Work-Related Overpayment and Benefit Suspension Experiences of Federal Disability Beneficiaries

This paper examines the work-related overpayment and benefit suspension experiences of recently employed Social Security Disability Insurance and Supplemental Security Income beneficiaries using data from the 2017 National Beneficiary Survey. It documents overpayment and benefit suspension rates and the characteristics of beneficiaries experiencing these events and examines the association between knowledge of Social Security Administration work incentive provisions and beneficiaries’ expectations, benefit suspensions, and overpayments. It also documents reasons that some who achieve benefit suspension discontinue or reduce their work effort and return to receiving benefits. The findings are descriptive and do not attribute causality to the relationships between awareness of program provisions and the overpayment and benefit suspension experiences.

The paper found that:

• Among recently employed beneficiaries, overpayment and benefit suspension rates differed by program, age, education, race, and ethnicity.
• Awareness of key provisions was positively associated with the likelihood of benefit suspension and anticipating a benefit suspension after controlling for other personal characteristics. We observed a positive association between beneficiaries who were aware of their ability to retain their health insurance after losing cash benefits and those who experienced a benefit suspension.
• About half of beneficiaries whose benefits were suspended had returned to benefits or were in the process of doing so at the time of the interview. These beneficiaries reported a variety of reasons for resuming benefits, with health-related reasons being the most common.
• Awareness of key provisions was not associated with benefit resumption after suspension. However, anticipating a benefit suspension was associated with a reduced likelihood of resuming benefits among SSI recipients. Although beneficiaries aware of key provisions were more likely to report their employment to the Social Security Administration relative to unaware beneficiaries, after controlling for other characteristics, awareness of earnings-related provisions was not associated with the likelihood of overpayment or changes in employment after experiencing an overpayment. However, among those who experienced a benefit suspension, anticipation of the suspension was associated with a smaller likelihood of experiencing a DI overpayment.

The policy implications of the findings are:

• Increasing beneficiaries’ knowledge about key provisions such as health insurance coverage could prompt more beneficiaries to work at levels that suspend benefits, improve their anticipation of and planning for benefit suspensions, and reduce the chances of overpayments.
• Targeting policies, information, or supports to beneficiaries with earnings-related benefit suspensions could help them remain off of benefits, especially those that address health needs.
• Examining the job attributes, health insurance, and other characteristics of beneficiaries who resume benefits after suspension might identify supports to help these beneficiaries remain employed.