December 13, 2011
Jobless Benefits Delay Disability Filings
In New York, prosecutors recently charged 11 people with illegally collecting disability checks – some were caught playing tennis or golf or shoveling snow.
Boston’s mayor called “disappointing” a jury acquittal last summer of a hulky firefighter who was filmed posing during bodybuilding competitions – while on city disability.
Sensational news stories add to the stigma around people who collect disability for legitimate health reasons. New research on the Social Security Disability Insurance program provides insight into what really motivates people to file. There are two opposing ways to interpret these interesting findings, but more about that later.
Matt Rutledge, my colleague at the Center for Retirement Research, specifically researched disability filings by people who are unemployed in a new study for the Retirement Research Consortium. His work is particularly relevant at a time when the duration of joblessness has soared. Applications for disability typically increase in economic downturns, but they reached record highs in response to the Great Recession.
He found that when Congress grants extensions of unemployment insurance (UI) benefits, applications for Social Security Disability Insurance (SSDI) by the unemployed decline. He writes:
(J)obless individuals are significantly less likely to apply for disability benefits during the months their UI benefits are extended and significantly more likely to apply to SSDI in the month that UI is ultimately exhausted.
One way to interpret the results is that people stay on the UI dole as long as they can, and it’s certainly much easier to qualify for UI benefits than for disability. Indeed, Rutledge found that Social Security also denies fewer applications when UI is extended – that’s because the least healthy will still apply but others don’t apply, or they postpone.
For the unemployed, the hope is that they may still find employment. For those collecting private disability from their employers, the hope may be that they can one day return to health – and their old jobs. To borrow a cliché, UI extensions keep their hopes alive.
Applying for disability is a major life decision: once someone goes on the rolls, most never go back to work. It seems that most people don’t give up that easily.