Business Environment Profiles - United States
Published: 11 July 2024
Federal expenditure on disability benefits
123 $ billion
-2.0 %
The annual payouts from the Social Security Disability Insurance (SSDI) Trust Fund represent the federal expenditure on disability benefits. The SSDI provides financial support to citizens whose disability restricts their ability to be employed. Specifically, Disability Insurance is an earned benefit for workers and their dependents who face disability before reaching retirement age. Historical data is sourced from the US Social Security Administration. IBISWorld's projections are based on data obtained from the White House budget. Data is reported in chained 2017 dollars.
We measure the upstream and downstream ramifications on thousands of industries so businesses can monitor their external operating environment. Explore membership options today.
Our industry reports include 35+ pages of data, analysis and charts, including:
The SSDI trust fund pays monthly benefits to disabled workers and their spouses and children until retirement. Once beneficiaries reach retirement age, they stop receiving SSDI payments and begin receiving regular Social Security Retirement benefits.
Since 2014, federal expenditure on disability benefits has slumped, except for a marginal 0.1% boost in 2015. Before 2014, federal spending on disability benefits was expanding strongly, particularly during the recession, with growth of 5.2% in 2008 and 10.5% in 2009. Strong growth in federal expenditure on disability benefits up until 2013, particularly during the Great Recession, led to fears of the SSDI program's inability to remain solvent. However, the trend has reversed and fears of insolvency have calmed. Federal expenditure on disability benefits has consistently declined ever since 2016.
This slump is the result of several factors. Investigations surrounding potential disability benefits fraud have led to significantly tighter eligibility standards, reducing the number of those enrolled and the number of applicants. In addition, as more adults have aged into retirement, they have been phased out of the SSDI program and have begun to receive Social Security retirement benefits instead. Expanding Medicaid has also reduced some individuals' reliance on SSDI by providing them with healthcare coverage where they would otherwise use their SSDI benefits.
A more robust economy has played a significant part as well. When the economy is strong, more lower-skilled jobs become available that don't require manual labor and suit people with modest disabilities. In addition, employers are more to make accommodations in a tight labor market. These factors have reduced overall reliance on the SSDI program and resulted in a slump in federal expenditure on disability benefits. Despite the COVID-19 pandemic resulting in a historic level of unemployment, federal expenditure on disability benefits maintained its downward trend. The stronger move by businesses and companies alike to accommodate workers with disabilities by offering various programs and mental health resources has also contributed to a steady incline of people relying on SSDI payouts instead of a more disability-friendly labor market. Continued advancements in technology, as well as eased work for employees with the advent of remote work, have helped open up more opportunities for individuals who may be immunocompromised or have other medical conditions that restrict their movement, which also helped remove reliance on these forms of payouts in the period. Adjustments to payments amid inflationary pressures had led to a rally of payments undertaken in 2023. Still, funding on disability payments will cool down in 2024 as these factors evolve amid the Federal Reserve's fight to combat inflation. Even with these developments, funding is set to scale up in 2025 as the evolving definitions of what counts as being a disability or a condition that will get covered by such programs will shake up how many individuals will get covered in the period while changes in how much support people will need depending on their circumstances will also change how much government funding will be necessitated in the following years.
Through the end of 2030, federal expenditure on disability benefits is set to boost. However, fed...
Gain strategic insight and analysis on thousands of industries.