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Policy Proposals for Improving SSDI, SSI, and Medicaid Work Incentives

Policy Brief 11

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Originally published: 4/2006

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Allen Jensen and Robert "Bobby" Silverstein recently proposed policies for improving SSDI work incentives (e.g., addressing the cash cliff). Policies for updating and improving SSI and Medicaid work incentives are also proposed. These proposals are the product of a research project funded by the Social Security Administration (SSA) through a sub-award from the Disability Research Institute (DRI) at the University of Illinois at Urbana-Champaign. Additional funding was provided by the Robert Wood Johnson Foundation.

The policy proposals developed by the project team (referred to as the Gradual Reduction Choice Option and Related Policy Proposals) recognize the heterogeneous nature of the SSDI disability population and the many variables impacting the ability of persons with severe disabilities to sustain a substantial level of earnings over a significant period of time. The policy proposals are designed to enhance the quality of life and financial independence of SSDI and SSI beneficiaries and at the same time facilitate net long-range cost savings (or at least not result in additional costs) to the Social Security Trust Fund, the U.S. Treasury, and the states.

In a nutshell, the proposals provide SSDI beneficiaries with an informed choice (which entails tradeoffs) between current SSDI policy (which includes the cash cliff) and an alternative, which includes a $1 for $2 gradual reduction in benefits after an initial earned income disregard of one-half of the dollar value of the monthly Substantial Gainful Activity (SGA) level and continued attachment to the SSDI program when benefits are reduced to zero as long as the individual's severe impairments continue. The proposals also encourage work for both the SSDI and SSI populations by making the programs' work incentives similar and thus easier to understand and utilize. In addition, the project team suggests related policies for enhancing SSI, Section 1619, and Medicaid work incentives. Finally, the project team developed a framework for conducting cost estimates of an SSDI policy which entails a $1 for $2 gradual reduction of benefits as earnings increase.

Links to the papers prepared by the project staff are as follows:

Contact Information

Allen Jensen
Director, Work Incentives Project
Center for Health Services Research and Policy
George Washington University
2021 K Street, N.W. Suite 800
Washington, DC 20006
202/530-2319
Fax: 202/530-2336
Email: ihoacj@gwumc.edu
Website: www.medicaidbuyin.org

Robert "Bobby" Silverstein
Director, Center for the Study and Advancement of Disability Policy
1660 L Street, NW, Suite 701
Washington, D.C. 20036
202/783-5111
Fax: 202/783-8250
Email: bobby@csadp.org
Website: www.disabilitypolicycenter.org

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