Interesting new Disability Insurance demonstration project

Social Security has awarded a contract to Abt Associates to run an experiment allowing disability insurance (DI) recipients to have higher earnings before their benefits are withdrawn. Currently DI beneficiaries can earn only $1,640 per month without risking their eligibility. The following draws from Abt's press release:

For many years, there has been concern about the low rate at which SSDI beneficiaries return to work. Although SSA encourages employment for workers with disabilities who receive these benefits, program rules that reduce benefits to zero after earnings reach the threshold of Substantial Gainful Activity (SGA) create a financial disincentive to employment. Congress mandated this study to test the effect of reducing the SSDI benefit by $1 for every $2 of countable earnings above the SGA threshold. In addition to offering this positive financial incentive, the demonstration will also test whether offering BOND participants enhanced counseling—to assist them in understanding the rules changes and taking advantage of them—will lead to higher earnings than only eliminating the "SGA cash cliff."

"We are pleased to have this opportunity to undertake a project of such significance for the Social Security Administration," said Katie Heintz, Division Vice President for Social and Economic Policy at Abt Associates. "We have a strong team in place to conduct and complete this important work."

The $121 million contract is for a period of nine years. Because of its complexity, it requires a diverse collection of skills and capabilities, including experience designing and executing large-scale random assignment impact studies, expertise in disability and employment policy, and ability to implement secure data systems and manage complex data collection. The project also involves designing a communications strategy, operating a call center, and providing training and technical assistance to local agencies.

After a pilot period to test important implementation procedures, the full demonstration is scheduled to be launched in April 2011 and will involve approximately 90,000 participants in ten large, randomly selected sites around the U.S. SSDI beneficiaries will be randomly assigned to treatment and control groups for the purpose of testing the incentives. The results will be followed over the course of the nine-year period.

The Abt Associates team for this project includes: Mathematica Policy Research; Cherokee Information Services; HTA Technology; LionBridge Technologies, Inc.; Convergys; the Virginia Commonwealth University Rehabilitation Research and Training Center; Palladian Partners; the Center for Essential Management Services; MEF associates; Institute for Public & International Affairs (University of Utah); Proia Associates; TransCen; and Rick deFriesse Consulting.

In theory you should get both more work and more DI applicants, since the current earnings limit is presumably a disincentive for some folks to apply, but it will be interesting to see how things balance out. The US doesn't really allow for partial disability, so there are some DI beneficiaries who probably could work more but are prevented from doing so by program rules.