The authors used linked Social Security (SS) administrative data to analyze SS Disability Insurance (DI) program reform proposals that would hold firms partially responsible for a portion of the DI benefits paid to their recent employees. One proposal would require employers to carry short-term disability insurance; the second proposal would apply an experience rating to the DI portion of the Federal Insurance Contributions Act premium. Our analysis creates baseline firm-level benefit liability measures, simulates firm liabilities under the proposals, and compares the simulated liabilities to the baseline measures.

We found that the proposals would place a relatively large burden on low-wage firms with fewer than 500 workers.

The policy implications of the findings are:

• Firms with high potential liabilities face competing incentives to accommodate and retain or reduce hiring and retaining workers at high risk for medical problems.
• Although these proposals would likely reduce DI expenditures, they might have less desirable unintended consequences.