Sunday, December 23, 2012

Gov't Disability Benefits: Safety Net Turning to Hammock

  • Since 1980, disability benefits grew by 82 percent and the termination rate fell by 42 percent.
  • Furthermore, 50,000 awards to beneficiaries were paid per year on average in the past decade.
  • That number peaked at 1.7 million awards after the economic crisis.
  • The termination of benefits continues to fall, which allows people to stay on SSDI for a longer time -- 163 per 1,000 beneficiaries in 1982 compared to 74 per 1,000 in 2011.

More and more beneficiaries tend to receive awards as long as they are disabled or until they reach the full retirement age, at which point they'll receive retirement benefits.

  • Less than 10 percent of individuals stop receiving disability benefits by improving their medical condition or returning to work.
  • Of the 653,877 terminated benefits, 51.7 percent were due to a conversion to retirement benefits and 36.1 percent owing to death.

The current system incentivizes people to stay out of the labor force and defer termination of their disability benefits until they reach retirement age.

The result of this has been more backlogs in the application process, hurting the people that need SSDI the most. Furthermore, SSDI is becoming unsustainable as the trust fund is being used up at increasing rates. 
Source: Veronique de Rugy, "More Americans Dependent on Disability, Longer," Mercatus Center.