THE LONG-RANGE DISABILITY ASSUMPTIONS

FOR THE 2019 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY

SOCIAL SECURITY ADMINISTRATION

April 22, 2019
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DISABILITY

ASSUMPTIONS FOR THE 2019 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY, SSA

TABLE OF CONTENTS PAGE

1 OVERVIEW ................................................................................................................................... 3

2 DISABILITY INCIDENCE ............................................................................................................... 4

2.1 EFFECTS OF ECONOMIC CYCLES AND POLICY CHANGES ON DI INCIDENCE RATES ..................................................4

2.2 ASSUMED FUTURE DISABILITY INCIDENCE RATES ...................................................................................................5

3 DISABILITY DEATH RATE............................................................................................................ 6

4 DISABILITY RECOVERY RATE..................................................................................................... 7

CHART 1: EFFECT OF THE ECONOMY ON DI INCIDENCE .................................................................................................8

CHART 2: NEW DISABLED-WORKER AWARDS PER 1,000 EXPOSED (INCIDENCE) ..........................................................9

CHART 3: MALE DISABLED-WORKER AWARDS PER 1,000 EXPOSED (INCIDENCE) BY AGE GROUP .............................10

CHART 4: FEMALE DISABLED-WORKER AWARDS PER 1,000 EXPOSED (INCIDENCE) BY AGE GROUP..........................11

CHART 5: AGE-SEX-ADJUSTED COMPARISON OF SSA GENERAL POPULATION TO DISABLED-WORKER DEATH RATES

..............................................................................................................................................................................12

CHART 6: DISABLED-WORKER RECOVERIES PER 1,000 BENEFICIARIES.......................................................................13
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1 Overview

Each year the Board of Trustees of the Federal Old-Age and Survivors Insurance (OASI) and 

Disability Insurance (DI) Trust Funds provides an annual report to the Congress on the financial 

and actuarial status of the OASDI program. The Office of the Chief Actuary (OCACT) produces 

projections of future cost and income based on three separate sets of long-range (75-year) 

assumptions for three key disability variables. The intermediate (alternative II) set of 

assumptions represents the Trustees’ best estimate for future experience, while the low cost 

(alternative I) and high cost (alternative III) sets of assumptions are more and less favorable, 

respectively, from the perspective of program cost as a percent of taxable payroll. In addition, the 

intermediate assumptions serve as the central tendency for the stochastic projections presented in 

the OASDI Trustees Report. This memorandum presents the disability assumptions used in the 

2019 annual report of the Board of Trustees (the “Trustees Report”). 

The disability assumptions are: 

• The ultimate disability incidence rates by age group and sex,

• The ultimate disability death rates by age group and sex, and

• The ultimate disability recovery rates by age group and sex.

Compared to the values assumed for the 2018 Trustees Report, these assumptions include lower 

disability incidence rates for all alternatives. The death and recovery rate assumptions are the 

same as those used for the 2018 Trustees Report, and there are no significant method changes in 

the disability model for the 2019 Trustees Report. 

The alternative II age-sex-adjusted disability incidence rate was lowered from 5.4 in the 2018 

Trustees Report to 5.2 in the 2019 Trustees Report. Recent award rate data indicate a continued 

decline since the peak in 2010. Applications and award rates are both near historic low levels. 

Possible explanations for the recent decline in disability applications and awards include the low 

unemployment rate, the drop in hearings allowance rates, and the greater availability of health 

care because of the Affordable Care Act. The lower disability incidence rates assumed for the 

2019 Trustees Report are more consistent with recent award rate data and also with long-term 

historical averages. The following table shows the ultimate summary measures for the 

assumptions. 1

 1 The ultimate disability death and recovery rate assumptions are the same in the 2018 Trustees Report and 2019 

Trustees Report. The ultimate death summary measures increased due to data and methodology updates.
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Key Disability Summary Measures for the Long-Range (75-year) Projection Period

2018 Trustees Report and 2019 Trustees Report

2018 Trustees Report 

Alternative

2019 Trustees Report 

Alternative

2019 Trustees Report 

Less 2018 Trustees 

Report 

I II III I II III I II III

Age-sex-adjusted Disability Incidence 

Rate per 1,000 in the last year of the 

75-year projection

4.3 5.4 6.4 4.2 5.2 6.2 -0.1 -0.2 -0.2

Age-sex-adjusted Disability Death 

Rate per 1,000 in the last year of the 

75-year projection

18.4 11.6 6.9 18.9 12.0 7.1 0.5 0.4 0.2

Age-sex-adjusted Disability Recovery 

Rate per 1,000 in the last year of the 

75-year projection

12.5 10.3 8.2 12.5 10.3 8.2 0.0 0.0 0.0

The assumed ultimate disability incidence and recovery assumptions are applied for the twentieth 

projection year and thereafter. During the first ten years of the projection period, the long-range 

model reconciles with projections from the short-range model. There is a transition between the 

rates at the end of the short-range period and the implementation of the ultimate rates as of the 

twentieth projection year. The age-sex adjusted incidence rate in year 10 is very close to the 

ultimate. Therefore, the transition from years 10 to 20 is very small.

The lower ultimate disability incidence rate assumption results in a 0.04 increase (improvement)

in the long-range OASDI actuarial balance. Also including recent disability data and changes in 

near-term assumptions increased (improved) the actuarial balance by a combined total of 0.07

percent of payroll.

The remainder of this paper provides details regarding the historical values and future values for 

each of the disability assumptions, and the basis for the assumptions.

2 Disability Incidence

2.1 Effects of Economic Cycles and Policy Changes on DI Incidence Rates

Disability incidence rates are the proportion of workers in a given year, insured for but not 

receiving disabled-worker benefits (exposed population), who file for and are awarded disabledworker benefits. The age-sex-adjusted historical and short-range projected alternative II 

incidence rates are shown in Chart 1. A number of specific economic and policy drivers have 

influenced disability program cost historically and will continue to have an effect on disability 

incidence. Periodic economic recessions, as indicated by the civilian unemployment rate in red 

in Chart 1, have been associated with temporary increases in disability incidence. Incidence rates 

tend to increase temporarily in bad economic times. Some individuals who gradually develop 

conditions that would qualify for DI benefits based on the severity of their medicallydeterminable impairment are able to continue work at a level in excess of substantial gainful 

activity (SGA) given the opportunity and needed assistance during a period of strong economic 

activity and demand for workers. But with elevated unemployment rates like those seen in the 

last recession, many of these individuals will lose employment and will seek DI benefits.
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The recent recession which began in December 2007 resulted in an increase in disability 

applications and incidence to peak levels in 2010 that were exceeded only by the peak in 

1975. One apparent exception to the relationship between disability incidence and economic 

recessions is the strong recession of 1981-1982. The effect of that recession appears to have 

been offset by the net effects of the 1980 Amendments, which: (1) sharply increased the levels of 

pre-effectuation review of disability allowances and continuing disability reviews of current 

beneficiaries; (2) introduced the extended period of eligibility to encourage work; and (3) 

lowered the maximum family benefit for DI beneficiaries.

Additional policy changes over the years had significant effects on disability incidence. Doubledigit ad-hoc benefit increases in 1970 through 1974 made disability benefits more 

attractive. The 1984 Amendments may have offset the effects of a strong economic recovery 

with increased emphasis on multiple impairments and mental listings, and the requirement to 

show medical improvement for benefit cessation. The SSI outreach to disabled adults likely 

added to the effects of the 1990-1991 recession. Also, the effects of a strong economic recovery 

from 1995 to 2000 on lowering incidence rates may have been enhanced by the 1996 

Amendments which eliminated drug addiction and alcoholism as disabling conditions.

Incidence rates have fallen steeply since 2010, concurrent with the recovery from the recent

recession. Incidence rates have recently dropped to levels well below those expected over the 

long-term. Future policy changes and economic cycles will undoubtedly continue to cause 

fluctuations in disability incidence rates. 

2.2 Assumed Future Disability Incidence Rates

As previously mentioned, the disability incidence rate (the percent of the exposed population that 

is newly awarded benefits in the year) rose sharply in the recent recession, and has declined since 

the peak in 2010 to an extraordinarily low level by 2016. Some small portion of this decline has 

resulted from an increase in the disability case backlog, especially at the hearings level. For the 

2019 Trustees Report, consistent with agency Budget assumptions, the hearings backlog is 

assumed to be eliminated, producing the temporarily elevated levels of incidence for the years 

2019 through 2022, as seen in the blue line in Chart 1. Also, new disabled-worker 

determinations are projected to be completed on a timely basis after 2022. In this year’s report, 

incidence rates are assumed to rise more gradually early in the short-range period than in last 

year’s report, and are lower later in the period. In 2028, at the end of the short-range period, agesex-specific incidence rates approximate the ultimate rates assumed for the long-range period.

For alternative II of the 2019 Trustees Report, the Trustees assume an ultimate age-sex-adjusted 

disabled-worker incidence rate of 5.2, the same ultimate level assumed for the 2011 report. This 

rate was 5.4 awards per thousand for the 2012 through 2018 Trustees Reports. The 5.2 incidence 

rate equals the historical average experienced from 1995 through 2018 and is slightly higher than 

the most recent ten-year historical average (5.1 awards per thousand) experienced from 2009 

through 2018. These new ultimate incidence rates are calculated by age group and sex using a 

no-lag unemployment rate regression model for the years 1995-2017. We began our regression 

model in 1995, instead of 1990 (the first year we have unemployment rates by age group and 

sex), to better capture recent higher levels of female disability incidence rates. For ages 60-64, 

rates are increased from the regression results to reflect the planned increase in the Social 
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Security Normal Retirement Age from 66 to 67. We calculated rates for ages 65 and older using 

a weighted average of our base incidence rates and projected exposure. The Office of the Chief 

Actuary will continue to monitor experience closely and review the disability incidence

assumption. 

The 2011 Technical Panel suggested raising the 2011 Trustees Report ultimate alternative II 

incidence rate assumption of 5.2 to 5.8. The 2015 Technical Panel agreed with the ultimate 

alternative II incidence rate assumption of 5.4 and suggested that OCACT closely monitor 

experience. The Congressional Budget Office raised their ultimate disability incidence rate to 

5.6 for their 2013 through 2015 Long-Term Budget Outlooks, and reduced the assumption to 5.4 

for their 2016 through 2018 reports, matching the Trustees. 

Chart 2 shows age-adjusted historical and ultimate alternative II incidence rates for males and 

females. For males, the age-adjusted incidence rate has averaged 5.2 new disability awards per 

thousand exposed workers from 1995 through 2018. The female age-adjusted incidence rate has 

averaged 5.1 from 1995 through 2018. Since 1980, the age-adjusted incidence rate for females

has increased to a level much closer to the rate for males. The male and female age-adjusted 

disability incidence rate assumptions under alternative II for the 2018 Trustees Report were 5.5 

and 5.3, respectively. For the 2019 Trustees Report, the Trustees assume that females have 

caught up to males with age-adjusted disability incidence rates for both males and females fairly 

stable in the future at 5.2. 

Chart 3 and Chart 4 show the historical and ultimate alternative II incidence rates by age group

for males and females, respectively. The table below shows the 2019 Trustees Report alternative 

II ultimate incidence rates by age group for 2093, the last year of the projection period. 

Disability Incidence Rates per 1,000 Exposed for 2093, 2019 Trustees Report Alternative II

Age Group

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+

Male 0.5 1.5 1.7 2.1 2.8 3.8 5.3 9.0 15.0 19.7 10.3

Female 0.3 1.0 1.5 2.2 3.1 4.4 6.0 9.5 14.3 16.6 8.9

Because the low-cost and high-cost alternative ultimate disability incidence rates are determined 

by adjusting the incidence rates from the intermediate alternative down and up by roughly 20

percent, respectively, rates for these alternatives are not included in the charts. 

3 Disability Death Rate

Death rates are much higher for the disabled population than the general population, as seen in 

Chart 5. Base probabilities of death (from Actuarial Study No. 123) by duration, age, and sex 

are applied to the disabled-worker population. In the first year of the projection period, the death 

rate is determined by fitting an exponential curve to historical death rates for disabled workers by 

age group and sex. For the rest of the projection period, death rate improvement factors are 

applied to the base probabilities of death to reflect the same rate of improvement as the general 

population for that age group and sex. The incorporation of higher than expected 2018 disabled 

worker death experience and lower projected mortality improvement in the general population 
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results in higher projected disability death rates for the 2019 Trustees Report. From the age-sexadjusted death rate of 25.2 per thousand beneficiaries in 2018, this rate decreases to a rate of 12.0

per thousand for 2093 under the intermediate assumptions for the 2019 Trustees Report. The 

low-cost and high-cost alternative disability death rates are determined by increasing and 

decreasing by 7.5 percent, respectively, the death rate in the first year of the projection period. 

Then the general population mortality improvement for that alternative is applied to project death 

rates for the remainder of the 75-year period.

The 2011 Technical Panel recommended a more rapid decline in disability mortality rates for 

both men and women from 2020 through 2030. The 2015 Technical Panel stated that they were 

comfortable with the Trustees’ assumption. 

4 Disability Recovery Rate

Beneficiaries stop receiving disability benefits when they (1) die, (2) covert to a retired-worker 

benefit at normal retirement age, (3) recover from their medically-determinable disabling 

condition, or (4) return to work for an extended period. Disabled-worker beneficiaries who return 

to substantial work for an extended period are deemed to have recovered, and their benefits are 

then terminated. The recovery rate is the ratio of the number of recoveries for reasons (3) and (4) 

to the average number of disabled-worker beneficiaries during the year. Base probabilities of 

recovery (from Actuarial Study No. 123) by duration, age, and sex are applied to the disabledworker population. 

Chart 6 shows age-sex-adjusted historical and projected alternative II recovery rates. The rate of 

recovery is at times, affected by budget appropriations for continuing disability reviews, with no 

general upward or downward trend since 1985. The ultimate disability recovery rate under the 

intermediate alternative is equal to the average recovery rate by age group and sex for the years 

1985-2005, excluding 1997. The averaging period begins in 1985, after the Social Security 

Disability Benefits Reform Act of 1984 created medical improvement standards for continuing 

disability reviews. The spike in recoveries in 1997 when drug and alcohol addictions were 

eliminated as bases for disability entitlement is excluded from the calculation.

The projected age-sex-adjusted recovery rate (medical improvement and return to work) under 

the intermediate assumptions decreases from the relatively high level of 20.2 per thousand 

beneficiaries in 2018 to the ultimate level of 10.3 per thousand beneficiaries under the 

intermediate assumptions for the 2019 Trustees Report. Recovery rates by age, sex, and duration 

reach ultimate levels in the twentieth year of the projection period. The recovery rate has been 

high recently due to an ongoing administrative effort to work down a backlog of continuing 

disability reviews. The rate is expected to decrease as the backlog is reduced.

Because the low-cost and high-cost alternative ultimate disability recovery rates are determined

by adjusting the recovery rates from the intermediate alternative up and down by roughly 20

percent, respectively, rates for these alternatives are not included in the chart. 

The 2011 Technical Panel suggested reducing the ultimate alternative II recovery rate 

assumption to 8.7. The 2015 Technical Panel recommended reducing the ultimate alternative II 

recovery rate assumption from 10.4 to 10.1.
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Chart 1: Effect of the Economy on DI Incidence

Note: The projections reflect the Trustees’ assumptions for the 2019 Trustees Report.

Social Security Administration

Office of the Chief Actuary

April 22, 2019
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Chart 2: New Disabled-Worker Awards per 1,000 Exposed (Incidence)

Age-Adjusted (2000)

 Note: The projections reflect the Trustees’ assumptions for the 2019 Trustees Report. 

Social Security Administration

Office of the Chief Actuary

April 22, 2019
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Chart 3: Male Disabled-Worker Awards per 1,000 Exposed (Incidence) by Age Group

Age-Adjusted (2000)

 Note: The projections reflect the Trustees’ assumptions for the 2019 Trustees Report. 

 -

 5

 10

 15

 20

 25

 30

 35

197519801985199019952000200520102015202020252030203520402045205020552060206520702075208020852090

New Awards per 1,000 Exposed

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65+

Social Security Administration

Office of the Chief Actuary

April 22, 2019
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Chart 4: Female Disabled-Worker Awards per 1,000 Exposed (Incidence) by Age Group

Age-Adjusted (2000)

Note: The projections reflect the Trustees’ assumptions for the 2019 Trustees Report. 

 -

 5

 10

 15

 20

 25

 30

 35

197519801985199019952000200520102015202020252030203520402045205020552060206520702075208020852090

New Awards per 1,000 Exposed

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65+

Social Security Administration

Office of the Chief Actuary

April 22, 2019
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Chart 5: Age-Sex-Adjusted Comparison of SSA General Population to Disabled-Worker Death Rates

Social Security Administration

Office of the Chief Actuary

April 22, 2019
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Chart 6: Disabled-Worker Recoveries per 1,000 Beneficiaries

Age-Sex-Adjusted (2000)

Note: The projections reflect the Trustees’ assumptions for the 2019 Trustees Report. Social Security Administration

Office of the Chief Actuary

April 22, 2019