduce the Growth in SSDI Rolls.” 7-5700, R43054. Washington, DC: Congressional Research Service.
She, Peiyun, and Gina A. Livermore. 2007. “Material Hardship, Poverty, and Disability among Working-Age Adults.” Social Science Quarterly 88 (4): 970–89.
———. 2009. “Long-Term Poverty and Disability among Working-Age Adults.” Journal of Disability Policy Studies 19 (4): 244–55.
Social Security Administration. 2014. Annual Report of Continuing Disability Reviews, Fiscal Year 2012. Baltimore, MD.
———. 2015a. Annual Statistical Report on the Social Security Disability Insurance Program, 2014. Washington, DC: Social Security Administration.
———. 2015b. Annual Statistical Supplement to the Social Security Bulletin, 2014. Washington, DC: Social Security Administration.
———. Forthcoming. Annual Statistical Supplement to the Social Security Bulletin, 2015. Washington, DC: Social Security Administration.
Social Security Advisory Board. 2012. Aspects of Disability Decisionmaking: Data and Materials. Washington, DC: Social Security Advisory Board.
Zayatz, Tim. 2015. “Social Security Disability Insurance Program Worker Experience.” Actuarial Study 123. Baltimore, MD: Social Security Administration, Office of the Chief Actuary.
About the Authors
Melissa M. Favreault is a senior fellow in the Income and Benefits Policy Center at the Urban Institute, where her work focuses on the economic well-being and health status of older Americans and individuals with disabilities. She also analyzes long-term care needs and the distributional effects of Medicare and Medicaid. Her work in this area has focused on how changes in family structure and work/earnings patterns affect economic well-being in retirement, with a special emphasis on effects for women and lower-wage workers. For this research, she often relies on dynamic microsimulation models. She has helped develop these types of models for both Urban and the Social Security Information. Favreault coedited Social Security and the Family: Addressing Unmet Needs in an Underfunded System with Frank Sammartino and C. Eugene Steuerle, and has written extensively about the distributional effects of proposed changes to Social Security. She served on the Social Security Advisory Board’s 2011 Technical Panel on Assumptions and Methods.
Jonathan Schwabish is a senior research associate in the Income and Benefits Policy Center at the Urban Institute. He also specializes in data visualization and presentation design; as a member of the communications team, he is a leading voice for clarity and accessibility in research. His research agenda includes earnings and income inequality, immigration, disability insurance, retirement security, data measurement, and the Supplemental Nutrition Assistance Program.
This brief was funded by Laura and John Arnold Foundation. We are grateful to them and to all our funders, who make it possible for Urban to advance its mission.
The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Further information on the Urban Institute’s funding principles is available at www.urban.org/support.