Improving Employment Outcomes for People with Psychiatric Disorders and Other Disabilities. A. Introduction

04/01/2014

In this chapter, we describe the employment and program-participation patterns of people with disabilities before they applied for SSDI. ASPE is interested in understanding these characteristics so it can recommend policies and programs to help potential applicants remain in the workforce, thereby stemming the growth in the SSDI rolls. To uncover these patterns, we used SIPP data matched to SSA administrative data to compile statistics on several characteristics of SSDI applicants and to answer the following two questions:

  1. What are the demographic, employment, and program-participation characteristics of SSDI applicants before they apply for SSDI?

  2. What are the demographic, employment, and program-participation characteristics of at-risk group members who later apply for SSDI?13

Although relatively few studies have uncovered the employment and program-participation paths of eventual SSDI applicants and recipients, a few things are known. The lives of SSDI applicants before application are often characterized by a disruptive change in health, separation from employment, and a period of time between job separation and applying for SSDI (Lindner 2013). Most SSDI applicants stop work for health-related reasons, such as the onset of a work limitation, rather than because of layoff or resignation. Those who leave because of illness or injury are more likely to apply for SSDI quickly, and they are less likely to seek other work. Individuals who receive SSDI are less likely than those who do not to have health coverage for as many as three years before they receive benefits (Livermore et al. 2010). SSDI applicants are also influenced by the current business cycle (Coe & Rutledge 2013). During a recession, individuals may perceive their employment to be more unstable and replacement work more difficult to find, increasing the likelihood they will apply for SSDI.

Using the Panel Study of Income Dynamics from 1970 through 1991, Daly (1998) found that 25 percent of SSDI beneficiaries received some type of public assistance in the five years before receiving SSDI benefits and 83 percent received some type of public transfer benefit. Honeycutt (2004), using the Current Population Survey and the SIPP, found that individuals enrolled in employer disability benefits, other types of disability income, or Medicaid were the most likely to later access SSDI; those who received workers' compensation, food stamps, utility assistance, or retirement income, or those who lacked health insurance coverage had a moderate likelihood of later receiving SSDI. Analysis by Lindner & Nichols (2012) revealed that improved access to unemployment insurance benefits reduced SSDI applications, at least in the short term.

TABLE IV.1. Definition of At-Risk Groups
At-Risk Group Definition
Unemployment benefit recipients Individuals with a work limitation who began receiving unemployment benefits after the first interview wave.
Workers at risk of unemployment benefit receipt Individuals with a disability who worked in the first interview wave and who scored in the top 33% based on a model predicting unemployment benefit receipt within 36 months.
Individuals with high health expenditures Individuals who had out-of-pocket health expenditures, not including health insurance premiums, in the past year that equaled or exceeded 7.5% of their household income. This mirrors federal tax law, which allowed individuals to claim out-of-pocket health expenses above 7.5% as a tax deduction. (In 2013, this percentage increased to 10%.) Health expenditures are available only in topical modules 3 and 6.
Workers' compensation beneficiaries Individuals who began receiving workers' compensation benefits after the first interview wave.
Private disability beneficiaries Individuals who began receiving employer or individual disability benefits after the first interview wave.
Veterans with disabilities Individuals with a disability who reported being a veteran in the first interview wave.
Recipients of job training or education services Individuals with a work limitation who reported in wave 2 participating in job training or education services in the past 12 months.

For this analysis, we use SIPP data matched to SSA administrative records to examine the characteristics of all individuals who applied to SSDI within six years of their first SIPP interview.14 We further explore the characteristics of individuals within seven groups who are at risk of applying for and receiving SSDI. The at-risk groups include: unemployment insurance recipients with a disability, workers with disabilities who are at risk of applying for unemployment insurance benefits, individuals with high health expenditures, workers' compensation beneficiaries, private disability insurance beneficiaries, military veterans with a disability, and individuals with disabilities who received job training or education services within the past year (Table IV.1). The disability definition used for the above categories is the work limitation question from the first SIPP wave. The individuals in these groups might overlap (that is, an individual in the veterans group could also be an individual with high health expenditures). We examined various characteristics--including demographic variables (age, gender, race, marital status, and educational attainment) as well as specific employment, income and program-participation measures (defined in Table IV.2)--for each group. We restrict the sample to individuals 25-55 years old because individuals younger than that are less likely to qualify for SSDI and individuals older than that can qualify for Social Security early retirement benefits during our six-year observation period. We provide a fuller description of our methods in Appendix C. The results presented here come from a working paper, conducted through SSA's Disability Research Center, on the experiences of SSDI applicants before they apply for benefits (Thompkins et al. forthcoming).

TABLE IV.2. Definitions of Employment, Income, and Program Participation
Measure Definition
Employment and Income
Any employment Reported having a job for any month during the specified period.
Without a job and not looking for work   Reported not having a job and not looking for work for any month during the specified period.
Individual earned income The individual's average monthly earned income during the specified period.
Individual total income The individual's average monthly earned and unearned income during the specified period.
Household total income The household's average monthly earned and unearned income.
Households under FPL A comparison of the household's total income relative to 100% of FPL.
Program Participation
SNAP Household receipt of food stamps.
Energy assistance Household receipt of federal, state, or local energy assistance.
Subsidized housing Household receipt of housing assistance or subsidized rental assistance.
TANF Household receipt of TANF (or, for the first 3 waves of the 1996 SIPP panel, Aid to Families with Dependent Children).  
SSI Receipt of SSI benefits due to disability (from SSA administrative data).
Employer-based disability insurance Receipt of disability insurance benefits through one's employer.
Own sickness or disability insurance Receipt of benefits through a personal sickness, accident, or disability policy.
Workers' compensation Receipt of workers' compensation income in one's own name.
Medicaid Receipt of Medicaid health coverage in one's own name.
Private health insurance Covered by health insurance other than Medicaid and Medicare.
Unemployment benefits Receipt of state unemployment compensation benefits in one's own name.
Veterans' benefits Receipt of veterans' benefits in one's own name.

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