In 2000, about 5 million disabled workers received DI cash benefits totaling about $50 billion, with average monthly cash benefits amounting to $787 per person. For example, we found that about 13 percent of working beneficiaries who had earnings between 75 and 100 percent of the annualized SGA level in 1985 still had earnings near the SGA level in 1995, even though the SGA had increased from $300 to $500 a month during this period. Even after the SGA level was increased in 1990, a small proportion of these beneficiaries continued to have earnings between 75 to 100 percent of the new annualized SGA level. While beneficiary deaths and conversions to retirement benefits accounted for most program exits, the percentage of exits caused by medical improvement or a return to work increased gradually, from 1.9 percent in 1985 to 9.2 percent in 1996, and then rose sharply to 19.9 percent in 1997. However, the aggregation of medical improvement and return-to-work data prevent us from obtaining a full understanding of the link between the SGA and DI program exit behavior. The large increase in the percentage of beneficiaries returning to work or medically improving for 1997 may be related, in part, to an increase in the number of continuing disability reviews that occurred during 1997. These include data that identify the monthly earnings of beneficiaries and whether a beneficiary is blind, is participating in a trial work period, or has exited the DI program based on a return to work. Analysis of the Effect of the SGA on Beneficiaries’ Earnings

To analyze the effects of the SGA on the earnings of DI beneficiaries, we attempted to determine whether DI beneficiaries engage in “parking,” that is, whether they limit their earnings to a level at or just below the SGA limit in order to maintain eligibility for benefits. Analysis Of the Effect of the SGA on Program Entry and Exit

To examine the effects of the SGA on DI program entry and exit rates, we looked at the rate of entry and exit both before and after the increase in the SGA. Appendix II: Comments From the Social Security Administration
Why GAO Did This Study

The Social Security Administration's (SSA) Disability Insurance (DI) program paid $50 billion in cash benefits to more than five million disabled workers in 2000. Eligibility for DI benefits is based on whether a person with a severe physical or mental impairment has earnings that exceed the Substantial Gainful Activity (SGA) level. SSA terminates monthly cash benefit payments for beneficiaries who return to work and have earnings that exceed the SGA level--$1,300 per month for blind beneficiaries and $780 per month for all other beneficiaries.

What GAO Found

GAO found that the SGA level affects the work patterns of only a small proportion of DI beneficiaries. However, GAO also found that the SGA may affect the earnings of some beneficiaries. About 13 percent of those beneficiaries with earnings near the SGA level in 1985 still had earnings near the SGA level in 1995, even though the level was increased during that period. The absence of key information identifying the monthly earnings of beneficiaries, their trial work period status, and whether they are blind limited GAO's ability to definitively identify a relationship between SGA levels and beneficiaries' work patterns. Data limitations also make the effect of the SGA on DI program entry and exit rates difficult to isolate. Although the rate of program entry increased in the years immediately following a 1990 increase in the SGA level, it then gradually declined to a level below the pre-1990 entry rates. Since 1990, DI exit rates continue to be driven largely by beneficiary death and conversion to retirement benefits. However, the percentage of all exits caused by improvements in medical conditions or a return to work increased slowly, from 1.9 percent in 1985 to 9.2 percent in 1996, and then rose dramatically to 19.9 percent in 1997. A substantial increase in the number of continuing disability reviews done by SSA may account, in part, for this 1997 upturn, but data limitations preclude GAO from obtaining a full understanding of the link between the SGA and exit behavior.