Mandatory Spending

Function 650 - Social Security

Require Social Security Disability Insurance Applicants to Have Worked More in Recent Years

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

(Billions of dollars) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018 2014-2023
Change in Outlays 0 -0.5 -1.2 -1.9 -2.8 -3.7 -4.6 -5.6 -6.7 -7.8 -6.3 -34.8

Note: This option would take effect in January 2015.

To be eligible for benefits under Social Security Disability Insurance (DI), disabled workers must generally have worked 5 out of the past 10 years. Specifically, workers more than 30 years old must have earned at least 20 “quarters of coverage” in the past 10 years. In 2013, a worker receives one quarter of coverage for each $1,160 of earnings during the year, up to a maximum of four quarters; the amount of earnings required for a quarter of coverage generally increases annually with average wages.

This option would raise that threshold for recent work by requiring disabled workers older than 30 to have earned 16 quarters in the past six years, which is usually equivalent to working four of the past six years. The change in policy would apply to people seeking benefits in 2015 and later and would not affect blind applicants. It would reduce the number of workers who received DI benefits by 4 percent by 2023, the Congressional Budget Office estimates, and would reduce federal outlays for Social Security by $35 billion from 2015 through 2023. By 2038, outlays for Social Security would be about 1 percent lower than those projected under current law. (Those estimates do not include any effects of this option on spending for other federal programs, such as Medicare, Medicaid, and the Supplemental Security Income program.)

An argument in favor of this option is that it would probably target benefits more narrowly toward people who leave the workforce because of their disability. To qualify for disability benefits, applicants must be judged to be unable to perform “substantial” work because of a disability—but there is no way to know whether applicants would have worked if they were not disabled. Under current law, even people who have not worked for five years can qualify for disability benefits. By comparison, the tightening of work requirements under this option would ensure that only people with a substantial record of recent work qualified for benefits, and those people would be more likely to work if they were not disabled than would people without a substantial record of recent work.

A reason to retain the existing work requirement is that the option could reach well beyond denying benefits to people who left the workforce for reasons other than their disability. In particular, some people might not meet the new requirement for recent work but would be working if they did not have a disability. For example, some people who left the workforce temporarily to care for children or pursue additional education and then became disabled while out of the workforce or shortly after returning to work could qualify for disability benefits under current law but not under the option. Similarly, some people who were searching for work for an extended time before becoming disabled would become ineligible for benefits under the option.