Indiana University SPEA Edward J. Bloustein School of Planning and Public Policy University of Pennsylvania AIR American University

Panel Paper: Early Findings from Stage 1 of the Benefit Offset National Demonstration

Friday, November 13, 2015 : 8:50 AM
Orchid A (Hyatt Regency Miami)

*Names in bold indicate Presenter

Denise Hoffman, Mathematica Policy Research
Under current program rules, SSDI beneficiaries lose all SSDI benefits after a sustained period of substantial earnings. Specifically, benefits are lost if a beneficiary’s countable monthly earnings exceed the monthly Substantial Gainful Activity (SGA) amount after completing a nine-month Trial Work Period (TWP) and a three-month Grace Period (GP). In 2012, the SGA amount was $1,010 per month for non-blind beneficiaries and $1,690 per month for blind beneficiaries. The complete loss of benefits—known as the “cash cliff”—likely discourages some beneficiaries from working at all and encourages those who could work with earnings above the SGA level to keep their earnings below that level.

BOND replaces the cash cliff with a “ramp” (benefit offset) with the policy objective of encouraging beneficiaries who can work above the SGA level to increase their earnings and reduce their reliance on benefits. The theoretical direction of impacts of the benefit offset on mean earnings, however, is ambiguous. The benefit offset is expected to increase the earnings of those who might otherwise not work at all, or might not attempt to earn more than the SGA amount. If such individuals engage in SGA under the benefit offset, their benefits will ultimately be reduced. Offsetting the possible earnings increase are effects on earnings for beneficiaries who would have had earnings above the SGA amount in the absence of BOND. Those beneficiaries lose their benefits entirely under current law, whereas under the benefit offset many, perhaps most, will be eligible for a reduced SSDI benefit. While still on the ramp—i.e., while earning above the SGA amount but less than the zero-benefit amount at the end of the ramp—beneficiaries can increase the size of their benefits by working at less than their full earnings potential.

The goal of the Stage 1 BOND experiment is to make inferences about what the impact of the benefit offset would be if it applied to all SSDI beneficiaries in the nation who met the BOND eligibility criteria. The statistical design for the demonstration supports the production of unbiased point estimates and standard errors for this population. To estimate impacts, we compare mean outcomes for the Stage 1 treatment group to mean outcomes for the Stage 1 control group that have been weighted for differences in sampling rates across sampling strata and adjusted for the effects of random differences in baseline characteristics. We find no evidence that the benefit offset had an impact on earnings in the first two years of the demonstration; year three results, not yet released, will be included in the presentation.