Trends in the

Social Security

and Supplemental

Security Income 

Disability

Programs

Social Security Administration

Offi ce of Policy

Offi ce of Research, Evaluation, and Statistics

500 E Street, SW, 8th Floor

Washington, DC 20254

SSA Publication No. 13-11831

Released: August 2006

Preface

The Social Security Disability Insurance program celebrates its 50th anniversary in 2006. As part of the 

Social Security Administration’s recognition of this milestone, the agency’s Offi ce of Policy compiled 

these Trends in the Social Security and Supplemental Security Income Disability Programs. This volume 

combines much of the information on SSA’s disability programs that is available in other publications. 

However, information from across decades of program data appears in a user-friendly format that is 

accessible to both the disability policy researcher and the interested private citizen. The topics covered 

are:

program cost and size;

entry into and exit from the disability programs;

population factors infl uencing program size;

changes in program policy infl uencing program size;

changes in incentives infl uencing program size; and

projected future course for SSA programs.

This publication was conceptualized and written by L. Scott Muller, Brett O’Hara, and John R. 

Kearney, all researchers in the Offi ce of Policy’s Offi ce of Research, Evaluation, and Statistics. Staff of the 

Offi ce’s Division of Information Resources edited the report and prepared the print and electronic versions 

for publication. This and other Offi ce of Policy reports on the Social Security and SSI disability programs 

are available on the Web at http://www.socialsecurity.gov/policy.

The authors wish to acknowledge others who helped make this publication possible. Eli Donkar, 

Bert Kestenbaum, Mary McKay, and Tim Zayatz of the Offi ce of the Chief Actuary provided fi nance data 

and supplied insight concerning their signifi cance. Tim Cliff, Dale Cox, and Barry Eigen of the Offi ce of 

Disability and Income Support Programs provided additional information about some of the program 

policy changes and assisted with explanations of how those changes may have affected the data series.

General questions about the publication should be directed to L. Scott Muller at 410-966-1798 or 

L.Scott.Muller@ssa.gov. For additional copies of the report, please e-mail op.publications@ssa.gov or call 

202-358-6274.

Linda Drazga Maxfi eld

Associate Commissioner

for Research, Evaluation, and Statistics

August 2006

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Notes

The Old-Age and Survivors Insurance (OASI) program provides benefi ts to retired workers and their 

dependent family members and to survivors of deceased workers. The Disability Insurance (DI) program 

provides benefi ts to disabled workers, their spouses, and children (whether or not disabled).

Benefi ts are paid from the OASI and DI trust funds. However, not all disabled benefi ciaries are paid from 

the DI trust fund. All disabled widow(er)s’ and most disabled adult children’s benefi ts are paid from the 

OASI trust fund. Disabled persons receiving disability benefi ts from either trust fund are referred to in this 

report as disabled Social Security benefi ciaries.

The Supplemental Security Income program provides monthly cash benefi ts to aged, disabled, and blind 

individuals who meet income and resource limits as well as the medical eligibility requirements. Benefi ts 

are paid to blind and disabled children under the age of 18 and adults aged 18 or older.

With respect to the SSI blind and disabled, unless otherwise specifi ed—

recipients are persons receiving federally administered payments

all payments are federal payments only, and

SSI blind and disabled adults include only persons aged 18-64.

With respect to the data contained herein, unless otherwise specifi ed—

all cost, award, and termination data are for calendar years, and

all counts of Social Security benefi ciaries, SSI recipients, and the insured population are as of 

December of the given year.

With respect to projections of the future of the programs, unless otherwise specifi ed—

all estimates were made by SSA’s Offi ce of the Chief Actuary (OCACT),

all estimates for the trust funds come from the 2005 Trustees Report,

all estimates for the SSI program come from OCACT’s 2005 annual report on the SSI program, 

and

all estimates are based on the Trustees’ intermediate assumptions.

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Contents

Contents

Overview and Background

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Social Security Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Supplemental Security Income for the Blind and Disabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Defi nition of Disability and the Determination Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Program Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

History of Major Program Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Sources of Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Program Cost and Size

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Social Security Disability

Total cost of benefi ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Number of benefi ciaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Number of disabled-worker benefi ciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Average cost per benefi ciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Benefi ciaries also receiving Supplemental Security Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Medicare for the Disabled

Total cost of benefi ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Number of benefi ciaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Average cost per benefi ciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

SSI for the Blind and Disabled

Total cost of payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Number of recipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Average cost per recipient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

Disabled SSI recipients also receiving Social Security disability benefi ts . . . . . . . . . . . . . . . . . . .27

Medicaid for the Disabled

Total cost of payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Number of recipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

Average cost per recipient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Benefi t Costs as a Percentage of GDP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

International Expenditures on Disability Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

Disability Programs and Self-Reported Disability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

International Prevalence of Disability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Contents

Contents (cont.)

vi ♦ Trends in the Social Security and SSI Disability Programs

Entry into and Exit from the Disability Programs

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

Entry and Exit by Disabled Workers

Number and rate of awards and terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

Entry and Exit by SSI Blind and Disabled Adults and Children

Number and rate of awards and terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

Entry by Disabled Workers

Number of awards, by sex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

Percentage distribution of awards, by age. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Percentage distribution of awards, by diagnostic group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

Entry by SSI Blind and Disabled Adults

Number of awards, by sex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46

Percentage distribution of awards, by age at fi rst receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

Percentage distribution of awards, by diagnostic group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

Entry by SSI Disabled Children

Number of awards, by sex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Percentage distribution of awards, by age. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

Percentage distribution of awards, by diagnostic group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Exit by Social Security Disabled Benefi ciaries

Number and rate of terminations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Exit by Disabled Workers

Number and rate of terminations, by reason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

Exit by SSI Blind and Disabled Adults and Children

Number and rate of terminations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57

Number, rate, and percentage distribution of terminations, by reason . . . . . . . . . . . . . . . . . . . . .59

Population Factors Infl uencing Program Size

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

Population Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66

Number of Workers Insured for Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67

Prevalence of Work Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

Disabled-Worker Incidence Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

SSI Blind and Disabled Incidence Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Contents (cont.)

Contents

Trends in the Social Security and SSI Disability Programs ♦ vii

Changes in Program Policy Infl uencing Program Size

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

Changes in Policy Infl uencing—

Disability awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

Disability awards for mental disorders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

Disability terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79

Disability terminations for return to work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

Changes in Incentives Infl uencing Program Size

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85

Changes in Prices and Wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86

Replacement Rates for Disabled Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88

Maximum SSI Payment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90

Changes in Substantial Gainful Activity Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91

Substantial Gainful Activity Level and Application Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

Unemployment Rate and Application and Incidence Rates for Disabled Workers. . . . . . . . . . . . . . .93

Unemployment Rate, SGA, and Application Rates for Disabled Workers. . . . . . . . . . . . . . . . . . . . . .95

Unemployment Rate and SSI Application and Incidence Rates for Adults (18–64). . . . . . . . . . . . . .96

Projected Future Course for SSA Disability Programs

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99

Growth in DI Benefi ciaries per Covered Worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100

Income and Costs of the DI Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101

Solvency of the DI Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102

Growth in the SSI Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104

Costs of the SSI Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105

Number of SSI Recipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106

Glossary and Bibliography

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111

OVERVIEW AND BACKGROUND

Overview and Background

Introduction

Social Security Disability

Medicare

Supplemental Security Income for

the Blind and Disabled

Medicaid

Defi nition of Disability and the Determination 

Process

Program Administration

History of Major Program Changes

Sources of Data

Overview and Background

Trends in the Social Security and SSI Disability Programs ♦ 3

Introduction

The Social Security Administration administers 

two of the largest disability programs in the 

United States, and perhaps the world: the Social 

Security Disability Insurance (DI) program and 

the Supplemental Security Income (SSI) disability 

program. In 2003, these programs combined 

paid more than $90 billion in cash benefi ts to 

nearly 11.2 million disabled persons (more than 

12.8 million persons including dependents of DI 

benefi ciaries).

1

 Both programs have grown substantially in cost and number of participants, although 

the level of growth has varied from time to time and 

both programs have had periods of contraction, 

mainly in the early 1980s.

The programs share a common defi nition 

of disability for adults: the inability to engage in 

substantial gainful activity based on a medically 

determinable impairment that is expected to last at 

least 12 months or result in death.

2

 Both programs 

also consider blindness when defi ning disability. 

The SSI children’s benefi t category has a different 

defi nition of disability. 

3

Other than the common defi nition, the 

programs differ in many respects. Social Security 

disability benefi ts are an earned right. Individuals 

must have worked in employment covered by 

Social Security for a specifi ed time to be insured 

for benefi ts. However, disabled adult children and 

disabled widow(er)s may qualify on the record of a 

parent or spouse. There is no means- or resourcetesting of Social Security benefi ts, although 

there are limitations on earned income in some 

situations. Social Security benefi ts are funded by 

a dedicated payroll tax paid by the worker and 

the worker’s employer and by taxes paid by a 

self-employed person. SSI benefi ts are intended to 

alleviate poverty and are means-tested. There is no 

insured status or prior-work requirement for SSI, 

and the program is funded from general revenues 

rather than from a dedicated tax.

1. Benefi ciary counts are as of December 2003 and include 

disabled widow(er)s and disabled adult children who are paid 

from the Old-Age and Survivors Insurance Trust Fund.

2. The SSI program for adults has a provision (1619a) that 

permits recipients whose earnings exceed the substantial 

gainful activity (SGA) level to remain in the program.

3. Disabled children, for SSI purposes, are children who are not 

engaging in substantial gainful activity and whose impairment, 

or combination of impairments, results in marked and severe 

functional limitations and is expected to last at least 12 months 

or result in death (42 U.S.C. 1382c(a)(3)(C)(i)).

The following sections briefl y describe the 

features of SSA’s disability programs and two other 

federal programs—Medicare and Medicaid—that 

provide health benefi ts to, among others, the 

disabled benefi ciaries of the Social Security and 

SSI programs.

Social Security Disability

The Social Security Disability Insurance program 

was enacted in 1956, more than two decades after 

the original Social Security Act. Before the cash 

benefi t program was instituted in 1956, a disability 

freeze provision had been in place for 1 year that 

protected only the disabled worker’s retirement 

benefi t. At inception, the DI program covered 

only workers aged 50 or older and disabled adult 

children whose disability began before the age of 

18. Dependents’ benefi ts were added in 1958, and 

the age 50 requirement was eliminated in 1960. In 

1967, disability benefi ts were added for disabled 

widow(er)s. In 1972, disabled adult children who 

were disabled after the age of 18, but before the 

age of 22, became eligible.

The program is funded by a payroll tax of 

7.65 percent of earnings (subject to a maximum) 

that applies to both the worker and the employer 

(15.3 percent total) and funds all Social Security 

programs and most of Medicare. 

4

 Self-employed 

individuals pay both portions, or 15.3 percent. The 

tax is allocated to separate trust funds: the employee and employer each contribute 0.9 percent to 

the Disability Insurance Trust Fund, 5.3 percent to 

the Old-Age and Survivors Insurance (OASI) Trust 

Fund, and 1.45 percent to the Hospital Insurance 

(HI) Trust Fund. The tax rate and the allocation of 

taxes to the trust funds have varied over time.

The benefi ts payable are calculated on 

the basis of the worker’s earnings from Social 

Security–covered employment, and there are 

requirements to establish insured status. The 

worker’s benefi t is based on a measure of lifetime 

predisability earnings: average indexed monthly 

earnings (AIME). There is a 5-month waiting period 

before benefi ts can start, and Medicare coverage 

is available after the worker has been entitled to 

disability benefi ts for 24 months. Benefi ts cease if 

the individual demonstrates the ability to engage 

in substantial gainful activity (SGA), medically 

improves, or dies. 

5

 At full retirement age (65 and 

4. Medicare is also funded, in part, from general revenue and 

other sources.

5. To be eligible for disability benefi ts, a person must be unable 

to engage in substantial gainful activity. A person who is earning 
Overview and Background

4 ♦ Trends in the Social Security and SSI Disability Programs

8 months in 2006), disability benefi ts are converted 

automatically to retirement benefi ts. There are 

work incentive provisions and access to vocational 

rehabilitation services to promote return to work, 

though few benefi ciaries leave the program by 

returning to work. In December 2004, the average 

monthly benefi t paid to a disabled worker was 

$880. Workers with a dependent spouse, children, 

or both had an average monthly benefi t of about 

$1,390.

Benefi ts may be paid to the disabled worker, 

to qualifi ed dependents of the worker, or to both 

on the basis of dependency or the disability of a 

dependent. Dependents’ benefi ts are generally 

equivalent to one-half of the worker’s benefi t; 

benefi ts for disabled widow(er)s and surviving 

disabled adult children are equivalent to 71.5 

percent and 75 percent, respectively, of the 

worker’s benefi t. The combined benefi t for the 

disabled worker and all dependents is subject to a 

maximum family benefi t amount, which ranges from 

100 percent to 150 percent of the worker’s benefi t. 

The following disability benefi ts are paid from the 

Social Security (OASI and DI) trust funds:

From the DI trust fund

—Worker’s benefi t (paid to the holder of the 

Social Security number on the basis of his or 

her disability)

—Spouse’s benefi t (paid to a spouse aged 62 

or older or who has an entitled child in his or 

her care who is under age 16 or disabled)

—Child’s benefi t (paid to a child under age 

18 (under 19 if a full-time student) who is a 

dependent of a disabled worker)

—Disabled adult child’s benefi t (paid to the 

child of a disabled worker)

From the OASI trust fund

—Disabled widow(er)’s benefi t (paid to a 

disabled widow(er) who is over age 50 and 

whose deceased spouse was an insured 

worker

—Disabled adult child’s benefi t (paid to the 

child of a retired or deceased worker)

Low-income Social Security disability benefi ciaries 

may concurrently collect Supplemental Security 

more than a certain monthly amount (net of impairment-related 

work expenses) is ordinarily considered to be engaging in SGA. 

The monthly SGA amount for 2006 is $1,450 for statutorily 

blind individuals and $860 for nonblind individuals. Both SGA 

amounts rise with increases in the national average wage index. ••

Income benefi ts if they meet certain income and 

resource requirements.

Medicare

Social Security benefi ciaries receiving benefi ts 

that are based on their own disability are eligible 

for Medicare benefi ts beginning in the 25th month 

of entitlement. Medicare was established in the 

1965 Amendments to the Social Security Act, 

providing medical benefi ts to complement Social 

Security benefi ts. When the amendments were 

implemented in 1966, most persons aged 65 or 

older were covered by Medicare. In 1972, legislation was passed extending Medicare benefi ts 

to disabled workers, beginning in 1973, after a 

24-month waiting period. Medicare is funded mainly 

through the HI portion of the Social Security tax 

(1.45 percent of payroll from the worker and the 

same from the employer); additional sources of 

funding include general revenues, premiums, and 

a portion of the taxes collected on Social Security 

benefi ts.

Until recently, Medicare had two parts: Part A 

(Hospital Insurance) and Part B (Supplementary 

Medical Insurance, or SMI). In 1997, a third part 

was added to Medicare, known as Medicare 

Advantage, or Part C, which offers benefi ciaries 

options for participating in private-sector health 

plans. In 2003, a fourth part, Part D, offering 

prescription drug coverage was added and was 

implemented in 2006. Hospital Insurance, which 

covers the cost of inpatient hospital care and 

is generally provided free to persons who are 

eligible for Medicare, is paid out of the HI trust 

fund. There are deductibles and copayments 

under HI. Supplementary Medical Insurance 

covers doctors and other services and requires a 

premium equivalent to 25 percent of the average 

expenditure for the aged for this coverage ($88.50 

per month in 2006) to be paid by the benefi ciary 

or on the benefi ciary’s behalf. Most of the balance 

comes from the Treasury Department in the form 

of general revenue contributions. The coverage 

and cost of Medicare Advantage varies by plan 

and receives funding from the HI and SMI trust 

funds and benefi ciary premiums. During 2005, 

temporary, or “transitional,” prescription coverage 

was offered through prescription discount cards. 

Part D prescription coverage with deductibles and 

copayments became effective on January 1, 2006. 

Benefi ciaries pay a premium that varies by income 

level. A subsidy benefi t for Part D is available to 

assist low-income benefi ciaries who meet certain 

income and resource requirements.
Overview and Background

Trends in the Social Security and SSI Disability Programs ♦ 5

Supplemental Security Income for

the Blind and Disabled

The Supplemental Security Income program is 

a means-tested, federally administered income 

assistance program that was enacted in 1972 

(Public Law [P.L.] 96-603) and began in 1974. 

The program provides monthly cash benefi ts to 

aged, blind, and disabled individuals who meet 

income and resources limits as well as the medical 

eligibility requirements. The SSI program replaced 

the state-administered Old-Age Assistance meanstested programs for individuals aged 65 or older. 

For the blind and disabled, it replaced the federally 

mandated programs of Aid to the Blind, which was 

established in the original 1935 Social Security Act, 

and Aid to the Permanently and Totally Disabled, 

which was established in the 1950 Amendments to 

the Social Security Act.

Under the earlier programs, federal matching 

funds were provided to the states to administer 

programs. The SSI program federalized the earlier 

state programs, although states can supplement 

benefi ts, and some states have been required 

to maintain state expenditures at levels in place 

before SSI. SSI was intended to provide a basic 

national income program for the elderly, blind, and 

disabled, with a uniform minimum benefi t level. By 

having the program operate under the auspices of 

the Social Security Administration, it was intended 

that the program be uniformly and fairly administered with the same approaches that are used in 

the Social Security Disability Insurance program. 

Unlike Social Security, the SSI program is funded 

by general revenues.

Benefi ts are payable only to blind or disabled 

individuals, not to their dependents. There are two 

types of SSI disability benefi ts:

Disabled child’s benefi t—paid to disabled children under the age of 18; and

Disabled adult’s benefi t—paid to disabled persons aged 18 or older.

There is no waiting period required to qualify 

for SSI cash benefi ts, and, in most states, Medicaid 

benefi ts are available to most SSI recipients, also 

without a waiting period. Benefi ts cease if the 

individual medically improves or dies. With a few 

exceptions, SSI payments are suspended if income 

or resources exceed levels established for eligibility. 

Since 1980, SSI recipients can work above the 

SGA level and remain eligible for reduced cash 

benefi ts and continuing Medicaid benefi ts. There ••

is no conversion to old-age benefi ts at the age of 

65, and persons receiving disability benefi ts remain 

as disability recipients. Unless otherwise noted, 

the charts for SSI adults in this book include only 

persons aged 18–64. The SSI program provides 

work incentives and access to vocational rehabilitation services to promote return to work, although 

few SSI recipients leave the program through work.

In 2006, the SSI benefi t paid to disabled 

persons (known as the federal benefi t rate) is 

$603 ($904 for an eligible couple). The benefi t is 

reduced for earned and unearned income and may 

be supplemented by the state. Disabled Social 

Security benefi ciaries who receive a low benefi t 

and have limited resources may also be eligible to 

receive a reduced SSI disability benefi t.

Medicaid

As mentioned above, most SSI disability recipients 

receive Medicaid coverage for their health

expenses. Medicaid was established in 1965 as 

a joint federal/state program to provide medical 

coverage to the needy. States administer the 

program and, within federal guidelines, establish 

their own eligibility standards, types and levels 

of services, and rates of payment. Since the 

establishment of the SSI program in 1974, most 

SSI recipients have been eligible for Medicaid 

benefi ts, although in some states SSI is not a 

specifi c eligibility category. However, most SSI 

recipients in those states qualify for Medicaid 

under another eligibility category. In some states, a 

Medicaid “buy-in” is available for certain categories 

of disabled individuals that allows them to enroll 

in Medicaid even though they would not otherwise 

qualify because their income and resources exceed 

established limits. States may require the individual 

to share the cost of Medicaid through the payment 

of a premium or other cost-sharing arrangements, 

although these cost-sharing arrangements are 

generally assessed on a sliding scale based on 

income. In addition, under section 1619b provisions, Medicaid coverage may continue indefi nitely 

for SSI recipients who work above the SGA level 

and no longer receive cash benefi ts.

The federal government pays a percentage of 

total state Medicaid expenses. The federal percentage is determined by a formula that is based 

on state per capita income, with higher-income 

states receiving a smaller federal contribution 

rate. The federal contribution cannot be less than 

50 percent or more than 83 percent. States may 

impose deductibles, copayments, or both for some 
Overview and Background

6 ♦ Trends in the Social Security and SSI Disability Programs

ser vices. And, as mentioned above, some categories of persons are eligible for a Medicaid buy-in 

and pay part or all of the cost of the coverage. For 

persons eligible for both Medicare and Medicaid, 

Medicare is the primary payer, and Medicaid 

supplements the payments.

Defi nition of Disability and the 

Determination Process

Section 223(d)(1) of the Social Security Act defi nes 

“disability” in an adult as

Inability to engage in any substantial gainful 

activity by reason of any medically determinable physical or mental impairment which can 

be expected to result in death or which has 

lasted or can be expected to last for a continuous period of not less than 12 months; 6

 or

In the case of an individual who has attained 

age 55 and is blind (within the meaning of 

“blindness” as defi ned in section 216(i)(1)), 

inability by reason of such blindness to engage 

in substantial gainful activity requiring skills 

or abilities comparable to those of any gainful 

activity in which he has previously engaged 

with some regularity and over a substantial 

period of time.

The Social Security Administration (SSA) 

makes a decision on whether an individual is 

disabled using a fi ve-step sequential evaluation 

process. An outline of the process follows.

Is the individual engaging in substantial gainful 

activity? If yes, deny. If no, proceed to step 2.

Is the impairment severe and does it meet the 

duration requirement? If no, deny. If yes, proceed to step 3.

Does the impairment meet, or equal in severity, 

one of the medical listings? If yes, allow. If no, 

proceed to step 4.

Can the individual perform his or her past 

work? If yes, deny. If no, proceed to step 5.

Can the individual (considering his or her age, 

education, and prior work) perform any other 

work? If yes, deny. If no, allow.

6. A medically determinable physical or mental impairment is 

an impairment that results from anatomical, physiological, or 

psychological abnormalities that can be shown by medically 

accepted clinical and laboratory diagnostic techniques. An 

impairment must be established by medical evidence consisting 

of signs, symptoms, and laboratory fi ndings.

1.

2.

1.

2.

3.

4.

5.

This fi ve-step framework is followed by all SSA 

adjudicators in making disability decisions for 

adults at all levels of the administrative process.

The defi nition of disability and the sequential 

evaluation process for SSI children (under the 

age of 18) is similar to that for adults, but the 

severity requirement is more strict. For children, 

the impairment(s) must cause “marked and severe 

functional limitations,” which means that the child’s 

impairment must meet, medically equal, or be 

functionally equal to the listings.

Program Administration

The Social Security and Supplemental Security 

Income disability programs are administered jointly 

by the federal and state governments. Applications 

for disability benefi ts are taken by SSA fi eld staff 

by phone, in one of the 1,300 local fi eld offi ces, 

or, increasingly, on the Web. Decisions on technical eligibility (insured status, resources, and so 

on) are handled by fi eld offi ce staff. The claim is 

forwarded to the state Disability Determination 

Services (DDS) for a medical determination. The 

state disability examiner generally collects medical 

evidence, orders consultative examinations (when 

required), and makes a medical determination 

using the fi ve-step disability decision process. If the 

claim is allowed, the case is returned to the SSA 

fi eld offi ce to be paid. If the claim is denied, the 

claimant is notifi ed of the denial and has 60 days to 

fi le an appeal at the SSA fi eld offi ce.

The fi rst level of appeal is called reconsideration, and the case is returned to the DDS for 

reconsideration by a different disability examiner. 

7

If the denial of the claimant’s application is affi rmed 

at reconsideration, the next level of appeal is a 

hearing before an SSA administrative law judge 

(ALJ). The hearing occurs in one of about 140 

hearings offi ces located across the country (or 

through videoconferencing), and the claimant has 

the fi rst opportunity to appear in person before 

the decisionmaker, who is a federal, rather than a 

state, employee. Further appeals can be made to 

the Appeals Council and the federal courts.

In addition to the initial claims process, there 

are postadjudicative processes for Social Security 

and SSI disability benefi ciaries. Such processes 

include redeterminations and benefi t adjustments 

7. Since 1999, 10 states have been operating under an 

alternative process that does not include a reconsideration 

step. Appeals of the initial decision at the DDS go directly to the 

hearings level.
Overview and Background

Trends in the Social Security and SSI Disability Programs ♦ 7

for SSI recipients, continuing disability reviews, and 

the monitoring of work activity. Processes dealing 

with work and earnings verifi cation are handled by 

SSA fi eld staff; fi eld offi ces and program service 

centers handle benefi t computations. SSA initiates 

continuing disability reviews to ensure that persons 

who are no longer disabled are removed from 

the program. The state DDS reviews the medical 

evidence and decides whether the individual has 

medically improved and is no longer disabled. The 

benefi ciary may appeal a decision that he or she is 

no longer disabled. The fi rst level of appeal is the 

disability hearings unit in the DDS, where a state 

employee reviews the cessation of disability. In 

this level, the claimant is permitted a face-to-face 

meeting with a state disability hearings offi cer. The 

payment of benefi ts is permitted during the appeals 

process. A second level of appeal of a cessation is 

to a federal administrative law judge at the hearings 

offi ce.

History of Major Program Changes

This book shows trends in the size and cost of the 

disability programs from 1970 to 2003 and links 

these trends to major changes in the disability 

programs during the same period. Below is a brief 

history of major program changes and other events 

discussed in this book.

January 1970 Congress authorizes ad hoc 

15 percent increase in benefi ts (P.L. 91-172).

January 1971 Congress authorizes ad hoc 

10 percent increase in benefi ts (P.L. 92-5).

July 1972 Congress authorizes ad hoc 20 percent 

increase in benefi ts and provides for automatic 

indexing of benefi ts to the consumer price 

index, with the fi rst automatic increase effective 

in June 1975 (P.L. 92-336).

October 1972 Congress passes legislation 

(P.L. 92-603)

providing Medicare coverage for disabled 

Social Security benefi ciaries after 24 

months of entitlement (effective 1973),

reducing the waiting period for disability 

benefi ts from 6 months to 5 months,

establishing the SSI program (fi rst SSI payments made January 1974) and permitting 

states to provide Medicaid to SSI recipients, 

and

•••

extending benefi ts to disabled adult children 

disabled after the age of 18 but before the 

age of 22.

1974 Congress authorizes ad hoc two-step 

11 percent increase in benefi ts effective 

March 1974 (7 percent) and June 1974 

(4 percent) (P.L. 93-233).

1977 Amendments to the Social Security Act 

(P.L. 95-216) include new formula for benefi t 

calculations to decouple the cost-of-living 

adjustment from wage increases; freeze 

minimum benefi t.

1980 Amendments to the Social Security Act 

(P.L. 96-265)

place cap on family benefi ts for disabled

workers,

reduce the number of dropout years in calculating average indexed monthly earnings 

(AIME) for younger disabled workers, reducing the primary insurance amount (PIA) for 

young workers,

require periodic continuing disability reviews 

for nonpermanent disabilities,

establish preeffectuation reviews of favorable initial decisions, and

establish new work incentives (an extended 

period of eligibility and continuation of Medicare for DI benefi ciaries; sections 1619a 

and 1619b, which continue reduced cash 

benefi ts and Medicaid for SSI recipients 

working above SGA).

1981 Omnibus Budget Reconciliation Act (P.L. 97-

35) eliminates the minimum benefi t for Social 

Security benefi ciaries and establishes the 

“mega-cap” offset of public disability benefi ts for 

disabled workers.

1982–1983 Continuing disability reviews are 

accelerated, with special attention to certain 

impairment categories.

1983 P.L. 97-455 provides temporary continuation 

of benefi ts (through June 1984) for persons 

appealing the decision from a continuing 

disability review and establishes a hearing 

(personal appearance) in the DDS at reconsideration as part of the appellate process. ••••••
Overview and Background

8 ♦ Trends in the Social Security and SSI Disability Programs

June 1983 Secretary of the Department of Health 

and Human Services (DHHS) announces (1) a 

moratorium on denial or termination of disability 

claims for most mental impairments pending 

review and (2) revisions of the disability standards for mental impairments.

April 1984 Secretary of DHHS announces a 

moratorium on continuing disability reviews 

following state-level moratoriums declared 

earlier by governors of several states.

1984 Amendments to the Social Security Act 

(P.L. 98-460) require SSA to

temporarily codify SSA policy on evaluating 

pain,

consider the combined effect of multiple 

nonsevere impairments,

place emphasis on evidence from treating 

physicians,

develop new criteria for adjudicating mental 

impairments (in place in 1986),

establish a “medical improvement standard” 

for continuing disability reviews,

emphasize review by a psychiatrist or 

psychologist of a denial involving mental 

impairments, and

make permanent the continuation of benefi ts during the appeal of a cessation resulting from a continuing disability review.

1986 Omnibus Budget Reconciliation Act (P.L. 99-

509) gives states the option to provide full 

Medicaid coverage to Medicare benefi ciaries 

whose income is below 100 percent of the 

poverty threshold and whose resources do not 

exceed the SSI resource limits.

1988 Medicare Catastrophic Coverage Act 

(P.L. 100-360) mandates that states provide 

coverage of Medicare Part B premiums, 

deductibles, and coinsurance through Medicaid 

for Medicare benefi ciaries whose income is 

below 100 percent of the poverty threshold 

and whose resources do not exceed twice 

the SSI resource limits (Qualifi ed Medicare 

Benefi ciaries).

1990 Zebley court decision—the Supreme Court 

rules that SSA must establish new criteria for 

the SSI children’s disability program. The ruling 

states that applying the SSI adult listings to •••••••

children without applying the vocational rules 

does not result in “comparable severity” as 

required in the Social Security Act.

1990 The defi nition of “disability” for disabled 

widow(er)s is changed so that it is the same as 

that for disabled workers.

1990 SSA initiates a series of outreach activities 

designed to identify persons who are potentially 

eligible for SSI.

1990 States are mandated to cover Part B 

Medicare premiums through Medicaid for 

Medicare benefi ciaries whose income is less 

than 120 percent of the poverty threshold and 

whose resources are less than twice the SSI 

resource level (Specifi ed Low-income Medicare 

Benefi ciaries).

1991 New childhood rules, based on the Zebley

decision, are implemented. The rules include 

“functional equivalence” to fi nd listings-level 

severity and an individualized functional 

assessment for evaluating children whose 

impairments are not listings-level severity.

1994 Requirements that were already in place for 

SSI recipients who were disabled on the basis 

of drug addiction and alcoholism (DA&A) are 

extended to Social Security disabled benefi ciaries (P.L. 103-296).

1996–1998 Welfare reform era, which includes the 

Contract with America Advancement Act of 

1996 (P.L. 104-121); Personal Responsibility 

and Work Opportunity Act of 1996 (P.L. 104-

193); and Balanced Budget Act of 1997 

(P.L. 105-33). These pieces of legislation and 

subsequent revisions

change the policy for drug addiction and 

alcoholism to exclude from eligibility individuals for whom DA&A is a materially 

contributing factor in disability; requires representative payees for SSI recipients who 

had a DA&A condition (1996, P.L. 104-121).

tighten disability standards for SSI children, 

changing the statutory standard from “comparable severity” to “marked and severe 

functional limitations,” eliminating “maladaptive behaviors” in the childhood mental 

listings, and eliminating the “individualized 

functional assessment” (1996, P.L. 104-193).

••
Overview and Background

Trends in the Social Security and SSI Disability Programs ♦ 9

require SSA to review all SSI childhood 

cases based on individual functional 

assessment or maladaptive behavior 

within 1 year (1996, P.L. 104-193). The 

requirement was later modifi ed to extend 

the period for review to 18 months (1997, 

P.L. 105-33).

require SSA to review children awarded 

SSI benefi ts on the basis of low birth weight 

before the fi rst birthday (1996, P.L. 104-

193). The requirement was later modifi ed 

to permit SSA to schedule the review after 

the fi rst birthday if medical improvement is 

unlikely within the 12 months (1997, P.L. 

105-33).

provide dedicated funding to conduct continuing disability reviews for Social Security 

and SSI disability benefi ciaries from 1996 to 

2002 (1996, P.L. 104-121).

require SSA to conduct SSI redeterminations at age 18 using adult standards within 

1 year of the 18th birthday (1996, P.L. 104-

193). The requirement was later modifi ed to 

give SSA more discretion in scheduling this 

redetermination (1997, P.L. 105-33).

limit immigrants’ eligibility for SSI (1996, 

P.L. 104-193). Several changes to this limitation were made in 1997, 1998, and thereafter.

permit states to provide Medicaid coverage 

to the disabled on the basis of less stringent 

income and resource tests or to permit a 

buy-in to Medicaid based on a sliding scale 

related to income (1997, P.L. 105-33).

1999 Ticket to Work program (P.L. 106-170) passes 

and

establishes Ticket to Work with provisions 

for services from private providers as well 

as from state vocational rehabilitation. Payment for services under Ticket to Work are 

based on milestone and outcome or pure 

outcome payments for a successful return 

to work (traditional cost-reimbursement 

payment method remains an option for state 

vocational rehabilitation).

establishes “easy-back-on” provisions for 

persons terminated for return to work.

increases the period of extended Medicare 

coverage.

•••••••••prohibits SSA from conducting a continuing 

disability review while a person is using the 

Ticket and prohibits using work to demonstrate medical improvement.

permits states to offer a buy-in for Medicaid 

coverage for working-age persons with disabilities.

1999 SSA increases the substantial gainful 

activity level by regulation from $500 per 

month to $700 per month in July and, in 2000, 

establishes automatic annual indexing of the 

SGA level to growth in average wages. (The 

history of increases in the SGA level appears in 

Chart 57.)

Sources of Data

The data in this book are, to the extent possible, 

the most recent data available at the time the 

analysis was done. In some cases, data from 

2003 or 2004 are available, while in other cases 

older data have been used. The most recent data 

on Medicare and Medicaid expenditures for the 

disabled, for example, are from 2001.

The data come from a number of sources. 

The reader can fi nd much of the data used in the 

Social Security and Supplemental Security Income 

charts in publications from the Social Security 

Administration, such as

Annual Statistical Supplement to the Social 

Security Bulletin

Annual Statistical Report on the Social Security 

Disability Insurance Program

SSI Annual Statistical Report.

These publications are available from the Offi ce of 

Policy on the Social Security Administration’s Web 

site at http://www.socialsecurity.gov/policy.

The estimates of when the trust fund will be 

exhausted and the future size and cost of the 

Social Security Disability Insurance program come 

from the annual report of the Social Security 

Board of Trustees, which is available online at 

http://www.socialsecurity.gov/OACT/TR. Other 

benefi ciary and cost data come from the Offi ce of 

the Chief Actuary, much of which can be located 

at http://www.socialsecurity.gov/OACT. That offi ce 

also issues the Annual Report of the Supplemental 

Security Income Program.

••

•••
Overview and Background

10 ♦ Trends in the Social Security and SSI Disability Programs

The data used for international comparisons 

were obtained from the Organisation for Economic 

Co-operation and Development. Specifi cally, 

much of the data come from Facts and Figures 

on Disability Welfare: A Pictographic Portrait of an 

OECD Report by Bernd Marin and Christopher 

Prinz (Vienna: European Centre for Social Welfare 

Policy and Research, 2003), available at http://

www.euro.centre.org/detail.php?xml_id=469.

These and other sources of data are listed in 

the bibliography at the end of this report.

To facilitate access to data contained in the 

charts in this book, tabular data for all charts are 

available at http://www.socialsecurity.gov/policy.
PROGRAM COST AND SIZE

Program Cost and Size

Introduction

Social Security Disability

Medicare for the Disabled

SSI for the Blind and Disabled

Medicaid for the Disabled

Benefi t Costs as a Percentage of GDP

International Expenditures on Disability 

Programs

Disability Programs and SelfReported Disability

International Prevalence of Disability

Program Cost and Size

INTRODUCTION

This section describes the overall size and cost of the Social Security disability program 

and the Supplemental Security Income (SSI) program for the disabled. The costs 

considered include only the costs of the programs’ cash benefi ts; they do not include the 

administrative costs associated with managing the programs. Except for Chart 10, all data 

on SSI costs are federal payments only.

The section fi rst examines trends in the cost of these programs and then seeks to 

determine how these trends are generated, looking initially at trends in the number of 

disabled benefi ciaries (and dependents) and SSI recipients and then at the trends in 

average cost per individual over time. It also looks at the cost and size of the Medicare 

and Medicaid programs.

Costs for each of the programs have risen dramatically over time: in nominal dollars, 

in real (infl ation-adjusted) dollars, and as a percentage of gross domestic product. The 

programs have grown in terms of numbers of benefi ciaries and recipients; relative to 

the eligible population, however, the programs have tended to go through periods of 

contraction and expansion. Perhaps the most signifi cant fi nding is that the costs of health 

coverage for the disabled under Medicare and, even more dramatically, Medicaid are 

rising faster than the cost of the disability programs’ cash benefi ts.
Program Cost and Size

14 ♦ Trends in the Social Security and SSI Disability Programs

Social Security Disability TOTAL COST OF BENEFITS

The total cost of cash benefi ts for the Social Security disability program has increased dramatically since its 

inception. Since 1990 the total cost of disability has risen 93 percent in real terms (160 percent in nominal terms).

Chart 1. Total cost of Social Security disability benefi ts, by type of benefi ciary,

1970–2003

SOURCE: Annual Statistical Supplement to the Social Security Bulletin, 2004, Tables 4.A6 and 5.A17 (monthly 

amount multiplied by 12).

NOTES: This chart excludes a small number of young spouses of retired workers and mothers who are entitled 

solely on the basis of having a disabled adult child in their care. In 2003, there were fewer than 20,000 mothers 

and fewer than 12,000 young spouses, for whom the costs were $200 million and $80 million, respectively. 

Those costs are less than one-quarter of 1 percent of the expenditures in 2003.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

The cost of Social Security disability benefi ts in 

constant dollars has increased over time, though not 

consistently. 

1

 Benefi t costs grew rapidly during the 

1970s and peaked in 1978. A decline in those costs 

occurred in the early 1980s as the result of changes 

in program administration that reduced the number 

1. Social Security disability includes benefi ts paid from the DI trust 

fund to disabled workers and their dependents, as well as benefi ts 

paid from the OASI trust fund to disabled widow(er)s and some 

disabled adult children.

of applications and awards as well as the number 

of disabled-worker benefi ciaries. By the late 1980s, 

benefi t costs had begun to increase again, and they 

continue to rise. The largest increase in cost is among 

disabled-worker benefi ciaries, who accounted for nearly 

$65 billion of the total $77 billion in 2003.

0

10

20

30

40

50

60

70

80

1970 1974 1978 1982 1986 1990 1994 1998 2002

Billions of 2003 dollars

Disabled widow(er)s

Disabled adult children

Children

Spouses

Disabled workers
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 15

Social Security Disability NUMBER OF BENEFICIARIES

Much of the increase in costs for Social Security disability benefi ts is due to increases in the number of benefi ciaries. Since 1990, the number of disabled-worker benefi ciaries has increased 84 percent; disabled widow(er)s, 105 

percent; and disabled adult children, 24 percent.

Chart 2. Number of disabled Social Security benefi ciaries, by type of benefi ciary,

December 1970–2003

SOURCES: Annual Statistical Report on the Social Security Disability Insurance Program, 2004, Table 1; 

Annual Statistical Supplement to the Social Security Bulletin (authors’ compilation of missing years).

The number of disabled benefi ciaries in each benefi -

ciary category is shown for the period 1970–2003. 

All of the categories have shown steady increases in 

the number of benefi ciaries, with few exceptions. One 

exception is the period of the early 1980s, when the 

number of disabled workers declined as the result 

of changes in the structure of benefi ts in the 1977 

and 1980 Amendments and increased stringency in 

adjudicating claims and conducting continuing disability 

reviews.

Millions

012345678

1970 1974 1978 1982 1986 1990 1994 1998 2002

Disabled widow(er)s

Disabled adult children

Disabled workers

All disabled beneficiaries
Program Cost and Size

16 ♦ Trends in the Social Security and SSI Disability Programs

NUMBER OF DISABLED-WORKER BENEFICIARIES

Although the number of disabled workers has been increasing since 1983, their growth as a percentage of the 

insured population has been considerably slower.

Chart 3. Number of disabled-worker benefi ciaries and as a percentage of the 

insured population, December 1970–2003

SOURCES: Annual Statistical Supplement to the Social Security Bulletin, 2004, Table 4.C1; Annual Statistical 

Report on the Social Security Disability Insurance Program, 2003, Table 1.

When considered relative to the number of workers 

insured in the event of disability, the growth in disabled 

workers has been more moderate than what is 

suggested by raw numbers. After a period of stability 

(in terms of the number of benefi ciaries relative to the 

number insured for disability) between 1982 and 1989, 

the program is again growing. A number of factors are 

contributing to this increase, including the aging of the 

baby boomers into more disability-prone years. (The 

baby-boom generation was born after World War II, 

between 1946 and 1964. The number of births peaked 

in 1957.)

Social Security Disability

Millions Percent

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

1970 1974 1978 1982 1986 1990 1994 1998 2002

As a percentage of

insured population

Number
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 17

Social Security Disability AVERAGE COST PER BENEFICIARY

In real terms, the average cost per benefi ciary of all Social Security disability cash benefi ts has increased 

33 percent since 1970. Yet the average costs for disabled workers and disabled widow(er)s were relatively stable 

from the mid-1980s until recently. Thus, increased benefi t costs are not strictly due to increasing numbers of 

benefi ciaries.

Chart 4. Average annual cost per benefi ciary of Social Security disability benefi ts,

1970–2003

SOURCES: Annual Statistical Supplement to the Social Security Bulletin, 2004, Tables 4.A6 and 5.A17; Annual 

Statistical Report on the Social Security Disability Insurance Program, 2003, Table 1.

NOTE: All dollar amounts are in constant (price-adjusted) 2003 dollars. Costs have been annualized for disabled widow(er)s and disabled adult children paid from the Old-Age and Survivors Insurance Trust Fund.

a. Includes all types of disability benefi ciaries (disabled workers, disabled adult children, and disabled 

widow(er)s), with any benefi ts paid to dependents (for example, spouses or minor children) included in the 

average.

The average cash benefi t cost per disabled benefi ciary 

has generally risen during the period 1970–2003, 

although the cost declined slightly in the early 1980s. 

The increase in average benefi ts in the early to 

mid-1970s was probably related to ad hoc benefi t 

increases of 15 percent, 10 percent, and 20 percent 

that became effective in January 1970, January 1971, 

and September 1972, respectively. An additional ad hoc 

benefi t increase of 11 percent occurred in two steps in 

March and June 1974. Legislation in 1972 resulted in 

an automatic benefi t adjustment for annual increases 

in the consumer price index beginning in June 1975. 

Although this adjustment was intended to stabilize 

benefi ts, the way the adjustment was made resulted in 

overcompensation for infl ation, because it did not factor 

in infl ation-related wage increases.

In the late 1970s and early 1980s, there were small 

reductions in average benefi t costs, probably because 

of changes in the benefi t computation that applied to 

Thousands of 2003 dollars

02468

10

12

1970 1974 1978 1982 1986 1990 1994 1998 2002

Disabled widow(er)s

Disabled adult children

Disabled workers

All

a
Program Cost and Size

18 ♦ Trends in the Social Security and SSI Disability Programs

AVERAGE COST PER BENEFICIARY (CONT.)

future benefi ciaries. These changes, enacted in 1977, 

1980, and 1981, “decoupled” the benefi t formula from 

wages to end the “double indexing” from the 1972 

legislation, capped family benefi ts and reduced dropout 

years, and eliminated the minimum benefi t, respectively. Delaying scheduled cost-of-living adjustments in 

1983 may have also contributed to this result. From the 

late 1980s to the late 1990s, the average cost was fairly 

stable for disabled workers and disabled widow(er)s, 

while benefi ts for disabled adult children rose. The 

stability of the average cost over 20 years is surprising, since benefi t calculations are wage indexed and 

would tend to increase benefi ts over time. It has been 

suggested that lower-wage workers have been increasingly attracted to the disability rolls because of implicit 

increases in replacement rates for low earners resulting 

from increasing disparity in the wage distribution. This 

could help explain the stability of costs per benefi ciary 

during this period. Similarly, increases in the number 

of women insured for disability, whose numbers are a 

growing portion of the total number of disabled, could 

also account for this result, since women, on average, 

have lower earnings than do men. Further research 

is required to fully understand the underlying patterns 

affecting average benefi t costs.

The cost per benefi ciary for disabled adult children, 

on the other hand, has increased the most (67 percent) 

during this period. Since 2000, the average benefi t cost 

for workers and widow(er)s has begun to increase. 

One possible reason for the increase in the cost per 

benefi ciary is that wage increases exceeded price 

increases in the mid- to late 1990s, yielding higher 

real benefi ts. The average expenditure on all disability 

benefi ts, including benefi ts to dependents, increased by 

a third from 1970 to 2003, but more slowly (10 percent) 

between 1990 and 2003.

Social Security Disability
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 19

Social Security Disability BENEFICIARIES ALSO RECEIVING SUPPLEMENTAL SECURITY INCOME

The rates of concurrency reached a peak for disabled workers and disabled adult children in the mid-1990s and 

have decreased slightly since then. The rate of concurrency for disabled widow(er)s declined abruptly in 1983 

because of a change in the benefi t calculation and generally has continued to decline.

Chart 5. Percentage of Social Security disability benefi ciaries also receiving SSI 

benefi ts, by type of benefi ciary, December 1981–2003

The rate of concurrency, that is, the percentage of 

Social Security disability benefi ciaries who also receive 

SSI for the blind and disabled, increased for disabled 

workers and disabled adult children until the mid-1990s 

and has decreased slightly since then. The change was 

particularly large for disabled workers, with an increase 

from 10 percent receiving SSI payments in 1981 to 17 

percent in 1993. Since then, the rate has fallen to 14 

percent.

A policy change in 1983, which changed the actuarial reduction for disabled widow(er)s under the age 

of 60, resulted in an abrupt decline in the percentage 

receiving SSI. That change capped the actuarial reduction for disabled widow(er)s aged 50–59 at the level of 

reduction effective for widow(er)s at age 60, resulting 

in increased benefi ts for disabled widow(er)s younger 

than 60. The percentage of disabled widow(er)s receiving SSI payments has generally continued to decline 

since that time.

Percent

05

10

15

20

25

30

35

40

45

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

Disabled workers

Disabled widow(er)s

Disabled adult children

SOURCE: Annual Statistical Supplement to the Social Security Bulletin (authors’ compilation of data).
Program Cost and Size

20 ♦ Trends in the Social Security and SSI Disability Programs

TOTAL COST OF BENEFITS

The cost of Medicare benefi ts, which are provided to disabled Social Security benefi ciaries (but not to dependents) after a 24-month waiting period, has been rising dramatically, with costs increasing 90 percent in real terms 

between 1990 and 2001.

Chart 6. Total cost of Medicare for the disabled, 1973–2001

SOURCE: Centers for Medicare & Medicaid Services, Medicare & Medicaid Statistical Supplement, Table 12, 

available at http://www.cms.hhs.gov/MedicareMedicaidStatSupp/LT/list.asp.

NOTES: Medicare uses a different defi nition of disability, and not all disabled Medicare benefi ciaries receive 

cash disability benefi ts from Social Security.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

Medicare is provided to Social Security disabled 

benefi ciaries (but not to dependents) after a 24-month 

waiting period. Medicare Hospital Insurance (Part A) is 

provided for free, but Supplementary Medical Insurance 

(Part B), which covers doctor bills, requires a monthly 

premium paid by the benefi ciary or on the benefi ciary’s 

behalf.

Medicare benefi t costs for the disabled have been 

rising dramatically, with costs increasing by 90 percent 

in real terms between 1990 and 2001. Supplementary 

Medical Insurance has been increasing as a share of 

all Medicare costs, rising from 34 percent of total cost 

in 1975, to 39 percent in 1990, and to 46 percent in 

2001. Much of the increase in the cost of Medicare 

is due to an increase in the number of Medicare 

benefi ciaries. However, the increasing cost in medical 

services has also contributed to the overall increase in 

benefi t costs.

Medicare for the Disabled

Billions of 2003 dollars

05

10

15

20

25

30

35

1973 1977 1981 1985 1989 1993 1997 2001

Hospital Insurance

Supplementary

Medical

Insurance
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 21

Medicare for the Disabled

NUMBER OF BENEFICIARIES

The number of disabled Medicare benefi ciaries has increased in conjunction with the increase in disabled Social 

Security benefi ciaries, up nearly 70 percent since 1990 (see Chart 2). The proportion of Medicare benefi ciaries 

with Supplementary Medical Insurance has declined since the mid-1980s.

Chart 7. Number of disabled Medicare benefi ciaries with Hospital Insurance and 

Supplementary Medical Insurance as of July 1, 1973–2001

The number of disabled Medicare benefi ciaries has 

increased in near lockstep with the increase in disabled 

Social Security benefi ciaries, and it is up nearly 

70 percent since 1990 (Chart 7). The proportion of 

disabled Medicare benefi ciaries with Supplementary 

Medical Insurance (SMI) has varied over time (Chart 8). 

SMI coverage increased from 90.4 percent in 1975 to 

a peak of more than 92 percent in the mid- and late 

1980s and dropped fairly consistently to a historical low 

of 88.6 percent in 2001.

It is unclear why fewer persons are electing SMI 

coverage, although the cost of premiums for individuals has been rising. For some low-income Medicare 

benefi ciaries, special state programs funded through 

Medicaid pay all or part of the premium for SMI, making 

the decline in SMI coverage even more surprising. 

In 1988, the Qualifi ed Medicare Benefi ciary program 

mandated that states use Medicaid to pay all Medicare 

cost sharing (including Part B premiums) for Medicare 

benefi ciaries with income less than 100 percent of 

SOURCE: Centers for Medicare & Medicaid Services, Medicare & Medicaid Statistical Supplement, Table 5, 

available at http://www.cms.hhs.gov/MedicareMedicaidStatSupp/LT/list.asp.

NOTE: Medicare uses a different defi nition of disability, and not all disabled Medicare benefi ciaries receive cash 

disability benefi ts from Social Security.

Millions

Supplementary Medical

Insurance

Hospital Insurance

0123456

1973 1977 1981 1985 1989 1993 1997 2001
Program Cost and Size

22 ♦ Trends in the Social Security and SSI Disability Programs

NUMBER OF BENEFICIARIES (CONT.)

Chart 8. Percentage of disabled Medicare benefi ciaries with Supplementary 

Medical Insurance coverage and the SMI premium level as of July 1, 1973–2001

poverty and resources less than twice the SSI resource 

limit. Beginning in 1990, the Specifi ed Low-income 

Medicare Benefi ciary program mandated that states 

pay the Part B premium for Medicare benefi ciaries 

who are between 100 percent and 120 percent of 

poverty and whose resources are less than twice the 

SSI resource limit. In recent years, the proportion of 

disabled SMI enrollees who received this state SMI 

buy-in has risen slightly, from 39.7 percent in 1998 

to 41.2 percent in 2001, yet overall SMI enrollment 

continues to decline.

Medicare for the Disabled

2003 dollars

Percentage

with SMI

SMI premium

0

10

20

30

40

50

60

70

1973 1977 1981 1985 1989 1993 1997 2001

86

87

88

89

90

91

92

93

Percent

SOURCES: Centers for Medicare & Medicaid Services, Medicare & Medicaid Statistical Supplement, Table 5, 

available at http://www.cms.hhs.gov/MedicareMedicaidStatSupp/LT/list.asp; 2004 Annual Report of the Board of 

Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,

Table IV.C2.

NOTES: Medicare uses a different defi nition of disability, and not all disabled Medicare benefi ciaries receive 

cash disability benefi ts from Social Security.

All dollar amounts are in constant (price-adjusted) 2003 dollars.
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 23

Medicare for the Disabled

AVERAGE COST PER BENEFICIARY

The average cost of Medicare benefi ts for disabled Medicare benefi ciaries has generally increased over time; 

however, in the late 1990s, reductions in hospital payments helped reduce average Medicare costs, although 

costs are once again rising. Average Supplementary Medical Insurance benefi ts have increased consistently 

during this period.

Chart 9. Average annual cost per disabled benefi ciary of Medicare benefi ts,

1973–2001

The average cost of Medicare per benefi ciary rose 

from 1973, when disabled Social Security benefi ciaries 

were fi rst eligible for Medicare, until the mid-1990s. 

In the late 1990s, the average cost of Medicare per 

benefi ciary declined as the cost of Hospital Insurance 

declined. Cost containment in hospital reimbursements 

has probably contributed to the reductions in this 

component of Medicare costs. Hospital Insurance costs 

began to increase again in 2000, and overall Medicare 

costs are again rising in real terms. The average cost 

per benefi ciary of Supplementary Medical Insurance 

has continued to rise through the 1990s, and the 

increase accelerated between 2000 and 2001.

SOURCE: Centers for Medicare & Medicaid Services, Medicare & Medicaid Statistical Supplement, Tables 5 

and 12, available at http://www.cms.hhs.gov/MedicareMedicaidStatSupp/LT/list.asp.

NOTES: Medicare uses a different defi nition of disability, and not all disabled Medicare benefi ciaries receive 

cash disability benefi ts from Social Security.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

Thousands of 2003 dollars

HI and SMI

combined

Supplementary Medical

Insurance

Hospital Insurance

0123456

1973 1977 1981 1985 1989 1993 1997 2001
Program Cost and Size

24 ♦ Trends in the Social Security and SSI Disability Programs

TOTAL COST OF PAYMENTS

The cost to the federal government of the Supplemental Security Income (SSI) disability program has increased 

nearly 90 percent in real terms (150 percent in nominal terms) since 1990. At the same time, the states’ share of 

SSI has decreased.

Chart 10. Total cost of SSI payments to all blind and disabled recipients, by source,

1974–2003

SOURCES: SSI Annual Statistical Report, 2003, Table 2; Annual Statistical Supplement to the Social Security 

Bulletin (authors’ compilation of missing years).

NOTE: All dollar amounts are in constant (price-adjusted) 2003 dollars.

The cost to the federal government of SSI disability 

payments has increased nearly 90 percent in real terms 

(150 percent in nominal terms) since 1990. The states’ 

share of SSI payments has decreased over time, with 

federal payments now making up nearly 89 percent of 

the total, up from 75 percent at the program’s inception. 

The federal share peaked in 1997 at slightly more 

than 90 percent of the cost and has declined slightly 

since then. The reason for the diminishing role of 

the state dates back to the birth of the SSI program, 

when Congress mandated that states maintain, at a 

minimum, payment expenditures equal to the 1974 

level: Congress did not require increases in state 

funding to make up for changes in the cost of living 

or in the number of persons participating in the SSI 

program. 2 Although states’ expenditures have increased 

over time, they have not kept pace with increases in the 

cost of living and the number of recipients.

2. For a description and history of the SSI program, see the section 

on Program Descriptions and Legislative History of the Annual 

Statistical Supplement to the Social Security Bulletin. A specifi c 

discussion of state supplementation of SSI payments can be found 

under the heading “SSI: History of Provisions.”

SSI for the Blind and Disabled 

Billions of 2003 dollars

05

10

15

20

25

30

35

1974 1978 1982 1986 1990 1994 1998 2002

Federal

Federally administered

state

supplementation

State-administered

supplementation
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 25

NUMBER OF RECIPIENTS

Increasing numbers of blind and disabled SSI recipients contribute to the higher cost of the SSI program; however, 

since the mid-1990s the number of SSI recipients has been relatively constant as a percentage of the population 

in each age group.

Chart 11. Number of SSI blind and disabled recipients and as a percentage of the 

population in each age group, December 1974–2003

The number of blind and disabled SSI recipients has 

been increasing since the program began, with a few 

exceptions. The number of SSI disabled children grew 

dramatically after the Zebley decision in 1990. As the 

result of this growth, Congress enacted welfare reform 

legislation in 1996 (Public Law [P.L.] 104-193) that 

revamped the SSI defi nition of disability for children, 

and the program witnessed a small contraction 

thereafter. Currently, the SSI children’s category is 

growing again, and in 2003 the number of recipients 

surpassed the 1996 peak. The SSI blind and disabled 

adult category was affected by legislation in 1996 (P.L. 

104-121), which eliminated drug addiction and alcoholism as a basis for receiving benefi ts. As a result of this 

legislation, the number of SSI adults aged 18–64 in 

1997 decreased slightly. Several pieces of legislation 

have also limited the access of noncitizens to SSI, 

which has, for the most part, limited the number of new 

awards to noncitizens.

Asset limits, which have not changed in two 

decades, combined with disregards of earned and 

unearned income that have been unchanged since 

the program started, may have served to tighten the 

program’s fi nancial eligibility criteria over time. As a 

percentage of the general population, SSI has been 

growing very slowly since the mid-1990s, much more 

slowly than was the case in the 1980s and early 1990s. 

The slow growth is particularly evident in the 18–64 age 

group.

SOURCES: SSI Annual Statistical Report, 2003, Table 3; 2004 Annual Report of the Supplemental Security 

Income Program, Table IV.A1.

NOTE: The reference population is the “Selected Social Security Area Population” of the appropriate age group 

and includes the population of the United States and several additional areas. See the glossary for a complete 

defi nition.

SSI for the Blind and Disabled

Millions Percent

012345

1974 1978 1982 1986 1990 1994 1998 2002

0

0.5

1.0

1.5

2.0

2.5

As a percentage of

population under age 18 Number under age 18

As a percentage of population

aged 18–64

Number aged 18–64
Program Cost and Size

26 ♦ Trends in the Social Security and SSI Disability Programs

AVERAGE COST PER RECIPIENT

Although there were some increases in the average cost per SSI recipient in the early to mid-1990s and some 

reductions thereafter, the average cost has been fairly stable since 1980.

Chart 12. Average annual cost per blind and disabled recipient of SSI payments,

by age, 1980–2003

SOURCES: SSI Annual Statistical Report, 2003, Table 3; 2004 Annual Report of the Supplemental Security 

Income Program, Table IV.C1.

NOTE: All dollar amounts are in constant (price-adjusted) 2003 dollars.

The average cost per SSI recipient has remained fairly 

stable since 1980. It increased slightly in the early to 

mid-1990s and declined slightly thereafter. This result 

is not unexpected for a program with a fi xed benefi t 

rate that is indexed to infl ation. Changes over time are 

possible because of changes in countable income, 

backlogs, and retroactive payments, as well as other 

factors. The large increase in the average annual cost 

for SSI children in 1992 is probably an anomaly caused 

by the Zebley court decision. That decision produced a 

large increase of 40 percent in the number of disabled 

child recipients in a single year. Retroactive payments 

for new awards based on the Zebley decision probably 

resulted in the increased average expenditure that year, 

which exceeded the full means-tested payment. 3 

3. A large infl ux of awards (without retroactive payments) could be 

expected to reduce average cost because, on average, the new 

awards will collect only 6 months of benefi ts rather than 12 months 

for other benefi ciaries, thus increasing the denominator (benefi ciaries) more than the numerator (total payments). An infl ux of persons 

with large retroactive payments could alter this expectation and serve 

to increase the average annual cost.

SSI for the Blind and Disabled

Thousands of 2003 dollars

Aged 18–64

Under age 18

0123456789

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 27

DISABLED SSI RECIPIENTS ALSO RECEIVING SOCIAL SECURITY

DISABILITY BENEFITS

The proportion of SSI recipients aged 18–64 receiving a Social Security disability benefi t has remained fairly 

constant at around 30 percent since 1981. The proportion of SSI recipients receiving disability benefi ts as a 

disabled worker increased from 16 percent in 1981 to 21.8 percent in 2003, while the proportion receiving disability benefi ts as a disabled adult child has declined since the late 1980s.

Chart 13. Percentage of SSI blind and disabled adults also receiving

Social Security disability benefi ts, by type of benefi t, December 1981–2003

SSI recipients aged 18–64 who are blind or disabled 

were much more likely to receive disabled-worker 

benefi ts under the Disability Insurance program in 2003 

(21.8 percent) than they were in 1981 (16 percent). A 

number of factors may play a role in this increase. It has 

been suggested that the incentives may have increased 

for low earners to apply for disability benefi ts. Changes 

to SSI work incentives in 1980, most notably sections 

1619a and 1619b, may have led to more SSI recipients 

working and thus earning insured status, which would 

make them eligible for a worker benefi t. The Social 

Security Administration has been processing a special 

disability workload in recent years to determine whether 

SSI recipients might be eligible for a Social Security DI 

benefi t on the basis of their own earnings record.

The proportion of SSI recipients aged 

18–64 receiving any Social Security disability 

benefi t—disabled worker, disabled adult child, disabled 

widow(er)—has remained fairly constant at around 30 

percent since 1981. The percentage collecting Social 

Security DI benefi ts as disabled adult children has been 

declining since the late 1980s, and the percentage 

receiving disabled-widow(er) benefi ts declined slightly 

in the early 1980s and has remained at about 1 percent 

of SSI recipients since then.

SSI for the Blind and Disabled

SOURCE: SSI Annual Statistical Report, 2003, Tables 3 and 16.

Percent

Disabled widow(er)

Disabled adult child

Disabled worker

Any Social Security

disability benefit

05

10

15

20

25

30

35

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
Program Cost and Size

28 ♦ Trends in the Social Security and SSI Disability Programs

TOTAL COST OF PAYMENTS

Medicaid payments for the disabled have increased greatly in real terms since fi scal year 1975. Between 1990 

and 2001, Medicaid payments for the disabled grew nearly 150 percent in real terms, the highest growth rate in 

costs among the programs under study.

Chart 14. Total cost of Medicaid for the disabled, fi scal years 1975–2001

SOURCE: Centers for Medicare & Medicaid Services, Medicare & Medicaid Statistical Supplement, 2003, Table 

94 (fi scal year data), available at http://www.cms.hhs.gov/MedicareMedicaidStatSupp/LT/list.asp.

NOTES: Medicaid uses a different defi nition of disability, and not all disabled Medicaid recipients receive payments from the SSI program. Also, not all SSI recipients are categorically eligible for Medicaid.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

Medicaid benefi ts are available to the vast majority 

of disabled SSI recipients, supplementing Medicare 

benefi ts for SSI recipients who also receive Social 

Security disability benefi ts and have been through the 

24-month waiting period. Medicaid is also available to 

other categories of disabled persons, in some cases 

with a buy-in for coverage.

Medicaid payments for the disabled have increased 

greatly in real terms since 1975. Between 1990 and 

2001, they rose nearly 150 percent in real terms, the 

highest growth rate in costs among the programs 

under study. Costs associated with covering Qualifi ed 

Medicare Benefi ciaries (under a program established 

in 1988) and Specifi ed Low-income Medicare 

Benefi ciaries (a program that dates to 1990) contribute 

to the overall rise in payments.

Medicaid for the Disabled

Billions of 2003 dollars

0

10

20

30

40

50

60

70

80

90

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 29

NUMBER OF RECIPIENTS

The number of disabled Medicaid recipients nearly tripled between fi scal years 1975 and 2001 and increased 90 

percent between 1990 and 2001. Part of the increase is due to new Medicaid programs for the disabled, such as 

buy-ins.

Chart 15. Number of disabled Medicaid recipients, fi scal years 1975–2001

The number of disabled Medicaid recipients nearly 

tripled between 1975 and 2001 and increased 90 

percent between 1990 and 2001. This number includes 

not only most SSI recipients but also other qualifi ed 

disabled persons. Although some of this increase is 

due to growth in the number of disabled individuals 

in the general population and the number of SSI 

recipients, some of the increase is due to expansions in the Medicaid program since the late 1980s. 

Congress enacted several changes to the Medicaid 

program that increased the number of disabled persons 

eligible for the program. The numbers above include 

disabled Medicare benefi ciaries who are Qualifi ed 

Medicare Benefi ciaries (covered under a program 

established in 1988) and Specifi ed Low-income 

Medicare Benefi ciaries (since 1990). Another legislated 

expansion for the disabled involved provisions for 

states to establish buy-in programs, through which a 

disabled individual who was working or had relatively 

high income or resources, and who would not normally 

qualify for Medicaid, could pay a premium to buy 

Medicaid coverage. States may subsidize the buy-in 

premium for persons with low income. These optional 

buy-in programs were permitted by Congress in 1997 

and expanded in 1999. Many states do not have buy-in 

programs, and the number of participants is small in 

states with programs.

SOURCE: Centers for Medicare & Medicaid Services, Medicare & Medicaid Statistical Supplement, 2003, 

Table 88, available at http://www.cms.hhs.gov/MedicareMedicaidStatSupp/LT/list.asp.

NOTE: Medicaid uses a different defi nition of disability, and not all disabled Medicaid recipients receive payments from the SSI program. Also, not all SSI recipients are categorically eligible for Medicaid.

Medicaid for the Disabled

Millions

012345678

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
Program Cost and Size

30 ♦ Trends in the Social Security and SSI Disability Programs

AVERAGE COST PER RECIPIENT

Average cost of Medicaid payments for the disabled nearly tripled (an increase of 177 percent) between 1975 and 

2001 and increased 30 percent in real terms from 1990 to 2001. Costs per disabled recipient exceeded $11,000 in 

2001.

Chart 16. Average annual cost per disabled recipient of Medicaid payments, fi scal years 1975–2001

SOURCE: Centers for Medicare & Medicaid Services, Medicare & Medicaid Statistical Supplement, 2003, 

Tables 88 and 94 (fi scal year data), available at http://www.cms.hhs.gov/MedicareMedicaidStatSupp/LT/list.asp.

NOTES: Medicaid uses a different defi nition of disability, and not all disabled Medicaid recipients receive payments from the SSI program. Also, not all SSI recipients are categorically eligible for Medicaid.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

The average cost of Medicaid per recipient has been 

increasing over time, indicating that the increase in the 

number of Medicaid recipients does not fully account 

for the increased cost of the Medicaid program. From 

1975 to 2001, the cost per disabled recipient increased 

177 percent in real terms, compared with a rise of 143 

percent in Medicare over the same period. The cost 

of Medicaid per recipient in real terms increased at 

a slower rate over the period 1990 to 2001, increasing only 30 percent, while the total cost of Medicaid 

increased 150 percent during the same period. The 90 

percent increase in the number of Medicaid recipients 

between 1990 and 2001 was the greater contributor to 

the increase in Medicaid cost over that period. In the 

most recent years, the increase in average Medicaid 

costs has accelerated. The impact of the Qualifi ed 

Medicare Benefi ciary and Specifi ed Low-income 

Medicare Benefi ciary programs on average costs 

is unclear, although one might expect the expense 

associated with cost sharing and Part B premiums, 

respectively, to be less than the cost of providing full 

Medicaid coverage for the disabled, thus holding down 

the increase in average costs.

Medicaid for the Disabled

Thousands of 2003 dollars

02468

10

12

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 31

Benefi t Costs as a Percentage of GDP

The cost of benefi ts for the disability programs as a portion of gross domestic product (GDP) rose dramatically 

during the 1990s, increasing from 1.26 percent of GDP in 1990 to nearly 2 percent in 2001.

Chart 17. Cost of disability benefi ts as a percentage of gross domestic product,

by type of benefi t, 1970–2001

Although earlier charts showed that benefi t costs 

have increased dramatically, nearly doubling in real 

terms since 1990, it is important to view these benefi ts 

relative to the size of the economy. Chart 17 presents 

the major disability programs as a percentage of 

gross domestic product. Expenditures on cash and 

medical benefi ts for the disabled, as a percentage of 

GDP, increased 57 percent between 1990 and 2001, 

consuming 1.98 percent of GDP in 2001, up from 1.26 

percent in 1990.

Although many of the expenditures have increased 

over time, the most dramatic growth is seen in Medicaid 

expenditures for the disabled. As shown earlier, 

Medicaid costs have increased because of a tripling of 

the number of disabled individuals receiving Medicaid 

since 1975 and a 175 percent increase in the average 

cost of Medicaid benefi ts during the same period.

Before implementation of SSI in 1974, the Aid to 

the Permanently and Totally Disabled and Aid to the 

Blind programs addressed the needs of the low-income 

population. These state-administered programs are not 

included in the chart for the period 1970–1974, so costs 

during that period are under stated. Both programs 

were considerably smaller and less expensive than is 

SSI. In 1972, the two programs paid $1.4 billion in cash 

payments to 1.2 million recipients. After SSI was fully 

implemented in 1975, 1.9 million disabled recipients 

were receiving $3.3 billion in SSI payments.

SOURCES: Centers for Medicare & Medicaid Services, Medicare & Medicaid Statistical Supplement, 2003, 

Tables 12 and 94 (fi scal year data), available at http://www.cms.hhs.gov/MedicareMedicaidStatSupp/LT/list.asp; 

2004 Annual Report of the Supplemental Security Income Program, Table IV.C1; Annual Statistical Supplement 

to the Social Security Bulletin, 2004, Tables 4.A6 and 5.A17; Bureau of Economic Analysis, gross domestic 

product, available at http://www.bea.gov/bea/dn/home/gdp.htm.

NOTE: Medicaid data are for the fi scal year. All other data are for the calendar year.

a. Medicaid is for disabled persons, including those aged 65 or older.

b. Before 1980, SSI children were counted in the category “SSI adults 18–64.”

Percent

DI spouses

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

SSI children 

b

Medicare HI

Medicare SMI

Disabled widow(er)s

Disabled adult children DI children

DI workers

SSI adults 18–64

Medicaid for disabled 

a
Program Cost and Size

32 ♦ Trends in the Social Security and SSI Disability Programs

Chart 18. Cost of disability programs as a percentage of GDP

SOURCE: Bernd Marin and Christopher Prinz, Facts and Figures on Disability Welfare: A Pictorial Portrait of an 

OECD Report (Vienna: European Centre for Social Welfare Policy and Research, 2003, 36).

NOTES: Source and year of data from the report vary by country; data are from a year between 1996 and 

2000, depending on the country.

These fi gures include benefi t costs for disability programs and employment-related programs for the disabled; 

they do not include health coverage.

EU = European Union; OECD = Organisation for Economic Co-operation and Development.

It is interesting to compare the level of benefi t costs 

for disability programs in the United States with those 

in other countries. The Organisation for Economic 

Co-operation and Development (OECD) recently 

released a report comparing the costs of disability 

programs across countries, from which international 

data in this book are drawn. The data show the percentage of GDP that is expended on all disability-related 

programs in each of the countries. Analyzing the OECD 

fi gures shows that the United States spent a lower 

percentage of its GDP on disability programs than did 

all other countries under study except Canada, Korea, 

and Mexico.

4

 Norway, Sweden, and the Netherlands 

4. OECD fi gures differ somewhat from those generated from SSA 

administrative data; however, the OECD approach is consistent 

across countries, and relative magnitudes should be correct.

spent three times as much on their disability programs 

as did the United States.

There are many reasons why the cost of the 

disability programs is lower in the United States. The 

defi nition of disability is very strict in the United States, 

which includes only persons who are unable to work 

for extended periods, whereas many countries offer 

temporary and partial disability benefi ts. Moreover, 

many European countries have more generous 

disability benefi ts than does the United States, and 

some countries have used the disability programs as 

early retirement programs, particularly when economic 

conditions are poor.

International Expenditures on Disability Programs

Percent

0123456

Non-EU

OECD members

EU

Mexico

Korea

Canada

United States

Australia

Portugal

United Kingdom

France

Belgium

Italy

Spain

Switzerland

Austria

Germany

Denmark

Poland

Netherlands

Sweden

Norway

Country

Other

5.58

4.66

4.64

4.51

3.78

3.08

2.92

2.40

1.83

1.67

1.54

1.53

1.44

1.40

1.28

0.29

0.29

2.70

2.42

2.07

1.72

2.28

As a percentage of gross domestic product (GDP), the costs of disability programs in the United States are 

considerably smaller than those of most other countries.
Program Cost and Size

Trends in the Social Security and SSI Disability Programs ♦ 33

Disability Programs and Self-Reported Disability

Chart 19. Disability as self-reported by persons aged 16–64 compared with the size 

of the disability programs, 2000

SOURCES: Census Bureau data available at http://www.census.gov/hhes/www/disability.html; Current Population Survey (CPS) data available at http://www.bls.census.gov/cps/cpsmain.htm; Annual Statistical Supplement 

to the Social Security Bulletin, 2001, Tables 5.A1, 7.A1, and 7.D1.

a. Data are for December 2000.

The disability programs serve only a portion of the population self-reporting a disability. Although fewer than 

9 million disabled persons received benefi ts from Social Security disability, SSI disability, or both in 2000, estimates of the disabled population vary between 11 million and 33 million, depending on the defi nition of disability.

The disability programs served 8.7 million disabled 

persons aged 16–64 in 2000. The population selfreporting a disability ranged between 11 million and 

33 million persons, depending on the defi nition and 

the survey. 5 Using the defi nition yielding the smallest 

estimate of the disabled population—the defi nition of 

severe work disability in the Current Population Survey 

5. The variability from one source to another in estimates of the 

percentage of the general population that reports being disabled is 

evident in the chart above. The Decennial Census of 2000 and the 

Current Population Survey collected data using a defi nition of work 

disability in 2000, yet one estimate was 25 percent higher than the 

other: 21.3 million vs. 17.1 million, respectively.

(CPS)—nearly a quarter of these persons were not 

on the disability rolls. 6 This suggests that there may 

be additional potential for increases in the number of 

disability benefi ciaries in the future. Estimates based 

on other, less stringent defi nitions of disability suggest 

that programs directed at temporary or partial disability 

could attract a large number of potential benefi ciaries.

6. The Current Population Survey is a monthly survey conducted 

by the Census Bureau for the Bureau of Labor Statistics in the 

Department of Labor. The survey has been conducted for more 

than 50 years. Data on disability in the CPS come from the March 

Supplement to the survey. Additional CPS data on disability are 

provided in Chart 46. 

Millions

0 5 10 15 20 25 30 35

DI, SSI, or both

Children 16–17

Adults 18–64

Disabled widow(er)

Disabled adult child

Worker

Severe work disability

Work disability

Work disability

Any disability

Census

CPS

Social Security

SSI

Self-reported disability

Disabled beneficiaries 

a

33.2

21.3

17.1

11.3

0.7

0.2

3.7

0.1

8.7

5.0
Program Cost and Size

34 ♦ Trends in the Social Security and SSI Disability Programs

The overall prevalence of disability in the United 

States is relatively low compared with that in other 

countries, exceeding the prevalence in only Italy, 

Mexico, and Korea. The prevalence of severe disability 

is also lower in the United States than it is in many 

other countries, although the differences in rates of 

severe disability across countries do not seem as large 

as the differences in overall prevalence rates. Persons 

with a severe disability make up a greater portion of the 

disabled in the United States than they do in some of 

the countries with high disability prevalence rates (for 

example, Denmark and Germany). On the one hand, 

the lower rates of disability in the United States could 

suggest that the U.S. disability programs may be less 

at risk than are programs in other countries. On the 

other hand, if the prevalence of disability in the U.S. 

population were to begin to mirror that of other countries, U.S. disability programs could experience more 

growth in the future. The attractiveness of disability 

programs in some countries (for example, those in 

northern Europe) may actually infl uence the perception of disability and increase the number of people 

reporting disabilities or severe disabilities.

International Prevalence of Disability

The overall prevalence of disability in the United States is relatively low compared with prevalence in other 

countries. The prevalence of severe disability is also lower in the United States than it is in many other countries, 

although the differences in rates of severe disability across countries do not seem as large as the differences in 

overall prevalence rates.

Chart 20. Prevalence of moderate and severe disability as a percentage of the 

population aged 20–64

Percent

0 5 10 15 20 25

Non-EU

OECD members

EU

Korea

Mexico

Italy

United States

Belgium

Spain

Australia

Austria

Poland

Switzerland

France

Canada

Norway

Germany

United Kingdom

Denmark

Netherlands

Portugal

Sweden

Country

Other

Severe

Moderate

SOURCE: Bernd Marin and Christopher Prinz, Facts and Figures on Disability Welfare: A Pictorial Portrait of an 

OECD Report (Vienna: European Centre for Social Welfare Policy and Research, 2003, 31).

NOTES: Source and year of data from the OECD report vary by country; data are from a year between 1996 

and 2000, depending on the country. The U.S. data reported by OECD are from wave 4 of the 1996 Survey of 

Income and Program Participation.

Several countries (Canada, Switzerland, Poland, and Mexico) did not report data separately for severe and 

moderate disability, only the total.

EU = European Union; OECD = Organisation for Economic Co-operation and Development.
ENTRY INTO AND EXIT FROM THE DISABILITY PROGRAMS

Entry into and Exit from the Disability Programs

Introduction

Entry and Exit by Disabled Workers

Entry and Exit by SSI Blind and Disabled 

Adults and Children

Entry by Disabled Workers

Entry by SSI Blind and Disabled Adults

Entry by SSI Disabled Children

Exit by Social Security Disabled Benefi ciaries

Exit by Disabled Workers

Exit by SSI Blind and Disabled Adults and 

Children

Entry into and Exit from the Disability Programs

INTRODUCTION

This section provides further insight into the size of the disability programs by examining, 

from year to year, the number of persons entering and leaving each program. In addition 

to entry and exit, the size of the program is infl uenced by one other factor: duration of the 

stay. Duration is largely a factor of the age of entrants and their diagnosis, both of which 

infl uence the amount of time they are likely to remain on the rolls.

Entry into the disability programs is measured by the number of disability awards for 

each program. It is not always clear how many individuals enter the programs because 

in some benefi t categories, such as disabled adult children, the individual may leave the 

benefi t category as a benefi ciary of the Disability Insurance Trust Fund and immediately 

enter the same benefi t category as a benefi ciary of the Old-Age and Survivors Insurance 

Trust Fund. For this reason, this section focuses on disabled workers and SSI recipients. 

The reader is also cautioned that some individuals may enter both disability programs 

at the same time, or nearly the same time, depending on the waiting period and other 

factors. Thus, simply adding the number of entrants to the programs will yield a total that 

is greater than the total number of unique individuals entering the programs.

The termination of benefi ts in the Social Security disability program is based 

predominantly on four factors: conversion to the retirement program (that is, attainment 

of full retirement age), death, medical recovery, and work recovery. In addition, benefi ts 

to disabled widow(er)s and disabled adult children can be terminated for marriage or for 

entitlement to a larger benefi t.

In the SSI program, termination is a quite different concept. Although payments 

are terminated for death and medical recovery, suspension of payments is common, 

particularly for fi nancial reasons. Payments may be suspended because the recipient 

has excess earnings, excess unearned income, excess resources, or a change in 

living arrangements. For the purposes of this book, individuals who have had their SSI 

payments suspended for 12 months or longer are considered terminated from the SSI 

program.

There are other differences in the reasons for termination between the Social 

Security and SSI programs. For blind and disabled adults in the SSI program, there is no 

conversion to the aged category at age 65; the disability designation continues although 

medical recovery is no longer an issue after the age of 65. There is no termination for 

substantial gainful activity in the SSI program: benefi ts are reduced $1 for each $2 of 

earnings exceeding $65 per month until cash benefi ts are no longer paid. Even after 

cash benefi ts are suspended because of earnings, eligibility for Medicaid benefi ts can be 

maintained under the provisions of section 1619b. SSI disabled children are subject to a 

redetermination at the age of 18, during which an assessment is made as to whether they 

meet adult disability standards. Nearly one in three SSI children is terminated at the age 

of 18 for not meeting the adult standards.
Entry into and Exit from the Disability Programs

38 ♦ Trends in the Social Security and SSI Disability Programs

Entry and Exit by Disabled Workers

The number and rate of entry and exit by disabled workers in the Social Security Disability Insurance (DI) program 

vary considerably over time. The number of awards is at a historical high. The rate of entry, though currently rising, 

is considerably lower than peaks reached in the mid-1970s. Although the number of terminations is relatively high 

by historical standards, the rate of terminations has been generally falling since the early 1980s.

Chart 21. Number of awards and terminations for disabled workers, 1970–2003

The number of annual awards to disabled workers rose 

from 1970 to 1975, declined until 1982, and has generally been increasing since then (Chart 21). The rate 

of program entry, measured as the number of awards 

to disabled workers per 1,000 persons insured for 

disability, provides a better idea of the relative size of 

program entry and tends to vary over time (Chart 22). 

This measure reached a historical high in the mid1970s—increases often attributed to a poor economy, 

increasing incentives from higher benefi ts, the addition 

of Medicare, and the establishment of the SSI program 

in 1974. The decline from 1975 to 1982 was the 

result of legislation and policy changes that tightened 

program eligibility and reduced benefi t levels. Since that 

time, the entry rates into the DI program have risen, 

though not consistently, and are considerably lower 

than the peak level of the 1970s.

The number of exits, or terminations, rose until 

1982, when it fell for a few years because of the moratorium on continuing disability reviews. The number of 

terminations has increased since the mid-1980s and in 

2002 was close to the historical peak reached in 1982. 

Terminations declined in 2003, in part because of the 

increase in the full retirement age in that year from age 

65 to age 65 and 2 months (Chart 21).

Thousands

Hospital Insurance

Supplemental

Medical

Insurance

0

100

200

300

400

500

600

700

800

1970 1974 1978 1982 1986 1990 1994 1998 2002

Awards

Terminations

NUMBER AND RATE OF AWARDS AND TERMINATIONS

SOURCES: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Tables 31 and 

45; Annual Statistical Supplement to the Social Security Bulletin (authors’ compilation of missing years).
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 39

Chart 22. Rate of awards for disabled workers per 1,000 disability-insured workers 

and terminations as a percentage of disabled-worker benefi ciaries, 1970–2003

SOURCES: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Tables 1, 31, 

and 45; Annual Statistical Supplement to the Social Security Bulletin (authors’ compilation of missing years); 

Annual Statistical Supplement to the Social Security Bulletin, 2004, Table 4.C1.

Exits of disabled workers from the DI program, 

as a percentage of disabled-worker benefi ciaries, 

have varied over time, reaching a peak in 1982 when 

the pace of continuing disability reviews accelerated, 

producing large numbers of terminations due to recovery that increased the overall termination rate. 1

 Since 

that time, the medical improvement review standard, 

along with demographic and diagnostic trends, has 

led to reductions in the overall termination rate. One 

notable exception occurred in 1997, when legislation 

1. Terminations from the disabled-worker program are due to death, 

recovery (medical or a return to work), or conversion to retirement 

benefi ts at the full retirement age.

resulted in the review and termination of persons 

who had been entitled on the basis of drug addiction 

and alcoholism, contributing to a temporary increase 

in the overall rate of termination. Noteworthy demographic trends include more baby boomers entering 

the program (which has resulted in a change in the age 

distribution of benefi ciaries and thus relatively fewer 

persons reaching retirement age each year) and more 

allowances for persons with mental disorders, who tend 

to stay on the rolls longer. Recently the increase in the 

retirement age has reduced the number of exits that 

would be due to conversion to the retirement program.

Number per thousand Percent 

DI workers 

0

1

2

3

4

5

6

7

8

1970 1974 1978 1982 1986 1990 1994 1998 2002

0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

Awards per 1,000 insured

Terminations as a percentage of

disabled-worker beneficiaries

Entry and Exit by Disabled Workers

NUMBER AND RATE OF AWARDS AND TERMINATIONS (CONT.)
Entry into and Exit from the Disability Programs

40 ♦ Trends in the Social Security and SSI Disability Programs

The number of SSI awards and terminations and the entry and exit rates for disabled SSI recipients under 65 

years of age have varied over time. The number of awards in 1993 was more than 31⁄2 times that in 1982, and 

the entry rate was nearly 3 times as great. The rate of terminations has shown less variation, running between 

10 percent and 13 percent of recipients since the late 1970s.

Chart 23. Number of awards and terminations for blind and disabled adults and 

children, 1974–2003

SOURCES: SSI Annual Statistical Report, 2003, Tables 3 and 47; 2004 Annual Report of the Supplemental 

Security Income Program, Table IV.B5.

a. SSI benefi ts that have been suspended for 12 months or longer are referred to as terminations, even though 

in some cases (for example, workers under section 1619b) eligibility has not been terminated.

The number of awards of SSI to disabled recipients has 

varied over time, declining from 1975 to 1982, before 

increasing rapidly from 1983 to 1993 (Chart 23). The 

number of awards in 1993 was more than 31⁄2 times the 

number of awards in 1982.

The entry rate is based on the number of SSI 

awards per 1,000 in the population aged 0–64 (Chart 

24). SSI entry reached a low of 1.1 awards per 1,000 

in 1982, before rising to a peak of 3.7 per 1,000 in 

1992. This increase in awards is due, in part, to the 

Zebley decision and to Congressionally mandated SSI 

outreach efforts in the early 1990s. The SSI entry rate 

stabilized in 1997 after 4 years of declines.

Exit from the SSI program can be due to death, 

medical recovery, excess income (earned or unearned), 

excess resources, or a change in living arrangements. 

In many cases, for instance when dealing with excess 

income, payments are suspended. Suspension of 

payments for 12 months or longer is generally considered a termination for SSI program purposes, and as 

such it is counted as a termination in this book. There is 

no termination for substantial gainful activity. However, 

Entry and Exit by SSI Blind and Disabled

Adults and Children

NUMBER AND RATE OF AWARDS AND TERMINATIONS

DI workers 

0

100

200

300

400

500

600

700

800

900

1,000

1974 1978 1982 1986 1990 1994 1998 2002

Awards

Terminations a

Thousands
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 41

Chart 24. Rate of awards per 1,000 in population aged 0–64 and terminations as a 

percentage of SSI recipients, 1974–2003

SOURCES: SSI Annual Statistical Report, 2003, Tables 3 and 47; 2004 Annual Report of the Supplemental 

Security Income Program, Table IV.B5.

NOTE: The reference population for the award rate is the “Selected Social Security Area Population” of the 

appropriate age group and includes the population of the United States and several additional areas. See the 

glossary for a complete defi nition.

a. SSI benefi ts that have been suspended for 12 months or longer are referred to as terminations, even though 

in some cases (for example, workers under section 1619b) eligibility has not been terminated. 

payments are reduced $1 for every $2 earned in a 

month above a $65 earned income disregard, and cash 

payments can be eliminated under this offset. Even if 

cash payments end because of earnings, eligibility for 

Medicaid can continue under the provisions of section 

1619b. 

The number of exits from the SSI program declined 

from 1976 until the mid-1980s (Chart 23). Since 1985 

the number of terminations has increased considerably, 

peaking in 1997 because of welfare reform and other 

changes.

The SSI exit rate, as a proportion of SSI recipients, 

has generally fl uctuated in a narrow band of 10 

percent to 13 percent since the late 1970s (Chart 24). 

Terminations trended downward in the early 1980s, 

before the exit rate stabilized for nearly a decade 

beginning in 1985. In the 1990s, the exit rate increased 

in 2 years: in 1997 and again in 1999. The increase in 

1997 is directly related to two pieces of legislation from 

1996: P.L. 104-121, which eliminated drug addiction 

and alcoholism as a disability, and P.L. 104-193, which 

changed the defi nition of disability for SSI children 

and mandated the review of certain SSI childhood 

cases. The decrease in 1998 and subsequent increase 

in 1999 refl ect SSA administrative policies that 

rereviewed SSI children who were terminated as the 

result of welfare reform and were offered continuation 

of payments to permit appeals on those cases. The 

increase in the rate of exit in 1999 refl ects, in part, fi nal 

dispositions of the reviews of SSI children.

Entry and Exit by SSI Blind and Disabled

Adults and Children

NUMBER AND RATE OF AWARDS AND TERMINATIONS (CONT.)

Number per thousand Percent 

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1974 1978 1982 1986 1990 1994 1998 2002

0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

Awards per 1,000

in population

Terminations as a percentage

of SSI recipients a
Entry into and Exit from the Disability Programs

42 ♦ Trends in the Social Security and SSI Disability Programs

Disabled-worker awards have fl uctuated over the period 

for both sexes. However, since the early 1980s there 

has been a clear pattern of increase in the number of 

awards to women. In fact, the proportion of awards to 

women has increased fairly consistently over the entire 

period, rising from 26 percent in 1970 to 46 percent 

in 2003. Although the fact that more women have 

participated in the labor force and the rate of insured 

status has played a role in increased awards to women, 

disabled-worker incidence rates for women have also 

increased and are now similar to the incidence rates for 

men. Changes in the structure of occupations generally, 

as well as the trend toward women fi lling jobs traditionally held by men, may play a role, as may trends in the 

incidence of various disabling impairments.

Entry by Disabled Workers

NUMBER OF AWARDS, BY SEX

SOURCES: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Table 35; 

Annual Statistical Supplement to the Social Security Bulletin (authors’ compilation of missing years).

The number of disabled-worker awards has varied over time for both sexes; however, the number of awards has 

been generally increasing since the early 1980s. Awards to women have been increasing more rapidly than have 

those for men, both in absolute numbers and as a percentage of awards.

Chart 25. Number of awards to disabled workers, by sex, 1970–2003

Thousands

0

100

200

300

400

500

600

700

800

1970 1974 1978 1982 1986 1990 1994 1998 2002

Women

Men
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 43

Entry by Disabled Workers

PERCENTAGE DISTRIBUTION OF AWARDS, BY AGE

Since 1970, older workers (aged 60 and older) have constituted a generally decreasing share of new disabledworker awards. Persons in the middle age groups—those aged 40–49 and 50–59—have represented an 

increasing percentage of worker awards.

Chart 26. Percentage distribution of awards to disabled workers, by age at 

entitlement, 1970–2003

The number of awards has varied in each age group 

over time but has tended to increase, particularly for 

the age groups 40–49 and 50–59. As a percentage of 

awards, these two age groups make up increasingly 

large shares of the disability awards over time. At the 

same time, the oldest age group, 60–64, has had a 

decreasing share of awards over most of the period, 

although the percentage has increased slightly since 

1998. This change is partially due to the shifting demographics, specifi cally the aging of the baby boomers, 

who were born between 1946 and 1964. Changing 

demographics as a source of this change is further 

supported by the transitory increase and decrease in 

the percentages of persons who were under 30 and 

those who were aged 30–39 in the 1980s and early 

1990s, as baby boomers fi rst increased and then 

decreased the number of persons in these age groups. 

Other data show that while there has been a general 

trend toward lower age-specifi c disability incidence 

rates since the mid-1970s among those aged 45 and 

older, the decline has been smaller or nonexistent 

among those younger than 45. 2

2. See Tim Zayatz, Social Security Disability Insurance Program 

Worker Experience, Actuarial Studies No. 114 (June 1999) 

and No. 118 (June 2005) (Washington, DC: Social Security 

Administration, Offi ce of the Chief Actuary).

SOURCES: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Table 35; 

Annual Statistical Supplement to the Social Security Bulletin (authors’ compilation of missing years).

Percent 

0

10

20

30

40

50

60

70

80

90

100

1970 1974 1978 1982 1986 1990 1994 1998 2002

Under 30 

30–39

40–49

50–59

60–64
Entry into and Exit from the Disability Programs

44 ♦ Trends in the Social Security and SSI Disability Programs

PERCENTAGE DISTRIBUTION OF AWARDS, BY DIAGNOSTIC GROUP

Chart 27. Percentage distribution of awards to disabled workers, by diagnostic 

group, 1982–2003

The number of disabled-worker awards for mental and 

musculoskeletal impairments has grown substantially 

since 1982. The large increase in mental disorders 

in 1986 is directly attributable to changes in the decisionmaking process due to the 1984 Social Security 

Disability Benefi ts Reform Act (including mandatory 

specialist reviews of denials) and the fact that many 

cases were not adjudicated until new mental regulations were issued in 1986. The changes in 1984 also 

mandated that SSA revise the way it assesses pain, 

and after that point musculoskeletal awards began to 

slowly rise. Other factors may also play a role in the 

increase in these awards over time, such as an aging 

population and increases in the number of appeals to 

administrative law judges.

The percentages of awards represented by mental 

and musculoskeletal impairments have grown since 

1982, while neoplasms and circulatory diseases have 

declined. Infectious and parasitic diseases show an 

Entry by Disabled Workers

The percentage of awards to disabled workers resulting from mental and musculoskeletal impairments has 

increased signifi cantly, while the percentage of cases attributed to circulatory, neoplasms, and infectious diseases 

has decreased.

SOURCE: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Table 36.

NOTES: Unknown diagnoses are excluded from the series.

There was a change in the data series in 1995. Before 1995, the diagnostic data for awards at the appeals level 

were estimated from the diagnoses of cases allowed at the initial level. Beginning in 1995, all levels of decisions 

were included in the diagnostic data.

Percent 

Men

Women 

0

10

20

30

40

50

60

70

80

90

100

1982 1986 1990 1994 1998 2002

Mental disorders 

Injuries

Other

Circulatory

Neoplasms

Endocrine/nutritional/metabolic 

Respiratory

Musculoskeletal 

Infectious/parasitic

Nervous system 
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 45

increase in the late 1980s, which then began to subside 

in the mid-1990s. HIV/AIDS cases probably accounted 

for much of this increase, while new or improved 

treatments and adjustments to policy may have helped 

reduce the relative prevalence of HIV/AIDS cases 

among awards in the late 1990s and after. 3 Between 

3. Before 1990, HIV/AIDS was not counted in the “Infectious and 

parasitic disease” category but was included in the “Other” category.

1999 and 2000, the percentage of awards represented 

by nutritional and metabolic diseases dropped by half 

and thereafter continued at a lower rate. Elimination of 

the medical listing for obesity in late 1999 may have 

accounted for this decline.

Entry by Disabled Workers

PERCENTAGE DISTRIBUTION OF AWARDS, BY DIAGNOSTIC GROUP (CONT.)
Entry into and Exit from the Disability Programs

46 ♦ Trends in the Social Security and SSI Disability Programs

Entry by SSI Blind and Disabled Adults

NUMBER OF AWARDS, BY SEX

The percentage of awards of SSI payments for disability has been fairly constant for men and women: women 

aged 18–64 represent roughly half of all awards, varying between 49 percent and just under 53 percent from 1976 

to 2003. The small variations by sex show no systematic trend.

Chart 28. Number of awards to blind and disabled adults (aged 18–64), by sex, 

1976–2003

The profi le of SSI awards to disabled adults changed 

very little from 1976 to 2003. The percentage of 

awards to disabled women aged 18–64 has been fairly 

constant at roughly half of all awards, varying between 

49 percent and just under 53 percent during this period. 

The small variations have no systematic trend. The 

result is somewhat surprising, since one might expect 

that fewer women would be awarded SSI payments 

because of the sharp increase in the number of women 

awarded disabled-worker benefi ts during this same 

period. Given that more women are becoming insured 

for Disability Insurance and that, in general, they are 

earning more, the share of SSI for women might be 

expected to decrease. Other factors may be at play as 

well.

SOURCE: SSI Annual Statistical Report, 2003, Table 49.

NOTE: Unpublished data for missing time points were obtained from the Social Security Administration, Supplemental Security Record (Characteristic Extract Record format), 10 percent sample.

Thousands

0

50

100

150

200

250

300

350

400

450

500

550

600

650

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Men

Women
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 47

PERCENTAGE DISTRIBUTION OF AWARDS, BY AGE AT FIRST RECEIPT

Chart 29. Percentage distribution of awards to blind and disabled adults (aged 

18–64), by age at fi rst receipt, 1976–2003

As can be observed in the chart, new awards to recipients in the age group 40–49 increased over the entire 

period. Awards to persons aged 30–39 also increased, 

but that growth moderated in the mid-1990s. The 

changing age profi le for SSI blind and disabled adults 

is similar to that observed in the DI worker program. 

Given the timing and size of the increases in the 30–39 

and 40–49 age groups, at least part of this age shift 

may be demographic, though the changing diagnostic 

profi le may also play a role.

Entry by SSI Blind and Disabled Adults

Awards of SSI payments to recipients in the middle age groups have increased, which may in part refl ect the 

movement of the baby boomers through the age categories over time.

SOURCE: SSI Annual Statistical Report, 2003, Table 49.

NOTE: Unpublished data for missing time points were obtained from the Social Security Administration, Supplemental Security Record (Characteristic Extract Record format), 10 percent sample.

Percent 

0

10

20

30

40

50

60

70

80

90

100

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

60–64

50–59

40–49

18–21

30–39

22–29
Entry into and Exit from the Disability Programs

48 ♦ Trends in the Social Security and SSI Disability Programs

Entry by Blind and Disabled Adults

PERCENTAGE DISTRIBUTION OF AWARDS, BY DIAGNOSTIC GROUP

The proportion of SSI awards based on mental disorders (other than mental retardation) and musculoskeletal 

diseases among all SSI awards has increased over time, while the proportion based on mental retardation has 

declined.

Chart 30. Percentage distribution of awards to blind and disabled adults (aged 

18–64), by diagnostic group, 1983–2003

SOURCE: SSI Annual Statistical Report, 2003, Table 49.

NOTES: Unpublished data for missing time points were obtained from the Social Security Administration, 

Supplemental Security Record (Characteristic Extract Record format), 10 percent sample.

Unknown diagnoses are excluded from the series.

A change in the data series occurred in 1995. Before 1995, the diagnostic data for awards at the appeals level 

were estimated from the diagnoses of cases allowed at the initial level. Beginning in 1995, all levels of decisions 

were included in the diagnostic data.

Percent 

0

10

20

30

40

50

60

70

80

90

100

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

Other mental disorders 

Infectious/parasitic

Respiratory

Musculoskeletal

Circulatory 

Nervous system

Neoplasms

Mental retardation 

Other

Injuries

Endocrine/nutritional/metabolic 

There are clear trends showing increasing SSI awards 

for mental disorders (other than mental retardation) and 

for musculoskeletal diseases. The same increases were 

found for awards to disabled workers. Adult SSI awards 

for mental retardation have declined both in number 

and as a percentage of awards during most of the 

1983–2003 period. As was true with awards to disabled 

workers, the percentage of SSI awards for circulatory 

diseases declined from 1983 to 2003, and the increase 

in the number and percentage of awards for infectious 

and parasitic diseases (mostly HIV/AIDS) that began in 

the late 1980s moderated somewhat in the mid-1990s. 4

4. Before 1990, HIV/AIDS was not counted in the “Infectious and 

parasitic disease” category but was included in the “Other” category. 
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 49

NUMBER OF AWARDS, BY SEX

Chart 31. Number of awards to disabled children, by sex, 1976–2003

Entry by SSI Disabled Children

From 1976 to 2003, the percentage of males being awarded SSI children’s benefi ts increased from 57 percent to 

nearly 65 percent. There was a large increase in the proportion of awards to males after the Zebley decision in 

1990.

SOURCE: SSI Annual Statistical Report, 2003, Table 48.

NOTE: Unpublished data for missing time points were obtained from the Social Security Administration, Supplemental Security Record (Characteristic Extract Record format), 10 percent sample.

Thousands

0

25

50

75

100

125

150

175

200

225

250

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Male

Female 

The category of SSI disabled children has seen 

changes to its profi le of awards over time. Awards 

to males have historically outnumbered awards to 

females, and there has been a substantial increase in 

awards to males over the period 1976 to 2003. In 2003, 

there were nearly twice as many awards to males as to 

females. The percentage of awards to males increased 

dramatically after the Zebley decision in 1990, rising 

to nearly 65 percent in 1993. The percentage of males 

awarded benefi ts declined from 1993 until 1997 and 

has been increasing since. In 2003, the percentage of 

males was again nearing 65 percent and reached a 

historical high.
Entry into and Exit from the Disability Programs

50 ♦ Trends in the Social Security and SSI Disability Programs

Entry by SSI Disabled Children

PERCENTAGE DISTRIBUTION OF AWARDS, BY AGE

In the early 1990s following the Zebley decision, the percentage of awards going to children in the older age 

groups increased for a time, particularly in the age group 5–12. In 1992 the percentage of awards to children 

under the age of 5 began to increase; however, since 1997, it has been decreasing.

Chart 32. Percentage distribution of awards to disabled children, by age at fi rst 

receipt, 1976–2003

SOURCE: SSI Annual Statistical Report, 2003, Table 48.

NOTE: Unpublished data for missing time points were obtained from the Social Security Administration, Supplemental Security Record (Characteristic Extract Record format), 10 percent sample.

Percent 

0

10

20

30

40

50

60

70

80

90

100

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Under 5 

5–12

13–17

The Zebley decision in 1990 led to a large but temporary increase in the percentage of awards for children 

aged 5–12 and, to a lesser extent, for those aged 

13–17. The proportion of awards to children 13 and 

older has shown slight increases since 1997, reversing 

the trend of signifi cant decreases in the late 1970s 

and 1980s. The percentage of awards to children aged 

5–12 increased dramatically after Zebley and began 

to decline even before the implementation in 1996 of 

statutorily mandated changes to the children’s criteria, 

which altered the way that SSA assessed behavioral 

problems. Since 1997, both the number and percentage 

of awards to children aged 5–12 have been increasing 

modestly. With the exception of the temporary increase 

in other age groups mentioned above, the percentage 

of SSI disabled child awards to children under the age 

of 5 generally increased until it reached a peak in 1997 

and has decreased slightly since then. The increase in 

awards to children under 5 that began in 1993 is due, 

in part, to SSA regulations issued in 1991 that made 

low birth weight functionally equivalent to meeting 

a medical listing. 5 The number of awards based on 

low birth weight in this age group has continued to 

increase, despite the trend toward a smaller proportion 

of awards for children under 5.

5. Other factors included removal of prematurity as a requirement for 

an allowance based on low birth weight in 1993. Specifi c impairment 

codes for low birth weight were adopted in February 1994. Before 

1994, low birth weight awards fell under the “Other” category.
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 51

PERCENTAGE DISTRIBUTION OF AWARDS, BY DIAGNOSTIC GROUP

Chart 33. Percentage distribution of awards to disabled children, by diagnostic 

group, 1983–2003

Entry by SSI Disabled Children

Signifi cant changes in the distribution of diagnoses have occurred among awards to SSI disabled children. The 

percentage of awards due to mental retardation has been declining since the mid-1980s, while the percentage of 

awards for other mental disorders has increased dramatically. Nervous system impairments declined as a percentage of awards throughout the 1980s into the early 1990s, while awards for low birth weight increased after 1992.

SOURCE: SSI Annual Statistical Report, 2003, Table 48.

NOTES: Unpublished data for low birth weight and missing time points were obtained from the Social Security 

Administration, Supplemental Security Record (Characteristic Extract Record format), 10 percent sample. 

Unknown diagnoses are excluded from the series. Before 1995, the diagnostic data for awards at the appeals 

level were estimated from the diagnoses of cases allowed at the initial level. Beginning in 1995, all levels of decisions were included in the diagnostic data.

a. “Low birth weight” is part of the “Other” category but is shown separately here.

Very signifi cant changes have occurred in the distribution of diagnoses among awards to SSI disabled 

children. The percentage of awards based on mental 

retardation has been declining since the mid-1980s, 

while the percentage of awards for other mental 

disorders has increased dramatically. The increase 

in the percentage of awards based on other mental 

disorders is likely due to several factors: the 1984 

Amendments and revised mental listings; the Zebley

case in 1990 that resulted in increased awards for 

Percent 

0

10

20

30

40

50

60

70

80

90

100

1983 1987 1991 1995 1999 2003

Mental retardation 

Other mental disorders

Nervous system 

Low birth weight a Congenital anomalies 

Other

Neoplasms

Injuries Infectious/parasitic Respiratory 

Circulatory

Musculoskeletal

Endocrine/nutritional/metabolic
Entry into and Exit from the Disability Programs

52 ♦ Trends in the Social Security and SSI Disability Programs

mental disorders that cause behavioral problems; and 

a change to more precise diagnostic coding for children 

with certain cognitive limitations, that is, a change in 

the diagnostic coding of “borderline mental retardation” 

from the “Mental retardation” diagnostic group to the 

“Other mental disorders” group. The change in diagnostic coding cannot account for the entire reduction in the 

diagnoses for mental retardation, however, since the 

decline began before 1993.

“Nervous system” diseases declined as a percentage of awards throughout the 1980s into the early 

1990s, while the percentage of awards for “Other” 

disorders increased considerably after 1993. The 

increase in awards for “Other” and “Low birth weight” 

are due, in part, to Zebley-related changes. After the 

Zebley decision, SSA instituted a policy in which low 

birth weight was considered functionally equivalent to 

meeting a medical listing.

Entry by SSI Disabled Children

PERCENTAGE DISTRIBUTION OF AWARDS, BY DIAGNOSTIC GROUP (CONT.)
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 53

Exit by Social Security Disabled Benefi ciaries

NUMBER AND RATE OF TERMINATIONS

The number of terminations from the Social Security disability program has generally been increasing since the 

mid-1980s. The rate of termination of disabled workers declined from 1982 until 1996, and, with the exception of 

1997 and terminations for drug addiction and alcoholism, the rate was fairly stable until 2002.

Chart 34. Number of terminations for disabled Social Security benefi ciaries,

by type of benefi ciary, 1970–2003

SOURCE: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Table 45.

NOTE: Data for disabled widow(er)s were not available before 2001.

Thousands

Hospital Insurance

Supplemental

Medical

Insurance

0

50

100

150

200

250

300

350

400

450

500

1970 1974 1978 1982 1986 1990 1994 1998 2002

Disabled workers

Disabled adult children

Disabled widow(er)s

The number of terminations of disabled workers rose 

fairly consistently from 1970 to 1982, after which 

terminations began to decline because of reductions in 

the processing of continuing disability reviews by some 

states. This was followed by a nationwide moratorium 

on continuing disability reviews in April 1984 and 

the medical improvement review standard that was 

enacted in 1984. 6 The number of terminations began 

to rise again in 1986 and grew consistently with two 

6. Although the Secretary of Health and Human Services implemented the nationwide moratorium on CDRs, the governors of 

many states had ordered the Disability Determination Services to 

stop conducting CDRs long before that date. CDRs were resumed 

at a much diminished pace under the medical improvement review 

standard in 1986.

exceptions: a large and temporary increase in 1997 

that resulted from welfare reform legislation that ended 

entitlement to benefi ts based on drug addiction and 

alcoholism; and a decline in the number of terminations 

in 2003. The legislated increase in the full retirement 

age that took place for workers attaining age 62 in 

2000, and the resulting decrease in retirement conversions, would account for much of this decline in 2003. 7

The number of terminations of disabled adult children 

has varied but increased overall during the 1970–2003 

period.

7. Disabled widow(er)s did not have an increase in their full retirement age (and age of conversion) until 2005, because those who 

attained the age of 60 in 2000 were the fi rst affected.
Entry into and Exit from the Disability Programs

54 ♦ Trends in the Social Security and SSI Disability Programs

NUMBER AND RATE OF TERMINATIONS (CONT.)

Chart 35. Rate of termination per 1,000 disabled Social Security benefi ciaries,

by type of benefi ciary, 1970–2003

Exit by Social Security Disabled Benefi ciaries

SOURCE: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Table 45.

NOTE: Data for disabled widow(er)s were not available before 2001.

Number per thousand

Hospital Insurance

Supplemental

Medical

Insurance

0

25

50

75

100

125

150

175

200

1970 1974 1978 1982 1986 1990 1994 1998 2002

Disabled workers

Disabled widow(er)s

Disabled adult children

Despite the general pattern of increasing numbers 

of terminations in the Social Security disability program, 

terminations have not kept pace with the number of 

disability awards, and the program has grown. The rate 

of termination per 1,000 disabled-worker benefi ciaries 

declined nearly every year between 1982 and 1996. 

Although part of this decline is likely due to the medical 

improvement review standard enacted in 1984, it is 

also likely that increased awards of benefi ts to younger 

persons based on mental disorders contributed to this 

result. The brief increase in the rate of terminations of 

disabled workers in 1997 was due, at least in part, to 

the change in the drug addiction and alcoholism policy 

and the dedicated funding for continuing disability 

reviews that began in 1996 as part of P.L. 104-121.

Between 1998 and 2002, the rate of termination 

of disabled workers remained relatively stable at 

historically low rates, despite the dedicated CDR 

funding that was in place from 1996 to 2002. In 2003, 

the fi rst increase in the full retirement age reduced 

the rate of termination for disabled workers. Although 

the termination rate of disabled adult children dipped 

in 1980 and again in 1991, it has been increasing 

since then. Termination rates for disabled workers and 

disabled adult children have been converging since 

the early 1990s, although the rate for workers remains 

nearly twice that of adult children. Chart 35 shows that, 

from the limited data available, the termination rate for 

disabled widow(er)s is higher than that for disabled 

workers. This higher termination rate may be due to the 

fact that widow(er)s are not eligible for benefi ts until 

they are 50 and are consequently closer to a conversion to Social Security (OASI) widow(er)’s benefi ts.
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 55

Exit by Disabled Workers

The result of changes in policy concerning drug addiction and alcoholism is evident in the large, temporary 

increase in recoveries in 1997. The overall rate of termination decreased consistently until the 1-year rise in 1997 

resulting from terminations of benefi ts for drug addiction and alcoholism.

Chart 36. Number of terminations for disabled workers, by reason, 1970–2003

SOURCES: Tim Zayatz, Social Security Disability Insurance Program Worker Experience, Actuarial Studies

No. 114 (June 1999) and No. 118 (June 2005) (Washington, DC: Social Security Administration, Offi ce of the 

Chief Actuary), Table 5; Annual Statistical Supplement to the Social Security Bulletin (authors’ compilation of 

missing data).

NUMBER AND RATE OF TERMINATIONS, BY REASON

Thousands

0

50

100

150

200

250

300

350

400

450

500

550

1970 1974 1978 1982 1986 1990 1994 1998 2002

Death

Retirement conversion

Recovery

Other

Terminations of disabled-worker benefi ciaries peaked 

in 1982 (both in number and as a rate), driven mostly 

by recovery terminations as a result of accelerated 

CDRs. 8 After dropping off dramatically, the number of 

8. The history of policy changes that infl uenced terminations is 

discussed in greater detail in a later section.

recoveries (which includes medical improvement and 

terminations for substantial gainful activity, or SGA) has 

increased since the mid-1980s (Chart 36). The result 

of changes in drug addiction and alcoholism policy is 

evident in the large, temporary increase in recoveries in 

1997.
Entry into and Exit from the Disability Programs

56 ♦ Trends in the Social Security and SSI Disability Programs

Chart 37. Rate of termination per 1,000 disabled-worker benefi ciaries, by reason, 

1970–2003

SOURCES: Tim Zayatz, Social Security Disability Insurance Program Worker Experience, Actuarial Studies

No. 114 (June 1999) and No. 118 (June 2005) (Washington, DC: Social Security Administration, Offi ce of the 

Chief Actuary), Table 5; Annual Statistical Supplement to the Social Security Bulletin (authors’ compilation of 

missing data).

Exit by Disabled Workers

NUMBER AND RATE OF TERMINATIONS, BY REASON (CONT.)

Although the number of terminations of disabled 

workers has generally been rising since the mid-1980s, 

the overall (or total) rate of terminations decreased 

consistently until the 1-year rise in 1997, which was the 

result of terminations for drug addiction and alcoholism 

(Chart 37). The rate has been relatively stable since 

then.

The rate of termination for recovery (medical 

improvement and earnings above the SGA level) 

generally increased from the early 1990s until 2000, 

then began to decline. Special funding of continuing 

disability reviews in recent years may have helped 

increase terminations for medical recovery.

Terminations due to death and conversion to retirement (old-age) benefi ts have been declining, refl ecting 

the changing age profi le of the benefi ciary population, 

which was discussed earlier. The decline in old-age 

conversions in 2003 is the result, in part, of the delay of 

conversions because of the increases in the retirement 

age that are being phased in.

Number per thousand

0

20

40

60

80

100

120

140

160

180

1970 1974 1978 1982 1986 1990 1994 1998 2002

All terminations

Retirement conversion

Death

Recovery

Other
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 57

Exit by SSI Blind and Disabled Adults and Children

The number of terminations of SSI payments rose fairly consistently for blind and disabled adults and children 

until 1997. Since then the number of terminations has varied at levels slightly lower than those attained in 1997. 

The rate of terminations of disabled adult SSI recipients remained fairly constant from 1980 to 2003, while the rate 

of terminations of disabled child recipients has fl uctuated greatly.

Chart 38. Number of terminations for blind and disabled adults and children, 

1980–2003

NUMBER AND RATE OF TERMINATIONS

SOURCE: 2004 Annual Report of the Supplemental Security Income Program, Table IV.B5.

NOTE: SSI benefi ts that have been suspended for 12 months or longer are referred to as terminations, even 

though in come cases (for example, workers under section 1619b) eligibility has not been terminated.

The number of terminations of blind and disabled 

adult SSI recipients (aged 18–64) generally increased 

between 1980 and 1997 and, despite some reductions 

in the late 1990s, has roughly doubled. The moratorium 

in 1984 on continuing disability reviews (and earlier 

state actions) seems to have had little impact on 

the number of SSI terminations, although the rate of 

terminations for SSI disabled children may have been 

affected. After reaching a peak in 1997, in part because 

of the 1996 changes that terminated payments based 

on drug addiction and alcoholism and altered SSI 

policy toward children, SSI terminations decreased; 

however, for SSI adults, terminations are once again 

approaching the 1997 level.

Thousands

0

50

100

150

200

250

300

350

400

450

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Adults

(aged 18–64)

Children
Entry into and Exit from the Disability Programs

58 ♦ Trends in the Social Security and SSI Disability Programs

Chart 39. Rate of termination for blind and disabled adults and children per 1,000 

recipients in age group, 1980–2003

Exit by SSI Blind and Disabled Adults and Children

NUMBER AND RATE OF TERMINATIONS (CONT.)

SOURCES: 2004 Annual Report of the Supplemental Security Income Program, Table IV.B5; SSI Annual Statistical Report, 2003, Table 3.

NOTE: SSI benefi ts that have been suspended for 12 months or longer are referred to as terminations, even 

though in come cases (for example, workers under section 1619b) eligibility has not been terminated.

The rate of terminations for blind and disabled 

adult SSI recipients has been relatively consistent 

from 1980 to 2003, varying modestly but staying within 

the range of 100 to 120 per thousand, except in 1997. 

In contrast, the rate of terminations for SSI disabled 

children has witnessed large fl uctuations, with the 

rate falling below 60 per thousand and rising to 150 

per thousand. The large decline between 1982 and 

1985 probably refl ects the moratorium on continuing 

disability reviews and earlier state actions. The peaks in 

1997 and 1999 refl ect the childhood redeterminations 

mandated by welfare reform legislation in 1996 (and 

the administrative reviews of those redeterminations 

that followed). The mandated redeterminations of SSI 

children attaining the age of 18 and reviews by the fi rst 

birthday of children with low birth weight (P.L. 104-193) 

have also contributed to the higher rate of terminations 

of SSI disabled children since 1997. Before 1996, 

few continuing disability reviews were conducted on 

SSI disabled recipients. In 1994, Congress mandated 

that continuing disability reviews be conducted on a 

minimum of 100,000 SSI recipients a year between 

1996 and 1998 (P.L. 103-296). In 1996, Congress 

provided special dedicated funding for the agency to 

conduct CDRs on the disabled (both Social Security 

and SSI disabled) from 1996 to 2002 (P.L. 104-121), 

which led to increased SSI terminations for medical 

improvement during that period.

Number per thousand

0

20

40

60

80

100

120

140

160

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Children

Adults

(aged 18–64)
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 59

Exit by SSI Blind and Disabled Adults and Children

The result of changes during the welfare reform era is evident in the large, temporary increase in the number of 

terminations for disabled adults and children in 1997. The rate of terminations for death and for other reasons 

has been relatively stable for disabled adult SSI recipients during the 1980–2003 period. The rate of termination 

for death among SSI disabled children has been low and decreasing, while the rate of terminations for all other 

reasons has varied dramatically for SSI children and adults.

Chart 40. Number of terminations for blind and disabled adults and children,

by reason, 1980–2003

NUMBER, RATE, AND PERCENTAGE DISTRIBUTION

OF TERMINATIONS, BY REASON

SOURCE: 2004 Annual Report of the Supplemental Security Income Program, Tables IV.B3 and IV.B4.

Detailed data on the reason for terminations for 

disabled SSI recipients is available only for 1988 and 

later years. The data in Charts 40 and 41 for the period 

1980 to 2003 are limited to terminations of SSI disabled 

recipients for death and all other reasons. Charts 42 

and 43 show the percentage of terminations by additional categories for a shorter period (1988 to 2003).

The number of deaths of SSI disabled children 

was relatively constant, while deaths of SSI disabled 

adults (aged 18–64) rose from the mid-1980s to the 

mid-1990s. The rate of termination for reasons other 

than death has varied over time. The total number of 

terminations for SSI adults peaked in 1997, in part 

because of program changes in the welfare reform era.

Thousands

0

50

100

150

200

250

300

350

400

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Other reason

(adults 18–64)

Death

(adults 18–64)

Other reason

(children)

Death

(children)
Entry into and Exit from the Disability Programs

60 ♦ Trends in the Social Security and SSI Disability Programs

Chart 41. Rate of termination for blind and disabled adults and children

per 1,000 recipients in age group, by reason, 1980–2003

Exit by SSI Blind and Disabled Adults and Children

SOURCES: 2004 Annual Report of the Supplemental Security Income Program, Tables IV.B3 and IV.B4;

SSI Annual Statistical Report, 2003, Table 3.

Note, however, that the number of adult SSI 

recipients found to be no longer disabled (Chart 42) 

peaked in 1996, following implementation of P.L. 104-

121, which mandated the removal of persons for whom 

drug abuse or alcoholism was a materially contributing 

factor to their disability. Changes in the SSI program 

related to welfare reform (P.L. 104-193) resulted in a 

high number of terminations of disabled children from 

SSI in 1997. As the result of continuation of payments 

and reviews of these redeterminations of children, 

terminations fell in 1998 and rose again in 1999 as fi nal 

dispositions were entered. The effect of these changes 

on the size of the SSI program for disabled children 

is shown dramatically in Chart 43. The percentage of 

terminations due to no longer being disabled increased 

dramatically in 1997, then began to tail off. The trend 

has clearly been toward higher numbers of terminations 

for reasons other than death.

The death rates were relatively constant for SSI 

children and adults until downward trends began in 

the mid-1980s for children and around 1995 for adults 

(Chart 41). Even though the decline in death rates for 

children began before the Zebley decision in 1990, 

there has been a consistent decline in the death rates 

for children since 1990 that probably refl ects, at least 

in part, changes resulting from the Zebley decision and 

increased numbers of children with mental disorders 

receiving SSI.

Number per thousand

0

20

40

60

80

100

120

140

160

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Other reason

(children)

Other reason

(adults 18–64)

Death

(adults 18–64)

Death

(children)

NUMBER, RATE, AND PERCENTAGE DISTRIBUTION

OF TERMINATIONS, BY REASON (CONT.)
Entry into and Exit from the Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 61

Exit by SSI Blind and Disabled Adults and Children

Chart 42. Percentage distribution of terminations for blind and disabled adults 

(aged 18–64), by reason, 1988–2003

Percent

0

10

20

30

40

50

60

70

80

90

100

1988 1990 1992 1994 1996 1998 2000 2002

Death

Institutionalized

Excess resources

Excess income

No longer disabled

All other reasons

The rate of termination for reasons other than 

death has varied over time, particularly for SSI children. 

The rate of termination for SSI adults peaked twice—in 

1982 during the period of accelerated disability reviews 

and again in 1997 after Congress mandated changes 

to the SSI program (Chart 41). Terminations of SSI 

children for reasons other than death peaked twice, 

once in 1997 and again in 1999. In 1996, welfare 

reform legislation changed the statutory defi nition of 

disability for children and ordered redeterminations 

of cases allowed on the basis of the criteria resulting 

from the Zebley decision. In 1998, benefi t continuation 

while cases were reviewed and appeals undertaken 

was offered to children who had been terminated. The 

fi nal disposition of the welfare reform redeterminations 

occurred in 1999, resulting in the higher termination 

rate.

SOURCES: SSI Annual Statistical Report, 2003, Table 61; data for earlier years were obtained from the Social 

Security Administration, Supplemental Security Record (Characteristic Extract Record format), 1 percent 

sample.

NUMBER, RATE, AND PERCENTAGE DISTRIBUTION

OF TERMINATIONS, BY REASON (CONT.)
Entry into and Exit from the Disability Programs

62 ♦ Trends in the Social Security and SSI Disability Programs

Chart 43. Percentage distribution of terminations for disabled children,

by reason, 1988–2003

Exit by SSI Blind and Disabled Adults and Children

As can be seen in Charts 42 and 43, the impact of 

Congressionally mandated CDRs for SSI, particularly 

for children awarded payments because of low birth 

weight and redeterminations of SSI children reaching 

age 18, coupled with dedicated CDR funding, resulted 

in larger proportions of terminations because recipients 

were found to be no longer disabled. Blind and disabled 

adult SSI recipients for whom drug abuse or alcoholism 

was material to a prior fi nding of disability were no 

longer considered disabled after 1996, which increased 

terminations of disabled adult SSI recipients. The 

various other reasons for termination have represented 

a relatively constant proportion of terminations for 

adults, although they have varied somewhat for SSI 

children.

SOURCES: SSI Annual Statistical Report, 2003, Table 61; data for earlier years were obtained from the Social 

Security Administration, Supplemental Security Record (Characteristic Extract Record format), 1 percent 

sample.

Percent

0

10

20

30

40

50

60

70

80

90

100

1988 1990 1992 1994 1996 1998 2000 2002

All other reasons

No longer disabled

Excess income

Excess resources

Institutionalized

Death

NUMBER, RATE, AND PERCENTAGE DISTRIBUTION

OF TERMINATIONS, BY REASON (CONT.)
POPULATION FACTORS INFLUENCING PROGRAM SIZE

Population Factors Infl uencing Program Size

Introduction

Population Growth

Number of Workers Insured for Disability

Prevalence of Work Disability

Disabled-Worker Incidence Rates

SSI Blind and Disabled Incidence Rates

Population Factors Infl uencing Program Size

INTRODUCTION

Various factors affect the size of the disability programs. One factor is population growth. 

As the size of the population increases, other things remaining the same, one would 

expect that the size of the disability programs would increase proportionately, although 

it is rare for all other factors to stay the same. Another factor is change in the eligible 

population, which can be the result of changes in program eligibility criteria (for example, 

increases in the full retirement age result in disabled workers staying in the Disability 

Insurance program longer) or changes in the population vis-à-vis eligibility (for example, 

a greater proportion of workers being insured for disability). A fi nal factor that infl uences 

program size is the incidence and prevalence of disability in the population. 

1

A number of factors infl uence incidence and prevalence rates of disability in the 

general population. One is the general health of the population and the incidence rates 

for disease and disabling impairments. Another is the social environment that leads a 

person with an impairment to be disabled. Contributing factors may include economic 

conditions, social mores, environmental factors, and fi nancial incentives such as benefi ts. 

Demographic trends (such as the aging of the baby boomers) also play a role. However, 

the incidence rate is not simply a function of the factors discussed above but is also 

affected by the standards and methods that the Social Security Administration applies in 

determining medical eligibility. As the decision process becomes more or less stringent, 

the number of persons entering the disability programs changes. Similarly, perceived 

changes in the standards that SSA applies to medical decisions may infl uence the decision to apply for disability benefi ts.

1. Incidence is a fl ow concept, indicating the number of persons entering a state, such as the number who 

become impaired or the number of new entrants to a disability program. Prevalence is a stock concept, indicating the cumulative number in a state, in this case the number of persons with impairments (new and existing) or 

the number of persons on the disability rolls (new entrants and existing disabled benefi ciaries).
Population Factors Infl uencing Program Size

66 ♦ Trends in the Social Security and SSI Disability Programs

Between 1970 and 2000, the population of the United States aged 15–64 increased by nearly 50 percent. This 

increase made a major contribution to growth in the disability programs.

Chart 44. Population of the United States aged 15–64, 1970–2000

SOURCE: U.S. Census Bureau, Decennial Census.

The working-age population of the United States (ages 

15–64) grew 49 percent between 1970 and 2000, from 

125 million to 186 million. Over that same period, the 

number of disabled-worker benefi ciaries increased 

nearly 240 percent, from 1.5 million to more than 

5 million. The Supplemental Security Income program 

did not exist until 1974, but the population of blind and 

disabled adult SSI recipients aged 18–64 increased 

150 percent, from 1.5 million in 1974 to 3.7 million in 

2000. Many things have changed that alter the direct 

relationship between the size of the population and 

the size of the disability rolls: the change in the age 

distribution due to the baby boomers, the health of 

the population, improvements in medical treatments, 

economic circumstances, and changes in disability 

policy, to name a few.

Population Growth

Millions

0

20

40

60

80

100

120

140

160

180

200

1970 1980 1990 2000
Population Factors Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 67

Number of Workers Insured for Disability

The number of workers insured in the event of disability increased by 95 percent from 1970 to 2003, nearly twice 

the rate of population growth. The number insured for disability is increasing more rapidly for women than for men, 

refl ecting the emergence of the two-earner household and increased participation in the labor force by women.

Chart 45. Number of workers insured for disability, by sex, December 1970–2003

SOURCE: Annual Statistical Supplement to the Social Security Bulletin, 2004, Table 4.C2.

Although the growth of the population plays a role in the 

size of SSA’s disability programs, potential participants 

in the Disability Insurance program must be insured in 

the event of disability. The number of persons insured 

has increased steadily from 1970 to 2003, rising by 95 

percent—nearly double the 49 percent growth in the 

population. This growth indicates that the DI program 

is likely to grow faster than the population, because 

workers are being insured for disability at proportionately higher rates.

The number of women insured in the event of 

disability has increased by 176 percent during the 

period, compared with 55 percent (about the rate of 

population growth) for men. The larger increase in the 

number of women insured for disability can be attributed to the emergence of the two-earner household 

and stronger labor force attachment for women than in 

the past.

Millions

0

25

50

75

100

125

150

1970 1974 1978 1982 1986 1990 1994 1998 2002

All insured workers

Men

Women
Population Factors Infl uencing Program Size

68 ♦ Trends in the Social Security and SSI Disability Programs

Chart 46. Prevalence of self-reported work disability for persons aged 16–64,

1981–2003

Prevalence of Work Disability

After increasing from 9 percent of the population in 1981 to 10 percent in 1993, the percentage of the working-age 

population (16–64) reporting a work disability has been fairly stable at around 10 percent from 1993 until 2003, 

declining slightly after 1997. However, the percentage of the working-age population reporting a severe work 

disability has increased from less than 5 percent in 1981 to nearly 7 percent in 2003.

SOURCE: Authors’ compilation of published statistics from the U.S. Census Bureau, Current Population

Survey.

NOTES: In the Current Population Survey (CPS), people are categorized as “work disabled” if they are receiving disability benefi ts (such as persons aged 0–64 who are on Medicare or Medicaid or who receive DI or SSI 

benefi ts) or if the person has a problem working (or is not working) because of illness or disability.

There was a minor change in the CPS defi nition of disability in 1996, but the trends in the series were well 

established before, and continued after, the change.

The Census Bureau did not publish CPS data on severity of disability for 1993.

Obtaining a good, consistent measure of the disabled 

population in the United States is diffi cult. Different 

surveys use different defi nitions of disability and, 

depending on the context of the questions, respondents 

formulate their answers differently. Even when surveys 

use the same defi nition of disability, the estimates can 

differ. Given those caveats, the Current Population 

Survey permits one to track work disability on an 

annual basis using comparable measures. According to 

the CPS data, work disability increased slightly during 

the late 1980s and early 1990s, before moderating 

some in the late 1990s.

Perhaps most striking is the continuing increase in 

the percentage reporting a severe work disability since 

1985 (from less than 5 percent of the population to 

nearly 7 percent), along with a corresponding drop in 

the percentage reporting a nonsevere work disability. 

The increase in severe work disability that occurred 

while the overall prevalence of work disability remained 

relatively constant suggests that persons are viewing 

their impairments as more disabling. This is signifi cant 

because persons with severe work disabilities are 

those most likely to seek benefi ts from SSA’s disability 

programs.

Percent

0

1

2

3

4

5

6

7

8

9

10

11

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

All work disability

Severe

Not severe
Population Factors Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 69

Disabled-Worker Incidence Rates

Disabled-worker incidence rates varied considerably from 1970 to 2003. Incidence rates adjusted for age and sex 

closely track gross incidence rates, indicating that trends in the incidence of disability cannot be accounted for by 

the aging of the population or the greater presence of women in the workforce.

Chart 47. Gross and age-sex adjusted incidence rates for disabled workers,

1970–2003

SOURCE: 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and 

Disability Insurance Trust Funds, Figure V.C3.

NOTE: The disabled-worker incidence rate is the number of awards of DI worker benefi ts per 1,000 exposed 

(workers insured for disability but not receiving disability benefi ts).

a. The adjustment uses the population distribution of 2000 as its base. A description of the method used to 

adjust for age and sex can be found in the 2005 Trustees Report, p. 114.

The gross and age-sex adjusted incidence rates 

measuring the rate of entry into the DI worker program 

from the disability-insured population show considerable variation between 1970 and 2003. There is also a 

signifi cant trend in the age distribution of the population: the population bulge of baby boomers (persons 

born between 1946 and 1964 and aged 39–59 in 2005) 

is reaching the age at which the rate of disabilities 

increases. To the extent that sex and age play a role in 

disability, gross incidence rates may lead to incorrect 

conclusions about the actual incidence of disabling 

conditions. For that reason, incidence rates adjusted for 

age and sex provide a better indication of the trend in 

disability.

Incidence rates adjusted for age and sex closely 

track gross incidence rates for the 1970–2003 period. 

Although the gross incidence rate sometimes exceeds 

the adjusted rate, and vice versa, the similar patterns 

of the two trends over time indicate that trends in the 

incidence of disability cannot be accounted for solely 

by the aging of the population and increasing presence 

of women in the workforce. Instead, the greater impact 

on incidence rates appears to come from other factors 

including, among other things, program administration 

and the economy.

Number per thousand 

0

1

2

3

4

5

6

7

8

1970 1974 1978 1982 1986 1990 1994 1998 2002

Adjusted for age and sex a

Gross
Population Factors Infl uencing Program Size

70 ♦ Trends in the Social Security and SSI Disability Programs

Chart 48. Entry rate of SSI blind and disabled, by age group, 1980–2003

SSI Blind and Disabled Incidence Rates

The rate of entry of blind and disabled SSI recipients, regardless of age, increased in the late 1980s and early 

1990s, showing that population growth and a changing age distribution cannot explain all of the growth of the SSI 

program.

SOURCE: 2004 Annual Report of the Supplemental Security Income Program, Tables IV.A1 and IV.B2.

NOTE: The incidence rate is the number of blind and disabled SSI entrants per 1,000 in population. The reference population is the “Selected Social Security Area Population” of the appropriate age group and includes the 

population of the United States and several additional areas. See the glossary for a complete defi nition.

The change in incidence for the SSI disability program 

was examined by comparing blind and disabled SSI 

entrants per 1,000 persons in the population in various 

age groups. As expected, incidence rates of SSI 

disability vary over time. In contrast, incidence rates 

within each of the age groups tend to follow the same 

pattern over time. That pattern is similar to the one 

found for the DI program, with declines in the early 

1980s, followed by increases in the late 1980s and 

early 1990s. The pattern clearly shows that factors 

other than population growth and a changing age 

distribution are affecting the growth of the SSI disability 

program.

Number per thousand 

0

1

2

3

4

5

6

7

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

50–64

35–49

0–17

18–34
CHANGES IN PROGRAM POLICY INFLUENCING PROGRAM SIZE

Changes in Program Policy Infl uencing Program Size

Introduction

Changes in Policy Infl uencing—

Disability Awards

Disability Awards for Mental Disorders

Disability Terminations

Disability Terminations for Return to Work

Changes in Program Policy Infl uencing Program Size

INTRODUCTION

Policy changes can have direct effects on program size. Changes in the way that the 

Social Security Administration makes disability decisions can affect the number of 

persons entering the disability programs, as was the case with the changes in the criteria 

for determining disability for mental disorders that were enacted as part of the 1984 

Amendments. In the overview section of this book, a brief history of policy changes was 

presented (see pp. 7–9). In this section, those changes will be discussed with reference to 

program size, particularly with respect to entry into and exit from the disability programs.

The purpose of this section is to show trends leading up to policy changes and the 

trends that follow them. It is not possible to measure defi nitively the contribution each 

policy change has made to the trends of the disability programs, because numerous other 

factors play a role in infl uencing trends. The reader is cautioned that correlation does not 

imply causality, and one must keep in mind the totality of factors that may have contributed to trends in the disability programs.
Changes in Program Policy Infl uencing Program Size

74 ♦ Trends in the Social Security and SSI Disability Programs

Policy changes appear to play predictable roles in determining awards of disability benefi ts. Reductions in benefi ts 

for the DI program and program changes in the late 1970s and early 1980s appear to have led to fewer applications and fewer awards for the DI and SSI programs.

Chart 49. Number of awards of disability benefi ts and policy changes affecting 

them, 1970–2003

SOURCES: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Table 31; SSI 

Annual Statistical Report, 2003, Table 47.

NOTE: COLA = cost-of-living adjustment; DA&A = drug addiction and alcoholism.

In the early 1970s, Congress enacted changes 

that increased the levels of benefi ts paid under the 

Social Security disability program. These changes 

included ad hoc, across-the-board benefi t increases 

of 15 percent in 1970, 10 percent in 1971, 20 percent 

in 1972, and 11 percent in 1974. Automatic cost-ofliving adjustments (COLAs) began with the fi rst COLA 

in June 1975. Medicare was added to the disability 

program effective in 1973. The increasing benefi ts 

(higher cash benefi ts and Medicare) probably contributed to the growth of the disability program in the early 

to mid-1970s.

Growth in the disability rolls during the early to 

mid-1970s prompted Congress to enact legislation to 

slow the growth, in part by reducing benefi ts. The 1977 

Amendments “decoupled” the effects of infl ation on 

earnings and the adjustments of the consumer price 

index (CPI) in the benefi t formula to reduce the unintended increase in disability benefi ts and replacement 

rates. This decoupling was accomplished by indexing 

earnings in the benefi t formula and applying CPI adjustments to benefi ts rather than to the benefi t formula. 

As part of the 1980 Amendments, additional benefi t 

reductions were instituted by capping the family benefi t 

Changes in Policy Infl uencing—

Thousands

0

100

200

300

400

500

600

700

800

1970 1974 1978 1982 1986 1990 1994 1998 2002

Ad hoc 

benefit

increases

Decoupling

Benefit reductions 

DA&A 

SSI outreach

New mental listings 

Welfare reform Zebley

Medicare

extended to 

the disabled

First

automatic

COLA SSI adults (18–64)

SSI children

DI workers

DISABILITY AWARDS
Changes in Program Policy Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 75

Changes in Policy Infl uencing—

amount and reducing the number of dropout years in 

the benefi t calculation. In 1981, Congress eliminated 

the Social Security minimum benefi t (minimum primary 

insurance amount) and placed a cap on the replacement rate from all public disability program benefi ts. As 

can be seen in Chart 49, fairly signifi cant reductions in 

benefi ts and replacement rates probably contributed 

to a decline in awards from 1977 to 1982. The 1980 

Amendments also required SSA to conduct more 

preeffectuation quality reviews for favorable decisions.

The 1984 Amendments, enacted in response to 

public outcry over disability policy in the early 1980s, 

mandated that SSA develop new disability standards 

for individuals with mental disorders, evaluate pain 

as part of the decision process, place emphasis on 

evidence from treating physicians in the decision 

process, and consider the impact of multiple nonsevere 

impairments in determining disability. The decline in 

award rates and the decrease in disability benefi ciaries 

in the early 1980s began to reverse itself, and growth 

accelerated in the late 1980s and early 1990s. Awards 

for mental disorders continued to increase, both in 

absolute numbers (Chart 50) and as a percentage of 

awards (Charts 27, 30, and 33), after the new mental 

listings, which focused on functioning, were implemented in 1986. Awards for mental disorders continue 

at higher levels today.

SSA has, from time to time, conducted outreach 

activities to increase public awareness of the disability 

programs and help potentially eligible individuals apply 

for benefi ts. In 1990, a major outreach program was 

instituted for the SSI disability program. This program 

came in the aftermath of a period of deinstitutionalization of the disabled, particularly those with mental 

disorders, and an increase in homelessness. The 

outreach efforts probably contributed not only to the 

increase in the SSI recipient population but also to an 

increase in concurrent benefi ciaries (that is, persons 

eligible for disability benefi ts under both Social Security 

and SSI) in the early 1990s.

The Zebley court case was initiated by advocates 

for children with disabilities who objected to disability 

decisions for children that were based solely on the 

medical listings as not being of comparable severity 

to adult standards, as stated in the law. The decision 

process had no consideration of factors that contributed 

to disability at a level that was less severe than that in 

the listings (that is, there was no decision equivalent to 

steps 4 and 5 in the adult decision process). In 1990, 

the U.S. Supreme Court ruled for the plaintiffs, and 

SSA was required to make changes to the way claims 

for SSI disabled children were decided. The new decision process centered on the functioning of the child 

(for example, age-appropriate behavior), and, as with 

the mental listings for adult applicants, the number of 

awards rose quickly. The number of SSI child recipients 

more than tripled between 1989 (before Zebley) and 

1995. The number of SSI awards to children based 

on mental disorders increased signifi cantly, with a 

heightened awareness surrounding attention defi cit 

hyperactivity disorder (ADHD) and mental disorders 

that resulted in maladaptive behavior. Awards for low 

birth weight also increased dramatically.

In 1996, Congress passed reform legislation that 

resulted in changes to the way noncitizens were treated 

by the SSI program and eliminated drug addiction 

and alcoholism (DA&A) as the basis for a fi nding of 

disability. These changes probably produced only small 

changes in awards. The effect of the DA&A change 

probably had a larger effect on the SSI program than it 

did on the DI program, since it led to larger numbers of 

SSI terminations. Later that same year, welfare reform 

legislation changed the Zebley-based criteria for SSI 

children and may have reduced SSI awards to children, 

because the comparable severity standard was 

replaced with a stricter requirement of “marked and 

severe functional limitations.” The legislation also ended 

the use of individualized functional assessment, and it 

targeted mental disorders that manifested themselves 

as maladaptive behavior.

DISABILITY AWARDS (CONT.)
Changes in Program Policy Infl uencing Program Size

76 ♦ Trends in the Social Security and SSI Disability Programs

Changes in Policy Infl uencing—

Other internal policy changes have occurred 

within the disability programs that are too numerous to 

mention. There have been revisions to medical listings, 

including elimination of the obesity listing in 1999 and 

the issuance of new musculoskeletal listings in 2002.

There are also nondisability policy changes that 

infl uence the disability programs. Legislation in 1983 

designed to make the Social Security program solvent 

raised the age for full retirement to 67 in staged 

increases. Early retirement is still available for persons 

aged 62, but beginning in 2003 the larger actuarial 

reduction for persons younger than the full retirement 

age may serve to increase the attractiveness of the DI 

program. Although it is too early to know with certainty 

the magnitude of the effect on the DI program, there 

are many reasons to believe this change is likely to 

increase the number of DI benefi ciaries. The number 

of older benefi ciaries entering the DI program will 

increase as the retirement age increases to 67 and 

additional older workers are eligible for the DI program. 

The increase in the full retirement age to 67 will also 

result in longer stays on the DI rolls for many benefi -

ciaries, since conversion to the retirement program 

will occur at older ages. Again, the increase in the 

full retirement age could increase incentives to seek 

disability benefi ts, particularly for persons in their 60s 

who face higher actuarial reductions for early retirement.

DISABILITY AWARDS (CONT.)
Changes in Program Policy Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 77

Chart 50. Number of awards for the diagnostic category of mental disorders and 

policy changes affecting them, 1980–2003

New mental listings put in place in 1986 seem to have led to continuing increases in the number of awards for 

mental disorders other than mental retardation, initially from the 1984 backlog and then continuing for several 

more years. Changes from welfare reform legislation, which mandated a stricter defi nition of disability for children 

and which were put in place in late 1996, do not seem to have reduced awards to SSI children with mental 

disorders, because these awards began to increase shortly thereafter.

SOURCES: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Table 36; SSI 

Annual Statistical Report, 2003, Tables 48 and 49.

NOTES: Between 1995 and 1996, changes were made in the series, and data are not directly comparable. The 

SSI series includes only mental disorders other than mental retardation. Because of limitations in the historical data series, the DI workers series includes all mental disorders and does not exclude mental retardation. In 

recent years, awards based on mental retardation have consistently accounted for 10 percent to 13 percent of 

awards to DI workers based on mental disorders, with nearly 90 percent being other mental disorders.

DA&A = drug addiction and alcoholism.

In the 1984 Amendments, Congress mandated that 

SSA develop new disability standards for individuals 

with mental disorders, including mandatory specialist reviews of denials. Awards for mental disorders 

continued to increase after new mental listings, which 

focused on functioning, were implemented in 1986, and 

they continue at higher levels today.

The Zebley court case in 1990 resulted in new 

disability criteria for deciding claims for SSI disabled 

children’s benefi ts. The new criteria centered on the 

functioning of the child (for example, age-appropriate 

behavior), and the program saw awards to children 

increase dramatically and the number of SSI child 

recipients more than triple between 1989 (before 

Changes in Policy Infl uencing—

DISABILITY AWARDS FOR MENTAL DISORDERS

Thousands

0

50

100

150

200

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

1984

Amendments

New mental

listings

Zebley

DA&A

Welfare reform 

DI workers, all mental disorders

SSI adults (18–64), excluding 

mental retardation

SSI children, excluding mental 

retardation
Changes in Program Policy Infl uencing Program Size

78 ♦ Trends in the Social Security and SSI Disability Programs

Changes in Policy Infl uencing—

DISABILITY AWARDS FOR MENTAL DISORDERS (CONT.)

Zebley) and 1995. A signifi cant portion of the increase 

in awards involved mental disorders other than mental 

retardation, with much attention directed at awards 

based on attention defi cit hyperactivity disorder (ADHD) 

and various mental disorders manifesting themselves in 

maladaptive behaviors.

Welfare reform legislation passed by Congress 

in 1996 changed the defi nition of disability for SSI 

children, eliminating the individualized functional 

assessment and certain references to maladaptive 

behaviors in the mental listings that had been in 

place since 1991, pursuant to the Zebley decision. 

This change established a listings-level standard for 

disabled children under the SSI program that could 

be expected to reduce awards. However, the number 

of SSI awards to children for mental disorders began 

increasing again after 1997, and in 2003 reached an 

all-time high.
Changes in Program Policy Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 79

Policy changes enacted in 1980 and accelerated reviews in 1982 and 1983 increased the number of terminations. 

The moratoriums on continuing disability reviews on mental disorders in 1983 and on all CDRs in 1984 and the 

adoption of the medical improvement review standard resulted in large reductions in terminations.

Chart 51. Number of terminations of disability benefi ts and policy changes 

affecting them, 1970–2003

SOURCES: Annual Statistical Report on the Social Security Disability Insurance Program, 2003, Table 45; 

2004 Annual Report of the Supplemental Security Income Program, Table IV.B5.

NOTE: CDR = continuing disability review; DA&A = drug addiction and alcoholism.

The 1980 Amendments included a requirement that 

SSA conduct continuing disability reviews (CDRs) 

every 3 years, except for persons expected to be 

permanently disabled.1 In the early 1980s, these 

medical reviews were accelerated, with large numbers 

of benefi ciaries terminated by the reviews under a new 

standard. The outcry over the high termination rate, 

as well as numerous court cases, led to a nationwide 

1. CDRs may be done more frequently than every 3 years, as 

is generally the case for persons who are expected to improve 

medically.

moratorium on continuing disability reviews for most 

mental disorders in 1983 and for all cases in 1984, 

although some states had suspended all CDRs before 

the national moratoriums.

In 1986, SSA began to conduct CDRs again, 

employing the new medical improvement review standard mandated by Congress in the 1984 Amendments. 

In 1994, legislation (P.L. 103-296) mandated that SSA 

conduct continuing disability reviews on a minimum 

of 100,000 SSI recipients a year from 1996 to 1998. 

Before 1996, very few CDRs were conducted on SSI 

Changes in Policy Infl uencing—

DISABILITY TERMINATIONS

Thousands

0

100

200

300

400

500

1970 1974 1978 1982 1986 1990 1994 1998 2002

SSI adults (18–64)

SSI children 

DI workers 

Increased medical reviews CDR moratoriums 

Medical improvement

review standard Welfare reform

DA&A
Changes in Program Policy Infl uencing Program Size

80 ♦ Trends in the Social Security and SSI Disability Programs

recipients, and the reviews were predominantly on 

concurrent benefi ciaries receiving Social Security 

benefi ts.

In 1996, during the era of welfare reform, Congress 

enacted changes that required SSA to change 

disability criteria. First, in P.L. 104-121, drug addiction 

and alcoholism was removed as a basis for disability, 

which led to an increase in terminations of adults in 

the DI and SSI programs in 1996. That legislation 

also provided dedicated funding for SSA to conduct 

continuing disability reviews of both Social Security and 

SSI disability benefi ciaries from 1996 to 2002. Second, 

legislation (P.L. 104-193) tightened the defi nition of 

disability and eligibility criteria that were established for 

SSI children after the Zebley decision; required redeterminations of awards to SSI children awarded on the 

basis of the Zebley decision that initiated individualized 

functional assessment and certain diagnostic criteria; 

mandated redeterminations that applied adult disability 

standards for all SSI children who were within a year 

of their 18th birthday; and mandated the review of all 

awards for low birth weight for children nearing their 

fi rst birthday. These reviews and redeterminations led 

to an increase in terminations of SSI children in 1997 

but were followed by the reinstatement of provisional 

benefi ts for some children whose payments were 

ceased while SSA initiated a rereview of those cases. 

Terminations peaked a second time in 1999 as appeals 

were exhausted and SSA rereviews were completed.

Changes in Policy Infl uencing—

DISABILITY TERMINATIONS (CONT.)
Changes in Program Policy Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 81

Changes in Policy Infl uencing—

DISABILITY TERMINATIONS FOR RETURN TO WORK

It does not appear that policy changes have resulted in any signifi cant increases in successful returns to work. 

Consequently, changes in policy appear to have had little infl uence on termination rates.

There have been various changes to program work 

incentives to encourage return to work and increase 

program exit, although it does not appear that any of 

these changes resulted in any signifi cant increase in 

successful return to work and consequently appear to 

have done little to infl uence termination rates.

The 1980 Amendments made several major 

changes to work incentives. A 15-month extended 

period of eligibility, which permits benefi ciaries whose 

disability benefi ts are ceased because of work to 

regain their benefi ts if their earnings fall below the 

substantial gainful activity level, and a 36-month period 

of extended Medicare were added to the Disability 

Insurance program. Provisions were added to the SSI 

program that enabled SSI recipients to work without 

the fear of losing cash payments or Medicaid eligibility 

(sections 1619a and 1619b were implemented for a 

limited period and were made permanent in 1986). 

Impairment-related work expenses were added to 

the SSI and DI programs, and the Plan for Achieving 

Self-Support was added to SSI. The 1980 Amendments 

eliminated the need to serve a second waiting period 

for cash benefi ts for disability benefi ciaries who 

returned to the program within 60 months of a termination. They also eliminated a second Medicare waiting 

period for a disabled worker returning to the disability 

rolls within 60 months and for a disabled widow(er) or 

disabled adult child returning to the DI program within 

84 months of termination.

Beginning in 1988, the extended period of eligibility was increased from 15 months to 36 months. In 

1989, DI benefi ciaries who exhausted their extended 

Medicare eligibility were permitted to buy into the 

Medicare program to maintain coverage.

The trial work period was established in 1960 to 

encourage the disabled to test their ability to work. It 

permitted benefi ciaries to work for 9 months (which 

need not be consecutive) and earn as much as they 

were able to without losing cash benefi ts. Beginning 

in 1992, the 9-month trial work period was changed to 

a rolling 9 months in any 60-month period, permitting 

persons who failed at a work attempt to obtain additional months of trial work.

In 1999, the Ticket to Work and Work Incentives 

Improvement Act made further major changes to work 

incentives. Extended Medicare coverage was increased 

to 102 months from 36 months. The Ticket to Work 

made private vocational rehabilitation providers eligible 

for payments for successful rehabilitation. Under the 

Ticket, providers receive outcome payments for months 

in which the benefi ciary’s cash benefi t is suspended 

for work. They also have the option to elect milestone 

payments, which reduce later outcome payments. The 

legislation permits disabled benefi ciaries who can no 

longer work an “easy-back-on” option to again receive 

cash payments. The law prohibits SSA from using 

a benefi ciary’s return to work to trigger a continuing 

disability review, prohibits termination for medical 

improvement if the benefi ciary is using the Ticket, 

and precludes SSA from using evidence from work to 

show medical improvement. The law also authorized 

additional options for states to offer Medicaid buy-ins 

for the disabled who work.

CHANGES IN INCENTIVES INFLUENCING PROGRAM SIZE

Changes in Incentives Infl uencing Program Size

Introduction

Changes in Prices and Wages

Replacement Rates for Disabled Workers

Maximum SSI Payment Amount

Changes in Substantial Gainful Activity Level

Substantial Gainful Activity Level and 

Application Rates

Unemployment Rate and Application and 

Incidence Rates for Disabled Workers

Unemployment Rate, SGA, and Application 

Rates for Disabled Workers

Unemployment Rate and SSI Application and 

Incidence Rates for Adults (18–64)

Changes in Incentives Infl uencing Program Size

INTRODUCTION

Empirical evidence suggests that the incentives to seek Disability Insurance and 

Supplemental Security Income are positively related to the size of the benefi t. The 

relationship between the real value of earnings and benefi ts or payments is one factor 

that determines the attractiveness of the program.

As will be shown in this section, the increase in wages lagged behind the increase in 

prices through much of the 1970s and 1980s, and individuals in the disability programs 

gained relative to those in the workforce. In such periods, the promise that future Social 

Security benefi ts will be adjusted for infl ation can increase incentives to seek benefi ts.

Furthermore, disparity in the distribution of income has increased, with low earners 

realizing proportionately smaller wage gains than high earners. Because the formula 

used to calculate Social Security benefi ts is indexed to the average growth in wages, 

systematic disparities in earnings growth will result in altered incentives. A slower rate 

of wage growth for low earners than for high earners (that is, widening disparity in the 

distribution of earned income), as has been reported in recent years, coupled with SSA’s 

calculation of average indexed monthly earnings (AIME), which uses an indexing formula 

based on average wages, have been hypothesized to result in higher replacement rates 

and increased incentives among lower earners to apply for benefi ts.

This section focuses on several changes that may have altered program incentives 

and program size: indexation of benefi ts, changes in the replacement rate and maximum 

SSI cash payments, changes in the level of earnings considered to be substantial gainful 

activity, and economic conditions as measured by the unemployment rate.
Changes in Incentives Infl uencing Program Size

86 ♦ Trends in the Social Security and SSI Disability Programs

Through much of the 1970s, wages did not grow any faster than prices, and in the late 1970s and early 1980s the 

increase in wages lagged behind the increase in prices. Individuals in SSA’s disability programs gained relative to 

those in the workforce. The effect has been greater on low earners, and the decline in real wages may be continuing for this group.

Chart 52. Changes in prices and wages, 1970–2003

SOURCES: Offi ce of the Chief Actuary, Automatic Increases, Average Wage Index Series, available at http://

www.socialsecurity.gov/OACT/COLA/AWIgrowth.html; Bureau of Labor Statistics, CPI-W, available at http://www.

bls.gov/cpi.

NOTES: 1970 = 100 for both series.

CPI-W = consumer price index for urban wage earners and clerical workers.

Chart 52 shows that, in the aggregate, increases in 

wages kept pace with price increases during much 

of the 1970s, leaving no real wage growth. Then, in 

the late 1970s and early 1980s, wage growth actually 

lagged behind price increases.

Chart 53 shows that the annual percentage 

change in price and wage indexes over the 1970–2003 

period has not had a consistent pattern, with greater 

wage growth and price increases alternating from 

year to year. However, large ad hoc increases in 

Changes in Prices and Wages

Index value

0

100

200

300

400

500

600

1970 1974 1978 1982 1986 1990 1994 1998 2002

Price index

(CPI-W)

Wage index
Changes in Incentives Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 87

Changes in Prices and Wages (cont.)

Chart 53. Annual percentage change in prices and wages, 1970–2003

Social Security benefi ts in the early 1970s, followed 

by automatic cost-of-living adjustments beginning in 

June 1975, may have increased incentives to apply for 

Social Security disability benefi ts during this period and 

contributed to the growth experienced by the program 

in the late 1970s and early 1980s. Furthermore, these 

charts do not show the impact that price increases 

have had on real wages of low earners, who have 

continued to see declining real wages over time.

SOURCES: Offi ce of the Chief Actuary, Automatic Increases, Average Wage Index Series, available at http://

www.socialsecurity.gov/OACT/COLA/AWIgrowth.html; Bureau of Labor Statistics, CPI-W, available at http://www.

bls.gov/cpi.

NOTE: CPI-W = consumer price index for urban wage earners and clerical workers.

Percent 

02468

10

12

14

1970 1974 1978 1982 1986 1990 1994 1998 2002

Price index

(CPI-W)

Wage index 
Changes in Incentives Infl uencing Program Size

88 ♦ Trends in the Social Security and SSI Disability Programs

Chart 54. Median and quartile replacement rates for newly entitled disabled 

workers, 1970–2000

Replacement Rates for Disabled Workers

Replacement rates for disabled workers increased signifi cantly from 1970 to the late 1970s or early 1980s. 

Congressional action in 1977, 1980, and 1981 resulted in reductions in DI benefi ts and replacement rates, which 

have since stabilized.

SOURCE: Unpublished data compiled by the authors using the 1% Continuous Work History Sample.

NOTE: Replacement rates are based on average indexed monthly earnings.

Percent 

0

10

20

30

40

50

60

70

80

90

100

1970 1975 1980 1985 1990 1995 2000

Highest quartile 

Median

Lowest quartile 

A better sense of the relationship between benefi ts and 

earnings is provided by examining replacement rates, 

which is the ratio of workers’ DI benefi ts to predisability 

earnings. 

1

 This simple measure provides a glimpse of 

the adequacy, equity, and incentives associated with 

disability benefi ts.

Although there are many caveats related to taxes, 

multiple sources of disability income, and other factors, 

high replacement rates for DI benefi ts increase incen1. The measure of predisability earnings used in the computation 

of replacement rates was average indexed monthly earnings, which 

is basically the same formula used by SSA since 1980 to compute 

benefi ts. Earnings are indexed by average wages for each year and, 

depending on age, up to 5 years of lowest earnings after the age of 

22 are dropped from the calculation.

tives for individuals to apply for benefi ts rather than to 

continue working. High replacement rates also reduce 

incentives for benefi ciaries to return to self-supporting 

work. Replacement rates in the United States vary 

with workers’ earnings histories and earnings levels, 

because the Social Security benefi t formula is designed 

to replace a higher fraction of earnings for low earners 

than for high earners, thus giving low earners a higher 

replacement rate than that for high earners.

Charts 54 and 55 show trends of replacement rates 

for newly entitled DI benefi ciaries from 1970 to 2000 

that are based on a measure of actual lifetime earnings 

up to the year before the year of disability onset. The 

numerator is the amount of DI benefi ts paid to the 

worker and to any dependents.
Changes in Incentives Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 89

SOURCE: Unpublished data compiled by the authors using the 1% Continuous Work History Sample.

NOTE: Replacement rates are based on average indexed monthly earnings. High replacement rates are those 

that exceed 80 percent of predisability earnings.

Replacement Rates for Disabled Workers (cont.)

Chart 55. Percentage of newly entitled disabled workers with high replacement 

rates, 1970–2000

Percent 

05

10

15

20

25

30

35

40

1970 1975 1980 1985 1990 1995 2000

As can be seen from these charts, replacement 

rates rose from the early to late 1970s, declined in the 

early 1980s, and have stabilized considerably since. 

The reduction in replacement rates resulted from 

Congressional action to stem the increase in replacement rates after the program experienced signifi cant 

growth in the mid-1970s. Replacement rates began 

to rise dramatically after Congress passed automatic 

cost-of-living adjustments (COLAs) in 1972. The rise in 

replacement rates was partially the result of the method 

used to index benefi ts, which overcompensated new 

DI benefi ciaries for the effects of infl ation. In 1977, 

Congress enacted legislation intended to stabilize 

replacement rates by “decoupling” the COLA increase 

for current benefi ciaries from the calculation of benefi ts 

for new benefi ciaries. Current DI benefi ciaries would 

receive COLA adjustments for price increases, and 

new benefi ciaries would have their benefi ts based on 

wage-indexed earnings and on a benefi t formula that 

was adjusted for increases in average wages. The new 

benefi t calculation generally applied to disabled-worker 

benefi ciaries becoming eligible in January 1979 and 

later. This legislation also froze the minimum benefi t at 

its 1979 level.

In 1980, Congress took further action to limit 

replacement rates for disabled workers, targeting 

younger workers and those with dependents. That 

legislation made the formula for these workers less 

generous and placed caps on family benefi ts. In 1981, 

Congress eliminated the minimum benefi t for all Social 

Security benefi ciaries and placed an offset for multiple 

sources of public disability benefi ts (except veterans 

and means-tested programs) to ensure that replacement rates from all disability benefi ts would not be 

excessive. Replacement rates have not been a subject 

of controversy or legislation since that time.
Changes in Incentives Infl uencing Program Size

90 ♦ Trends in the Social Security and SSI Disability Programs

Chart 56. Incidence of SSI applications and new adult entrants (aged 18–64) and 

the maximum monthly federal SSI payment amount for individuals and couples, 

1980–2003

Maximum SSI Payment Amount

The maximum federal SSI payment, known as the federal benefi t rate, is fi xed and indexed to the cost of living, 

and the real value does not change over time. Thus federal SSI payment amounts are stable and do not correlate 

with changes in applications for benefi ts and awards.

SOURCES: SSI Annual Statistical Report, 2003, Table 1; 2004 Annual Report of the Supplemental Security 

Income Program, Tables IV.A1, IV.B1, and IV.B2.

NOTES: Incidence is the number of SSI applicants and new entrants aged 18–64 per 1,000 in population aged 

18–64. The reference population is the “Selected Social Security Area Population” of the appropriate age group 

and includes the population of the United States and several additional areas. See the glossary for a complete 

defi nition.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

Number per thousand Hundreds of 2003 dollars

0123456789

10

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

0123456789

10

Couple’s benefit

Application rate

Individual’s benefit

New entrant rate

Many SSI recipients have limited or no earnings history, 

so replacement rates are not as relevant a measure for 

the SSI program. Less than one-quarter of recipients 

had suffi cient work experience to qualify for even a 

small Social Security benefi t. Furthermore, the federal 

benefi t amount for SSI is relatively static over time, as 

the benefi t is indexed to infl ation. Chart 56 illustrates 

that the infl ation-adjusted benefi ts are fairly stable 

over time, and changes in applications and awards of 

SSI payments do not correlate with benefi t amounts. 

The periods of growth and contraction in applications 

and awards seem to follow patterns similar to those 

observed for the DI program. The patterns seem 

to have some correlation with economic and policy 

changes, but the precise relationship is not known.

One other factor may contribute to incentives to 

seek SSI payments: the income and resource test. 

SSI limits the amount of assets, earned income, and 

unearned income the individual may have and still 

qualify for benefi ts. The asset limit ($2,000) has not 

been increased since 1984, and the disregards for 

earned and unearned income ($65 and $20 per month, 

respectively) have not been changed since the program 

began. The effect that infl ation has had on the real level 

of these tests may have served to tighten eligibility 

criteria, although spend-down provisions, under which 

individuals must divest themselves of assets to qualify 

for SSI, may have lessened the impact of the asset test.
Changes in Incentives Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 91

Changes in Substantial 

Gainful Activity Level

For long periods, the monthly level of substantial gainful activity for the nonblind, in nominal dollars, did not 

change. Since 2001, the level automatically increases as a consequence of changes in the wage index.

Chart 57. Maximum and minimum SGA amounts for the nonblind and the SGA 

level for the blind, 1970–2003

SOURCE: Annual Statistical Supplement to the Social Security Bulletin, 2004, Table 2.A30.

The level of substantial gainful activity (SGA) has long 

been established by regulation. Before 2002, there was 

a maximum and minimum SGA amount. Monthly earnings (minus impairment-related work expenses) that fell 

below the minimum SGA amount were not considered 

to constitute SGA. Monthly earnings between the 

maximum and minimum SGA amounts required that 

consideration be given to all circumstances related to 

work activities to determine whether the work activity 

was SGA. Work activity that resulted in monthly earnings that were above the maximum SGA amount was 

automatically determined to be SGA. Beginning in 

1978, the SGA level for the blind was tied to the early 

retirement test exempt amount and has thus been 

automatically adjusted for changes in the average 

wage. Until 2001, the SGA level for the nonblind had 

been subject to ad hoc increases as determined to be 

appropriate by the Commissioner of Social Security, 

with the last two ad hoc increases occurring in 1990 

and 1999. Since 2001, the SGA level for the nonblind 

has also been subjected to automatic adjustments for 

changes in the wage series, albeit at a lower absolute 

level than that established for the blind. For 2006, the 

monthly SGA amount is $1,450 for statutorily blind 

individuals and $860 for nonblind individuals.

Nominal dollars

0

200

400

600

800

1,000

1,200

1,400

1970 1974 1978 1982 1986 1990 1994 1998 2002

SGA for the blind

Maximum SGA amount

Minimum SGA amount
Changes in Incentives Infl uencing Program Size

92 ♦ Trends in the Social Security and SSI Disability Programs

Chart 58. Application rates for disabled-worker benefi ts and SSI blind and disabled 

adult payments and real SGA level, 1970–2003

Substantial Gainful Activity Level

and Application Rates

Changes in the real (price-adjusted) SGA level for nonblind individuals suggests that increasing the real value of 

substantial gainful activity may infl uence the application rates for the DI and SSI programs.

SOURCES: Annual Statistical Supplement to the Social Security Bulletin, 2004, Tables 2.A30, 4.C1, and 6.C7; 

2004 Annual Report of the Supplemental Security Income Program, Table IV.A1; SSI Annual Statistical Report, 

2003, Table 41.

NOTES: Application rates are per 1,000 disability-insured workers for disabled workers and per 1,000 in population aged 18–64 for SSI blind and disabled adults. The reference population for SSI adults is the “Selected 

Social Security Area Population” of the appropriate age group and includes the population of the United States 

and several additional areas. See the glossary for a complete defi nition.

All dollar amounts are in constant (price-adjusted) 2003 dollars.

The changes in the real (price-adjusted) SGA level 

for nonblind individuals during the period 1970 to 

2003, along with trends in the rate of applications 

for disabled-worker benefi ts and SSI disabled adult 

benefi ts (aged 18–64), suggest that increasing the real 

value of SGA may infl uence the application rates for 

both programs. However, the policy decisions to raise 

the SGA level in 1990 and in 1999 came at peaks in the 

economic cycle, just as the economy was tilting toward 

recession, and it is diffi cult to determine the extent to 

which the change in SGA infl uenced applications or to 

what extent the tightening labor market did.

Number per thousand 2003 dollars

02468

10

12

14

16

18

1970 1974 1978 1982 1986 1990 1994 1998 2002

0

100

200

300

400

500

600

700

800

900

Disabled-worker application rate Real SGA level

SSI blind and disabled

adult application rate
Changes in Incentives Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 93

Unemployment Rate and Application and 

Incidence Rates for Disabled Workers

Disabled-worker application rates and incidence rates have tended to rise in periods of increasing unemployment 

and fall in periods of decreasing unemployment with the exception of the early 1980s, when the program was 

tightened and the benefi ts were reduced.

Chart 59. Rate of disabled-worker applications per 1,000 disability-insured workers 

and the unemployment rate, 1970–2003

SOURCES: Annual Statistical Supplement to the Social Security Bulletin, 2004, Tables 2.A30, 4.C1, and 6.C7; 

Bureau of Labor Statistics, unemployment rate, available at http://www.bls.gov/cps/prev_yrs.htm.

Economic changes infl uence applications to the DI 

and SSI programs. Historically, when unemployment 

rises, applications and awards for the DI program have 

increased as well. Disabled-worker application rates 

have tended to rise in periods of increasing unemployment and fall in periods of decreasing unemployment, 

with the notable exception of the early 1980s, when 

unemployment approached 10 percent and the rate of 

applications declined dramatically (Chart 59). However, 

at the same time, a tightening of the program and 

reductions in benefi ts were taking place and may 

have had a greater infl uence that resulted in declining 

application rates. The incidence rate for DI workers 

(awards per 1,000 in the disability-insured population) 

also tends to follow the unemployment rate (and 

application rate), with the same caveat about the period 

of the early 1980s (Chart 60).

Number per thousand Percent

02468

10

12

14

16

18

1970 1974 1978 1982 1986 1990 1994 1998 2002

02468

10

12

14

16

18

Application rate

Unemployment rate
Changes in Incentives Infl uencing Program Size

94 ♦ Trends in the Social Security and SSI Disability Programs

Chart 60. Age-adjusted incidence rates for disabled workers, by sex, and

the unemployment rate, 1975–2003

Unemployment Rate and Application and 

Incidence Rates for Disabled Workers (cont.)

SOURCES: Tim Zayatz, Social Security Disability Insurance Program Worker Experience, Actuarial Studies 

No. 114 (June 1999) and No. 118 (June 2005) (Washington, DC: Social Security Administration, Offi ce of the 

Chief Actuary), Table 4; Bureau of Labor Statistics, unemployment rate, available at http://www.bls.gov/cps/

prev_yrs.htm.

NOTE: Incidence rates are the number of awards of disabled-worker benefi ts per 1,000 disability-insured

workers.

Number per thousand Percent

0123456789

10

0123456789

10

1975 1979 1983 1987 1991 1995 1999 2003

Unemployment rate

Men

Women

Economic factors in addition to the unemployment 

rate may also infl uence applications, awards, and the 

size of the DI program. These factors could include 

changes in the wage distribution and changes in the 

occupational structure of the economy, as well as a 

multitude of other factors. Quantifying such changes is 

diffi cult and beyond the scope of this book; however, it 

is clear that the distribution of income and wages has 

widened and that low-income workers are falling behind 

higher-income workers. 

2

 The occupational structure in 

2. See, for example, Arthur F. Jones, Jr., and Daniel H. Weinberg, 

The Changing Shape of the Nation’s Income Distribution, 1947–1998, 

Current Population Reports P60-204 (Washington, DC: Census 

Bureau, 2000), which shows a generally consistent pattern of a 

widening of the earnings distribution from 1981 to 1998.

the United States has moved away from manufacturing 

and toward service jobs, which has an indeterminate 

effect on applications and awards. Although service 

jobs tend to be less physically demanding, the mental 

and cognitive requirements are greater.
Changes in Incentives Infl uencing Program Size

Trends in the Social Security and SSI Disability Programs ♦ 95

Unemployment Rate, SGA, and 

Application Rates for Disabled Workers

Although the application rate seems to follow the same trends as changes in real substantial gainful activity level 

(in 2003 dollars) and the unemployment rate, it is diffi cult to determine the factors that affect growth and to disentangle the effects of those factors.

Chart 61. Rate of disabled-worker applications per 1,000 disability-insured 

workers, real SGA level, and the unemployment rate, 1970–2003

SOURCES: Annual Statistical Supplement to the Social Security Bulletin, 2004, Tables 2.A30, 4.C1, and 6.C7; 

Bureau of Labor Statistics, unemployment rate, available at http://www.bls.gov/cps/prev_yrs.htm.

a. Unemployment rate in percent; real SGA level in hundreds of 2003 dollars.

This chart shows the application rate for disabledworker benefi ts along with the unemployment rate 

(an external factor) and the level of substantial gainful 

activity in constant dollars (an internal factor). It is 

interesting that the unemployment rate and the real 

SGA level follow similar trends, perhaps because, in the 

past, SGA levels received ad hoc increases near the 

peak in the economic cycle. Although these data are 

suggestive of relationships, it is diffi cult to determine 

the factors that affect growth and to disentangle the 

effects of those factors.

Number per thousand Percent and hundreds of dollars 

a

0123456789

10

1970 1974 1978 1982 1986 1990 1994 1998 2002

02468

10

12

14

16

18

20

Application rate

Real SGA level

Unemployment rate
Changes in Incentives Infl uencing Program Size

96 ♦ Trends in the Social Security and SSI Disability Programs

Chart 62. Rates of SSI applications and entry for blind and disabled adults per 

1,000 in population aged 18–64 and the unemployment rate, 1980–2003

Unemployment Rate and SSI Application 

and Incidence Rates for Adults (18–64)

SOURCES: 2004 Annual Report of the Supplemental Security Income Program, Tables IV.A1, IV.B1, and IV.B2; 

Bureau of Labor Statistics, unemployment rate, available at http://www.bls.gov/cps/prev_yrs.htm.

NOTE: The reference population is the “Selected Social Security Area Population” of the appropriate age group 

and includes the population of the United States and several additional areas. See the glossary for a complete 

defi nition.

Because of the limited work history of SSI applicants, one might not expect their rates of applications and new 

entrants to follow unemployment rates in the same pattern as the rates for DI applicants, who have a substantial 

work history. The patterns, however, are quite similar.

Number per thousand Percent

Application rate

New entrant rate

Unemployment rate

02468

10

02468

10

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

The SSI program tends to serve persons with no, or 

very limited, work history. As demonstrated in Chart 

13, the proportion of SSI recipients who concurrently 

receive a DI worker’s benefi t increased from 16 percent 

in 1981 to about 20 percent in 1993 and has remained 

near that level ever since. This would seem to suggest 

that the SSI program would be less infl uenced by 

economic conditions than would the DI worker program. 

The application rate of disabled adults and the rate 

of new entrants to the SSI program follow a pattern 

similar to that of DI workers, with rates of applications 

and incidence tracking the unemployment rate after the 

mid-1980s, but not in the early 1980s.
PROJECTED FUTURE COURSE

FOR SSA DISABILITY PROGRAMS

Projected Future Course for SSA Disability Programs

Introduction

Growth in DI Benefi ciaries per Covered Worker

Income and Costs of the DI Trust Fund

Solvency of the DI Trust Fund

Growth in the SSI Population

Costs of the SSI Program

Number of SSI Recipients

Projected Future Course for SSA Disability Programs

INTRODUCTION

This section charts the projected future course of the Social Security Administration’s 

disability programs. Projections for the Disability Insurance program show increasing 

costs and declining trust fund income, leading toward insolvency of the DI trust fund. 

By contrast, projections for the Supplemental Security Income disability program show 

that it appears to be on track to stabilize in size relative to the population and to actually 

decrease in cost as a portion of gross domestic product.

The data for all charts in this section come from SSA’s Offi ce of the Chief Actuary 

and are based on the intermediate assumptions of the Board of Trustees. 1 The data on 

the DI program come from, or were used in the preparation of, the 2005 Annual Report 

of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability 

Insurance Trust Funds. The Board of Trustees reports each year on the current and 

projected fi nancial condition of the Social Security Administration’s two separate trust 

funds: the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust 

Fund. The projections for future years refl ect the Trustees’ considered judgment about 

the demographic, economic, and program factors that affect income and expenditures. 

The Board of Trustees has historically produced estimates focused on 10-year (the short 

range) and 75-year (the long range) time frames, although in recent years estimates 

have been provided for the infi nite time horizon. Projections are based on current Social 

Security law and do not anticipate any future changes that Congress might make.

Data on the SSI program come from, or were used in the preparation of, the 

2004 Annual Report of the Supplemental Security Income Program. The Personal 

Responsibility and Work Opportunity Reconciliation Act of 1996 (Public Law 104-193) 

requires the Commissioner of Social Security to report annually to the President and 

Congress on the status of the Supplemental Security Income program. These reports are 

required to provide projections of program participation and costs at least 25 years into 

the future.

1. Because any projection of future experience is uncertain, the Trustees use three alternative sets of assumptions to show a range of possible outcomes: the intermediate set of assumptions (alternative II) refl ects the 

Trustees’ best estimate of the future fi nancial outlook of the two trust funds; the low-cost alternative I is more 

optimistic, and the high-cost alternative III is more pessimistic.
Projected Future Course for SSA Disability Programs

100 ♦ Trends in the Social Security and SSI Disability Programs

The root cause of future insolvency in the DI program, as in the retirement program, is the increasing number of 

benefi ciaries relative to the number of workers paying into the system. The number of DI benefi ciaries per 100 

covered workers is projected to grow by more than 40 percent between 2004 and 2030, from 4.8 to 6.8 per 100.

Chart 63. DI benefi ciaries per 100 covered workers

SOURCE: 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and 

Disability Insurance Trust Funds, Table IV.B2.

NOTE: Data refl ect the intermediate set of assumptions (alternative II), which represents the Trustees’ best 

estimates of the future fi nancial outlook of the trust funds.

The root causes of future insolvency in the DI program 

are similar to those facing the retirement program. For 

example, the number of DI benefi ciaries supported 

by 100 covered workers is increasing rapidly. In 1970, 

there were fewer than 3 benefi ciaries per 100 covered 

workers; in 2004 there were 4.8. By 2030 the dependency ratio is projected to be 6.8 benefi ciaries per 100 

workers who are paying into Social Security, more than 

a 40 percent increase from the 2004 level. The same is 

true in the retirement program, though at even higher 

rates of dependency.

According to the 2005 Trustees Report, much of the 

increase in the ratio is attributable to the demographics 

of an aging population, with baby boomers entering 

the prime disability age group. Although age-adjusted 

incidence rates have increased in recent years, the 

Trustees Report projects that these rates will return to 

lower levels in the future.

Growth in DI Benefi ciaries per Covered Worker

Number per hundred

0

1

2

3

4

5

6

7

8

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080

Historical Estimated
Projected Future Course for SSA Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 101

Income and Costs of the DI Trust Fund

Chart 64. Income and costs of the DI trust fund as a percentage of GDP

Overall, the disability programs have generally 

been increasing as a proportion of gross domestic 

product (GDP) over the past few decades. As shown 

in Chart 17, the cost of Social Security’s disability 

programs (including Medicaid and Medicare) increased 

from 0.32 percent of GDP in 1970 to 1.98 percent of 

GDP in 2001.

Chart 64 shows income and expenditures of the 

DI trust fund as a percentage of GDP from 1970 to 

2014. Expenditures from the trust fund as a percentage 

of GDP rose from 0.3 percent in 1970 to nearly 0.6 

percent in 1977 and then declined to 0.45 percent 

in 1989. Since then, expenditures have risen to a 

historical high of 0.69 percent of GDP in 2004 and 

are projected to continue to rise over the next decade. 

Income to the DI trust fund is projected to decline 

slightly, contributing to the solvency problem for DI.

Income to the DI trust fund is projected to plateau as a percentage of gross domestic product while costs are 

projected to continue to grow, contributing to the solvency problem for the DI program.

Percent

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Historical Estimated

Total income 

Total cost 

SOURCES: 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and 

Disability Insurance Trust Funds, Tables IV.A2, VI.A3, and VI.F7; Bureau of Economic Analysis, gross domestic 

product, available at http://www.bea.gov/bea/dn/home/gdp.htm.
Projected Future Course for SSA Disability Programs

102 ♦ Trends in the Social Security and SSI Disability Programs

Chart 65. Income and cost of the DI program as a percentage of taxable payroll

Solvency of the DI Trust Fund

Social Security is facing issues of long-term solvency, with the DI trust fund facing exhaustion in 2027, 16 years 

before the insolvency of the Old-Age and Survivors Insurance (OASI) trust fund. The Hospital Insurance (HI) Trust 

Fund, which funds the Medicare program, will be exhausted even earlier, in 2020.

Table 1. Key insolvency dates for the Social Security trust funds, 2005

Key dates OASI DI OASDI HI

First year that outgo exceeds income

Excluding interest 2018 2005 a 2017 2004

Including interest 2028 2014 2027 2012

Year that trust fund assets are exhausted 2043 2027 2041 2020

SOURCES: 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust 

Funds and 2005 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance 

Trust Funds.

a. In 2005, the DI trust fund met this threshold with total expenditures of $88.0 billion; income excluding interest was $87.1 billion. The DI 

trust fund, however, increased by $9.4 billion because of interest payments.

SOURCE: 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and 

Disability Insurance Trust Funds, Table IV.B1.

Percent 

0

0.5

1.0

1.5

2.0

2.5

3.0

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080

DI trust fund exhausted (2027)

INCOME

COST: Scheduled

and payable benefits

COST: Scheduled but not payable benefits 

COST: Income = payable benefits in the year the trust 

fund is exhausted 
Projected Future Course for SSA Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 103

Solvency of the DI Trust Fund (cont.)

The increasing size and costs of the Social Security 

disability and Medicare programs are having adverse 

impacts on program solvency. The Trustees project 

that the DI trust fund will become insolvent in 2027, 

16 years before the OASI trust fund. Furthermore, in 

2005, total expenditures from the DI trust fund actually 

exceeded the infl ow of tax receipts by $868 million, 

although the DI trust fund continued to increase 

because of interest payments. Note that this estimate 

does not include the costs of Medicare benefi ts 

provided to DI benefi ciaries, which are also growing 

(Charts 6–9). The Hospital Insurance (HI) Trust Fund, 

which funds Medicare, is also facing a solvency 

problem, with that trust fund projected to be exhausted 

in 2020, 7 years earlier than the DI trust fund. Because 

all disabled widow(er)s and the majority of disabled 

adult children collect benefi ts from the OASI trust fund, 

disability policy has an effect, albeit very small, on the 

solvency of the retirement and survivors (OASI) trust 

fund as well.

Congress has numerous options to deal with the 

projected future insolvency of the DI trust fund, such as 

altering the benefi t formula or eligibility rules, altering 

the share of payroll taxes devoted to the DI trust fund, 

raising overall payroll taxes, or undertaking more 

fundamental reform of the DI and OASI programs. 

However, in the absence of any Congressional action, 

the Trustees’ intermediate projections suggest that in 

2027 the DI trust fund will have insuffi cient resources to 

pay all scheduled benefi ts to DI benefi ciaries.

This is not the fi rst time the Disability Insurance 

Trust Fund has faced insolvency. As recently as the 

early 1990s, the DI trust fund was facing imminent 

insolvency and, in 1994, Congress enacted a change in 

the allocation of payroll taxes between the DI and OASI 

trust funds. The allocation of tax revenue to the DI trust 

fund was increased from 1.2 percent of taxable payroll 

to 1.8 percent. The 1995 Trustees Report estimated 

that, on the basis of the intermediate assumptions, 

the reallocation of taxes that occurred in 1994 would 

leave the DI trust fund solvent until 2016. Reallocations 

have also been made in the opposite direction, with 

Congress reallocating taxes away from the DI trust 

fund to the OASI trust fund. For example, the 1983 

Amendments reduced the allocation to the DI trust fund 

and established a future schedule of tax allocations 

between the DI and OASI trust funds to help ensure 

solvency of the retirement program. As discussed 

earlier, benefi t cuts and program tightening have also 

been used to control program costs, most notably in the 

late 1970s and early 1980s.
Projected Future Course for SSA Disability Programs

104 ♦ Trends in the Social Security and SSI Disability Programs

Growth in the SSI Population

Blind and disabled SSI recipients, as a percentage of the population in their age group, are projected to be 

relatively stable in the future, although anticipated growth in the population will lead to increases in the number of 

SSI recipients.

Chart 66. Blind and disabled SSI recipients as a percentage of the population in 

their age group, December 1974–2029

SOURCE: 2005 Annual Report of the Supplemental Security Income Program, Table IV.B7 and Figure IV.B5.

NOTE: The reference population is the “Selected Social Security Area Population” of the appropriate age group 

and includes the population of the United States and several additional areas. See the glossary for a complete 

defi nition.

The SSI program does not have a trust fund and is 

fi nanced through general revenues. Thus, although 

there is no solvency issue for SSI, the potentially 

long-term defi cit in general revenue receipts compared 

with expenditures makes it imperative to assess various 

budget priorities. The future of the SSI program looks to 

remain relatively stable, with the percentage of adults 

in the older age groups (35–64) projected to decrease 

slightly and the percentage in the younger age group 

(18–34) to increase modestly. The percentage of SSI 

disabled children (0–17) is also projected to increase 

slightly, with the projected increase moderating after 

2014. Because the general population is expected to 

grow over this period, the number of SSI recipients is 

projected to continue increasing.

Percent

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 2029

Historical Estimated

50–64

35–49

18–34

0–17
Projected Future Course for SSA Disability Programs

Trends in the Social Security and SSI Disability Programs ♦ 105

Costs of the SSI Program

The future of SSI for the blind and disabled is brighter than the future of the DI program, because the cost of the 

SSI program is projected to decline as a percentage of gross domestic product. However, the cost of the SSI 

program does not include costs related to Medicaid.

Chart 67. Federal SSI payments to the blind and disabled as a percentage of GDP, 

by age group, 1974–2029

SOURCE: 2005 Annual Report of the Supplemental Security Income Program, Table IV.D1 and Figure IV.D1.

The cost of federal SSI payments to the blind and 

disabled is shown as a percentage of gross domestic 

product (GDP). Although the cost of the program as 

a percentage of GDP was higher in 2004 than it was 

in 1974, the cost relative to GDP actually declined 

between 1996 and 2000, before increasing slightly in 

the past several years. Overall, however, the fi nancial 

future of SSI is brighter than that of the DI program, 

because the cost of the SSI program is projected to 

decline as a percentage of GDP. As noted in Chart 66, 

age plays little role in determining the future composition of the SSI rolls, so costs relative to GDP decline for 

all age groups.

Percent

0

5

10

15

20

25

30

1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 2029

Historical Estimated

50–64

35–49

18–34

0–17
Projected Future Course for SSA Disability Programs

106 ♦ Trends in the Social Security and SSI Disability Programs

Number of SSI Recipients

The projected decline in costs relative to gross domestic product is not a function of decreasing numbers of SSI 

disabled recipients, since the number of recipients is projected to increase well into the future.

Chart 68. Blind and disabled recipients of federally administered SSI payments,

by age group, December 1974–2029

Millions

0

1

2

3

4

5

6

7

1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 2029

Historical Estimated

50–64

35–49

18–34

0–17

SOURCE: 2005 Annual Report of the Supplemental Security Income Program, Table IV.B9 and Figure IV.B4.

The projected decline in costs relative to gross 

domestic product is not a function of decreasing 

numbers of SSI disabled recipients, since the number 

of recipients is projected to increase, albeit slowly, well 

into the future. The increase in the number of recipients 

appears to be related to the size of the population, 

rather than to an increase in the prevalence of disability, 

since the SSI population is projected to be relatively 

stable or even decline as a portion of the population in 

each age group (Chart 66). This relationship indicates 

that the projected growth in the economy will play a role 

in diminishing the cost of the program relative to GDP. 

This analysis does not include the cost of Medicaid for 

the disabled, which, as shown in Chart 17, has been 

growing much more quickly than has the cost of the 

disability programs.
Glossary

Glossary

Appeals Council. The third—and fi nal—level of appeal in the disability determination process, following 

the administrative law judge. Subsequent appeals go to federal courts.

average indexed monthly earnings (AIME). An average of a benefi ciary’s lifetime (or predisability) earnings on which the primary insurance amount, or basic Social Security benefi t amount, is calculated.

administrative law judge (ALJ). The second level of appeal in the determination process, following reconsideration. It is the fi rst opportunity for the claimant to appear in person and the fi rst decision by a 

federal adjudicator.

award. An award occurs when there has been a medical allowance and all technical criteria have been 

met so that a benefi t payment can be made.

benefi t suspension. Benefi ts are suspended for various reasons, including excess income for Supplemental Security Income recipients and work above the substantial gainful activity level for Social 

Security Disability Insurance benefi ciaries, among others. Under benefi t suspension, the individual 

remains eligible for the program but does not collect a cash benefi t.

benefi t termination. Benefi ts are terminated when the individual is no longer eligible for the program.

continuing disability review (CDR). A review of the benefi ciary’s medical condition to determine whether 

there has been suffi cient medical improvement so that the individual is no longer disabled or whether 

an individual has demonstrated the ability to engage in substantial gainful activity.

constant (real) or current (nominal) dollars. Constant (real) dollars have been adjusted for infl ation to 

refl ect what expenditures would have been if the value of the currency had not changed and the cost 

of living had not increased. By contrast to current (nominal) dollars are the actual dollar fi gures in 

each year, not considering the value of the currency or the cost of living. The base year for constant 

dollars is the year in which its value is the same as that of the current (nominal) dollar.

Current Population Survey (CPS). A monthly survey of 50,000 households conducted by the Census 

Bureau for the Bureau of Labor Statistics. The survey has been conducted for more than 50 years. 

The CPS is the primary source of information on the labor force characteristics of the U.S. population. 

Data on disability come from the annual March Supplement to the survey.

disabled adult child. A dependent child aged 18 or older—a son, daughter, or eligible grandchild of a retired, deceased, or disabled worker entitled to Social Security benefi ts—whose disability began before 

age 22.

Disability Determination Services (DDS). The state agency responsible for developing medical evidence and rendering the initial determination and reconsideration on whether a claimant is disabled 

or a benefi ciary continues to be disabled within the meaning of the law.

disabled widow(er). The disabled dependent spouse of a deceased worker who was insured for Social 

Security purposes. Eligibility begins at age 50.

low birth weight. Defi ned for the SSI disabled children’s program as a birth weight under 1,200 grams or 

under 2,000 grams and small for gestational age.
Glossary

Glossary (cont.)

108 ♦ Trends in the Social Security and SSI Disability Programs

medical improvement review standard. The standard, since 1984, that applies when reexamining disability cases in the Social Security and SSI disability programs. Before ceasing disability benefi ciaries, 

it must be demonstrated that there has been medical improvement, not simply that the individual no 

longer meets current disability criteria. This standard is not applicable to age 18 redeterminations of 

SSI children.

Listing of Impairments. Issued by the Social Security Administration and used to identify medical conditions for purposes of determining disability. Also referred to as the medical listings.

medical recovery. A reason for termination that is based on evidence that the benefi ciary’s medical condition has improved suffi ciently so that the individual is no longer medically disabled.

Medicaid. The program that offers medical coverage under means-tested criteria that vary from state to 

state. The vast majority of SSI recipients are eligible for this program. Some states offer buy-in programs for Medicaid coverage.

Medicaid disabled. The category used for classifying Medicaid eligibles. It includes low-income individuals of any age who are eligible as persons meeting SSA’s programmatic defi nition of disability. Individuals who meet that defi nition are those receiving SSI disability benefi ts as well as those whose income is too high for SSI but who qualify under separate Medicaid income standards. This latter group 

includes Medicare benefi ciaries who receive cost sharing or assistance with Supplementary Medical 

Insurance premiums as a Qualifi ed Medicare Benefi ciary or as a Specifi ed Low-income Medicare 

Benefi ciary and disabled persons using a state’s buy-in program.

Medicare. The program that offers hospital coverage (Part A) and optional supplemental medical coverage (Part B) to Social Security disability benefi ciaries 24 months after entitlement to benefi ts. More 

recently, Medicare has added the Medicare Advantage option (Part C), which offers benefi ciaries the 

opportunity to participate in private plans, and prescription coverage (Part D) which became effective 

on January 1, 2006.

Medicare disabled. The category used for classifying Medicare eligibles. It includes disabled individuals 

under age 65 who are eligible by virtue of receiving Social Security or Railroad Retirement disability 

insurance benefi ts for 24 months or longer, as well as individuals under age 65 who have been diagnosed with end-stage renal disease.

preeffectuation review. A federal review of a state disability allowance before payment effectuation. The 

purpose of the review is to ensure greater uniformity and consistency of the decisions made by various adjudicators within a state agency and of decisions made by the various states.

primary insurance amount (PIA). The monthly amount payable to a retired worker who begins to receive 

benefi ts at full retirement age or to a disabled worker who has never received a retirement benefi t 

reduced for age. This amount, which is derived from the worker’s average monthly wage or average 

indexed monthly earnings, is also used as a base for computing all types of benefi ts payable on the 

basis of one individual’s earnings record.

Organisation for Economic Co-operation and Development (OECD). An international organization 

that, among other things, provides statistics for international comparative work. OECD provided the 

international statistics for this book.
Glossary (cont.)

Glossary

Trends in the Social Security and SSI Disability Programs ♦ 109

redetermination. A redetermination of disability applies the rules used for new applicants. The medical 

improvement review standard does not apply. Disability redeterminations were required on some SSI 

childhood recipients after the 1996 welfare reform legislation and are required on SSI children who 

attain age 18 (redetermination is based on adult standards).

replacement rate. The ratio of disability benefi t income to predisability income. The measure provides information about the adequacy and equity of benefi t programs, as well as information about incentives 

to participate in the program.

section 1619a. The section of the 1980 Amendments that provides a work incentive for SSI recipients by 

permitting them to work above the substantial gainful activity level without being terminated. SSI payments continue to be offset $1 for each $2 earned.

section 1619b. The section of the 1980 amendments that provides a work incentive for SSI recipients 

by continuing Medicaid coverage for those whose earnings are high enough to result in the SSI cash 

benefi t being ceased. The individual must continue to be disabled and use Medicaid services.

Selected Social Security Area Population. The population comprising residents of the 50 states and the 

District of Columbia (adjusted for net census undercount); civilian residents of Puerto Rico, the Virgin 

Islands, Guam, American Samoa, and the Northern Mariana Islands; federal civilian employees and 

persons in the armed forces abroad and their dependents; crew members of merchant vessels; and 

all other U.S. citizens abroad.

substantial gainful activity (SGA). The level of earnings that is used

to determine eligibility for disability benefi ts upon application;

to determine whether the individual is eligible to receive the disability benefi t during the extended 

period of eligibility; and

to establish that an individual, after completing the trial work period and extended period of eligibility, has successfully returned to work and is no longer eligible for cash benefi ts.

The SGA level in 2006 is $860 a month for the nonblind and $1,450 for the blind. The level is adjusted

annually by the wage index.

SGA recovery. A reason for termination that is based on the individual’s successful completion of the trial 

work period and extended period of eligibility and the demonstration that the individual has the capacity to do work that is substantial and gainful and is therefore no longer eligible for cash benefi ts.

technical denial. A denial of disability benefi ts for reasons other than medical, such as excess income or 

resources for SSI applicants or lack of insured status for Social Security applicants. Technical denials 

can occur before or after receiving a medical decision.

work disability. A disability that affects one’s ability to work. Defi nitions vary, but a work disability typically 

means that the individual is limited in the amount or kind of work that can be performed. A severe 

work disability refl ects an inability to do any work.

Zebley. The 1990 Supreme Court decision (Sullivan v. Zebley) that fundamentally changed the SSI defi nition of disability as it applies to children. Before Zebley, SSA used a “listings-only” standard for children. The Court found that this usage did not comport with the “comparable severity” criterion in the 

Social Security Act and mandated that SSA fi nd a way to provide children with an “individualized functional assessment” that would parallel steps 4 and 5 for adults. In 1996, Congress replaced the “comparable severity” standard with a more strict standard of “marked and severe functional limitations.”

•

•

•

Bibliography

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