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How Common is "Parking" Among Social Security Disability Insurance (SSDI) Beneficiaries? Evidence from the 1999 Change in the Level of Substantial Gainful Activity (SGA)

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Abstract

Fewer Social Security Disability Insurance (DI) beneficiaries have their earnings suspended or terminated because of work than those who are actually working, partly because beneficiaries “park” earnings at a level below substantial gainful activity (SGA) to retain benefits. We assess the extent of parking by examining how beneficiary earnings and months off the rolls for work responded to a 1999 change in the SGA level for non-blind beneficiaries from $500 to $700 per month. Specifically, our difference-in-difference analysis compares longitudinal data for two beneficiary cohorts with different incentives to park their earnings; one experienced the increased SGA level the first year after its Trial Work Period (TWP), when beneficiaries can earn any amount without losing benefits, while the two-year-earlier cohort did not. The impact of the increased SGA level is consistent with parking, but its magnitude small. The reduction in TWP completers with earnings less than $500 was 1.0 percentage points, the reduction in the percentage with earnings over $700 was 1.2 percentage points, and the increase for those with earnings between $500 and $700 was 2.2 percentage points. However, there was no change in mean earnings; small increases for those with relatively low earnings were offset by reductions for those with relatively high earnings. The SGA increase had a significant negative effect on the average number of months that beneficiaries were off the rolls for work; the effect was largest–about six-tenths of a month–for those who earned $500 to $700 during in year they completed their TWP.

Key Findings

  • We estimate that 0.2 to 0.4 percent of disability beneficiaries “parked” their earnings below the $700 “substantial gainful activity” cap during 2002-2006.
  • Those who park keep earnings low in order to retain disability benefits.
  • The fraction of beneficiaries who park earnings is large relative to the number of individuals whose benefits are suspended because of work in a typical month (0.5 percent) or terminated in a typical year (0.5 percent).

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Project

Paper ID

WP 2009-220

Publication Type

Working Paper

Publication Year

2010