When Impairments Cause a Change in Occupation

IntroductionA fundamental and definitional distinction in the evaluation of Social Security Disability Insurance (DI) claims is whether the claimant is capable of work in any job that exists in the national economy. Claimants who are not capable of any such work and meet work history and recency requirements are eligible for DI. However, impairments that are severe and do not allow for continued employment in the pre-onset occupation but do allow for employment in other occupations do not meet the statutory requirements for DI.1Private disability insurance analogously distinguishes between more severe impairments that cause the loss of ability to work in all occupations and less severe impairments that cause only the loss of ability to work in one's own occupation. "Any-occupation" insurance protects against the loss of ability to work in any job that exists in the national economy. By comparison, "own-occupation" insurance provides additional coverage against impairments that allow for continued employment in the national economy but not in one's pre-onset occupation. Using these terms, DI provides any-occupation insurance but not own-occupation insurance.We study the population with own-occupation impairments for two reasons. First, we provide information relevant to early vocational rehabilitation intervention by describing this group of individuals with impairments and comparatively high rates of post-onset employment. Looking ahead to our results, over half of our sample was employed a few years after the initial denial of DI benefits. This is true even for claimants with low earnings prior to onset. To the extent that DI reform efforts expanding early intervention would retrain workers for employment in different occupations, our study group provides a highly relevant example.2 Second, by studying the population with own-occupation impairments, a group that does not qualify for DI by design, we provide a benchmark for the DI program. This particular group of individuals did not qualify for DI benefits, yet they nevertheless experienced substantial earnings losses upon further employment. Our results help outline one aspect of the "generosity" of the DI program.We build upon previous research that focused on the well-being of denied DI claimants or the wellbeing of the population with impairments (regardless of whether they have claimed benefits).3 One limitation of both types of studies is the difficulty of analyzing workers with high earnings prior to onset. Denied-claimant studies are limited by a preponderance of claimants with low prior earnings, whereas population-level studies can be limited by high rates of survey nonresponse among high earners.4 By contrast, we present results across the entire distribution of pre-onset earnings. As a result, we are able to answer this question: When a person at a specific earnings and education level experiences the onset of ownoccupation impairment(s), what degree of continued labor force participation and what magnitude of earnings loss should be expected?We answer the question using an administrative indicator of own-occupation impairments. Our study sample applied for DI once, was denied benefits, and did not appeal the decision. Because this sample has no additional involvement with the Social Security Administration (SSA) after the denial, it is relevant to the population that has own-occupation impairments but does not apply for DI benefits. Also, the sample resembles the population that is targeted by early intervention; that is, workers who experience onset of impairments but could continue to work, perhaps with vocational rehabilitation or other supports.In the next section, we review what is known about the risk of onset of impairments. Then, we explain the administrative way of identifying own-occupation impairments, describe the sample and data, present the study results, and discuss our findings.The Risk and Consequences of Impairment OnsetThe DI program provides any-occupation insurance; thus, a measure of the risk of the onset of anyoccupation impairments can be measured by programmatic entitlement data. …