Risk of Bankruptcy among Applicants to Disability Insurance

Poor health can lead to financial instability and, eventually, bankruptcy. We examined how entrance into the Social Security Disability Insurance (SSDI) program was associated with bankruptcy filings among those who had a disability and applied to the SSDI program.

We merged dockets from U.S. bankruptcy courts that cover 2000 through 2009 to administrative records on all SSDI applicants from 2000 through 2003 (adults aged > 18, N = 1,500,607). We estimated logistic regression models for bankruptcy declaration within one year of the decision to allow applicants onto the SSDI program.

Being allowed onto the SSDI program was associated with a decreased risk of bankruptcy (adjusted odds ratio = 0.754). The association was negative and statistically significant for all age groups, including older applicants nearing eligibility for Medicare.

The findings contribute to a growing body of research suggesting that increased aid to adults with a disability can reduce financial instability.