Vocational Factors in Disability Claim Assessment: A Comparative Survey of 11 Countries

Introduction

Vocational factors (VFs) are characteristics of disability benefit claimants that are used by public disability-insurance program staff in many countries to inform decisions of whether to approve benefit claims. Specifically, VFs are the applicant's age, education, and work experience. This article explores the role of VFs in assessing disability benefit claims. In the United States, the Social Security Administration (SSA) uses a five-step process to determine whether an adult qualifies for disabled-worker benefits. This process comprises tests of (1) whether the claimant has current work and income, (2) the severity of the impairment, (3) whether the medical condition meets criteria contained in SSA's codified Listing of Impairments, and the claimant's ability to perform (4) past work or (5) any type of work. SSA considers VFs during the last two steps of the process. To varying extents, other countries employ VFs in similar ways. All countries conduct some sort of evaluation of a disability benefit claimant's residual capacity to engage in paid work, and it is during this evaluation that VFs are most likely to be applied. Although the assessment processes they use may not be as formulaic as SSA's five-step sequence, other countries generally follow a multistep process to determine program eligibility.

This article discusses the disability determination process in selected countries, with a focus on the residual-capacity evaluation and the use of VFs. The key participants in the process—besides the claimant—typically include the treating physician (the claimant's personal doctor and/or one contracted by the disability agency) along with medical and nonmedical agency staff who gather documentation, evaluate evidence, and present their findings to a nonmedical administrator authorized to make the final disability claim determination. In some countries, a broad-based review team (specialists in medicine, rehabilitation, and labor market placement) are available to address a potential range of claims, especially where a work capacity assessment is pivotal.

Certain countries encourage or even mandate employer efforts to assist the employee's possible return to work. Instead of requiring the disability program staff to rely exclusively on medical information to determine a claimant's benefit eligibility, this approach enables claimants who possess residual work capacity to be identified as potential participants in return-to-work interventions. Some countries use the term “gatekeeper” to describe certain medical or nonmedical staff who are tasked with work capacity assessment, vocational rehabilitation assignment, or job placement responsibilities. In executing those roles, various deadlines—affecting different stages of sickness, eligibility for work capacity assessment, and employer involvement—may come into play, although their application can be flexible.

Procedures vary from country to country based on variables such as jurisdiction (federal, provincial, or local); operational definition of disability (full or partial, temporary or permanent); whether disability determinations require the claimant to receive rehabilitation services; whether administrators are required to evaluate the claimant's work capacity and medical, functional, and vocational factors; and time limits on each step in the assessment processes. Non-U.S. disability programs often also provide sickness benefits for the initial period of absence from the workplace, for which workers may need to apply as a preliminary requirement before they can apply for long-term disability benefits.

This article examines the disability determination processes in the United States and 10 other developed countries. It describes each country's process in detail. It compares how the countries assess claimant functional capacity, and how that assessment affects disability determinations. In particular, it explores the role and relevance of VFs in each country's claim-processing procedure.

The article is divided into five sections, beginning with this introduction. In the second section, we list the countries in our sample and explain the methodology involved in their selection. In the third section, we profile each country, explaining how it processes disability claims and describing the extent to which VFs are used. In the fourth section, we summarize the disability program aspects that tend to recur—or differ—from country to country. The fifth section concludes the article by highlighting differences between the United States and other countries in the disability determination process and the role of VFs.

Country Selection and Research Methodology

The countries examined in this study use VFs in varying roles in their disability assessment processes. To select a representative sample of such countries, we reviewed official definitions of “disability” used by the member countries of the Organisation for Economic Co-operation and Development (OECD).¹ Those definitions provided reliable indications of whether the countries might use VFs in their disability determinations. On that basis we selected 11 OECD member countries (including the United States) for our sample. The 11 countries have advanced economies and well-developed social security systems. We verified that the countries employ at least one VF by reviewing program descriptions and other materials posted on disability agency websites.

We then sought further information on the extent to which VFs are used. We reached out to subject experts in the study countries and constructed a network of contacts from whom we gathered evidence that we present in the country profiles that follow.² This study relies heavily on the knowledge of these experts. Without their verification of the information we present, the study would not have been possible.

The development of a network of experts was also catalyzed by a coincidental request that SSA received from a panel representing the United Kingdom's Department for Work and Pensions. The panel was studying how the United States and other countries conduct work capacity assessments for disability determinations. At the same time, a panel of the Dutch Social Security Institute was conducting its own comparative study of other countries' work capacity assessment processes. By exchanging information with both of those panels, we expanded and solidified our database and refined the details of many of the country profiles presented in this article. To our knowledge, no other cross-national study in the disability literature focuses on VFs.³

Table 1 presents summary indicators of disability prevalence and the reach of disability benefit programs in our 11 sample countries. The prevalence of self-reported disability, based on OECD data as of unspecified years in the late 2000s, ranges from about 10 percent of the working-age population (Switzerland) to roughly 12 percent in the United States and nearly 21 percent in Finland and Denmark. Most countries in our sample have prevalence rates above the OECD average (covering 27 member countries) of nearly 14 percent.

Table 1 shows the prevalence of disability benefit receipt among the working-age population for two reporting periods. An annual average for the period 2007–2008 is shown for each country (as well as the OECD average); a more recent figure—the latest available—is also given for each country (except Canada). For 2007–2008, only three of the countries in the sample recorded lower benefit receipt rates than the OECD average of 5.7 percent. Overall, rates ranged from 4.4 percent (Canada) to 6.2 percent (United States) and 10.3 percent (Norway and Sweden). More recent data provide largely similar country rankings, although some changes occurred in the interim—most notably, a dramatic decrease in Sweden's rate.

Table 1 also shows public disability program-related spending as a percentage of gross domestic product. Such expenditures include the costs of sick-leave, disability, and occupational benefits. The expenditure levels range from 0.8 percent (Canada) to 1.4 percent (United States) and more than 4 percent (Sweden and Denmark). Seven of the sample countries spend more than the OECD average of 2.1 percent.

Country Profiles: Disability Program Characteristics, Claim Procedures, and Role of VFs

In the country profiles that follow, the disability programs we examine are not necessarily limited to long-term disability pensions but may include others such as partial or short-term disability insurance, sickness benefits, and work-related injury compensation.

Each profile begins with an overview of the disability programs (both long- and short-term) operating in the country, including a detailed description of the disability determination process. Then, a subsection summarizes how VFs are used (directly or indirectly) in the disability assessment process. Each profile addresses the country's concept of residual work capacity and how that capacity is evaluated. Depending on the country, residual capacity may be discussed in either the program description or the VF subsection of the profile, or in both.

Each profile concludes with a list of information sources that are specific to the particular country; those sources were consulted extensively and many of them contributed substantially to our profiles.⁴ When needed, a list of profile-specific abbreviations also appears.

We profile the United States first; but as a preface, we note the following significant differences between U.S. disability programs and those of most of the other sampled countries:

• U.S. programs do not extend eligibility to claimants with partial and/or temporary disabilities;
• Workers in many other countries receive sickness benefits for 1 year or longer before becoming eligible to claim long-term disability benefits;
• Although SSA assesses residual work capacity in the later stages of the five-step U.S. process, many of the other countries conduct their assessment in the initial determination phase; and
• Several other countries involve the claimant's employer in the assessment process.

We also note the following significant attributes that the U.S. disability programs share with those of other countries:

• The assessment is carried out in sequential steps (although agencies in other countries do not always spell out those steps quite as definitively as does SSA); and
• Medical experts are consulted to confirm diagnoses and evaluate disablement.

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United States

SSA manages two programs that provide benefits based on disability or blindness: Social Security Disability Insurance (DI) and Supplemental Security Income (SSI). DI provides benefits to disabled or blind persons who are insured—workers who have made the required contributions to the DI trust fund—and to their dependents or survivors, if they meet the criteria to file under the insured worker's Social Security number.⁵ By contrast, SSI is a means-tested program that provides cash payments to aged, blind, and disabled persons (including disabled children) who have limited income and resources. There is no work requirement. SSI payments are drawn from the General Fund of the Treasury.

The Social Security Act defines disability as the inability to engage in substantial gainful activity (SGA) because of a medically determinable physical or mental impairment that is expected to result in death or that has lasted, or is expected to last, for a continuous period of not less than 12 months. SSA uses a five-step process in both DI and SSI to determine whether an adult is disabled (SSA 2016a).⁶ The five steps comprise tests of whether the claimant has work and income, the severity of the impairment(s),⁷ whether the condition meets criteria contained in SSA's medical listings (described later), the claimant's ability to perform past work, and the claimant's ability to perform any type of work.

The process begins when a claimant files an application, typically at an SSA field office. The application (and related forms) require a description of the claimant's impairment, treatment sources, and other information relevant to an alleged disability. The field office is responsible for verifying nonmedical eligibility requirements, which may include age, employment, marital status, and Social Security coverage status. For SSI applications, field office staff must also obtain information on the claimant's income and resources. Once the information is verified, the field office refers the case to a federally funded state agency called a Disability Determination Service (DDS).

The DDS is responsible for compiling medical evidence and rendering the initial determination on whether a claimant's condition (including blindness) meets the law's definition of disability. The DDS first seeks evidence from the claimant's own medical sources. If that evidence is unavailable or insufficient to make a determination, the DDS will arrange for a consultative examination—conducted by a licensed physician who is not employed by SSA but is familiar with the disability programs—to provide the needed information.

After reviewing the evidence, an adjudicator and a medical (and/or psychological) consultant make the initial disability determination and return the case to the SSA field office for appropriate action. If the DDS allows the claim on medical grounds, the field office must confirm that all nonmedical criteria are satisfied before computing the benefit amount and initiating payments. If the DDS denies the application, the claimant may appeal the decision. The first appeal of a denied claim—called a reconsideration—is also adjudicated by the DDS. Any subsequent appeals, if needed, are reviewed by SSA's Office of Hearings Operations (OHO), which uses the same evaluation process that the DDS follows.⁸ We describe the process below. The adjudicative actions in steps 2–5 of the process are taken either by the DDS or OHO, depending on the iteration of the appeal; however, for brevity, we ascribe all such actions to the DDS in the discussion.

In step 1 of the disability determination process for adults,⁹ the SSA field office determines whether the individual is currently engaged in SGA. SGA is a monthly earnings level that is adjusted annually to account for changes in the national average wage index.¹⁰ It is meant to indicate

the performance of significant physical and/or mental activities in work for pay or profit, or in work of a type generally performed for pay or profit, regardless of the legality of the work. “Significant activities” are useful in the accomplishment of a job or the operation of a business, and have economic value. Work may be substantial even if it is performed on a part-time basis, or even if the individual does less, is paid less, or has less responsibility than in previous work. Work activity is gainful if it is the kind of work usually done for pay, whether in cash or in kind, or for profit, whether or not a profit is realized. Activities involving self-care, household tasks, unpaid training, hobbies, therapy, school attendance, clubs, social programs, [and the like] are not generally considered to be SGA (SSA 2007).

If the field office determines that the applicant is not performing SGA, the case is referred to a DDS. At step 2, the DDS determines if an impairment is considered severe or not severe. Impairments are severe if they significantly limit an individual's physical or mental abilities to do basic work activities. Impairments that do not meet that standard, including those that have no more than a minimal effect on the ability to do basic work activities, are considered programmatically not severe.¹¹ When the DDS determines that a claimant has a severe impairment, the DDS adjudicator must proceed to step 3. If the claimant's impairment is deemed not to meet the programmatic definition of “severe,” the DDS renders a “not disabled” determination.

At step 3, the DDS determines if an individual's impairment meets (or is of equal severity to) the criteria contained in SSA's medical Listing of Impairments. The listing “describes, for each major body system, impairments considered severe enough to prevent an individual from doing any gainful activity (or in the case of children under age 18 applying for Supplemental Security Income (SSI), severe enough to cause marked and severe functional limitations)” (SSA n.d. b). If the DDS determines that an individual's impairment does not meet or equal the criteria in the medical listings, the claimant's physical and/or mental residual functional capacity (RFC) must be assessed. RFC accounts for any work-related activities an individual can perform despite her or his impairment. The RFC assessment addresses the claimant's exertional, manipulative, postural, special sense, and mental capacities, as well as environmental restrictions. The RFC test is “an administrative assessment of the extent to which an individual's medically determinable impairment(s), including any related symptoms, such as pain, may cause physical or mental limitations or restrictions that may affect his or her capacity to do work-related physical and mental activities…RFC is the individual's maximum remaining ability to do sustained work activities in an ordinary work setting on a regular and continuing basis” (SSA 1996).

Role of VFs

VFs are considered in steps 4 and 5. In step 4, the DDS adjudicator must determine whether the individual's RFC would enable him or her to perform past relevant work. If so, the case is denied, whether or not such past work still exists in the national economy. Past work is considered relevant if the DDS, with assistance from the SSA field office if needed, confirms that the work was performed no more than 15 years prior to the adjudication of the claim,¹² lasted long enough for the claimant to learn the job, and was determined to constitute SGA (SSA n.d. a). The applicant's age and education are not considered at this step; work experience, by contrast, is the central nonmedical consideration.

If the vocational evidence is not sufficient to establish whether the claimant can perform past relevant work, the DDS must consider whether the claimant falls into any of three special medical-vocational profiles before proceeding to step 5.¹³ This process may enable the DDS to preempt step 5 because the profiles list “combinations of the [VFs] of age, education and work experience that are so unfavorable that an individual who meets one of them will be deemed to be unable to adjust to other work and therefore will be found disabled at step 5 of the sequential evaluation process” (SSA 2006). The special medical-vocational profiles are:

1. Arduous unskilled work. The claimant is not working at SGA level, has performed at least 35 years of arduous unskilled work and cannot continue this arduous work because of a severe impairment, and has no more than a “marginal” education (no formal schooling after grade 6).
2. No work experience. The claimant has a severe impairment, has no past relevant work, is aged 55 or older, and has no more than a “limited” education (formal schooling completed at grade 7 through 11).
3. Lifetime commitment. The claimant is not working at the SGA level and has a lifetime commitment (30 years or more) to a field of work that is unskilled or that is skilled or semi-skilled but with no transferable skills, cannot continue this past work because of a severe impairment, is aged 60 or older, and has no more than a limited education.

Claims are denied at step 4 if claimants are considered able to perform past relevant work. At step 5, the DDS considers the claimant's RFC along with the VFs of age, education, and work experience to determine his or her “occupational base,” a term that denotes the approximate number of occupations the individual can perform given her or his exertional and nonexertional limitations.¹⁴

Age affects the claimant's ability to adapt to a new work situation and to participate in the competitive labor market.¹⁵ Education (or training) can provide abilities that meet vocational requirements. The period between formal education and disability onset may be relevant. A claimant's education is classified as one of the following levels: illiteracy (including inability to communicate in English¹⁶); marginal (grade 6 or less), adequate for unskilled jobs; limited (grades 7–11), adequate for semiskilled or skilled jobs; and high school (at least grade 12), required for semiskilled or skilled jobs.^17,18 Work experience may impart transferable skills. When acquired skills are not transferable, the claimant is considered capable of adjusting only to unskilled work. SSA defines transferable skills as those “obtained from performing past relevant skilled or semiskilled work that a claimant can use to adjust to the requirements of other skilled or semiskilled work that falls within the claimant's RFC” (SSA 2018). Transferability applies only to jobs that would involve the same or a lesser degree of skill because claimants are not required to do more complex work than was expected in their previous jobs. DDS consideration of transferable skills extends to the use of the same or similar tools and machines and the involvement of the same or similar raw materials, production, processes, or services.¹⁹

In using VFs to assess whether the individual can work in employment consistent with his or her RFC, the DDS often consults a set of tables called the medical-vocational guidelines (sometimes shortened to the vocational grid).²⁰ Using the grid, the DDS can classify a claimant according to how four factors—age, education, past relevant work, and RFC—intersect. For example, a claimant with a relatively nonrestrictive RFC, and/or who is younger than 50, and/or has education or training or transferable job skills is considered likely to be able to adjust to other jobs.

The DDS denies a claim at step 5 if the applicant is deemed to be capable of performing any other work in the national economy. When this occurs, the DDS usually cites three examples of jobs that a claimant could perform. If the claimant is instead found to be unable to adjust to other work, the DDS medically allows the case and forwards it to the SSA field office to confirm that all nonmedical criteria are satisfied. If so, the field office then computes the claimant's benefit amount and initiates benefit payments.

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Australia

Benefits for Australians with permanent disabilities are provided primarily by the Disability Support Pension (DSP). To qualify for the DSP, an applicant must meet age, residency, disability, and employment criteria. The nonmedical factors (age and residency, as well as income and assets) are assessed first. A qualifying individual must be aged 16 or older, younger than pensionable age, and an Australian resident at the time of claiming. Disability benefits are means-tested unless the claimant is blind. Although Australia also has a Sickness Allowance program to assist individuals who temporarily cannot work or study because of an injury or illness, this profile focuses on the DSP program.

Centrelink is the agency that administers the DSP. In 2012, policymakers introduced tighter eligibility rules, revised measures of how a person's impairment may affect her or his ability to work, and implemented requirements meant to encourage beneficiaries to work. A two-stage process for claiming DSP, detailed below, was established in July 2015 (Hermant 2016).

The DSP claim process begins with the job capacity assessment (JCA), which identifies the level of functional impairment caused by any permanent medical condition(s), current and future work capacity, barriers to finding and maintaining employment, and supports that may improve work capacity.²¹ The JCA is conducted by Department of Human Services health professionals²² who review medical evidence along with the claim documentation. Claimants who provide medical evidence of certain conditions may receive a “manifest grant” that immediately qualifies them for benefits. These conditions include terminal illness (life expectancy of less than 2 years with significantly reduced work capacity during that period); permanent blindness; severe intellectual disability (documented IQ of less than 70); a need of nursing-home or equivalent care; category 4 human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS); or a condition that qualifies for a veteran's disability pension with a rating of “totally and permanently incapacitated” (Australian Government 2016a, 2019).

To qualify for DSP benefits, claimants who do not receive a manifest grant must be judged to have a severe impairment causing a continuing inability to work more than 15 hours weekly at or above the minimum-wage level at any location in Australia (not only the claimant's locally accessible labor market). Additionally, claimants must either:

• actively participate in a program of support without which they will be unable to work independently in the next 2 years;
• undertake a training activity to prepare for independent work within the next 2 years; or
• be unlikely to complete such training or perform work in the next 2 years because of their impairment(s).

The JCA concludes with the claimant's referral either to employment support services or the second step of the DSP claim process, a disability medical assessment, which is conducted by a government-contracted doctor (Australian Government 2016a; Hermant 2016).²³ At this stage, an applicant can meet the DSP medical requirements either with a diagnosis of permanent blindness or with a finding of permanent physical, intellectual, or psychiatric impairment that meets a given severity threshold. Persons who are permanently blind automatically meet the medical eligibility criteria for the DSP and are exempt from the income-and-assets test that applies to all other DSP recipients. The threshold for those in the latter group is a rating of 20 points based on point values listed in comprehensive Impairment Tables, which assess an applicant's work-related functional limitations. In the Impairment Tables, each level of functional impact has a corresponding rating expressed in points in accordance with a consistent, generic scale that has been adapted from a standard World Health Organization classification scheme. The ratings are 0 points if the functional impact is negligible, 5 points if mild, 10 points if moderate, 20 points if severe, and 30 points if extreme. For a physical, psychological, or psychiatric impairment to be considered permanent, it must be fully diagnosed, treated, stabilized, and unlikely to show any significant functional improvement within 2 years, with or without reasonable treatment.

The Impairment Tables describe functional activities, abilities, symptoms, and limitations in terms of their effects on body systems rather than as diagnoses (Australian Government 2011). When using the tables to assess functional capacity, the reviewer must evaluate the impairment on the basis of what the person can or could do, not of what the person chooses to do or what others do for the person. The claimant's self-reported symptoms must be corroborated by the treating physician's report and other medical evidence when the reviewer applies the Impairment Tables.

Using the information accumulated in the JCA and the disability medical assessment, Centrelink grants or rejects the DSP claim.

Role of VFs

As noted above, DSP applicants who are not considered manifestly disabled must undergo the JCA. The assessor collects the claimant's medical files, employment history, and other relevant information. Assessors and claimants discuss factors such as the claimant's educational attainment, work history, skills, qualifications, and interests, as well as medical matters such as treatment history and the stability of and prognosis for any episodic conditions. Assessors and claimants may also discuss other factors that could affect the claimant's ability to work, such as language difficulties or mobility problems. This information underlies the impairment rating.

A person receiving a DSP may remain qualified for benefits even if he or she works more than 15 hours a week. DSP beneficiaries who work remain subject to means testing.²⁴

Since July 1, 2014, DSP recipients aged 34 or younger with an assessed work capacity of 8 or more hours per week must participate in Disability Employment Services, which involves developing and signing a Job Plan for work resumption and attending informational interviews on support service availability and beneficiary obligations with DSP administrators. Interviews must take place quarterly during the first 18 months of benefit receipt and semiannually thereafter. The Job Plan is individually tailored and includes voluntary activities that address vocational and nonvocational barriers to employment; however, DSP payment may be suspended or canceled for nonparticipation in the Job Plan's required activities (Australian Government 2015).

Apart from requiring the assessment based on the Impairment Tables, the regulations specify which factors Centrelink staff can and cannot consider when determining the ability to work. As specified in informational websites of the Australian Government (2016a, 2016b), the following factors must be considered:

• physical and intellectual characteristics required to perform any work;
• the impairment's effect on the claimant's ability to demonstrate those characteristics over the next 2 years;
• the impairment's effect on specific work functions, such as the ability to report regularly to work, persist at work tasks, understand and follow instructions, communicate, travel to and from work, move around, attend to personal care needs, manipulate objects, exhibit appropriate behavior, undertake a variety of tasks and alternate between tasks, and/or lift, carry, and move objects;
• whether a person requires a moderate to high level of ongoing assistance to maintain employment;
• the impairment's effect on the ability to undertake mainstream educational, vocational, or on-the-job training (excluding programs designed specifically for people with physical, intellectual, or psychiatric impairments); and
• whether such training is likely to enable the individual to do any work within the next 2 years.

Conversely, the following factors must be disregarded:

• the availability of the person's usual work in the locally accessible labor market;
• the availability of any kind of work in the locally accessible labor market that the person could do or be trained to do;²⁵
• the availability of educational, vocational, or on-the-job training that would assist the claimant in developing work skills;
• the availability of transportation to and from work;
• the person's motivation to work or train, except when medical evidence indicates that the lack of motivation is directly attributable to the impairment (as in a psychiatric disability);
• the individual's preferences regarding the type of work or training;
• the person's potential attractiveness to an employer in a particular area of work;
• difficulties with literacy, numeracy, or language which are not directly attributable to a medical condition; and
• employer preferences and discriminatory practices that may exist in the open labor market.

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Canada

Disability benefits are provided under the Canada Pension Plan Disability (CPP-D) program, administered by Service Canada. CPP-D provides monthly benefits to program contributors who cannot work at any job because of a “severe and prolonged” physical and/or mental disability (IBIS Advisors 2017). A severe disability renders the applicant incapable of regularly pursuing any gainful occupation because it prevents the performance of any type of work on a regular basis. A prolonged disability is one of long-term and indefinite duration or that is likely to result in death (OECD 2010a).

CPP-D eligibility is based on earnings history and medical evidence. A CPP-D applicant must be younger than 65 and have made CPP payroll-tax contributions in at least 4 of the last 6 years, or in 3 of the last 6 years for long-term contributors (25 years or longer).

Medical eligibility depends on whether the claimant's disability meets the definitions of both severe and prolonged, noted above. If so, the adjudicator grants the CPP-D benefit and a benefit officer calculates the monthly benefit amount based on the applicant's lifetime contributions.

Medical adjudicators are registered nurses with specific knowledge of CPP-D legislation, regulations, policies, and procedures, who are authorized to determine CPP-D eligibility. After reviewing documentation of a claimant's clinical observations, diagnosis, and long-term prognosis, they decide whether the applicant's medical condition meets the CPP-D definitions of severe and prolonged. For complex cases, medical adjudicators may consult with a physician from the CPP-D Medical Expertise Division. Medical eligibility is not based solely on a specific diagnosis; instead, the adjudicator considers other factors as well, including the nature and severity of the medical condition(s); the effect of the condition (and its treatment) on the claimant's capacity to work at any job; and personal characteristics (for example, age, education, and work experience).

In addition to reviewing the detailed information provided by the applicant, the adjudicator may consult with employers, schools, and other third parties such as worker compensation boards and long-term disability insurers who may be able to provide additional information on the applicant's functional capacity. Information provided by the applicant's treating physician is also important. Medical adjudicators may also seek information from specialists who have seen the applicant in the past or from independent medical examiners to ensure that Service Canada has enough information to determine the applicant's eligibility.

Role of VFs

In processing a claim, the adjudicator uses the CPP-D Adjudicative Framework. The framework consists of five components: (1) establishing whether the medical condition (called the Prime Indicator) meets the definition of “severe”; (2) establishing whether the medical condition regularly prevents the applicant from pursuing substantially gainful work; (3) considering the claimant's personal characteristics (specifically, age, education, and work experience); (4) establishing whether the medical condition meets the definition of “prolonged”; (5) applying a reasonable standard of evidence for granting or continuing pension benefits (Government of Canada 2018).²⁶ In the course of following the framework, the adjudicator examines whether the condition is progressive, the functional limitations it imposes, and how its treatment affects the claimant; reviews the statements and opinions of health professionals as well as of the applicant himself or herself; and identifies any additional conditions.

The medical condition is evaluated in the context of work capacity. Specifically, the applicant must demonstrate that he or she has a severe and prolonged physical or mental disability that prevents him or her from regularly pursuing any substantially gainful occupation, defined in the CPP-D regulations as one “that provides a salary or wages equal to the maximum annual amount a person could receive as a disability pension.” The medical adjudicator must determine if the evidence on the claimant's disability, notwithstanding any functional limitations and restrictions, indicates an inability to perform any job that exists in the competitive workforce. The regulations define “any job” as one in which a person might reasonably be expected to be employed because of skills, education, and training the person possesses or could timely acquire (on the job or otherwise), accounting for the person's limitations and restrictions (Canada Minister of Justice 2016). Although retraining must be considered in some cases, age may be a countervailing factor for some workers. In general, retraining for an occupation for which an applicant has no previously demonstrated suitability is not in itself an appropriate factor in determining whether an older worker is capable of work.

Age is evaluated in the context of the medical condition(s), as are education and work experience. These factors constitute the personal characteristics that are considered in the third component of the adjudication framework. Age alone does not entitle a person to a CPP-D benefit but it is an important consideration. With increasing age, there is a gradual reduction in the reserve capacity of most body organs. This can affect a person's ability to recover from injury or illness and to sustain work.

An applicant's education is also considered under the framework, because higher levels of education are assumed to enhance the likelihood that an individual will be able to perform some form of work. Education includes both formal and informal knowledge and skills obtained through a structured learning process and/or work experience.

The relevance of a claimant's work experience to an evaluation of work capacity is self-evident. The CPP-D adjudicator considers the type(s) of work the applicant has performed, reason(s) for stopping work, and the frequency and length of nonwork spells (as indicated by the Record of Earnings, or ROE). The ROE may reveal a decline in earnings that is consistent with the deterioration in the medical condition or a fluctuation that the adjudicator may ask the employer to explain.

The official title of the third component of the adjudication framework mentions socioeconomic factors. However, as a consequence of federal court rulings,²⁷ those factors—such as business closures or seasonal layoffs; regional unemployment, predominant language spoken, industry mix of employers, occupations available, and skills needed for those occupations; and local access to specific jobs—are not considered in a CPP-D determination, as they do not affect the capacity of a claimant with a severe and prolonged disability to work at any job.

Sources

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Denmark

In Denmark, disability benefits are administered by municipalities under authority of the national pension program.²⁸ Benefits are payable to individuals whose ability to work has been permanently reduced by more than half. The program encourages rehabilitation by permitting a beneficiary to retain eligibility while earning a modest income through rehabilitative employment. A disability pension can be granted to a claimant aged 18–65 who has resided in Denmark for at least 3 years. Eligibility is means-tested and the benefit level is based on years worked and number of payroll contributions, not on earnings level (Pederson 2010).

The Danish system emphasizes labor force attachment at any practicable level for disability benefit claimants. Individuals younger than 65 who retain work capacity but cannot perform their prior jobs because of permanently reduced capacity are eligible for an extensive array of subsidized “flex jobs.” Claimants whose reduced work capacity prevents them from holding a flex job qualify for the early-retirement disability pension. The number of flex-job offerings has increased in recent years to provide maximal alternatives to receiving cash benefits. As the number of flex jobs expanded in recent years to accommodate potential beneficiaries, the Danish system eliminated partial disability benefits. A claimant who qualifies for a flex job but cannot currently find one is eligible for a “waiting benefit,” which has no time limit (OECD 2008).

Effective 2012, national pension program reforms restricted some of the eligibility criteria. For example, early retirement was virtually eliminated for individuals younger than 40 if return to work was possible. For claimants with any chance of returning to work, the municipality assigns a case manager to assist with rehabilitation, education, employment support, and social services.

A claimant may apply for various programs, such as sickness benefits, social assistance, and vocational rehabilitation. The case manager develops a human resource profile on receipt of an application for disability benefits (or after 8 weeks of illness, for a sickness-benefit recipient). The profile informs decisions on benefit eligibility or vocational rehabilitation and flex job requirements. Those decisions depend on the claimant's current and potential abilities and human capital and on whether the incapacity to hold a flex job has been proven. The case manager gathers evidence and renders a judgment on the claimant's abilities and human capital in the initial (medical) stage of the assessment, for which medical, psychological, vocational, or other experts may be consulted.

In the next step of the process, nonmedical staff of the municipality assess the claimant's residual work capacity using 12 measures: education, labor market experience, interests, social competence, adaptability, learning capacity, work-related preferences, performance expectations, the importance of work to one's identity, housing and finances, social networks, and health. Not all criteria are relevant to each case; and although “health” constitutes only 1 of the 12 criteria, a physician plays a critical role in the nonmedical assessment. The doctor's evaluation focuses on the claimant's resource capacity and its potential development. The claimant's capacity for labor market participation, rather than a specific diagnosis, is the primary factor of eligibility for disability benefits (Boer, Brenninkmeijer, and Zuidam 2004; ISF 2013).

In a typical claim, the worker notifies the municipality of work lost because of illness at some point during the first 4 weeks of the sick leave. The employer pays the benefit in the first 21 days of sickness. The employee initiates the claim by submitting a form describing the illness. (The employer may request a written statement as well.) After paying sick leave for the first 4 days, the employer may require the employee to provide a medical certification of illness. The municipality pays the employee's sickness benefits after 21 days. Payments may continue for 52 weeks, which may be nonconsecutive, over the ensuing 18 months. If medical certification has not been requested by the employer and has not been presented after 8 weeks of sick leave, the municipality requires such certification and is obliged to conduct follow-up evaluations at 8-week intervals thereafter to reassess the need for medical or vocational rehabilitation.

Based on the evidence gathered, the case manager may require vocational rehabilitation and begin to develop a plan with the client. Rehabilitation services typically last about 3 months but may be extended for as long as several years. If such services are judged insufficient to enable the claimant to find “normal” work, a flex job (or a series of such jobs) may be offered. Alternatively, an unsuccessful rehabilitation may lead to a new rehabilitation plan. If the rehabilitation service and flex job options are exhausted, the claimant is granted a disability pension. A disability pensioner may work and retain eligibility as long as earnings do not exceed a cap (OECD 2008; Kautto and Bach-Othman 2010).

Role of VFs

Age is not directly considered in rendering disability determinations, but the eligibility to file a claim for disability-related early retirement pension benefits without medical documentation certifying a permanent absence of working capacity is restricted to individuals aged 40 or older. Education and labor market experience (the latter of which includes the claimant's personal views on the importance of work) are among the 12 criteria used by municipality case managers to assess a claimant's work capacity.

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Finland

Two statutory pension systems provide disability benefits in Finland. The first, a universal flat-rate national pension, is administered by Kansaneläkelaitos (KELA), the Finnish Social Security Institution. The second, a mandatory employer-provided pension insurance program that ties benefit levels to lifetime earnings for private-sector wage and salary workers and self-employed persons, is coordinated by Eläketurvakeskus (ETK), the Finnish Centre for Pensions. The second program is authorized under five separate statutes, of which the primary law is the Employees' Pension Act, known by its Finnish acronym as TyEL; thus, the program is known as the TyEL pension or, more commonly, TyEL insurance.²⁹ The two programs complement each other. Workers with higher lifetime earnings qualify for higher earnings-based TyEL pension benefits and receive lower amounts from the KELA-run national pension; at a certain benefit threshold, high earners receive a benefit only from the earnings-related TyEL pension (IBIS Advisors 2017; ISF 2013). TyEL insurance is the primary source of pension benefits for Finnish workers. The national pension assures a minimum pension level for workers whose earnings-related pension is low because of an incomplete employment history or low wages.

Both pension systems encourage disabled persons to participate in a rehabilitation program. The national pension also provides an initial sickness allowance, which compensates for income lost because of work incapacity lasting less than a full year. The sickness allowance is available for individuals aged 16 to 67—employees, the self-employed, the unemployed, and students—and provides a preliminary phase before individuals are considered eligible to file a long-term disability claim under either the national pension or TyEL insurance.

Full or partial disability benefits under TyEL insurance are granted when incapacity for work is expected to last for at least 1 year; by contrast, national pension benefits are only granted in full.³⁰ Disability benefits granted under both the national pension system and the earnings-related pension system may continue indefinitely if the illness, handicap, or injury that reduces work ability appears unlikely to improve. Under the national pension, individuals who are blind or who are not mobile without assistance are entitled to a disability pension even if employed. Part-time work may be allowed with either a partial or full benefit under TyEL insurance, and new pension benefits accrue if the claimant works while receiving a disability pension (KELA 2017c).³¹

Eligibility for disability benefits under the national pension requires that insured claimants are Finnish residents aged 16 to 64 with an assessed illness, condition, or injury that prevents engaging in gainful employment (IBIS Advisors 2017; SSA 2016c). Disability benefits under TyEL insurance may be granted to covered individuals aged 18 or older, up to the age of eligibility for a retirement pension (63 or older, depending on birth year)³² who have an assessed loss of working capacity of at least 60 percent and have exhausted the sickness allowance benefit (SSA 2016c). A partial disability pension may be provided to workers with an assessed loss of working capacity of 40–59 percent, with benefits equal to half the insured's potential full disability pension. Should the beneficiary of either disability pension program receive vocational rehabilitation services, the TyEL insurance benefit increases by 33 percent for the duration of those services³³ and the KELA-administered disability pension increases by 10 percent.

The ETK, a department of the Ministry of Social Affairs and Health, coordinates the TyEL insurance program. Employer coverage of employees in the TyEL system is mandatory.³⁴ Employers offer coverage through providers such as private insurance companies, pension funds, and foundations.³⁵ Most employees belong to a trade union or are covered under a collective agreement; their employers provide TyEL benefits complementing those provided by KELA under the national pension. For firms or industries in which workers generate proportionally greater numbers of disability claims, employers may face “experience-rated” insurance premiums. Experience-rated employer contributions to pension providers vary based on firm payroll and the incidence of disability cases among employees (Hytti 2008; ETK 2019a, 2019b).³⁶ The primary purpose of experience ratings is to encourage employers to promote workplace safety and employee well-being and rehabilitation.

When the sickness allowance is exhausted, the claimant can apply to KELA or the TyEL pension provider for a long-term disability pension. If the TyEL insurance benefit is expected to be relatively low, the claimant can apply for both pensions. In such cases, KELA and the authorized pension provider will coordinate their pension decisions (KELA 2017a, 2017b). The sickness allowance, rehabilitation subsidy, and long-term disability pension are all awarded primarily on the basis of incapacity for work, as assessed by a medical expert and a claims processor at KELA based on the medical certificate and the information provided in the application. As such, these documents must detail how a claimant's illness reduces work capacity at the current job. KELA considers a wide variety of factors during the evaluation process including the claimant's age, profession, education, place of residence, potential for finding employment that fits the claimant's vocational qualifications, and prospects for rehabilitation (as determined during the initial phase of the sickness allowance evaluation).

A long-term disability claim is submitted on a single form along with a medical statement detailing the claimant's health status. Disability benefits can be paid by the employee's authorized pension provider, by KELA, or by both parties.³⁷ The applicant submits the paperwork to KELA; then, as needed, KELA forwards documentation to the appropriate TyEL pension provider. The claimant's treating physician's statement contains the claimant's medical status and history, assessment of functional and working capacity, likelihood of recovering working capacity through rehabilitation, any additional findings, and concluding remarks. Before the pension provider can render a decision, it must investigate whether the employee is entitled to rehabilitation supports. If the claimant is able to cope with part-time work or a lighter workload, she or he can apply for a partial disability pension from the authorized pension provider. (Recall that a partial disability pension is not available from KELA.)

For a national pension claim, KELA assigns an administrative officer to the case. To avoid regional variation, KELA handles all national disability pension applications centrally. An administrative officer prepares the case and forwards it to one of KELA's expert physicians, often a specialist who is selected based on the claimant's primary diagnosis. As a rule, the expert physician will assess working capability based on the medical documentation, including the care or rehabilitation plan that accompanies the claim. However, the physician may refer the claimant for an extensive multidisciplinary medical examination to more fully assess his or her functional and working capacity. This analysis typically addresses diseases that affect work capacity; medical history; information from previous examinations, treatments, and rehabilitations; results of any functional and work capacity tests; and the doctor's professional judgment of the activity restrictions imposed by the claimant's health status (Boer, Brenninkmeijer, and Zuidam 2004).

In the final stages of the disability determination, claim documentation is forwarded to an administrative officer who decides whether the applicant's work capacity has decreased so much that she or he is entitled to a full disability pension or, in the case of TyEL insurance, a partial pension. KELA sends approved TyEL pension claims to the designated pension provider. The case documents are accompanied by an evaluation of the applicant's working capability issued by the employer. TyEL pension providers often work closely with employers. After obtaining this information, a pension provider's administrative officer sends the medical documentation to an expert physician, who may request additional information from the treating doctor before rendering an opinion. Based on that information, the administrative officer decides the outcome in accordance with the pension provider's established practices (which may vary by region).

If a claimant is deemed eligible for benefits from both pension programs, the respective administrative officers attempt to reach a unanimous decision. If they do not, the respective expert physicians will attempt to reach an agreement based on the medical documentation. If they too cannot agree, the chief medical officers attempt to find a joint solution. In this way, the two medical assessments serve as “second opinions” for the assessing doctors.

Role of VFs

Age, education, and work experience are not addressed directly in the Finnish disability determination process. However, as mentioned earlier, a disability assessment can account for nonmedical factors such as the claimant's earning capacity in work that her or his education, work experience, age, and place of residence make reasonably possible. For example, disability benefits appear to be more easily granted to claimants aged 60 or older with low education levels and long work histories.

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Ireland

Ireland's Department of Employment Affairs and Social Protection (DEASP) administers three major income-support programs for people who are ill or disabled. The Illness Benefit is a short-term, contribution-based program that pays benefits to persons who are younger than 66, are unable to work because of illness, and meet the social insurance contribution requirements. Disability Allowance is a long-term, noncontributory, means-tested program that provides a weekly allowance for workers aged 16–66 with a disability that is expected to last at least 1 year. The Invalidity Pension (IP), a long-term contribution-based benefit, is paid to individuals who are permanently unable to work because of illness or incapacity (IBIS Advisors 2017; SSA 2016c). Ireland defines “disability” as the inability to work because of a specific disease or bodily/mental impairment.

This profile focuses on the IP program, which is similar to Disability Insurance in the United States. IP benefits may be awarded in cases of impairments judged to be severe based on a medical assessment or diagnostic medical report completed by the applicant's medical practitioner. A DEASP medical assessor reviews the report along with evidence-based medical protocols and follows departmental guidelines to determine benefit eligibility (Department of Social Protection 2014).

IP awards typically follow 12 months of cash Illness Benefits. A DEASP doctor must certify that an insured claimant is medically unfit for work and qualifies for IP benefits on medical grounds. To do so, the insured must have been incapable of work for at least 12 months and be likely to remain incapable of work for at least another 12 months, or have been declared permanently incapable of work because of serious illness or disability.

Entitlement to an Illness Benefit is determined after the claimant's treating doctor submits an initial certificate of incapacity, which provides a medical diagnosis or a description of symptoms. DEASP medical assessors—registered practitioners with special training in disability evaluation—then review the certificate and may offer an independent medical opinion of loss of functional capacity either for the claimant's usual work or for other categories of work. DEASP officers, unaffiliated with the medical assessors, then review the documentation and decide the claims. Once allowed, the short-term Illness Benefit is payable after a 3-day waiting period.

A process known as dual referral aims to streamline the transfer of a qualifying candidate to the long-term IP as the end of the 2-year Illness Benefit approaches. About 18 months into an Illness Benefit claim, DEASP requires the beneficiary and her or his treating physician to provide current medical evidence, with which the agency's medical assessor determines continued eligibility for the Illness Benefit. If the assessor finds in the affirmative, then eligibility for the IP is considered (DEASP 2019).

Role of VFs

Age is not considered in the disability determination process, and education and work experience are considered indirectly. IP claimants who are receiving a short-term Illness Benefit have been medically assessed as described above. An individual who is not currently receiving an Illness Benefit will also require medical certification and/or an examination to proceed with an IP claim. The condition documented as the claimant's certified cause of incapacity determines the timing with which the claim is referred for a Medical Review and Assessment (MRA) to determine benefit eligibility.

DEASP opens the MRA process by recording the claimant's medical history. The medical assessor determines whether the documentation establishes work incapacity without the need of further medical examination. The assessor considers the claimant's work history and educational and vocational qualifications, and reviews the claimant's statement about the medical condition and its effect on work and activities of daily living. The assessor then provides a clinical description of the condition's effects on the following functional areas: mental health, learning, consciousness, balance, vision, hearing, speech, continence, reaching, lifting/carrying, manual dexterity, bending/kneeling/squatting, sitting, standing, climbing stairs, and walking. The MRA concludes with a Work Capacity Assessment (WCA). If the claimant has been out of work for more than 6 months and no jobs are available, or if the claimant was never employed, the assessor determines whether the person is capable of fulfilling a function in any of nine occupational categories identified by the combination of one of three levels of effort required (light, moderate, or heavy) and one of three required skill levels (lesser-skilled, semi-skilled, and skilled) (Department of Social Protection 2014).

The assessor documents whether or not the claimant is capable of work in functional terms and cites any nonfunctional incapacitating factors (including conditions which may not adversely affect the claimant's ability to perform any work-related activities). Possible examples of nonfunctional incapacitating factors include conditions that lead to general fatigue or situations in which a person's condition would be aggravated by work.

After considering not only the claimant's illness or injury but also how the condition affects the ability to perform required tasks for a particular job, or for jobs in general, the medical assessor renders an opinion on whether the person is permanently incapable of work. The assessor also considers the potential workplace health and safety implications of the patient's condition. If the assessor's opinion on the claimant's capacity in any functional area differs from that alleged in the claim, the assessor indicates the symptoms that are not adequately explained by objective clinical findings. A clerical DEASP officer considers nonmedical as well as medical qualifying conditions in making the final decision on IP benefit eligibility.

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Netherlands

In the 1990s, the Netherlands initiated disability program reforms that have resulted in beneficiary inflows declining by about 40 percent since 2000. Those reforms shifted responsibility from the federal system to employers and employees, introduced more stringent eligibility standards, reduced the generosity of benefits, and partially privatized the programs (OECD 2010b).

The Dutch program for individuals with a full and permanent incapacity for work is called Inkomensvooziening Volledig Arbeidsongeschikten (IVA). A separate program, Werkhervating Gedeeltelijk Arbeidsongeschikten (WGA), covers workers with partial disabilities. Employers must provide sickness and disability insurance for their workers; such insurance is optional for the self-employed. IVA is funded by employee and employer contributions in a pay-as-you-go-system. WGA benefits are financed in part by employer premiums that reflect the firm's (or the industry's) experience rating, or the relative history of disability prevalence among its employees. Prior to qualifying for IVA or WGA benefits, a worker receives employer-covered sickness benefits for up to 2 years. By requiring a 2-year waiting period, the Dutch programs encourage work-related disability prevention and disabled-worker reintegration (Willis Towers Watson 2016). Employers must consult a physician, typically under contract from a private-sector occupational health agency, who can confirm the legitimacy of a sickness report, refer a sick worker to specialists for evaluation, and suggest workplace management practices that might reduce the likelihood of sickness-related absenteeism. Employers must also contract with private work reintegration service providers who seek to retrain and find jobs for disabled employees who lack any suitable work opportunities from their current employer (de Jong 2015).

In the first 6 weeks of an employee absence because of sickness, the employer-provided occupational physician assesses the medical cause and the resulting functional limitations and provides a prognosis for work resumption. The doctor develops a “capacity profile” that summarizes the types of tasks the worker can undertake. In all, the profile addresses 28 different occupational tasks, such as walking, lifting, dexterity, bending and turning, and exhibiting various mental and psychological criteria. The physician creates a systematic inventory of capacities (unless the worker is judged to have virtually no remaining working capacity). Specifically, the level of work capacity is measured as the difference between current earning capacity and the worker's former wage. This approach is also used in the long-term disability assessment, described below.

Based on the occupational physician's prognosis, the employer and employee together draft a vocational rehabilitation plan that specifies an objective of either resuming the current job or starting a different job, under current or accommodated conditions. A schedule is set for plan reevaluations. The rehabilitation plan has to be established by the 8^th week of sickness and is binding on both parties.

After 87 weeks of sickness benefits, the employee receives a disability insurance application from program administrators. The application form must be completed, submitted before the 92^nd week of sickness, and accompanied by the rehabilitation plan and an assessment of why the plan did not lead to reemployment.

At the end of the 2-year waiting period (with sickness benefits), individuals who are partially or fully incapable of working may claim a long-term disability benefit. In processing the claim, a multidisciplinary team comprising a case manager, a social insurance physician, and a labor market expert assesses the medically caused functional limitations along with the claimant's earnings history to determine the degree of disablement.

The physician consults the previously assembled medical documentation, interviews the claimant, and may conduct a physical examination or other tests and contact previous medical assessors. For claimants with severe impairments and little or no chance of recovery, the physician can find full disability on medical grounds. For other claimants, the physician consults a standardized List of Functional Abilities (LFA) to determine functional capacity. The list contains 106 items arranged in six categories: personal functioning, social functioning, adjusting to the physical environment, dynamic movements, static posture, and working hours (Schellart and others 2011).

With the aid of a computer-assisted algorithm, a labor market expert uses the physician's LFA entries to determine the extent to which the claimant's residual functional abilities match the demands of various jobs, as well as the income the claimant could earn in those jobs. The expert calculates the degree of disability as the difference, in percent, between the claimant's predisability earnings and residual current earning capacity. The latter is determined by matching the claimant's functional abilities to the work demands outlined in a set of 7,000 heterogeneous regular job functions using the computerized Claim Assessment and Monitoring System (CAMS) (Broersen and others 2012). The task demands of jobs on file in the CAMS are taken from on-site observations by specialized labor market experts, with scheduled updates. The CAMS includes a list of jobs that corresponds with occupational classifications used by the Dutch national statistics agency.³⁸ The classifications distinguish occupations by educational requirements stratified into five levels of attainment: elementary, low, medium, high, and academic. The database of potential job descriptions in the CAMS reflects the Dutch labor market and the mental and physical capacities required to perform those tasks. Other typical characteristics of jobs recorded in the CAMS include wage levels, specific job tasks and required skills, and number of hours worked per day.

If the labor expert finds fewer than three suitable job descriptions for the claimant, the applicant is awarded a full disability benefit. If three or more suitable jobs are found, the wage of the job with the second highest earnings level serves as the claimant's earning capacity. The difference between residual earning capacity and predisability earnings is converted to a percentage of predisability earnings to indicate income loss. A result of 80 percent to 100 percent corresponds with full disability and a result of 35 percent to 79 percent represents a partial disability. In using the CAMS list of jobs to assess residual earning capacity, the labor expert may account for VFs such as age and Dutch language proficiency. Whether there are any vacancies among identified jobs is irrelevant.

Unless the physician diagnosed the claimant with either full disability or no disability in the initial stage, the case manager reviews the findings of the physician and the labor expert and either accepts or denies the application for disability benefits. IVA beneficiaries convert to the old-age pension upon reaching retirement age.

Role of VFs

A labor market expert may consider age when consulting the CAMS list of occupational classifications to determine residual earning capacity. Additionally, beneficiaries who are younger than 45 must undergo eligibility reassessments at regular intervals. Education is a central factor of the determination process; the CAMS occupational classifications are stratified in part by educational requirements, which are identified at one of five levels of attainment. The CAMS listings also account for knowledge that a worker would have acquired from prior work experience.

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Norway

Under Norway's National Insurance Scheme (NIS), insured individuals aged 18 to 67 whose work capacity is permanently reduced by at least 50 percent because of illness, injury, or disability are entitled to a disability pension (OECD 2013b). The NIS is administered by the Labour and Welfare Administration, known by the acronym NAV.³⁹ The discussion below focuses on full-time employees; however, the NIS also applies to many self-employed and part-time workers.

To qualify for NIS benefits, claimants generally must have at least 3 years of coverage at the time of application (SSA 2016c). The disability pension amount depends on the number of years of coverage (counted from age 16). A claimant typically must wait 1 year before being eligible to receive a disability pension benefit, during which time the worker is entitled to a sickness benefit that is paid partly by the employer and partly by the NIS. After 1 year of sickness benefits, the individual can apply for a work assessment allowance, which may provide payments for a period of up to several years (Støve and others 2015). The allowance is not granted automatically; it must be requested. The work assessment addresses the possibility of returning to work. If return to work is impossible, NAV grants a full permanent disability pension. If return to work is deemed possible, and work earnings might increase, NAV may grant a partial disability pension. During the assessment period, workers may receive an allowance that provides vocational rehabilitation, medical rehabilitation, and temporary disability benefits. The vocational and medical benefits are available to workers with a confirmed medical diagnosis, a reduction in work capacity of at least 50 percent, and the possibility of retaining employment (OECD 2013b; NAV 2016).

A disability benefit consists of a basic flat-rate portion and an income-tested portion; for low earners, it includes an additional income-tested supplement. The minimum benefit is based on length of residency and is independent of earnings history. It is calculated as a fixed multiple of the annually adjusted base amount. The total-benefit calculation considers the reduction in earning capacity: a full benefit is awarded for an earning-capacity reduction of 100 percent, while reductions in earning capacity of 50 percent to 95 percent result in proportional partial benefits (SSA 2016c).

Before filing a disability application, an employee receives a sickness allowance for as long as 260 workdays (52 weeks).⁴⁰ The employer pays the allowance for the first 16 days; thereafter, NIS pays the benefit (OECD 2013b). Workers are encouraged to resume work during sick leave—both to retain contact with the workplace and to test their capacity to perform regular tasks. Most disability pension claimants have experienced one or more periods of sick-leave absence and the associated rehabilitation services (Boer, Brenninkmeijer, and Zuidam 2004).

Before the end of the 4^th week of sick leave, the claimant and the employer develop a sick leave/part-time work plan, which the claimant's physician uses as the basis for a follow-up recovery plan. If there are medical causes for a 100 percent loss of work capacity, the worker's physician must produce a detailed certificate documenting the cause(s) before the end of the 8^th week of sickness-related absence. If the sickness causes partial work limitations and the employer can provide accommodations, the employee is obliged to work part-time or in another (modified) job. The claimant's treating doctor informs NAV of ongoing treatment, plans for further treatment, and possible rehabilitation measures. Employers are required to take steps to minimize long-term absence during illness, including changing the employee's work hours, processes, and assignments.

After 52 weeks of sick leave, a worker can apply for a disability pension or a work assessment allowance (described above) with NAV. The application requires an assessment from the treating physician describing the claimant's health, diagnosis, and any treatment undergone. The NAV administrative officer reviews the application, gathers relevant information (including consultation with the NAV advisory physician if necessary), and prepares the case (OECD 2014b).

Role of VFs

The NAV review includes a work capacity assessment (which is a preliminary step toward the work assessment allowance rather than one of its components, as its name might suggest). Claimants must already have attempted medical and vocational rehabilitation measures. Those efforts (among other topics) are outlined in a self-assessment that the claimant submits to initiate the work capacity assessment. The NAV official uses the assessment to develop an activity plan that identifies any needed rehabilitation measures and underlies the benefit determination. When assessing work capacity and appropriate vocational measures, NAV considers the claimant's age, functional capacity, education, work experience, and job opportunities. For example, “high age (over 55) can influence the decision about granting a disability pension, if the person is viewed as difficult to reassign to alternative employment” (Boer, Brenninkmeijer, and Zuidam 2004). However, OECD (2013b) reports that official eligibility criteria for disability benefits are not strictly followed.⁴¹ In particular, nonmedical factors such as social background, socioeconomic status, employment opportunities, and geographic location may be important.

Claimants who are granted a work assessment allowance must participate in various initiatives to strengthen their working capacity and show evidence of independent efforts to improve their capacity. The initiatives are documented in an activity plan developed by the allowance recipient in coordination with NAV. If the claimant fails to provide a valid reason for not participating in these initiatives, the allowance may be withdrawn.

The allowance may be paid for up to 4 years (or longer for special exceptions). During the payment period, the claimant must contact NAV every 2 weeks and describe the rehabilitation activities or other steps taken. If rehabilitation measures do not improve work functioning—that is, work capacity remains less than 50 percent and is deemed permanent—then a disability benefit may be granted.

The NAV administrative officer determines whether the claimant qualifies for a disability pension or a work assessment allowance. In assessing the person's vocational capability, the NAV officer considers the claimant's ability to perform any job, rather than the more restrictive criterion of being able to return to his or her own job. In certain cases (terminal or compound impairments, according to a standardized medical listing), NAV may decide that further testing of work capacity and employment prospects is unnecessary. NAV may refer some claimants to private or other non-NAV vocational rehabilitation institutions. However, health care professionals can provide medical documentation to NAV for persons with serious impairments if they believe that vocational rehabilitation is not possible. If vocational rehabilitation is deemed unnecessary, the claimant is referred back to NAV for a final decision on the disability pension.

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Sweden

The Swedish Social Insurance Agency (SIA) administers sickness benefit and disability benefit programs. At the initial stage of a work absence caused by illness, injury, or disability, an employee aged 16 or older with work earnings exceeding a modest threshold can claim a cash sickness benefit (sjukpenning).⁴² The benefit begins on the second day of the reported absence. Employers pay the benefits for days 2 through 14; SIA pays them thereafter. SIA pays all benefits for the involuntarily unemployed. Sickness benefits are capped at 1 year, with occasional exceptions in special cases. If the absence reaches 180 days, SIA assesses the beneficiary's work capability. Sickness benefits continue only if the worker is deemed presently unable to perform any work.

On the expiration of the sickness benefit, a claimant with a permanent impairment (expected to last at least 1 year) is assessed for eligibility for disability benefits, which are funded by employer contributions. Workers with an impairment-related reduction of work capacity of 25 percent or more may qualify for one of two disability benefit programs, depending on the claimant's age. Workers aged 19–29 are eligible for activity compensation (aktivitetsersättning), which is a temporary benefit intended to retain and reinforce young workers' connection to the labor market. Workers aged 30–64 are eligible for the long-term sjukersättning disability benefit—if necessary, until age 65 and conversion to retirement benefits (Kautto and Bach-Othman 2010). The purpose of providing a separate activity compensation program for younger workers is to furnish rehabilitation and other services that might improve functional capability and enable a return to work among those workers most likely to do so (ISF 2013).

SIA evaluates the claimant's work capacity against all work available in the labor market, including wage-subsidized employment targeted to people with disabilities. SIA subsequently reassesses a disability beneficiary's work capacity every 3 years. An administrative officer obtains medical documentation and other supporting material, as needed, to demonstrate a linkage between the claimant's diagnosis, disability, and activity limitation. Typically, SIA also considers the claimant's working and social conditions. The claimant's eligibility for a disability benefit is determined by a specially appointed adjudicator who follows uniform rules and processes (ISF 2013).

Disability benefits may be paid either as an earnings-related pension benefit (requiring at least 1 year of covered earnings) or as a guaranteed pension benefit (requiring at least 3 years of coverage and little or no income from the earnings-related pension).⁴³ A “full benefit” reflects a fixed percentage of the insured worker's future annual income (projected on the basis of the 3 highest-income years in a given period immediately before the year of the claim) for the earnings-related pension and a flat benefit amount (adjusted for age and years of coverage) for the guaranteed pension (SSA 2016c). Partially disabled beneficiaries receive three-quarters, one-half, or one-quarter of the full benefit amount, depending on the extent of reduced work capacity.⁴⁴ After 1 year of receiving either activity compensation or the long-term disability benefit, the beneficiary may attempt to work without losing entitlement to the benefit.⁴⁵

Recent reforms have sought to reduce sickness-related work absence and reliance on disability benefits. In 2008, the government introduced a series of reforms with the goals of strengthening incentives for disabled individuals to work and improving their opportunities to do so (OECD 2009). One major policy reform was the “rehabilitation chain,” which established a new timeline for providing rehabilitation services for the sickness benefit program; fixed time limits now applied, within which work capacity had to be assessed and sickness benefits were reduced for those choosing not to return to work (Hartmann 2011). Additionally, applications for sickness benefits and disability benefits now share a standardized screening and assessment process and are reviewed by the same officers (government vocational and rehabilitation practitioners) who administer the programs to promote workforce reintegration for the claimant before awarding benefits. Workforce reentry efforts are the focus of the sickness benefit period, which is capped at 1 year. After 3, 6, and 12 months of sickness benefits, an administrator evaluates the beneficiary's capacity to work in any job. These evaluations thereby provide rehabilitation and other supports for workers relatively shortly after impairment onset (Burkhauser and others 2014). The employer of a worker whose evaluation indicates residual work capacity is responsible for developing a rehabilitation plan with the employee, securing government approval of the plan, and tracking its progress and results. Employers must also track and report overall absence data to the national statistical agency (IBIS Advisors 2017).

Role of VFs

Age is the determining factor for whether a Swedish disability benefit applicant is eligible for one compensation plan or the other. Disability benefits can be granted without a work capacity assessment to applicants who have been prevented by disability from completing compulsory secondary education. Work experience is not directly considered in the determination process, given that work capacity is assessed against all work available in the labor market rather than the claimant's previous job. Sweden also provides subsidized employment arrangements for workers with disabilities. Such arrangements are not necessarily linked to work experience.

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Switzerland

The Swiss disability benefit system takes the form of three component programs or “pillars.” The first pillar, public invalidity insurance, serves all Swiss residents and workers; coverage is mandatory for all persons of working age, including the self-employed and unemployed. The second pillar is an occupational pension program that covers all employees with earnings exceeding an annually adjusted threshold; coverage is mandatory for affected employees and their employers, voluntary for the self-employed, and available (with restrictions) to the unemployed. The third pillar, a supplementary benefit providing means-tested payments to individuals with low income and assets, is similar to the U.S. Supplemental Security Income program. Benefit levels for the three programs depend variously on earnings and payroll contribution histories, number of dependents, and other factors. Invalidity and occupational pension benefits replace 60–80 percent of covered net earnings (Bütler and others 2014). The invalidity insurance program is managed by the 26 cantons (administrative jurisdictions similar to U.S. states) under Federal Social Insurance Office (FSIO) oversight, and the occupational insurance program is managed by employer-provided private pension funds (for which the employer's premiums are experience-rated). Both programs operate under similar rules.

Because a partial disability benefit is available to workers who lose less than 100 percent of their earning capacity, many beneficiaries work at least part-time. The benefit amount depends on the degree of impairment, measured as the estimated earnings lost because of disability. Beneficiaries with a 40–49 percent degree of disability receive a quarter pension, those with a 50–59 percent degree of disability receive a half pension, those with a 60–69 percent degree of disability receive a three-quarter pension, and those with a disability degree of 70 percent or higher receive a full pension (Bütler and others 2014).

Employers are required by law to pay benefits equal to full regular pay to employees who cannot work because of sickness or impairment for at least the first 3 weeks of absence; the benefit period is extended for workers with longer tenure. However, the employer's legal responsibility does not include sickness management or providing supports to employees who return to work after a long sickness absence. Occupational disability benefits may be reduced if those benefits (plus other income and benefits) exceed 90 percent of the earnings lost because of disability (OECD 2014a).

Invalidity program claimants who are (or appear likely to become) disabled are entitled to rehabilitation services regardless of whether they were employed prior to disability onset. If the canton disability insurance office determines that a claimant's work capacity can be maintained or improved, it can require rehabilitation services (FSIO 2018a). A disability pension can be awarded if, in the administrator's judgment, “the income which the person could have earned if he/she were not disabled is compared to the income which he/she could earn exercising the employment which could reasonably be required in a balanced labor market, after completion of treatments and rehabilitation measures” (FSIO 2018b). Claimants must actively participate in work reintegration efforts; for example, by engaging job placement services. They are subject to sanctions for noncompliance. Conversely, positive reinforcements include extending disability benefits through a 6-month trial work period for those who find employment. Similarly, beneficiaries who agree to leave the rolls to search for jobs are entitled to employment counseling and transition benefits for as long as 3 years. Those who find work are monitored and reassessed for further work capacity decline (and reinstatement of disability benefits) after reemployment.

The medical evidence for a disability benefit claim originates with a general practitioner, who issues a medical certificate in the early stages of the illness or disablement. A 360-day period of disability-related work absence precedes any disability pension payments and, in most cases, permanent disability is not determined until after 2 years—the period for sickness benefit payment if the employer has entered into a contract for such coverage with a private insurance company. During a period of vocational professional rehabilitation, which may last 3 years or longer, a transitional benefit is paid. Under the occupational pension program, the payment amount relevant to a specific degree of disability begins with the expiration of the waiting period, as specified in the labor contract.⁴⁶

Under public invalidity insurance, claimants undergo a medical examination to determine the impairment's damage to their health and effect on their activities. Regional medical services—each employing approximately 300 physicians—assess these medical reports and appraisals and may also conduct their own medical examinations. The regional medical services examine and sometimes supplement the medical files of the canton offices. Regional medical service officials decide whether a claimant meets the medical eligibility criteria, particularly in relation to the earning incapacity for a pension claimant, suitability for professional rehabilitation services, and eligibility for occupational supports. Benefit decisions are made by the canton officers.

Role of VFs

Although age and education are not considered in the Swiss disability determination process, work experience plays a central role. To decide eligibility for and the payment amount of the first-pillar invalidity benefit, canton officials estimate two levels of hypothetical earnings: (1) the amount the claimant could earn if not disabled and (2) the amount she or he could earn after receiving vocational rehabilitation (or other services) in any job one could reasonably expect in the labor market. The former is based on predisability earnings and the latter is based on presumed postrehabilitation earnings. For a claimant deemed to have residual work capacity, the canton caseworker calculates potential earnings based on the assumed work capacity using official wage indices.

Sources

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United Kingdom

The United Kingdom operates a Statutory Sick Pay (SSP) program to provide temporary benefits for workers facing short-term work absence and an Employment and Support Allowance (ESA) benefit for workers facing potential long-term work absence because of illness, injury, or disability. SSP is funded and administered by employers and ESA is administered by a government agency called Jobcentre Plus.

ESA provides two kinds of benefits. Contributory ESA provides a flat-rate benefit to claimants who have met a threshold for national insurance contributions. Income-related ESA provides a means-tested benefit for claimants regardless of their insurance contribution history. An individual may qualify for either benefit or for both. Contributory ESA payments are capped at 12 months for most beneficiaries. There is no limit on the period for income-related ESA. ESA claimants must be aged 16–64 and must either have exhausted the 28-week limit on SSP benefits or have been unemployed when the disabling condition began.

The United Kingdom also provides noncontributory, nonmeans-tested benefits to help individuals meet the extra costs of living with a long-term disability, in the form of Personal Independence Payments (for persons of working age) or the Attendance Allowance (for those of State Pension—that is, retirement—age).

The ESA process begins with the claimant answering a questionnaire covering specific capabilities for work-related activity. The claimant submits the completed questionnaire (and, in most cases, a medical certificate) to a Department for Work and Pensions (DWP) adjudicator, who typically refers the claim to a privately contracted registered doctor, nurse, or other health care professional to conduct a face-to-face assessment with the claimant. On the basis of this assessment and medical evidence from the claimant's treating doctor, the DWP adjudicator determines the claimant's benefit eligibility. A claimant who is found “fit for work” or otherwise ineligible can apply for unemployment benefits.

A work capability assessment (WCA), which may include the face-to-face assessment noted above, occurs within 13 weeks of the ESA claim.⁴⁷ While awaiting the assessment outcome, claimants receive a basic benefit equal in value to the unemployment benefit. The WCA determination places the claimant into one of two categories: a support group—which does not require the claimant to take part in any back-to-work activity—or a work-related activity group. Support group members can receive income-related ESA payments indefinitely. Members of the latter group can receive contributory ESA benefits for up to 365 days. The WCA does not apply for terminally ill claimants or those who are reapplying for ESA within 12 weeks of an earlier claim (and who already completed the assessment phase in that claim).

The WCA process was implemented in 2008 but from the outset, doctors, patients, charitable groups, and the DWP itself have aired concerns related to access, delays, accuracy, and other matters. For example, in 2011, the DWP required reassessments for all individuals receiving incapacity benefits, the ESA's predecessor program. Those reassessments were scheduled to conclude by April 2014; however, delays prevented their completion (Pring 2014).⁴⁸

Role of VFs

The WCA emphasizes the functional effect of the claimant's health condition rather than any specific VFs. Claimants are assessed against a number of functional descriptors addressing both physical and mental health—for example, whether the claimant has mobility over a set distance or can learn and initiate various tasks. Thus, two individuals whose condition affects them in the same way should receive the same determination, regardless of (for example) age.

More specifically, the WCA indicates whether the claimant's capacity either for work or for work-related activity is limited. These capacities are assessed with a point-based system using itemized functional descriptors indicating tasks of varying levels of difficulty with corresponding point values of 0 to 15. Limited capability for work is assessed first. For this test, physical descriptors are grouped into 10 types of activity: mobility; standing and sitting; reaching; picking up and moving things; manual dexterity; making oneself understood; understanding communication; navigating and maintaining safety; controlling the bowel or bladder; and maintaining consciousness. Mental, cognitive, and intellectual descriptors comprise seven types of activity: learning tasks, being aware of everyday hazards, initiating and completing personal action, coping with change, getting about, engaging socially, and behaving appropriately with other people. With a score of 15 points in any one activity, or any combination of points totaling 15 or more, the claimant passes the test and retains ESA eligibility. A claimant who does not accrue at least 15 points may challenge the decision or file a Jobseeker's Allowance (unemployment insurance) claim instead (DWP 2016b).

The second test, which assesses limited capability for work-related activity, determines whether the claimant is placed in the support group or the work-related activity group. It also determines both the ESA benefit amount and the requirements for retaining the benefit. This test uses descriptors for each of 16 types of activities addressing physical and mental functions. These descriptors are slight variants of the 17 descriptors used in the first test and they similarly correspond with point values ranging from 0 to 15. A claimant who is found to be incapable of work-related activity in at least one of these functions is placed in the support group.

Claimants are asked about their work experience in the face-to-face assessment; however, that information is not used to determine ESA eligibility. It is used instead as part of the evaluation of former work tasks that the claimant no longer can do. The WCA functional descriptors are designed to reflect a generic modern workplace and to cover activities that would make up most (typically low-level) jobs.⁴⁹

Sources

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Findings

This section summarizes the disability program characteristics shared by our 11 sample countries. It also reviews common approaches to assessing functional capacity and using VFs in those assessments. The review encompasses long-term, short-term, temporary, and partial disability programs.

Disability Program Characteristics

Table 2 briefly summarizes each country's disability program and its claim processes. Some countries operate multiple disability programs (Finland, Ireland, Sweden, Switzerland, and the United Kingdom). Although disability programs typically feature a contributory element (program financing and claimant eligibility depend on participant contributions, sometimes requiring the employer to ensure compliance), some programs are noncontributory and financed from general revenue (Australia, Ireland) and some are means-tested (Australia, Denmark, Finland, Ireland, Norway, Switzerland, and the United Kingdom). Of the latter, three (Denmark, Finland, and Norway) provide universal coverage with a residency requirement. Years of service (contributory periods) affect eligibility in Canada, Ireland, Norway, Switzerland, and the United States. Programs in some countries (Australia, Canada, Denmark, and the United States) do not have partial-disability coverage, but many of them link to or incorporate short-term sickness benefit programs lasting up to 1 year or longer. In countries with multiple disability programs, requirements for disability reassessment can vary between the programs (the Netherlands and Sweden). Sweden operates distinct programs for two target age groups. Some programs permit part-time work for beneficiaries (Australia, Finland, Norway, Sweden, Switzerland, and the United States), and many encourage vocational rehabilitation (Denmark, the Netherlands, Norway, Switzerland, the United Kingdom, and the United States).⁵⁰ Finally, employer involvement in disability program rules and processes differs; for instance, involvement may be either mandated or incentivized. In Finland, the Netherlands, and Switzerland, experience rating affects the level of contributions paid by the employer.

Functional Capacity

Table 3 summarizes how the 11 countries in our sample define and assess concepts related to functional capacity lost (or retained) by disability benefit claimants. Although disability determination processes differ, most countries require their administering agencies to calculate a quantifiable reduction in ability (or a residual capacity) to perform work for pay. Rating systems may involve some type of a point system (Australia and the United Kingdom) or link to one or more items on a comprehensive medical listing (the Netherlands and the United States) to determine either that a particular diagnosis is relevant or that a quantified level of residual capacity remains. In Australia, an applicant's functional work limitations are assessed in terms of effects on body systems rather than of a specific diagnosis. In the United Kingdom, a work capability assessment uses a point system for each of a series of functional descriptors to quantify a level of limitation both for work and for work-related activity.

To qualify for disability benefits, a U.S. claimant must be unable to engage in substantial gainful activity because of a medically determinable physical or mental impairment(s) that is expected to result in death, or that has lasted or is expected to last for a continuous period of at least 12 months. Among our study countries, only Canada and Ireland use a similarly restrictive definition of disability. For a claimant to qualify for a full benefit, some countries do not require an inability to perform any job in the national economy. Likewise, some countries do not require total work incapacity; for example, Denmark and Norway allow benefits for workers with a 50 percent incapacity rating, as do Finland at 60 percent, Switzerland at 70 percent, and the Netherlands at 80 percent. Programs that cover partial impairment require functional capacity to be quantified, usually on a percentage basis. In Finland, a full earnings-related disability pension may be granted to claimants with an assessed loss of working capacity of at least 60 percent (once they have exhausted the sickness allowance benefit) and a partial disability pension of half the insured's potential full benefit may be granted with an assessed loss of working capacity of 40–59 percent (SSA 2016c).

In 2001, all 191 members of the World Health Organization endorsed the International Classification of Functioning, Disability and Health (ICF) as the uniform international standard for measuring health status and disability at both the individual and aggregate levels. The ICF treats functioning as a dynamic interaction between a person's health condition, environmental factors, and personal factors (World Health Organization 2013). Despite broad agreement with the ICF framework, few countries have adopted its use in their disability determination processes.

Anner, Kunz, and Boer (2014) surveyed senior medical advisors of social insurance institutions in 15 European countries (Finland, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom, and nine countries not included in our own survey) and asked them “Do medical examiners use an instrument based on the ICF classification to depict work capacity?” Although the respondents in each country reported that they are required to report on work capacity and prognosis, only Sweden has compulsory guidelines for the content of the medical reports in a disability evaluation that are explicitly based on ICF categories. The core set of Swedish activity categories includes watching, listening, communicating, changing basic body position, maintaining body position, carrying, moving, handling objects, and so forth. Although the British and Dutch report-form guides were drafted before the ICF document was published, they contain comparable categories (Geiger and others 2017; Anner and others 2012).

Although the United States and the Netherlands both have a multistep evaluation process that is not based on the ICF framework, they follow the basic model of determining the interaction between a person's health condition and environmental factors, as well as whether the claimant can perform a job in the national economy with her or his assessed residual functional capacity (RFC).

U.S. adjudicators determine if an individual's impairment(s) “meet or medically equal” criteria included in SSA's Listing of Impairments. Although the listings include some functional criteria, the majority of the listings are impairment-specific. When the adjudicator determines that an individual's impairment does not meet or medically equal the description contained in the listings, the claimant's physical and/or mental RFC must be assessed. If the claimant's RFC no longer enables him or her to perform past relevant work (any job held in the prior 15 years), adjudicators use the RFC to determine whether the individual can work in any other job. Capability to do other work is determined by considering the interaction of RFC with VFs—age, education, and work experience—to indicate vocational adaptability. For this determination, the adjudicator may refer to a set of tables called the medical-vocational guidelines (sometimes known as the vocational grid).

Similarly, in the Netherlands, a social insurance physician assesses impairments and functional capacities. For Dutch claimants with severe impairments and little or no chance of recovery, the physician can assess full disability on medical grounds. For other claimants, the functional capacity for work is determined with reference to a standardized List of Functional Abilities, which is based on the ICF. It consists of 106 factors divided into six categories: personal functioning, social functioning, adjusting to the physical environment, dynamic movements, static posture, and working hours. A labor expert uses the physician's report and a computer-assisted algorithm to determine the extent to which the claimant's residual functional abilities match the work demands of various jobs and the income the claimant could earn in these jobs. The expert calculates the degree of disability as the difference between the claimant's predisability earnings and the potential postrehabilitation earnings from a job that could be performed given her or his RFC. The labor expert makes this determination by matching the claimant's functional abilities with work demands outlined in a set of 7,000 heterogeneous regular job functions, with the aid of the automated Claim Assessment and Monitoring System.

In Denmark and Norway, the initial purpose of assessing functional capacity is to determine if an individual can participate in vocational rehabilitation or remain in the workforce, rather than to determine whether she or he immediately qualifies for a disability benefit. In Denmark, jurisdictional case managers develop a human-resource profile for the claimant after 8 weeks of sickness benefit receipt or upon application for disability benefits. The profile is used in making decisions on disability benefit eligibility and amount, as well as on vocational rehabilitation and accommodative flex job requirements. Following a medical assessment, case managers assess work capacity according to a standardized 12-point methodology, including functional areas such as social competence, learning capacity, and adaptability. The methodology focuses on the claimant's resource capacity and its potential development. The decision to award disability benefits depends on the functional capacity of the claimant in relation to the labor market, not necessarily on the diagnosis itself.

Similarly, one of the two outcomes of Australia's comprehensive job capacity assessment (JCA) is the claimant's referral to employment support services. The other JCA outcome is referral to a disability medical assessment and continuation of the disability determination process.

In several of the countries we surveyed, government health experts conduct formal assessments to determine an individual's functional capacity. In Canada, specially trained registered nurses have extensive knowledge of disability program legislation, regulations, policies, and procedures. As medical adjudicators, these nurses decide the disability benefit claims. In Ireland, an administrator reviews claims for the various programs with an assessment of medical evidence and/or a direct medical examination. The claimant's treating physician submits the initial certificate of incapacity by providing a medical diagnosis or description of symptoms. Medical assessors then offer an independent opinion on loss of functional capacity. In the United Kingdom, pension program adjudicators may refer the claimant to a face-to-face assessment with a registered doctor, nurse, or physiotherapist who works for a private health contractor as part of the determination process.

Role of VFs

Table 3 also summarizes whether—and how—each of the 11 countries we study uses VFs in the disability determination process. We discuss age, education, and work experience individually below. For each VF, the discussion highlights U.S. rules and policies and notes significant similarities and contrasts with the programs in the other surveyed countries.

Age

SSA considers a claimant's age in assessing his or her ability to adapt to and perform other work. An age of 55 or older, especially in combination with a severe impairment and limited work experience, is considered a limiting factor in one's ability to adjust to other work.

In other countries in our sample, age is generally considered a “soft” criterion; if used, it usually complements other VFs in the assessment process. Some countries may informally consider age for claimants nearing retirement but do not include age as an explicit factor in their disability assessment process (Australia, Denmark, Ireland, the Netherlands, Switzerland, and the United Kingdom). In Finland and Norway, age is specifically considered in the assessment process, indicating that vocational or rehabilitative measures are deemed less appropriate for older claimants, or that alternative employment options may prove difficult to find and retain.⁵¹

Age is a definitive factor in Sweden, where distinct disability programs provide either a temporary benefit (for beneficiaries aged 19–29) or a long-term benefit (for those aged 30–64). Providing temporary benefits to younger beneficiaries emphasizes vocational rehabilitation to improve functional capacity for the age cohorts most likely to respond to rehabilitative efforts and enter or return to the labor market.

In Australia, beneficiaries younger than 35 with an assessed work capacity of 8 or more hours per week must attend informative interviews and develop action plans designed to help them find and keep a job. In the Netherlands, disability reassessments are more frequent for beneficiaries younger than 45. Danish claimants younger than 40 must comply with stricter requirements than those for older claimants to become or remain eligible for disability benefits; they also must collaborate with case workers and receive social service supports designed to increase their chances to return to work.

Education

SSA considers a claimant's schooling and/or training in determining whether he or she can engage in substantial gainful activity in a job other than his or her relevant past work. SSA uses four broad categories of educational attainment to assess the level of job skills the claimant could fulfill.

Education is not considered during the disability determination process in Ireland, Switzerland, and the United Kingdom, but it plays a role—if an indirect one—in Australia, Canada, Denmark, Finland, the Netherlands, Norway, and Sweden. Similar to the United States, some countries consider formal schooling and/or training to be factors that may enable a claimant to handle the vocational requirements necessary to secure a job. In the Netherlands, a labor market expert can select jobs that the claimant is capable of doing by linking his or her education level and related factors (such as language competency) to the List of Functional Abilities that the insurance physician compiled during the disability assessment. In Denmark, education is one of 12 components that assessors use to evaluate work capacity. The chance of placing a Danish claimant in a subsidized flex job is enhanced with a higher level of education.

Although education is not considered in disability determinations there, Sweden encourages education by extending temporary disability benefits to individuals as young as 19 to provide income support that permits completion of formal secondary schooling. In addition, a “dormant benefit” provision allows up to 2 years of combined work and study.

Australia also does not directly consider education in the assessment based on their impairment tables, but can consider the impairment's effect on the ability to undertake mainstream educational, vocational, or on-the-job training (excluding programs designed specifically for people with physical, intellectual, or psychiatric impairments). Norway's process accounts for education to the extent that the available vocational or rehabilitative treatment and employment options are considered appropriate. In Canada, “education” is assumed to encompass work experience, and the more education a Canadian claimant has, the more likely that person will be judged as able to do some form of work. In Finland, disability benefit awards tend to be more likely for claimants aged 60 or older with low educational attainment and a long work history than for younger and more educated claimants with shorter work histories.

Work Experience

To one extent or another, all countries in this study consider work experience in their disability assessment processes. In considering a claimant's work experience (especially the capacity to perform other work), SSA considers skills obtained from all previous employment and the transferability of those skills given the individual's RFC. SSA defines transferability in this context as applying work skills that a claimant has demonstrated in past relevant skilled or semiskilled work to meet the requirements of other skilled or semiskilled work. A claimant whose acquired skills are deemed not transferable is considered capable of adjusting only to unskilled work (note that individuals are not expected to perform jobs more complex than their prior work). When determining whether previous work is relevant, SSA considers whether the claimant performed substantial gainful activity in the 15-year period before adjudication. Claimants who are judged to be able to perform their past relevant work or other work in the economy within the limits of their RFC are denied disability benefits.

Many countries apply a similar “transferability of skills” criterion without defining a specific necessary skill set. For example, in Denmark, Norway, and Switzerland, assessors can deny a claim by citing the availability of a “reasonable” or “suitable” job elsewhere. In Norway, a vocational capability assessment considers all jobs for which the claimant may be qualified. Thus, the eligibility criteria are based on the ability to perform an disability benefits ranges from the local (Australia) to the national (Canada, Sweden, and the United States).

In Canada, the medical adjudicator reviews a claimant's work history (including jobless periods) to decide whether that experience affects the claimant's capacity to pursue any occupation. The Danish work capacity assessment includes labor market experience, work-related preferences, and the importance of work to one's identity. Benefit awards are based on how the claimant functions with respect to the labor market and not necessarily on the impairment or diagnosis. In the United Kingdom, the work capability assessment process uses employee descriptors that reflect a generic workplace indicative of most low-level jobs—somewhat similar to the U.S. concept of unskilled work—to provide the context of a claimant whose acquired skills are deemed not transferable.⁵² In general, the United Kingdom disability determination process uses work history to indicate how the claimant's capacity for work has changed.⁵³

The availability of other work and the length of time out of the workforce may also be considered in the disability determination (Ireland, the Netherlands). For example, when the claimant has been out of work for more than 6 months in Ireland and there is no job open, or if the claimant was never employed, the assessor considers whether the person is capable of fulfilling a function in any of nine categories combining three levels of required effort and three levels of required skills, with occupational examples provided for each category.

In the Netherlands, a claimant and his or her employer together devise a plan for the worker's reintegration under former or accommodated work conditions. Prior work experience and RFC are considered in making the plan. Later, a labor market expert may analyze the beneficiary's RFC and corresponding employment possibilities with the help of a computer algorithm. As in the Netherlands, employers in Finland, Norway, and Sweden are involved at various (typically early) stages of the assessment. The Swiss system does not require employer involvement but it does emphasize early intervention.

Concluding Remarks

This comparative survey has shown that the use of VFs in the disability determination process varies widely in OECD countries. Unlike previous surveys, this study focuses specifically on the role played by VFs—age, education, and work experience—in processing disability claims. We also describe the interplay between VFs and functional capacity.

The U.S. disability programs differ from those in other countries in ways besides VF use. For example, most other countries operate sick-leave programs through which the claimant progresses, sometimes in a series of time-limited stages, before application for a long-term disability benefit is permitted. These stages may assign responsibilities to parties besides the claimant, including the employer, the treating physician, and government (or contract) officials. Further, some countries provide partial-disability benefits, for which claim determinations may use VFs to various extents.

The timing with which VFs are used also may differ across countries—perhaps early in the assessment process (for sickness benefits), or later (for long-term disability), or even throughout the entire process, from application to benefit receipt. Mandatory employer participation is common.

In the 11 countries we survey, age and education may not be used as explicit VFs in disability determination processes, but they are used selectively for program eligibility decisions or as mechanisms to restrict or relax eligibility requirements. All of the countries in our survey consider work experience at some point in the disability determination, but they use different methods of assessing how prior work experience or the transferability of skills affects an individual's eligibility for benefits (or a variety of compensatory services). In fact, individual VFs are rarely considered alone but are generally used in tandem with other factors at different stages in the disability determination processes. For example, VFs may play integral roles in each country's functional capacity assessments.

To briefly summarize our findings on each VF, we observe that:

Age is not used in the disability determination processes of most of the countries we survey. The use of age as an explicit factor in determining whether certain claimants are disabled (as in step 5 of the U.S. sequential evaluation process) is rare. However, age is considered in determining eligibility for certain sickness and partial- or long-term disability programs. In general, advancing age is thought to increase the likelihood of disablement, and therefore increase the claimant's chance to receive a benefit. Sweden uses age in determining program eligibility and Australia uses age in deciding the frequency of reassessment for disability benefit eligibility.

Education is generally not directly considered during disability determination. The United States is the most notable exception, directly considering education in step 5 of its sequential evaluation process. Likewise, Denmark and the Netherlands consider education in determining the claimant's ability to perform other work in the general economy. In the same way, formal schooling or training may suggest a claimant's ability to undertake available vocational or rehabilitative options or employment opportunities.

Work experience is considered in the disability determination processes in each of the surveyed countries. Work experience is a central factor in assessing a claimant's transferable skills, which in turn constitute a central component of the RFC assessment that drives many disability assessment procedures.