Profile of Social Security Disabled Workers and Dependents Who Have a Connection to Workers' Compensation or Public Disability Benefits

Summary

This note explores the characteristics of Disability Insurance (DI) beneficiaries and their dependents who also have a connection to workers' compensation (WC) and/or public disability benefits (PDBs). As of December 2008, 8.3 percent of the 9.2 million DI beneficiaries and their dependents had filed for either WC or PDBs. We compare that population to the general DI population by such attributes as age, sex, primary insurance amount, state, diagnosis, and days between disability onset and filing for DI benefits. Of special interest are states, such as California, with large nonoccupational public disability programs. Because California drives much of public disability take-up in the Social Security Administration's San Francisco region and indeed a majority of DI beneficiaries with a connection to PDBs reside in this state, we have included a special focus on California in our analysis.

Introduction

Since 1956, the Social Security Administration (SSA) has provided cash benefits to workers with severe, long-term disabilities who have worked in Social Security–covered employment for the required length of time. Spouses and children of disabled workers may also be eligible for benefits.

Workers' compensation (WC), a state-based program that predates Social Security, provides cash benefits and medical care when employees suffer work-related injuries or illnesses. Unlike Social Security Disability Insurance (DI), WC is payable only for work-related injuries and illness. In addition, five states—New York, New Jersey, Rhode Island, California, Hawaii—and Puerto Rico have public disability programs that partially compensate for the loss of wages caused by temporary nonoccupational disability or maternity. Although only those five states and Puerto Rico have general public disability programs for nonoccupational illnesses and injuries, the term "public disability" also refers to certain local programs offered in many states as well as disability coverage for federal government workers.

A significant number of DI beneficiaries also receive state WC and/or public disability benefits (PDBs). Because SSA offsets a portion of the DI benefit in certain cases when a beneficiary is also receiving another disability benefit, the receipt of WC or PDBs presents important administrative issues for the agency. Additionally, people receiving those benefits may have a more recent connection to the workforce and therefore it should be easier to engage them in work incentives, making their characteristics of special interest to SSA. As of December 2008, 8.3 percent of the 9.2 million DI beneficiaries and their dependents had filed for either WC or PDBs.¹ About 7.4 percent had filed for WC, while 1.2 percent had filed for PDBs.² Because the offset applies first to the dependent's share of the benefit and next to the worker's share, a greater proportion of dependent beneficiaries (10.4 percent) than of worker beneficiaries (7.9 percent) had part of their DI benefits offset because the disabled worker was receiving either WC or PDBs.^3, 4

In May 2005, the Social Security Bulletin featured several articles on WC, including an assessment of the relationship between DI and WC and a factsheet about the WC offset. In our analysis, we explore the characteristics of DI beneficiaries who have a connection to WC, PDBs, or both, using a data extract from SSA's 2008 Master Beneficiary Record (MBR). We define "connection" as the process of either currently receiving WC and/or PDBs or when the application status for those benefits is pending. We compare workers with this connection to other DI beneficiaries. In general, we find that worker beneficiaries with WC and/or PDBs tend to be older, have higher primary insurance amounts (PIAs), and are more frequently male than the greater DI worker-beneficiary population.⁵

Legislative Background

The Social Security Amendments of 1955, which instituted disability benefits, also contained an offset provision to prevent duplication of benefits when another federal or state WC periodic benefit was also payable (US Congress 1955). The 1958 amendments removed that offset requirement (US Congress 1958). The report of the 1963–1964 Advisory Council on Social Security (1965) noted concern about the potential administrative difficulty of an offset on disability benefits. Nevertheless, the 1965 amendments reinstituted the offset provision for periodic WC benefits in cases where the total benefits payable to the worker and dependents under both programs would exceed 80 percent of the predisability average monthly earnings covered by Social Security. Because the previous offset had reduced disability benefits by the entire amount of the WC benefit, the Senate Finance Committee report noted that this provision "…would generally avoid the inequity encountered under the previous offset provision, where the reductions that were required frequently resulted in benefits that replaced no more than 30 percent or so of the worker's earnings at disablement" (US Senate 1965).

As part of the Omnibus Budget Reconciliation Act (OBRA) of 1981 (Public Law 97-35), Congress added the so-called "Megacap" provision extending the application of the DI offset to any benefit payable (including PDBs) on account of disability under any law or plan of the United States, any state, or political subdivision (US Senate 1981). The law excluded needs-based benefits, Veterans' benefits, private insurance benefits, and benefits based on public employment covered by Social Security from the offset of PDBs. (Those benefits were already excluded from the WC offset as far back as 1957.) Prior to OBRA, several states and Puerto Rico had enacted reverse offset legislation that allowed those states and Puerto Rico to offset WC or PDBs if the recipient was also receiving DI. SSA does not offset DI benefits when WC or PDBs are subject to offset under the statutes of those states.⁶ The 1981 legislation honored the existing reverse offset statutes, but would not recognize any future state statutes providing for a reverse offset. These changes were enacted as a matter of equity and in recognition of the cost to the DI Trust Fund from an increasing number of states enacting reverse offset statutes.

Also as part of OBRA 1981, Congress raised the age at which the offset ended, from age 62 to 65, so that it would apply to the entire period of DI eligibility. (DI benefits convert to retirement benefits at full-benefit retirement age.) However, when an increase in the full-benefit retirement age was legislated in 1983—effective beginning in 2003—no conforming change was made to the ending point of the WC/PDB offset. Thus, the offset still ends at age 65, even though the full-benefit retirement age will be increasing gradually to age 67.

Geographic Distribution of DI Beneficiaries With WC or PDBs

SSA is organized into 10 regions, as shown in Chart 1. The distribution of DI beneficiaries with a connection to WC or PDBs is somewhat similar to the overall distribution of DI beneficiaries, with the largest numbers seen in the Atlanta region (Table 1). However, the San Francisco and New York regions have a somewhat disproportionate number of workers with a WC or PDB connection: 38 percent of workers with a connection reside in those regions, even though the regions contain only 21 percent of the overall DI population in the United States. The San Francisco region has a disproportionate number of persons with connection to PDBs: 59 percent of all DI workers with that connection reside in the San Francisco region.⁷ California's large public disability program accounts for most of the public disability recipients in the San Francisco region: The majority, 56 percent, of all disabled workers with a connection to PDBs reside in California (see Table 2).

New York and California have more workers with a connection to WC than any other state, with 12 percent and 11 percent, respectively (see Table 2). These are crucial states when examining WC and PDB populations. Because of California's particularly prominent role, we will examine disabled workers from that state more closely throughout this analysis. (For comparison across all states, see Chart 2 for national figures and Chart 3 for California figures.) In fact, 17.1 percent of all DI workers who have filed for either WC or PDBs reside in California (Table 2). New York—another populous state that offers general PDBs—is second with 11.2 percent. California is also the state with the most disabled workers in general (8.2 percent). New York is third for all disabled workers—6 percent, behind California and Texas. California and New York also report a high proportion of disabled workers who have a connection to either program—almost 16 percent and 14 percent, respectively. In Puerto Rico, which also has a general public disability program, almost 20 percent of disabled workers have a connection (Chart 4). Conversely, states such as Texas and Indiana—in addition to the District of Columbia—are among those that have a very small portion of disabled workers with a connection to either program, at about 3 percent, 2 percent, and another 3 percent, respectively (see Chart 4).

Disabled Workers With and Without the Offset

SSA offsets disability benefits if a beneficiary's DI benefit, in combination with his or her WC and/or PDB, exceeds 80 percent of the worker's predisability average current earnings. However, in states with "reverse offset" rules, SSA does not offset DI. In December 2008, 28.8 percent of disabled workers and their dependents (spouses and children) who had a connection to WC or PDBs had their benefits offset, including 7.5 percent who were subject to a reverse offset (as shown in Table 3). More dependents had their benefits offset than workers (35.4 percent compared with 26.8 percent). As mentioned earlier, the offset applies first to the dependent's share of the benefit and next to the worker's share. However, a near majority of beneficiaries (47.1 percent) did not have an offset because of either high average predisability earnings or low combined benefits (the beneficiary's combined DI and WC or PDBs did not exceed 80 percent of his or her predisability income). Note that a sizeable minority (24.1 percent) had their WC or PDB claims pending.⁸

Economic Well-Being of Beneficiaries With a Connection to WC and/or PDBs

We get an idea of the economic well-being of DI-worker beneficiaries with a connection to WC or PDBs by examining their PIAs (Table 4). Disabled workers with a WC/PDB connection have higher PIAs: About 64 percent have PIAs of $1,000 or more, compared with only about 49 percent of all disabled workers. Although we do not have information on beneficiaries' expenses, higher PIAs suggest that DI beneficiaries who have a connection to either WC or PDBs may be financially better off than other disability beneficiaries.

As with the general DI population, women with a WC/PDB connection have lower PIAs, with 54 percent at less than $1,000 a month, compared with only 24 percent of men. Women with PDBs fare better than those with WC: 44 percent have PIAs under $1,000, compared with 56 percent with a connection to WC (see Table 4). The relative differences between male and female workers are especially notable at the extremes. For instance, 11 percent of WC/PDB female workers have PIAs of less than $600, compared with only 2.8 percent of male workers. Similarly, 2 percent of female workers have PIAs over $2,000, compared with 8 percent of male workers.

Beneficiary Demographics

More disabled workers with a WC/PDB connection are middle aged than those in the general DI population: 88 percent are aged 45–64, compared with 76 percent in the general worker population (Table 5). In addition, only 4.9 percent of disabled workers with a connection to either program are younger than age 40, compared with 11.3 percent in the general DI population.

Dependents (spouses and children) make up 23.8 percent of all disability beneficiaries with a connection to WC or PDBs, with children making up a large majority (88.4 percent). Dependents comprise less of the general DI population—19.9 percent, though more of them are children—91.6 percent (see Table 5 for reference only, as data not explicitly shown in table).⁹

Although men comprise a larger part of the DI rolls than women (53 percent and 47 percent, respectively), that difference is even more pronounced among those with a WC/PDB connection, where 61 percent are men and 39 percent women. As shown in Table 6, the difference between men and women is more pronounced for those workers receiving WC (61.7 percent compared with 38.3 percent) than those receiving PDBs (56 percent compared with 44 percent). In California, men are also more likely than women to have a WC/PDB connection, although the difference is substantially smaller than the national figures—55.8 percent men compared with 44.2 percent women. Similarly, the contrast by sex between a WC connection and a PDB connection is less pronounced in California (see Table 6).

Tables 7 and 8, respectively, show family composition and age group of disabled workers for the general disabled population and for those with a WC/PDB connection. In general, workers with a connection are older on average than other disabled workers. Workers younger than age 40 with a WC/PDB connection are less likely to have dependents than their same-age counterparts in the general DI population. DI families with a connection are also less likely than the general DI population to receive the family maximum benefit,18.6 percent (Table 8) compared with 28.6 percent (Table 7), reflecting the effect of the benefit offset. For instance, only 26.1 percent of WC/PDB disabled-worker families in which the worker is younger than age 30 receive the family maximum benefit (Table 8), compared with 66.5 percent of the general DI family population in the same age group (Table 7).

Types of Impairments

The majority of disabled workers with a connection to WC or PDBs qualify for benefits under the musculoskeletal system and connective tissue diagnostic group—54.6 percent (see Table 9). Mental disorders other than intellectual disability are second with 18.8 percent. Those are the two most frequent disabilities for all disabled workers as well, although the musculoskeletal category is not as prominent: 27 percent qualified because of a musculoskeletal system and connective tissue impairment, while nearly 29 percent had a mental disorder other than intellectual disability (Table 9). The general DI population is also much more likely to qualify because of intellectual disability than those with a connection to either WC or PDBs. Californians with a connection to either program fall somewhere between all disabled workers and disabled workers with a WC/PDB connection, with 41.4 percent having a musculoskeletal system and connective tissue impairment and 24.7 percent having a mental disorder other than intellectual disability (see Table 9).

The percentage among those with a WC/PDB connection who have a musculoskeletal system and connective tissue disorder increases with age. Disabled persons younger than age 35 with a WC/PDB connection have the lowest rate of musculoskeletal disorders, with 32.2 percent, while those aged 60–64 have the highest rate, with 57.9 percent (Table 10; see Table 11 for California figures). That pattern holds true for all disabled workers, although the rate of musculoskeletal disorders is lower across the board, accounting for 4.1 percent of the disabilities for those younger than age 30 and 34.7 percent for those in the group aged 60–FRA (see Table 12 for reference only, as data not explicitly shown in table; see Table 13 for comparable California figures).¹⁰ Again, disabled workers in California with a connection to either WC or PDBs fall somewhere in between: The percentage of those with a musculoskeletal ailment increases with age from 13.2 percent of those under age 35 to 48.0 percent of those aged 60–64 (Table 11).

The opposite is true for the mental disorders category. In general, the younger a worker is, the more likely he or she is to claim disability based on a mental disorder other than intellectual disability. For instance, 31.4 percent of those younger than age 35 with a WC/PDB connection have a mental impairment, while only 14.2 percent of those aged 60–64 claim under the same diagnostic group (Table 10; see Table 11 for comparable California figures). Again this pattern holds when we look at all disabled workers, where mental disorders are an even more prominent category: 47.5 percent of those younger than age 30 claim a mental disorder, while this is true for 18.6 percent of disabled workers aged 60 or older (see Table 12 for reference only, as data not explicitly shown in table; see Table 13 for comparable California figures).¹¹

We see some differences in diagnostic groups between individuals receiving WC compared with those receiving PDBs (see Table 14 for data on disabled workers who have filed for PDBs and Table 15 for comparable California figures). For all age groups, workers with a connection to WC are much more likely to have a musculoskeletal disorder than those with a PDB connection, 58.5 percent (see Table 16 for data on disabled workers who have filed for WC and Table 17 for comparable California figures) compared with 29.5 percent (Table 14). That may be because WC is predicated on a job-related injury and many occupational injuries are musculoskeletal in nature.¹² California exhibits a similar pattern with 56.2 percent of those with a WC connection filing under the musculoskeletal system (Table 17), compared with 23.5 percent of those with PDBs (Table 15). The opposite is true for mental disorders other than intellectual disability: People with a WC connection have a 17.6 percent rate of filing under mental disorders (Table 16), compared with 26.5 percent of those with PDBs (Table 14).

More women than men with a connection to either WC or PDBs have a mental disorder other than intellectual disability—22.5 percent compared with 16.4 percent of men (Table 18). Both women and men in the general DI population have a high likelihood of having a mental disorder, and the difference between the sexes is narrower—30.6 percent of women and 26.8 percent of men (SSA 2009, Table 6, 25–26). The rate of mental disorder other than intellectual disability is significantly higher for both men (22.9 percent) and women (31.1 percent) with a connection to PDBs than to WC (see Table 18).

Days Between Disability Onset and Filing for DI

Although in some cases the WC/PDB payment may not begin until after DI entitlement, the number of days between the onset of disability and filing for Social Security disability benefits may indicate how effectively WC and PDBs work as intervention for people with disabilities.¹³ Disabled workers with a connection to either WC or PDBs tend to wait longer to apply for disability benefits after disability onset than disabled workers in general (Table 19 and Chart 5). About half of disabled workers with a WC/PDB connection file for DI in less than 8 months of disability onset, compared with 62.7 percent of all disabled workers. A substantial percentage of the disabled population with a connection wait 16 months or over to apply for DI (22.4 percent). In comparison, 17.7 percent of all disabled workers wait 16 months or over to file for benefits (Table 20). That might indicate that WC and/or PDBs allow workers to maintain their households longer without DI support. It may also indicate that those people are hoping to return to work and are engaging in rehabilitation programs. On the other end, a smaller but still sizable portion of the disabled population with a connection file in less than 2 months of disability onset (18.6 percent). They may be beneficiaries who are more seriously disabled from the start. In contrast, 29.6 percent of all disabled workers apply for benefits in under 60 days (Table 20).

Disabled workers in California (with and without a WC/PDB connection) fall somewhere in between all disabled workers and disabled workers with a connection: 21.2 percent file in under 60 days, 22.2 percent file in 480 days or over, and 50.8 percent file in less than 8 months (Table 20). Disabled workers in California who have a connection to either program have the lowest rate of applying for DI benefits in under 60 days among all disabled workers and disabled workers with a connection (17.3 percent) and the highest rate of waiting 480 days or over to apply for those benefits at 23.7 percent (see Table 20).

Workers with a WC/PDB connection who have diseases of the genitourinary system, which include renal failure, have the highest rate of quick filing (37.8 percent file in less than 2 months, while only 6 percent wait 16 months or over). Interestingly, persons in the most common diagnostic group—musculoskeletal system and connective tissue—are the least likely to apply for DI benefits soon after onset: 16.2 percent apply in less than 2 months, while 25.6 percent wait 16 months or over. That group may have the most to gain from rehabilitation and early intervention programs (Table 19).

Workers with lower PIAs tend to wait longer to apply for disability. For instance, 24.2 percent of beneficiaries with benefits below $500 wait 480 days or over to apply, while only 11.1 percent of beneficiaries in the $2,200 and above category wait this long (Chart 6 and Table 21).

The youngest age group (under age 35) with a WC/PDB connection is also the group that applies for DI in the shortest time after disability onset: 33.5 percent apply in less than 4 months. The 45–49 age group is the least likely to apply in less than 4 months—only 27.3 percent do so. Although the differences are small, the group that waits the longest, on average, to apply is aged 40–44: 25.3 percent wait 480 days or over to apply (see Table 22).

Compared with the national average of 18.6 percent, workers with a WC/PDB connection in the Northeastern states have the lowest rates of applying for DI in less than 2 months after disability onset: 11.7 percent in Massachusetts, 13.4 percent in Connecticut,13.2 percent in New Hampshire, 14.0 percent in New York, 14.2 percent in Vermont, 15.3 percent in Maine, and 18.1 percent in Rhode Island (see Table 20). All of those states, except for New York and New Jersey, also have the highest rates of waiting 16 months or over, ranging from 25.3 percent in Rhode Island to 36.1 percent in Connecticut, compared with the national average of 22.4 percent. In contrast, many of the Midwestern states have a higher than average rate of applying for DI in under 60 days after disability onset; Indiana, Iowa, Kentucky, Minnesota, Missouri, North Dakota, and Ohio all have high rates of quick application, from 23.2 percent in North Dakota to 25.0 percent in Minnesota.

Conclusion

This note provides tabulations of the characteristics of disability beneficiaries with a connection to WC or PDBs. The 8.3 percent of disabled workers who have this connection tend to be economically better off, more frequently middle aged, male, afflicted with a musculoskeletal and connective tissue disorder, and tend to wait longer to apply for Social Security DI benefits after disability onset than the general disabled-worker population. Because California represents a large portion of this workload, its experience has a substantial effect on the national picture. This profile will be useful for those with an interest in the intersection of DI and WC/PDBs.