for Long-Term Disability: The Role of Workers’ Compensation and
This report presents the basic data
needed to inform policymaking on benefits for longer-term
disabilities (those lasting more than one year). The report
addresses several key questions:
- How much of a worker’s after-tax
income is replaced by workers’ compensation benefits by
themselves and in combination with social security disability
insurance (SSDI) benefits?
- How do patterns of income
replacement vary for different types of workers, different state
systems, and disabilities of different duration?
- How can these data be used to
evaluate the adequacy and equity of benefits?
Among the major findings:
- No single number can describe
income replacement for all workers and disabilities. The income
replacement rate differs for different workers, disabilities,
and workers’ compensation programs.
- For a typical worker, workers’
compensation disability benefits replace 86 percent of after-tax
income in the first year, but successively smaller percentages
in succeeding years. Without cost-of-living adjustments, in the
fifth year, income replacement falls to 68 percent; in the
fifteenth year, to 40 percent.
- The addition of SSDI benefits to
workers’ compensation benefits raises income replacement
substantially for each year of disability. For example, the
addition of SSDI benefits raises income replacement by 23 points
in the fifth year of disability, 30 points in the tenth year,
and 37 points in the twentieth.
Income Replacement for Long-Term
Disability: The Role of Workers’ Compensation and SSDI. Dr.
Karen R. DeVol. December 1986. SP–86–2.