To be eligible for SSDI, applicants must satisfy both work history and medical criteria. The SSDI program is a social insurance program, so to be eligible, a person must either have contributed to the SSDI Trust Fund via their payroll taxes or be a dependent of a parent or spouse who has done so. When a worker cannot work because of a medical condition, the SSDI benefits are meant to substitute for his or her lost earnings. The amount of benefits a person receives is based on his or her earnings record.
The Social Security Act specifies a stringent criterion for SSDI medical eligibility. According to the statute, an applicant must be "unable to engage in any substantial gainful activity (SGA) by reason of any medically determinable physical or mental impairment(s) that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months."3 In practice, the stringency of eligibility depends on the standards set in law as well as the process used to implement this criterion.
In 2013, SGA for non-blind applicants is defined as countable earnings of at least $1,040 per month in an unsubsidized job--just above the poverty guideline for a person living alone ($957 per month).4 For blind applicants, the SGA amount is $1,740. Applicants engaged in SGA are not eligible for benefits. After SSA determines the first month in which the applicant could not engage in SGA, beneficiaries must wait five months before benefits start. SSA's rules call for immediate termination of benefits if the beneficiary engages in SGA during the first seven months after benefits start.5
To help determine whether a worker has a qualifying physical or mental impairment, SSA maintains listings of impairments. If an applicant has a listed impairment (or its equivalent) and is not engaged in SGA, the application is accepted without consideration of other factors such as the applicant's age, job experience, and education. In 2010, about 47 percent of accepted applicants had a condition that was either listed or was equal in severity to a listed condition.6 If the applicant's condition does not meet or equal an impairment listing, SSA determines whether the condition is severe enough to prohibit substantive work at a job for which the applicant would be qualified, based on his or her residual functional capacity. Age, job experience, and education are considered for applicants age 45 and above who do not meet an impairment listing.7
Given the complexity of the determination process and the subjective nature of some issues, some errors can be expected--that is, applications from some who can engage in SGA are allowed, while applicants from some who cannot are denied. The best evidence on this point suggests that only a small percentage of those allowed can engage in SGA. Maestas et al. (2013) use initial eligibility decisions (the allowance rate of the disability examiner assigned to the claim) to estimate that just under 7 percent of applicants would be engaged in SGA two years after their initial application decision if their application had not been allowed. French and Song (2011) found a very similar result using assignments of appeals to administrative law judges (ALJs). Historical trends also show that many denied applicants never return to work (Bound 1989; Gruber & Kubik 1997; von Wachter et al. 2011); that might be indicative of errors in denials, but also might reflect factors other than disability that influence the decision to work (Parsons 1991).
The challenges of implementing these medical eligibility criteria have increased dramatically. Advances in medicine, technology, and the availability of accommodations, including those that employers are required to provide under the Americans with Disabilities Act, make the "medically determinable" language of the Social Security Act seem out of step with today's understanding of disability. The current scientific understanding of the causes of work disability takes into account the interactions between the person's medical conditions, the environment including available technology and accommodation, and personal characteristics such as age and education (WHO 2012). However, the Government Accountability Office (GAO) found that in federal disability programs, including the SSDI program, "eligibility criteria have not been updated to reflect medical and technological advances and labor market changes" (GAO 2012). But, GAO also notes specifically that "SSA faces constraints considering the extent to which assistive devices and accommodations can mitigate work disability because these are not universally available, and SSA lacks the resources to conduct individualized assessments" to determine eligibility.