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Young adults with disabilities are a specific target of the welfare-to-work policy introduced by many OECD countries over the past decade. The implementation of these policies is a significant concern for service delivery organisations and advocates in Australia and internationally due to complex intersecting structural barriers that persist for many young adults with disabilities. A particular focus of this article is work capacity assessments. Drawing on socio-political theories and interpretive policy analysis, the 22 in-depth interviews with personnel from service delivery organisations and advocacy organisations reveal how the deemed capacity to work process is not only interpreted as flawed, but the current policy approach disables young adults, perpetuates stigma, and creates division between service users and service providers. The accounts reinforce the need to contest such assessments and instead turn towards a rights-based capability approach permitting young adults with disability self-determination over their education-to-employment pathway.