SOCIAL SECURITY ADMINISTRATION BALTIMORE, MD 21235-0001

SOCIAL SECURITY

Office of the Chief Actuary

March 4, 2014

The Honorable Sylvia Mathews Burwell

Director, Office of Management and Budget

Washington, D.C. 20503 

Dear Ms. Burwell:

I am writing in response to your request for estimates of the financial effects on Social Security 

of a proposal, included in the President’s FY2015 Budget, to reduce Social Security Disability 

Insurance (DI) benefits, dollar for dollar, for any month in which a disabled-worker beneficiary 

receives unemployment insurance (UI) payments. The estimates and analysis provided in this 

letter reflect our careful analysis of this proposal, with assistance from Jacob Kaplan and Jack 

Smalligan of your staff. The estimates provided here have been greatly enhanced through 

cooperation and assistance from the Office of Child Support Enforcement at the Department of 

Health and Human Services in allowing us to access certain data in the National Directory of 

New Hires (NDNH). Mary Kemp and Bert Kestenbaum of the Office of the Chief Actuary have 

worked diligently and creatively in modeling the implications of the proposal using these data.

We estimate that enactment of this proposal in January 2015 would reduce DI benefit payments 

by $2.67 billion in total for calendar years 2015 through 2024, assuming the DI benefit reduction 

applied for UI claims with payments starting in August 2016 or later (see enclosed Table 1). 

Reduction in DI benefit payments through the end of Fiscal Year 2024 would be $2.57 billion 

(see enclosed Table 2). The proposal specifies that the DI offset would apply for UI claims with 

payments starting in months beginning at least 18 months after enactment. For the long-range 

actuarial status of the overall OASDI program, we estimate that enactment of the proposal would

reduce the actuarial deficit by about 0.01 percent of taxable payroll. All estimates are based on 

the intermediate assumptions of the 2013 Trustees Report.

This proposal would result in reduction of DI benefits for any month of entitlement in which the 

primary disabled-worker beneficiary received any UI payment. Because UI payments are often 

less for a month than DI benefits, we anticipate that some individuals would, for their own 

convenience, forgo potential UI payments—collecting from unreduced DI the same amount of 

benefits as would be available to them from UI and reduced DI in combination. Based on our 

modeling, we estimate that national UI payments would be reduced in calendar years 2015

through 2024 by a total of $0.88 billion (by $0.85 billion through the end of Fiscal Year 2024),

assuming implementation of the proposal for August 2016 and later. 

The upper panel of each enclosed table provides our estimate of the percentages of disabledworker beneficiaries who would be in receipt of a UI payment under current law. We 
Page 2 – The Honorable Sylvia Mathews Burwell

additionally show the estimated average monthly percentages of disabled-worker beneficiaries

forgoing UI payments or incurring a reduction of their own or their auxiliaries’ DI benefits under 

this proposal.

The lower panel of each enclosed table provides our estimates of the cost of the DI program 

under current law and of the amounts of change in DI benefits and in UI payments for years 2015

through 2024, assuming implementation of the proposal for August 2016 and later.

Due to the nature of the data that we were able to receive from HHS and the limited period that 

these data cover, there is a substantial degree of uncertainty associated with these estimates. In 

particular, the estimates are sensitive to the assumed future rates of unemployment, to our 

estimates of the numbers of individuals starting UI payments, and to the duration of UI receipt.

We hope these estimates will be helpful. Please let me know if we may provide further 

assistance.

Sincerely,

Stephen C. Goss

Chief Actuary

Enclosures
Consistent with enactment by January 31, 2015

Calendar Year

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-24

Average Monthly Number as Percent of Disabled Workers Currently Entitled

Present Law DI Entitled & UI 0.39% 0.38% 0.37% 0.37% 0.36% 0.35% 0.35% 0.35% 0.35% 0.35%

Reduced DI under proposal 0.00% 0.04% 0.18% 0.26% 0.25% 0.25% 0.24% 0.24% 0.24% 0.24%

Forgo UI under proposal 0.00% 0.04% 0.12% 0.12% 0.11% 0.11% 0.11% 0.11% 0.11% 0.11%

Billions of Current Dollars

Present Law DI Benefit Cost $151.5 $156.8 $162.4 $168.3 $174.8 $181.7 $190.6 $200.0 $210.0 $220.6 $1,816.7

Change in DI Cost $0.0 -$0.04 -$0.22 -$0.32 -$0.32 -$0.33 -$0.34 -$0.35 -$0.36 -$0.38 -$2.67

Change in UI Cost $0.0 -$0.03 -$0.10 -$0.10 -$0.10 -$0.10 -$0.11 -$0.11 -$0.11 -$0.12 -$0.88

 Note: Reduction in DI benefits would result in a small reduction in taxes paid on benefits.

 Based on Intermediate Assumptions of the 2013 Trustees Report

Office of the Chief Actuary, Social Security Administration

 March 4, 2014

Table 1. Estimated Change in Disability Insurance and Unemployment Insurance Cost under Proposal 

in President's FY 2015 Budget: Offset DI Benefit by Amount of UI Received after July 31, 2016. 
Consistent with enactment by January 31, 2015

Fiscal Year

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-24

Average Monthly Number as Percent of Disabled Workers Currently Entitled

Present Law DI Entitled & UI 0.39% 0.38% 0.37% 0.37% 0.36% 0.35% 0.35% 0.35% 0.35% 0.35%

Reduced DI under proposal 0.00% 0.03% 0.15% 0.24% 0.25% 0.25% 0.24% 0.24% 0.24% 0.24%

Forgo UI under proposal 0.00% 0.03% 0.10% 0.12% 0.11% 0.11% 0.11% 0.11% 0.11% 0.11%

Billions of Current Dollars

Present Law DI Benefit Cost $150.3 $155.5 $161.0 $166.8 $173.2 $180.0 $188.4 $197.7 $207.5 $218.0 $1,798.2

Change in DI Cost $0.0 -$0.03 -$0.17 -$0.29 -$0.32 -$0.33 -$0.34 -$0.35 -$0.36 -$0.38 -$2.57

Change in UI Cost $0.0 -$0.02 -$0.08 -$0.10 -$0.10 -$0.10 -$0.10 -$0.11 -$0.11 -$0.12 -$0.85

 Note: Reduction in DI benefits would result in a small reduction in taxes paid on benefits.

 Based on Intermediate Assumptions of the 2013 Trustees Report

Office of the Chief Actuary, Social Security Administration

 March 4, 2014

Table 2. Estimated Change in Disability Insurance and Unemployment Insurance Cost under Proposal 

in President's FY 2015 Budget: Offset DI Benefit by Amount of UI Received after July 31, 2016.