Improving Employment Outcomes for People with Psychiatric Disorders and Other Disabilities. Executive Summary



The Office of the Assistant Secretary for Planning and Evaluation (ASPE) in the U.S. Department of Health and Human Services funded the Improving Employment Outcomes for People with Psychiatric Disorders and Other Disabilities Project to identify effective programs that help individuals with psychiatric disorders find and retain employment. A second goal of the project was to explore how these programs can be funded through the Affordable Care Act (ACA) and other sources. ASPE was particularly interested in knowing what supports will assist the following subgroups of people with psychiatric disorders:

  • Individuals who are now or who are expected to be long-term clients of mental health services and who are in the process of applying for disability benefits.

  • Individuals at risk of losing employment due to mental illness.

  • Individuals, such as transition-age youth (TAY), who are experiencing an initial episode of psychosis and require early-intervention (EI) services.

This project aimed to find answers to the following overarching questions:

  • What services are most effective at helping people in the previously described three subgroups find and keep employment?

  • What are the work-support needs of and services currently available to individuals with other disabilities? What can income and service-use trajectories of participants in particular programs tell us about service needs and program effectiveness?

  • What policies and funding can be adopted in a post-ACA environment to overcome employment barriers for people with psychiatric disorders and other disabilities?

We conducted two targeted literature reviews: (1) employment programs and outcomes for people with psychiatric disorders (O'Day et al. 2013); and (2) employment programs and outcomes for people with other disabilities (Martin et al. 2013). We also analyzed data from the Survey of Income and Program Participation to examine service-use trajectories of vulnerable populations who might be expected to apply for Social Security Disability Insurance (SSDI) benefits. We also examined literature and policy documents that outlined funding options for employment services for people with psychiatric disorders and other disabilities. We highlight our findings in this summary.

Evidence for Improving Employment Outcomes for Individuals with Psychiatric Disorders

A number of employment programs and services have proven effective at helping people with serious mental illness (SMI) and other psychiatric disorders find and keep work. In particular, evidence-based supported employment (SE), especially the standardized Individual Placement and Support model, has been shown to be more effective than traditional vocational programs in helping people with SMI obtain competitive employment. SE is a strategy for helping people with disabilities participate in the labor market, in a job of their choosing, with professional support (Bond et al. 2001). SE helps individuals with a variety of characteristics--age, gender, diagnosis, education, and so on--achieve higher rates of competitive employment than those in control-groups who have the same characteristics. Job-development services and integration of vocational and clinical services are vital for making SE successful. However, room for improvement remains. Those who received SE and obtained employment found only part-time jobs with low wages, and we found little strong evidence for positive long-term outcomes. The absence of improved long-term outcomes may result from the lack of programmatic emphasis on job tenure and economic self-sufficiency, or work disincentives built into Social Security disability and other financial-support programs that discourage more than minimal levels of work.

Several strategies have been used to improve employment outcomes for individuals who are now or who are expected to be long-term clients of traditional mental health services and may be in the process of applying for disability benefits. Although it is difficult to identify this subgroup of people with SMI before they become attached to the Social Security disability benefits and mental health systems, the population is of interest to policymakers because once they begin receiving benefits, the likelihood of their returning to work is minimal (Social Security Administration [SSA] 2011a, 2011b). The Accelerated Benefits Demonstration, funded by the SSA, showed that providing vocational and other support services along with health insurance may lead to improved short-term employment outcomes for new SSDI beneficiaries with mental health impairments. There is limited evidence that providing SE along with housing supports may improve employment outcomes for people with SMI who are homeless, and that SE may improve employment outcomes for veterans with SMI. More research is needed to establish a strong evidence base for the effectiveness of these services, as well as for services to other discrete populations of people with SMI, such as ex-offenders or recipients of Temporary Assistance for Needy Families.

The occupational outcomes of interventions for workers with mental illnesses at risk of job loss are not as well established. Few high quality studies of the impact of interventions on the employment of workers with mental illness exist. However, two sites from the Demonstration to Maintain Independence and Employment suggest that providing "wrap-around" health services to people with SMI may increase earnings and decrease reliance on federal disability benefits. Several other studies offer hope that employer interventions, such as depression screening, EI, and providing reasonable accommodations, increase job tenure and hours worked, and reduce job loss for workers with mental illness; for example, Wang et al. (2007) demonstrated that a telephone-based care management program targeted to employees with significant depression significantly improved job retention and hours worked.

Some well-established EI programs provide services to people who experience a first episode of mental illness. Evidence suggests that intervening early may help prevent full-blown psychosis and long-term involvement with the mental health and disability systems, especially when the intervention includes an SE component. Evidence of the efficacy of these programs for people with schizophrenia is limited but positive. Studies of the effects on employment outcomes of services for a broader range of TAY are few, but it appears that services may be more effective for older than for younger individuals in this category. Work in this field continues to be an important priority for researchers and policymakers. Several studies are underway that should offer more evidence in the future on the effectiveness of services for this population.

Several other innovative approaches to employing people with psychiatric disabilities have been discussed in the literature. More research is needed to establish the effectiveness for individuals with psychiatric disorders of self-employment and consumer-managed firms, asset-development, financial-literacy programs, and self-determination models. The evidence for social enterprises, consumer-provided services, and supported education is more substantial, but more work must be done to establish which models are most effective and how much to expect from them.

Evidence for Return-to-Work and Employment-Support Programs for People with Other Disabilities

We also reviewed literature on return-to-work (RTW) and employment-support programs for people with other disabilities, including physical, intellectual, and sensory. We reviewed evidence from programs sponsored by employers, demonstrations sponsored by the Federal Government, and employment interventions in other countries.

Most of the evidence of success with EI services is based on employer-sponsored RTW and employment supports, also known as disability management (DM), delivered to workers on sick leave or before employment is terminated. In general, these reviews show that employer-sponsored RTW components, such as workplace accommodations, RTW coordinators, contact between a health care provider and the workplace, and modified job duties or work schedules are effective in retaining employees with general health conditions who otherwise would exit jobs for health or disability reasons. Most of the evidence of DM success pertains to persons with musculoskeletal disorders--a broad category of conditions that may include injury or damage to, or disorders of the joints or other tissues in the upper or lower limbs or back. We identified relatively few high quality systematic reviews of RTW or employment-support interventions focused on other specific disabilities or impairments, making it imprudent to draw conclusions about their findings.

We found a little evidence on the effectiveness of RTW programs for veterans, and a lack of rigorous high quality evidence supporting state and federal vocational rehabilitation (VR). We identified two reports summarizing evaluations of federally funded interventions directed at individuals who are unemployed and Social Security disability program beneficiaries. The results of these interventions indicate that more intensive interventions with individualized supports can produce impacts on employment and earnings than less intensive interventions.

We identified several systematic reviews that were international in scope or included United States and non-United States studies. These reviews also indicate moderate evidence of success for DM interventions, including RTW coordinators; however, it is not readily apparent whether reviews that focus primarily on non-United States countries can be generalized to United States settings.

Pre-Application Work Activity of SSDI Applicants

We examined the employment and program-participation paths of individuals with disabilities who did and did not apply for SSDI. The patterns help us understand the characteristics of those at greater risk of SSDI entry compared to those who do not enter SSDI, most of whom continued working. This can help craft policies that simultaneously divert those with disabilities from applying for SSDI while providing the support necessary to make work feasible for those with disabilities.

As expected, we observed a decline in employment and earned income of SSDI applicants before applying for benefits, with the biggest change observed in the six months immediately preceding SSDI application. However, somewhat surprisingly, a large share of these individuals (more than two-thirds) were employed during this period and over half were covered by private insurance with Medicaid covering most of the rest. This may suggest an opportunity to divert SSDI entry by providing employment supports to maintain connection to the workforce.

A significant proportion of eventual SSDI applicants received some type of poverty-related benefit up to 42 months before applying for SSDI, and participation in these benefits programs showed an increase during the six months immediately before SSDI application. Among individuals in at-risk groups, those with private disability insurance had the highest rates of applying for SSDI. Participation in income and other support programs increased markedly during the six months before SSDI application. This increased access to some benefit programs--most notably, employer-based disability insurance, workers' compensation, Supplemental Nutrition Assistance Program, and Medicaid--may point to areas where investments in EI initiatives could be fruitful.

Funding for Employment Services and Supports for People with Psychiatric Disorders and Other Disabilities

Several mechanisms exist to fund employment supports for people with psychiatric disorders and other disabilities, but the funding picture is imperfect. Medicaid provides several options, such as the 1915(c) Home and Community-Based Services waiver, state plan options, the managed care delivery system waiver, and the Medicaid rehabilitation services option. However, individuals must meet very specific eligibility requirements to receive them. States have cobbled together funding from various Medicaid provisions, their own state VR agencies, and grants from Substance Abuse and Mental Health Services Administration and other sources, but many people find it difficult or impossible to access SE and other employment services. The mechanisms most commonly used to fund SE services are typically available only to people who have already been identified as disabled and are most often already receiving Social Security disability benefits. Their availability for populations not yet dependent on benefits is often limited.

Elements of the ACA that Might Affect Individuals with Psychiatric Disorders and Other Disabilities

The ACA can serve as a means to expand current payment options for DM, SE, and other employment supports. This important new law contains several provisions that have the potential to positively impact individuals with mental illness and to lessen the degree to which a lack of health care coverage may incentivize people to seek public benefits. These provisions include the Medicaid expansion and the introduction of the state-based health insurance exchanges, the establishment of mental health and substance use disorder services as "essential health benefits," and coverage up to age 26 on a parent's plan. Because these provisions have the potential to expand access to coverage, the ACA is a significant step toward breaking the link between eligibility for Social Security disability benefits and public health insurance. This step may weaken the incentive to forego employment and remain on Social Security disability benefits in order to maintain health care benefits. Similarly, because the ACA extends medical coverage to those who heretofore have been ineligible for or unable to purchase coverage, it also has the potential to increase access to employment services and supports in a number of ways.

In January 2014, provisions of the ACA that allow states to expand their Medicaid programs went into effect. In states that accept this option, low-income and moderate-income residents who do not meet the definition of disability for Supplemental Security Income or SSDI or are otherwise ineligible for Medicaid are able to obtain health care coverage. Other reforms to the private health insurance market are also likely to increase access to health insurance and services for people with mental illnesses and other disabilities.


In conclusion, our literature review found that evidence-based SE provides the strongest evidence for helping people with SMI to find work, but there is little strong evidence for positive long-term outcomes. The absence of improved long-term outcomes may result from work disincentives built into Social Security disability and Medicaid programs that discourage more than minimal levels of work, or from lack of long-term funding options for SE. The ACA may provide a better source of long-term funding, since it expands the population of individuals eligible for Medicaid and offers additional options for health insurance coverage.

The ACA may support workers by expanding eligibility for health insurance among low-income people who experience SMI and among individuals who experience a psychiatric disorder that does not qualify them for Social Security disability benefits. Evidence suggests that intervening early may help prevent full-blown psychosis and long-term involvement with the mental health and disability systems, especially when the intervention includes an SE component. Because the ACA enables youth to remain on their parents' insurance until age 26, mental health services and supports may become more available to this population. The ACA could also improve availability of vocational and other support services along with health care coverage for low-income populations leading to improved employment outcomes for this group and perhaps fewer applications for SSDI.

Our analysis shows a consistent decline in employment as early as three years before SSDI receipt. Targeting individuals who leave employment due to a mental illness and go on to apply for means-tested benefits or private disability insurance, or those with high health expenditures or those receiving workers' compensation benefits may reduce future applications for SSDI.

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