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Raising the Alarm on the Unintended Consequences of Social Security’s Return to Work Policies

March 9, 2023

Individuals receiving Social Security Disability Insurance (SSDI) and Supplemental Security Insurance (SSI) benefits have serious, long-lasting disabilities that prevent them from doing substantial work. However, many beneficiaries have a desire and capacity to work. Both programs include special rules aimed at incentivizing work and substantial resources have been dedicated to promoting, testing and evaluating strategies to encourage work among beneficiaries. However, recent research shows that if beneficiaries attempt work, they are likely to be confronted with an overpayment, and it is likely to be large. According to one study, 71 percent of SSDI beneficiaries who exhaust available work incentives experienced an overpayment and the median overpayment was $9,282 (Hoffman et al. 2019).  Analogous estimates for SSI beneficiaries are not available, however it appears SSI beneficiaries experience smaller, but more frequent overpayments.

The paper is authored by Urban Institute policy researchers Jack Smalligan and Chantel Boyens. Commissioned as an independent report, this paper reflects the authors’ views, not necessarily those of the Board or any individual member.

In this paper, Smalligan and Boyens examine work-related overpayments in SSDI and SSI programs among beneficiaries who work with a focus on the root causes of overpayments. The authors begin with background on the role of work in both programs, the rules governing earnings, and the assessment of overpayments. They examine the frequency and causes of overpayments and the effectiveness of SSA’s current processes, and their impact on beneficiaries. They conclude with options for reform, including lessons from the Supplemental Nutrition Assistance Program (formerly known as food stamps), which has considerable overlap with the SSI population.