A Double Safety Net? Understanding Interactions between Disability Benefits, Formal Assistance, and the Role of the Family

Stephanie Rennane

NBER Disability Research Center Paper No. NB 18-18
Issued in September 2018

Disabled individuals draw upon many types of support after the onset of a disability. I examine how formal and informal insurance evolve over the course of a disability and examine interactions between federal disability programs and these other insurance mechanisms. I use the Health and Retirement Study to examine trends in use of family assistance and other public and private insurance before and after the onset of disability. I identify the extent to which federal disability benefits change these patterns by comparing a propensity score-weighted sample of accepted and rejected disability applicants before and after receipt of benefits, using matched Social Security Administration records. I find that total household income declines by 20-40 percent following disability onset, while family transfers and other formal income transfers increase. Disability benefits have a minimal impact on use of other formal insurance mechanisms; however, receipt of disability benefits crowd in family assistance on the extensive and intensive margins, increasing the probability of a family transfer by 7 percent, and nearly doubling the amount of assistance provided. I find further evidence that family support is especially important for Supplemental Security Income (SSI) beneficiaries, and that SSI may be used offset the costs of provision of informal care, thus enabling families to increase the amount of assistance provided.

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