Does Temporary Disability Insurance Reduce or Increase Older Workers’ Use of SSDI?

Laura D. Quinby and Siyan Liu, Boston CollegeIn recent years, policymakers have become increasingly focused on expanding access to paid family and medical leave (PFML). Although calls to expand paid leave predate COVID-19, the pandemic threw a spotlight on the issue. One component of PFML, Temporary Disability Insurance (TDI), provides workers with wage replacement while they recover from a serious medical condition. Proponents argue that these benefits allow workers to adjust to health shocks and return to the workforce, reducing reliance on SSDI. However, TDI could also encourage SSDI applications by providing income during the application period.This project uses the Health and Retirement Study (HRS) to evaluate how access to TDI benefits – and the generosity of the benefits – affects the likelihood that older workers end up on SSDI after a work-limiting health shock. It then explores two factors that could change the outcome: 1) spousal labor supply responses; and 2) employer accommodations for workers with a disability. The richness of HRS data on health shocks and outcomes at the individual level allows this study to extend prior work that relied on limited state-aggregate, cross-sectional data.

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