Protecting the Household Incomes of Older Workers with Significant Health-Related Work Limitations in an Era of Fiscal Responsibility
by Jody Schimmel and David Stapleton
- Policy proposals designed to encourage later retirement often include components to preserve existing benefits for those who have medical conditions that limit work.
- We explore a set of policy options that favor "work support" -- options designed to encourage and help workers continue to work if they can, perhaps with reduced hours or at lower paying jobs.
- We consider three specific work-support options for eligible workers:
* An expanded earned income tax credit (EITC), comparable to the credit currently available to parents with three children
* An employment support allowance (ESA) -- a payment to eligible workers provided that they do not apply for SSDI benefits
* A health insurance subsidy, designed to be comparable to that specified in the Affordable Care Act (ACA) for those who purchase insurance through a health insurance exchange -- an option that will presumably become available to all persons without employer coverage as health care reform is implemented
- Our expectation is that work-support options, on average, would cost less per capita than SSDI benefits, especially if the ACA health insurance subsidy is already in place. The relative cost of these options is even lower once the cost of Medicare for SSDI beneficiaries is factored in.
- These options would substantially reduce poverty among the families of qualified workers -- by 80 percent under the most costly option.
- A work-support program is likely to reduce hardship by more than would a program that preserves existing benefits for the same workers at comparable cost.