By: Ted McCann
They say imitation is the sincerest form of flattery, and with Senator Elizabeth Warren’s new plan for individuals with disabilities, she has decided to take a page from House Republicans. Even though it is 5 years after the fact, it is encouraging that Senator Warren has decided to publicly support a program design – a benefit offset – that House Republicans insisted be tested when negotiating the Bipartisan Budget Act of 2015 (BBA15). While we continue to wait for the evaluation of the demonstration project created under BBA15, it is a positive step that leading Democrats are finding common ground with Republicans around the idea of ensuring that individuals on the Disability Insurance (DI) program are able to work to their full ability.
Currently, if an individual is on DI, they enter into a confusing morass of well-intentioned programs designed to help them return to work as soon as they reach the “Trial Work Period” level, or receive earnings above $880 per month in 2020. As the chart below makes clear, trying to understand this morass would be trying for anyone. And, the consequences for an individual on DI making a mistake are dire. If the Agency makes a mistake and provides an overpayment, the individual will have to pay back that overpayment. And, worse, if an individual ends up earning more than what is called the ‘Substantial Gainful Activity’ (SGA) limit, or $1260 per month in 2020, then an individual could no longer be eligible for the DI program, which generally includes health care.
Because of these complex rules and benefit cliffs, individuals on DI are understandably hesitant to return to work. In fact, individuals on the Supplemental Security Income (SSI) program are more likely to work (though at a lower earnings level) than individuals on the DI program. You would expect that individuals who had a work history, that is, individuals on the DI program, would have a higher work likelihood than individuals without a work history, that is, individuals on the SSI program. One key reason for this lies in how these programs are designed: SSI, rather than having a confusing array of work incentive programs, has a ‘benefit offset’ design. For every dollar above a set-aside threshold an individual earns, they lose $.50 in benefits.
What Senator Warren is proposing is to take the SSI program design and port it into the DI program. Fortunately, there is strong agreement across the aisle to do this. In the 2015 Bipartisan Budget Act, then Chairman of the Ways and Means Committee Paul Ryan ensured that the Promoting Opportunity Demonstration project was included, and this demonstration would test how strong a work incentive this program design would be in the DI program. Over 10,000 people have enrolled thus far, and the expectation is that we will see results by June 2021.
It is encouraging that Senator Warren has joined her Republicans colleagues in supporting this program design. While there remain differences between the two – namely, where does one set the threshold to begin the ‘benefit offset’ – disability policy remains an area of great possibility. Individuals with disabilities are ill-served by the current system, which locks them into a life where they all too often have to choose between maintaining access to the DI program, or integrating more broadly into the workforce. Allowing individuals on DI to continue to pursue their American dream should remain an important policy goal for the future.