There are two separate Federal disability programs in the U.S.: Social Security
Disability Insurance (SSDI), and Supplemental Security Income
Disability Insurance (SSI). SSDI is a Social Insurance program enacted in 1956
to insure covered workers, their spouses and dependents against loss of
earnings due to disability.
Disability is defined
as: ``The inability to engage in any substantial gainful
activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of at
least 12 months'' (see Social Security Handbook, Section 507).
A person's application for SSDI benefits is sent
to one of the 54 DDS centers, usually in the state where the claimant resides.
The DDS makes initial, or ``first stage'', accept/reject decisions
according to a sequential five stage screening procedure illustrated in
Lahiri et al. (1995) and reproduced in
Figure 2.1.
This five stage procedure is designed to weed out
inappropriate cases quickly so that resources can be focused on judging
difficult cases where the determination of
medical or psychological problems is less clear cut.
The first stage is to determine whether or not the person has engaged in substantial gainful activity (SGA) subsequent to the claimed onset of disability. Any applicant who is found to earn in excess of the SGA threshold (currently $500 per month) has demonstrated an ability to engage in substantial gainful activity and is denied benefits at this stage. The second stage is to determine the severity of a medical or psychological problem. Applicants are denied if the impairment is not judged to be sufficiently severe, or if it is not expected to last longer than 12 months or end in death. The third stage consists of a determination of whether the applicant's impairment meets the criteria of one of over 100 standardized impairment classifications known as Listing Impairments. If the applicant's impairment is judged to fall into one of these categories of demonstrably severely disabling conditions then the applicant is automatically granted a Medical Allowance. Applicants who are denied a Medical Allowance are then referred to the fourth stage, where the DDS evaluates the applicant's residual functional capacity to determine whether the disability prevents them from doing their previous work. Applicants who are deemed capable of doing their past work are denied benefits, otherwise the application goes to the fifth and final stage where the DDS evaluates whether the applicant is capable of any other type of work. An applicant is awarded benefits only if the DDS determines that the applicant is incapable of engaging in any other type of substantial gainful activity. Otherwise, the applicant is given a Vocational Denial.
Individuals whose applications are accepted cannot begin
receiving DI benefits until a five-month waiting period is
satisfied.
According to program statistics, the mean time required
for a DDS to make its initial accept/reject decision is 5 months. Covered
individuals who wait this long automatically satisfy
the five-month waiting period and begin receiving DI benefits
in the month following notification of the award. SSDI beneficiaries are also
entitled to Medicare coverage two years after the date of successful application,
even if they are younger than 65, the normal age of eligibility for Medicare
coverage. The current average disability benefit is $750 per
month.
Following an initial rejection, a rejected applicant has the option
to appeal. There are four different appeal stages as is illustrated in
Figure 2.2. The first level of appeal is known as a
Reconsideration and is performed by the same DDS that made the
initial determination. An application for reconsideration
must be filed within 60 days of notification of the initial
denial. According to Social Security, in 1993 48% of
denied claimants requested a reconsideration and the mean time
required by DDS to come to a decision on a reconsideration was
2 months. The acceptance
rate at the reconsideration stage was 50%,
higher than the 40% average acceptance rate for the first
stage determination. If an applicant is denied benefits at the
reconsideration stage, they have 60 days to exercise the option
to have their case considered by an ALJ. According to Social
Security, in 1993 claimants requested an ALJ in about 75% of all
reconsideration denials. By this time the
claimant has typically retained an attorney for
assistance in the appeal process. The mean time to a decision at the
ALJ stage is over 9 months
and the acceptance rate at this
stage increases to 75%. If the applicant is denied benefits
by the ALJ, they have 60 days to file a request for consideration
at the central Appeals Board in Washington.
According to Social Security, the Appeals Board considers
about 18% of all ALJ dispositions, including cases it
reviews on its own initiative. The mean duration for
a decision from the Appeals Board is 3 months and the
acceptance rate is 30%. If a claimant is rejected
at this stage, their only remaining option is to appeal the
case in Federal Court. We have no data on the delays or
success rates of Federal Court appeals.
The other Federal program providing disability benefits is SSI, which
is a means-tested cash assistance program enacted in 1974. The
purpose of SSI is to assure a minimum level of income for people who
are aged, blind, or disabled, and have limited income and assets. In order to
qualify for SSI benefits a person must satisfy the SSDI
definition of disability and the person's income cannot exceed the
current Federal benefit rate. Furthermore, the person cannot have more
than a small threshold value of net worth. The current earnings and
asset thresholds for a single individual are $494 per month and $2,000,
respectively. In contrast to the SSDI, if eligible, a person can begin
receiving benefits
without being subject to the five-month waiting period.
Furthermore, SSI recipients are also immediately eligible for Medicaid
benefits. However, monthly SSI benefits are lower than SSDI: in 1996 the
average monthly SSI benefit was only $402 per month. The SSI applications
are also processed by the 54 state DDS using the same five-stage sequential
procedure as for SSDI applications.
Stapleton et al. (1994) show that since the late 1980s the
trends in applications, awards, and acceptance rates for the
SSI and SSDI programs were very similar. This is fortunate, from our perspective,
because the HRS data do not distinguish between the two.