The Social Security Administration's Efforts to Promote Employment for People with Disabilities
New Solutions for Old Problems

National Council on Disability
November 30, 2005

National Council on Disability
1331 F Street, NW, Suite 850
Washington, DC 20004

This report is also available in alternative formats and on the award-winning National Council on Disability (NCD) Web site (www.ncd.gov).

Publication date: November 30, 2005

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The views contained in this report do not necessarily represent those of the Administration as this and all NCD documents are not subject to the A-19 Executive Branch review process.

Letter of Transmittal

November 30, 2005

The President
The White House
Washington, D.C. 20500

Dear Mr. President:

On behalf of the National Council on Disability (NCD), I am pleased to submit this report, entitled The Social Security Administration's Efforts to Promote Employment for People with Disabilities: New Solutions for Old Problems. Under its congressional mandate, NCD is charged with the responsibility to gather information on the development and implementation of federal laws, programs, and initiatives that affect people with disabilities.
Our nation's current disability benefit programs are based on a policy principle that assumes that the presence of a significant disability and lack of substantial earnings equate with a complete inability to work. Americans with disabilities remain underemployed, despite the fact that many are willing and able to work. Although the Social Security Administration (SSA) has instituted a number of incentives to reduce the numerous obstacles to employment faced by its Supplemental Security Income (SSI) and Social Security Disability Insurance (DI) beneficiaries, such efforts have had little impact because few beneficiaries are aware of these incentives and how they affect benefits and access to health care.

In recent times there has not been a comprehensive, research-based examination of the practices that are most likely to support the employment of SSI and DI beneficiaries. NCD undertook this study to address that absence and found that the complex obstacles to employment faced by SSA beneficiaries require a comprehensive set of solutions. New approaches must be identified that emphasize beneficiary control of career planning and the ability to access self-selected services and supports. Public and private health care providers must develop new collaborations and new approaches to combining coverage from multiple sources to improve program efficiencies. SSA must continue to work with the Rehabilitation Services Administration and the Department of Labor to improve implementation of the Ticket to Work program and identify new approaches that will overcome the traditional inability of SSA beneficiaries to benefit from services provided by the nation's employment and training programs. Secondary and postsecondary educational institutions must emphasize benefits counseling and financial management training as the foundation for beneficiary self-direction and economic self-sufficiency. Federal agencies and the business community must realize that collaborative approaches to incorporating beneficiaries into the workforce are needed as a way to reduce dependence on federal benefits while simultaneously enhancing the productivity and competitiveness of large and small business.

The recommendations discussed in this report need to be addressed in policy and procedural modifications by both Congress and the Social Security Administration to significantly address the continuing number of SSA beneficiaries who never leave the SSI and DI rolls, and to increase the number of beneficiaries who enter, or reenter, the United States workforce.
Sincerely,

Lex Frieden, Chairperson

(The same letter of transmittal was sent to the President Pro Tempore of the U.S. Senate and the Speaker of the U.S. House of Representatives.)

National Council on Disability Members and Staff

Members

Lex Frieden, Chairperson
Patricia Pound, First Vice Chairperson
Glenn Anderson, Ph.D., Second Vice Chairperson

Milton Aponte, J.D.
Robert R. Davila, Ph.D.
Barbara Gillcrist
Graham Hill
Joel I. Kahn, Ph.D.
Young Woo Kang, Ph.D.
Kathleen Martinez
Carol Novak
Anne M. Rader
Marco Rodriguez
David Wenzel
Linda Wetters

Staff

Ethel D. Briggs, Executive Director
Jeffrey T. Rosen, General Counsel and Director of Policy
Julie Carroll, Senior Attorney Advisor
Joan M. Durocher, Senior Attorney Advisor
Martin Gould, Ed.D., Director of Research and Technology
Geraldine Drake Hawkins, Ph.D., Senior Program Analyst
Allan W. Holland, Chief Financial Officer
Pamela O'Leary, Sign Language Interpreter
Mark S. Quigley, Director of Communications
Mark E. Seifarth, Congressional Liaison
Brenda Bratton, Executive Assistant
Stacey S. Brown, Staff Assistant
Carla Nelson, Secretary

Acknowledgments

The National Council on Disability deeply appreciates Dr. John Kregel and Dr. Beth Bader of Virginia Commonwealth University's Department of Special Education and Disability Policy for the research and development of this report.

Table of Contents

Executive Summary

Chapter I: Introduction

Overview of the SSDI and SSI Programs
Determining Eligibility for DI and SSI
Overview of the Problem
Response of Congress and the Social Security Administration to the Problem
State Vocational Rehabilitation Agencies
Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA) (P.L. 106-170)
The Ticket to Work and Self-Sufficiency Program
Expanded Availability of Health Care Services
Enhanced Work Incentives
SSA's Work Incentives Support Plan
Development of Work Incentives
Purpose of the Study
Research Methodology
Content of the Report

Chapter II: The Mission and Purpose of the SSA Disability Benefit Programs

Introduction
Purpose of the Disability Benefit Programs
A Rigorous Test of Eligibility for SSA Disability Benefits
The Changing Societal View of Work Disability
The Problem
Policy Premises Underlying the Definition of Disability
Delinking the Concept of Disability from Work Incapacity
Recognizing the Concept of Partial Disability
Recognizing the Dynamic Nature of Disability
Providing Early Intervention Services
Attempts by SSA to Impact Its Definition of Disability Through Modified Program Rules
The Urgent Need for Policy and Program Changes

Chapter III: Beneficiary Perspective and Self-Direction

Introduction
The Problem
Customer Service
Health Care Concerns
Deficiencies in the Wage Reporting System Resulting in Overpayments
Complexity of Program Rules
Insufficient Access to Timely and Accurate Earnings Data
Marriage Penalty
Previous Attempts by Congress and SSA to Improve Customer Service and Beneficiary Control
The Ticket to Work and Work Incentives Improvement Act
SSA's Work Incentives Support Plan
Recommendations for SSA Policy Change: Beneficiary Perspective and Self-Direction
Recommendations Specific to Customer Service
Recommendations Specific to the Ticket to Work Program
Recommendations Specific to Facilitating Beneficiary Choice
Recommendations Specific to Reducing SSA Overpayments to Beneficiaries
Recommendations for Eliminating the Marriage Penalty
Summary

Chapter IV: Income Issues and Incentives

Introduction
The Problem
Employment Disincentives in the Disability Benefit Programs
Complex Rules Govern the Effect of Income on Disability Benefits
Harsh Income and Resource Limits Create Barriers to Employment
Many New Beneficiaries Who Could Work Delay Employment Out of Fear of Benefit Loss
Delays in Accessing Health Insurance and Risk of Losing Health Insurance Once Obtained
Previous Attempts by Congress and SSA to Impact Income Issues and Incentives
Efforts to Lessen the Impact of the SGA "Cash Cliff"
Efforts to Allow Increased Asset Development
Recommendations for SSA Policy Changes: Income Issues and Incentives
Recommendations for Easing the SGA Cash Cliff for DI Beneficiaries
Recommendations for Reducing Restrictions on Assets for SSI Beneficiaries
Recommendations for Improving Access to Health Care for DI Beneficiaries
Recommendations for Decreasing the Complexity of the DI/SSI Program Rules Governing Income and Resources
Summary

Chapter V: Coordination and Collaboration Among Systems

Introduction
Health Care System
The Problem
Previous Attempts by Congress and SSA to Impact the Health Care System
Vocational Rehabilitation System
The Problem
Previous Attempts by Congress and SSA to Impact the Rehabilitation System
Employment and Training System
The Problem
Previous Attempts by Congress and SSA to Impact the Federal Employment and Training System
Educational System
The Problem
Previous Attempts by Congress and SSA to Impact the Educational System and Youth
Employers, Business Community, and Private Insurance Industry
The Problem
Previous Attempts by Congress and SSA to Impact the Employer, Business, and Private Insurance Systems
Recommendations for SSA Policy Changes
Collaborating with the Health Care Systems
Vocational Rehabilitation System
Federal Employment and Training System
Educational System
Employers, Business Community, and Private Insurance Industry
Summary

Chapter VI: Summary of Findings and Recommendations

Research Question 1
Research Question 2
Research Question 3
Research Question 4
Beneficiary Perspective and Self-Direction
Customer Service
Ticket to Work Program
Facilitating Beneficiary Choice
Reducing SSA Overpayments to Beneficiaries
Eliminating the Marriage Penalty
Income Issues and Incentives
Easing the SGA Cash Cliff for DI Beneficiaries
Reducing Restrictions on Assets for SSI Beneficiaries
Decreasing the Complexity of the DI/SSI Program Rules Governing Income and Resources
Coordination and Collaboration Among Multiple Public and Private Systems
Health Care System
Vocational Rehabilitation System
Federal Employment and Training System
Educational System
Employers, Business Community, and Private Insurance Industry

References

Appendix A: Methodology

Appendix B: Results of Literature Review to Identify Evidence-Based Practices

Appendix C: Mission of the National Council on Disability

Americans with disabilities remain underemployed, despite the fact that many are willing and able to work. Although the Social Security Administration (SSA) has instituted a number of incentives to reduce the numerous obstacles to employment faced by its Supplemental Security Income (SSI) and Social Security Disability Insurance (DI) beneficiaries, such efforts have had little impact because few beneficiaries are aware of these incentives and how they affect benefits and access to health care.

Introduction to the Problem

Social Security beneficiaries with disabilities must spend months or even years convincing SSA that they are unable to work as a condition of eligibility. Yet, upon their receipt of benefits, SSA begins to communicate to beneficiaries that work is an expectation for them. Congress and SSA have developed a variety of work incentives and special programs designed to encourage beneficiaries to attempt to obtain and sustain employment. Yet SSA's efforts to eliminate work disincentives have often added to the complexity of the entire program, confusing beneficiaries and making them leery of any actions that might unknowingly jeopardize their benefits.

Current SSA benefit amounts are quite small and merely allow beneficiaries to live at a basic subsistence level. SSI resource limits make it very difficult to accumulate the financial resources necessary to move toward economic self-sufficiency. Tying eligibility for Medicaid or Medicare to eligibility for SSA benefits forces individuals with high-cost medical needs who could otherwise work to choose between pursuing a career and retaining the medical insurance that sustains their very lives.

The fear of losing benefits and medical insurance through an unsuccessful employment attempt starts well before adulthood with SSI beneficiaries. Many SSI recipients first apply for benefits as children while enrolled in public schools. These individuals often remain on the rolls well into adulthood, with very few transitioning from high school into substantial employment after graduation (GAO, 1996b; GAO, 1998b). Failure to focus on Social Security and other public benefits during transition is not only a missed opportunity, but harm may be caused when students and family members are not educated or prepared for the effect of earnings on cash benefits and medical insurance (Miller and O'Mara, 2003).

There is also the problem with poor educational attainment of DI beneficiaries who enter the disability system later in life. Efforts to help this population return to work are stymied by their lack of education and marketable job skills -- particularly in today's highly competitive information economy. It is now more important than ever that people of all ages have access to higher education and the financial means with which to pay for training and education (Moore, 2003).

Response of Congress and the Social Security Administration to the Problem

Well aware of the enormity and seeming intractability of this problem, Congress and SSA have initiated multiple efforts to promote employment and return to work among SSA beneficiaries. In recent years, a number of work incentives for SSI and DI beneficiaries have been implemented, allowing individuals to keep more of their earnings while retaining their benefits. Work incentives are aimed at reducing the risks and costs associated with the loss of benefit support and medical services as a result of returning to work. Some of the most commonly used incentives are Section 1619(a) and (b) provisions; impairment-related work expenses (IRWE); trial work period (TWP); Plan for Achieving Self-Support (PASS); extended period of eligibility (EPE); and continued payment under a vocational rehabilitation program.

However, despite efforts by SSA and the Federal Government that have led to more favorable conditions for returning to work, most SSI and DI beneficiaries continue to stay on the disability rolls. The work incentives offered by SSA remain largely underutilized; in March 2000, of the total number of eligible working beneficiaries, only 0.3 percent were using PASS, 2.8 percent were using IRWEs, 7.5 percent were receiving Section 1619(a) cash benefits, and 20.4 percent were receiving Section 1619(b) extended Medicare coverage (SSA, 2000). The major reasons cited for the extreme underutilization of these work incentives by beneficiaries were (1) few beneficiaries knew that the work incentives existed, and (2) those who were aware of the incentives thought they were complex, difficult to understand, and of limited use when entering low-paying employment (GAO, 1999).

The Office of Program Development and Research (OPDR) and the Office of Employment Support Programs (OESP) under the Deputy Commissioner for Disability and Income Security Programs are primarily responsible for the implementation of multiple components of the Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA). The TWWIIA provides a number of new program opportunities and work incentives for both SSI and DI beneficiaries, including the Ticket to Work (TTW) and Self-Sufficiency Program; development of a work-incentives support plan through the creation of national network of Benefits Planning, Assistance, and Outreach (BPAO) programs; and new work incentives, including expedited reinstatement (EXR) of benefits and postponement of continuing disability reviews.

The National Council on Disability's Study of the Problem

It is not known whether the new TWWIIA programs will have any more success than past attempts by SSA to impact the employment rate and earnings of beneficiaries. What is clear is that there has not been, in recent times, a comprehensive, research-based examination of the practices that are most likely to support the employment of SSI and DI beneficiaries. This study has been undertaken in response to the need for such a comprehensive analysis. The study was designed to address four research questions:

1. What are the evidence-based practices that promote the return to work of working-age beneficiaries of DI and SSI programs?
2. What policy changes are needed, given recent trends in program participation and employment?
3. Are there proven and documented practices that work better for some populations of people with disabilities and not others?
4. Which factors ensure that documented and evidence-based practices could be adapted/ adopted by SSA and other entities that seek to ensure the employment of people with disabilities? Which factors prevent adaptation/adoption?

A four-step approach was taken to implement the study. First, a comprehensive literature synthesis was completed through a review of published and unpublished literature. Second, detailed structured interviews were conducted with key stakeholders, including SSA beneficiaries, federal SSA officials, representatives of other federal agencies, consumer and advocacy organizations, service organizations, community service providers, and business representatives. Third, a preliminary list of findings, evidence-based practices, and recommendations based on the literature review and structured interviews was used to develop seven topic papers. These papers were used to facilitate discussion and obtain reaction from participants who were invited to a consensus-building conference at the end of January 2005. Individuals with disabilities (including current and former SSI and DI beneficiaries), advocacy organizations, service providers, and policymakers who attended the conference had the opportunity to further develop the recommendations that appear throughout the report.

Major Findings of the Study

Purpose and Mission of SSA's Disability Benefit Programs

Our nation's current disability benefit programs are based on a policy principle that assumes that the presence of a significant disability and lack of substantial earnings equates to a complete inability to work. The current SSA eligibility determination process thwarts return-to-work efforts, because applicants are required to demonstrate a complete inability to engage in substantial gainful activity (SGA) in order to qualify for benefits. The definition fails to recognize that, for many consumers, disability is a dynamic condition. The length of the application process in our current programs actually contributes to the ineffectiveness of our return-to-work efforts and our inability to intervene early in the disability process.

For DI individuals, lack of a gradual reduction in benefits as earnings increase and lack of attachment to the DI and Medicare programs after an individual has maintained employment for an extended period of time make return to work unfeasible. For SSI beneficiaries, the program's stringent asset limitations thwart efforts toward asset development and economic self-sufficiency. Inconsistencies in program provisions lead to confusion and inequities for beneficiaries of both programs.

Beneficiary Perspective and Self-Direction

To receive benefits, applicants must characterize their situation as an inability to work long-term. They must demonstrate that they are unable to work in any significant way. Once they are determined to be eligible for disability benefits, beneficiaries face a host of complex program rules and policies related to continuing eligibility for cash benefits and access to health care. Many beneficiaries are confused or uninformed about the impact of return to work on their life situation and have shied away from opportunities to become self-sufficient through work.

Beneficiaries report that their experience with SSA is often unfavorable. Insufficient staffing has led to long lines and poor services. Misinformation is frequent, and mistrust common. Local SSA field office staff members are overburdened with accurate and timely processing of post-entitlement earnings reporting, which often leads to overpayments to beneficiaries. Beneficiaries do not trust SSA to make appropriate and timely decisions. There is prevalent fear that work attempts would result in either a determination that the disability had ended or the need to repay benefits.

SSA has implemented many legislative changes, program modifications, training initiatives, and automation efforts in the past 15 years to improve its customer service. Although efforts to streamline processing and improve customer service should be lauded, they have not significantly improved beneficiaries' ability to direct and control their own careers.

Income Issues and Incentives

A multitude of rules regarding employment income, continued eligibility for disability benefits, waiting periods, earnings reporting, management of benefit payments, and management of assets (among many others) come into play once an individual is determined to be eligible for DI or SSI. SSA rules regarding employment and income are such that many beneficiaries will actually be worse off financially if they work full time. Disincentives to employment in the current benefits programs include a sudden loss of cash benefits as a result of earnings above the SGA level for DI beneficiaries. Despite a number of programs that are designed to encourage asset building among SSI beneficiaries, it remains very difficult for beneficiaries to save and accumulate resources under SSI, which contributes to long-term impoverishment and dependence on public benefits.

Over the past decade, SSA has devoted considerable resources to promoting employment and return to work among SSI and DI beneficiaries. The agency has aggressively implemented a number of new initiatives authorized under the TWWIIA, such as the Ticket to Work and Self-Sufficiency Program, the BPAO program, area work incentive coordinators, and Protection and Advocacy for Beneficiaries of Social Security. It has modified program rules to provide increased work incentives to beneficiaries, such as the EXR and protection from continuing disability review provisions of TWWIIA, indexing the SGA threshold, and increasing the level of earnings allowed during the Trial Work Period (TWP). The agency has also launched or is planning to initiate a number of demonstrations that will test the efficacy of new modifications to work incentives within the DI program and services targeted toward youth with disabilities. Yet, while SSA has taken steps to improve its return-to-work services through the provision of work incentives, these efforts are hampered by the underlying program rules that were designed for individuals assumed to be permanently retired from the workforce and individuals who were viewed as unable or unlikely to work in the future.

Coordination and Collaboration Among Systems

Expansion of the disability programs and the poor employment rates of adults with disabilities have become major concerns for SSA and disability policymakers across the country. Too often, the alarming growth of the Social Security disability rolls has been represented and perceived as SSA's problem to solve in isolation, when in fact it is a larger societal problem with myriad complex causes. Receipt of Social Security disability benefits is merely the last stop on a long journey that many people with disabilities make from the point of disability onset to the point at which disability is so severe that work is not possible. All along this journey, individuals encounter the policies and practices of the other systems involved in disability and employment issues. When these systems fail to stem the progression of disability or work at cross-purposes with one another to prevent successful employment retention or return to work, it is the Social Security disability system that bears the eventual brunt of this failure. Any meaningful effort to slow down or reverse this relentless march toward federal disability benefits will require significant and sustained collaboration and coordination among SSA and the other federal agencies with a stake in developing disability and employment policy.

The complex obstacles to employment faced by SSA beneficiaries require a comprehensive set of solutions. New approaches must be identified that emphasize beneficiary control of career planning and the ability to access self-selected services and supports. Public and private health care providers must develop new collaborations and new approaches to combining coverage from multiple sources to improve program efficiencies. SSA must continue to work with the Rehabilitation Services Administration (RSA) and the Department of Labor (DOL) to improve implementation of the TTW program and identify new approaches that will overcome the traditional inability of SSA beneficiaries to benefit from services provided by the nation's employment and training programs. Secondary and postsecondary educational institutions must emphasize benefits counseling and financial management training as the foundation for beneficiary self-direction and economic self-sufficiency. Federal agencies and the business community must realize that collaborative approaches to incorporating beneficiaries into the workforce are needed as a way to reduce dependence on federal benefits while simultaneously enhancing the productivity and competitiveness of large and small business.

Recommendations

A total of 38 specific recommendations have been developed in the areas of Beneficiary Perspective and Self-Direction, Income Issues and Incentives, and Coordination and Collaboration Among Multiple Public and Private Systems. The recommendations are presented and justified in Chapters III, IV, and V of the report, and a complete list is provided in Chapter VI. The key recommendations resulting from the study are summarized below.

Beneficiary Perspective and Self-Direction

Customer Service - SSA should take immediate steps to improve the services provided to beneficiaries by improving the accessibility of SSA field offices and Web sites; redesigning field office personnel roles, staffing patterns and work assignments; continuing efforts to automate work reporting procedures; and enhancing outreach efforts to beneficiaries.

Ticket to Work Program - Congress and SSA should address current shortcomings in the TTW program by (1) expanding Ticket eligibility to include beneficiaries whose conditions are expected to improve and who have not had at least one continuing disability review (CDR), childhood SSI beneficiaries who have attained age 18 but who have not had a redetermination under the adult disability standard, and beneficiaries who have not attained age 18; (2) modifying the TTW regulations to ensure that Ticket assignment practices do not violate the voluntary nature of the program and beneficiary rights to grant informed consent; and (3) implementing a strong national marketing program to inform beneficiaries about TTW and other SSA programs.

Facilitate Beneficiary Choice - Congress should authorize and direct SSA, the Rehabilitation Services Administration (RSA), the Centers for Medicare and Medicaid Services (CMS), the Department of Housing and Urban Development (HUD), and the Department of Labor Employment and Training Administration (DOLETA) to develop and implement an integrated benefits planning and assistance program that coordinates resources and oversight across several agencies that enables beneficiaries to access benefit planning services within multiple federal systems. Congress should also authorize and direct these agencies to consider changes to the existing BPAO initiative to improve the accuracy and quality of services provided to individual beneficiaries.

Reduce SSA Overpayments to Beneficiaries - Congress and SSA should implement a series of procedural reforms to reduce overpayment to beneficiaries by increasing the use of electronic quarterly earnings data and automated improvements to expedite the processing of work activity and earnings; piloting the creation of centralized work CDR processing in cadres similar to PASS and Special Disability Workload Cadres; and enhancing efforts to educate beneficiaries on reporting requirements, the impact of wages on benefits, and available work incentives.

Eliminate the Marriage Penalty - Congress and SSA should undertake a complete review of the SSI program and make program modifications that eliminate the financial disincentive to marriage inherent in the present program, including amending the current Title XVI disability legislation to modify the manner in which 1619(b) eligibility is applied to eligible couples.

Income Issues and Incentives

Ease the SGA Cash Cliff for DI Beneficiaries - Congress should modify the current Title II disability legislation to eliminate SGA as a post-entitlement consideration for continued eligibility for Title II disability benefits and provide for a gradual reduction in DI cash benefits based on increases in earned income.

Reduce Restrictions on Assets for SSI Beneficiaries - Congress should direct SSA to (1) develop and test program additions and regulatory modifications that will enable SSI beneficiaries to accumulate assets beyond existing limits through protected accounts and other savings programs, and (2) change current program rules and work with other federal agencies to modify and expand the value of individual development account (IDA) programs to SSA beneficiaries.

Decrease the Complexity of the DI/SSI Program Rules Governing Income and Resources - Congress should direct SSA to (1) simplify regulatory earnings definitions and wage verification processes so that they are consistent across the SSI and DI programs, and (2) direct SSA to modify regulations related to the treatment of earnings in the DI program by applying the same rules currently applied in the SSI program.

Coordination and Collaboration Among Multiple Public and Private Systems

Health Care Systems - Centers for Medicare and Medicaid Services (CMS) and SSA should work together closely to (1) modify existing program regulations in order to uncouple Medicare and Medicaid coverage from DI/SSI cash payments; (2) identify and eliminate the many employment disincentives currently built into the Medicaid waiver, Medicaid buy-in, and Health Insurance Premium Payment (HIPP) programs; (3) expand benefits counseling services to include the full range of financial education and advisement services; and (4) work collaboratively with public and private insurance providers and business representatives to design public-private insurance partnerships that will expand access to health care for individuals with disabilities.

Vocational Rehabilitation (VR) System - SSA should modify TTW program regulations to allow the SSA's traditional VR cost reimbursement program to carry on as a parallel program to the Employment Network (EN) outcome or outcome-milestone payment mechanisms, and ensure that an EN is able to accept Ticket assignment from a beneficiary, refer that individual to the VR agency for needed services, and not be required to reimburse the VR agency for those services.

Federal Employment and Training System - Congress, SSA, and the Department of Labor should undertake an analysis of the impact of allowing DOL One-Stop Career Centers to receive cost reimbursement payments for successfully serving beneficiaries under the TTW program, evaluate the impact of the Workforce Investment Act (WIA) performance standards on beneficiary participation in WIA programs, and design and test a set of waivers that will assist beneficiaries in accessing and benefiting from WIA core and intensive services, as well as individual training accounts.

Educational System - Congress should direct SSA to work with the Department of Education (ED) to (1) ensure that benefits planning and financial management services are available to the transition-aged population; (2) expand the current student earned income exclusion (SEIE) and the Plan for Achieving Self-Support (PASS) to encourage involvement of SSA beneficiaries in postsecondary education and training; and (3) implement a policy change that would disregard all earned income and asset accumulation limits for beneficiaries who are transitioning from secondary education to postsecondary education or employment for at least one year after education or training is completed.

Employers, Business Community, and Private Insurance Industry - Congress should direct SSA and the Department of the Treasury to (1) evaluate the possible effects of a disabled person tax credit as a means of increasing the use of disability management programs in business to prevent progression of injured and disabled workers onto the public disability rolls, and (2) collaborate with Department of Labor's Employment and Training Administration (DOLETA), the Small Business Administration (SBA), and the Rehabilitation Services Administration (RSA) to develop and implement an employer outreach program targeted toward small and mid-size businesses.

Overview of the SSDI and SSI Programs

The long-debated concept of social insurance for persons with disabilities was first set into action by the Social Security Amendments of 1956, with the establishment of the Social Security Disability Insurance (SSDI) program. Since its original enactment, SSDI (referred to in this report as DI) has been examined and modified repeatedly over the decades. In the beginning, monthly disability benefits were provided only for disability-insured workers between the ages of 50 and 65 who had an "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration" and for children of retired or deceased insured workers who developed a disability before the age of 18. There was a six-month waiting period from the end of work until the beginning of DI benefit payments (SSA, 1986).

Over the course of the next few years, legislation was enacted to make various amendments to the DI program, many of which increased both eligibility for disability benefits and benefit levels. The 1957 regulations added the consideration of nonmedical factors to the evaluation of disability, including education, training, and work experience. The Social Security Amendments of 1958 expanded DI to include benefits for the dependents of workers with disabilities. In 1960, the minimum age requirement of 50 years was removed for DI beneficiaries. That same year, a nine-month trial work period was established, allowing beneficiaries to test their ability to gain employment without losing their benefits. The Social Security Amendments of 1965 replaced the requirement that the impairment be of "long-continued and indefinite duration" with the condition that it was "expected to last for a continuous period of not less than 12 months" (SSA, 1986).

Such changes led to an increasing public awareness of DI, along with significant growth in both the size and complexity of the program. As a result, the Social Security Amendments of 1967 were passed to clarify that a claimant may only be found to have a disability "if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work." The Social Security Amendments of 1972 brought additional changes to DI, including a reduction in the waiting period to begin benefit payments from six to five months, and an extension of the definition of adult children with disabilities to those whose condition developed before age 22 (SSA, 1986).

The most momentous aspect of the 1972 Amendments was the creation of the Supplemental Security Income (SSI) program, which replaced various state programs of public assistance effective January 1, 1974. In contrast to DI, eligibility for SSI payments was needs-based and was available to individuals who had attained age 65 or who had a disability with little income and few resources, regardless of their work history, to ensure that they were afforded a minimum level of monthly income to meet expenses. SSI operated under the same definition of disability used for DI benefits, with a modification for SSI claimants under age 18. Other provisions applicable to DI were incorporated into the new program as well, including the nine-month trial work period and the suspension of benefit payments upon refusal to accept rehabilitation services. Medicare and Medicaid protection for Social Security disability recipients were also provided for the first time as a result of the 1972 Amendments (SSA, 1986).

The number of people on the disability rolls and the costs of both the DI and SSI programs increased substantially during the 1970s. Between 1970 and 1978, the number of workers on the DI rolls nearly doubled, and expenditures quadrupled. It was widely believed that factors such as high unemployment rates, changing attitudes toward disability, high benefit levels for beneficiaries who did not work, and inadequate administrative control were collectively responsible for such unprecedented growth. Consequently, a number of proposals for disability reform legislation were introduced in Congress in the latter half of the decade with the intent of removing the work disincentives that were purportedly built into the disability program, as well as improving program administration (SSA, 1986).

To that end, the Social Security Disability Amendments of 1980 included changes to the DI benefit structure and procedures for strengthening incentives for rehabilitation and return to work. A cap was placed on the benefits that could be paid to DI beneficiaries and their families, to prevent excessive replacement rates from discouraging employment. In addition, work incentives were augmented in both DI and SSI, and those who completed the nine-month trial work period were now provided with an additional 15-month period during which they could test their ability to maintain employment while retaining disability status, with benefits automatically reinstated in the event that the work attempt failed. Furthermore, impairment-related work expenses incurred by the individual were no longer counted when determining whether earnings could be counted as substantial gainful activity (SGA) (SSA, 1986).

In passing the 1980 legislation, Congress also aimed to strengthen federal management of the state disability determination process, eliminating the current system of individual state agreements in order to ensure more efficient and consistent administration of the disability programs throughout the nation. Furthermore, in an effort to maintain the integrity of the disability programs, Congress approved a requirement that the status of all disability beneficiaries be reviewed at least once every three years to assess their continuing eligibility for benefits. Prior to this highly contested change, such continuing disability reviews (CDRs) were only conducted in selected cases where the individual's condition was expected to improve, or where the individual had returned to work. Consequently, the Social Security Administration (SSA) found nearly one in two people reviewed ineligible for benefits, and for many of these people, benefits were terminated. Shortly thereafter, numerous hearings were held regarding the effect the controversial CDRs and subsequent terminations were having on beneficiaries, as well as concerns regarding the standards applied in evaluating disability (SSA, 1986).

In response, the Social Security Disability Benefits Reform Act of 1984 set forth a new standard of review for the termination of disability benefits, making it more difficult to terminate a beneficiary by requiring substantial evidence that an individual's impairments had medically improved to the point where he or she could now perform substantial gainful activity. Furthermore, the Act specified that in determining eligibility, the collective effect of all of an individual's impairments must now be taken into account, even if no single impairment qualified as "severe." In addition to providing explicit standards of disability review, the 1984 legislation had the goals of improving the accuracy and the nationwide uniformity of decisions in disability programs, and returning disability policymaking to federal legislators. Thus, this Act was viewed as corrective or remedial rather than driven by reform.

In the past two decades, continued progress has gradually been made toward increasing the availability of work incentives and return-to-work services for disability recipients, carried out within the context of the broader disability policy climate aimed at expanding the vocational and social prospects of persons with disabilities. Given the contradictions inherent in providing vocational services to a population of individuals who have already been required to demonstrate an inability to work in order to qualify for disability insurance, the ultimate effectiveness of such employment-focused endeavors within the current Social Security system is frequently regarded with skepticism.

Determining Eligibility for DI and SSI

Under both the Social Security (Title II) and SSI (Title XVI) programs, there are two sets of requirements that must be satisfied before entitlement: (1) does the individual meet the eligibility criteria other than disability, and (2) does the person meet the disability standard? When applying for benefits, potential beneficiaries must prove the former to SSA. Applicants must prove their age, relationship to the person who paid into the Social Security system, marital status, work history, and, for SSI, their income and resources.

The other determination, that of disability status, is made by contracted state agencies (20 CFR 404.1503). The disability determination process is complex and lengthy. There is inconsistency from state agency to state agency (GAO, 2004a), and determinations that an individual is not disabled are often appealed, leading to lengthy waits before final resolution. For example, a table from the SSA Annual Statistical Report for 2003 (SSA, 2004a) offers data on the outcomes of applications filed between 1992 and 2003. According to that data, 22,062 applications from 2000 were still pending in mid-2003.

Successful applicants for benefits receive one of four types of disability payments administered by SSA. The largest program, DI, is authorized by Title II of the Social Security Act. It is paid to former workers who contributed Social Security taxes on work income. The other two disability programs under Title II of the Social Security Act are Disabled Widow(er)s Benefits (DWB) and Childhood Disability Benefits (CDB). These are paid to the survivors or dependents of workers who paid Social Security taxes and then died, became disabled, or retired from the workforce. The fourth disability program, SSI, is a federal poverty program for individuals who are over age 65, blind, or disabled; it is authorized by Title XVI of the Social Security Act. All four programs use the same definition of disability, which follows:

(a) the law defines disability as the inability to do any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. To meet this definition, you must have a severe impairment(s) that makes you unable to do your past relevant work (see §404.1560(b)) or any other substantial gainful work that exists in the national economy (20 CFR 404.1503).

Currently, substantial gainful activity is work effort valued above $1,380 per month for blind individuals, and valued above $830 per month for beneficiaries who are not blind (2005 limits). The word "valued" refers to a host of complex work incentives that are used to trim the amount of gross wages earned in a month down to the amount considered to be "countable earnings." The countable earnings are then compared to the financial guidelines for substantial gainful activity (SGA) stated above.

SSI and the Social Security disability programs authorized under Title II of the Social Security Act (DI, CDB, and DWB) are currently the largest federal programs providing cash payments to people with disabilities. In 2002, about 6.5 million persons received Social Security benefits based on disability. This represented an increase from 6.2 million beneficiaries in 2001. In addition, nearly 4.8 million adults and children received SSI due to blindness or disability. The number of blind or disabled adults ages 18 to 64 rose by 1.7 percent between December 2001 and December 2002, while the number under age 18 increased by 3.7 percent. Benefit payments from the DI trust fund increased by 10.2 percent, from $59.6 billion in 2001 to $65.7 billion in 2002. Total SSI payments were $34.6 billion in 2002, up 4.6 percent from 2001 (SSA, 2004b).

The steady growth pattern of the DI and SSI rolls seen in the past few years is not a new phenomenon. As early as 1994, the Government Accounting Office (GAO), now called the Government Accountability Office, was investigating the growth in Social Security's disability programs. In a study released in February 1994, the GAO reported that in the three years between 1989 and 1992, DI applications rose by a third, and almost half the applicants in 1992 succeeded in obtaining benefits. The GAO also found that, once on the rolls, beneficiaries were staying longer. Between 1985 and 1992, the number of beneficiaries who had been on the rolls more than 15 years grew by an alarming 93 percent. In addition, while the total number of DI terminations continues to increase as the rolls swell, termination rates as a percentage of those on the rolls have steadily declined. Terminations from the DI program averaged approximately 12 percent during the 1988-1989 period, but stood at only 9.5 percent by 1994. SSA research concluded that termination rates were declining for three main reasons. First, the younger average age of beneficiaries over the past 10-15 years has led to a lower number of conversions to retirement and terminations due to death. Second, the decline in the number and rate of medical CDRs has been a significant problem (SSA, 1996). Finally, terminations from the disability programs due to employment are almost nonexistent. SSA statistics cited in a 1998 GAO report estimate that fewer than 1 in every 500 DI beneficiaries left the rolls by returning to work (GAO, 1998).

Considering the prevalence of poverty among beneficiaries of DI and SSI benefits, it was not surprising that, according to a 1994 Harris poll conducted for the National Organization on Disability, 79 percent of individuals who had a disability stated that they wanted to work. Although the criteria defining disability were far less stringent than those used by SSA, the poll still strongly indicated that people with disabilities wanted to work. Unfortunately, a very small number of individuals receiving benefits, consistently less than one-half of 1 percent, successfully left the benefit roles through work (SSA, 1999).

Overview of the Problem

Americans with disabilities remain underemployed, despite the fact that many are willing and able to work. Although SSA has instituted a number of incentives to reduce the numerous obstacles to employment faced by its beneficiaries, such efforts have had little impact because few beneficiaries are aware of these incentives and how they affect eligibility and benefits. The variety of complex issues surrounding disability policy and the provision of long-term disability benefits has been documented repeatedly. Such issues highlight the need to find adequate solutions that will allow Americans with disabilities to recognize their unfulfilled potential in the workforce.

Very few beneficiaries ever leave SSA rolls (SSA, 1999; GAO, 1996a; GAO, 1996b; GAO,1996c). There is a lack of temporary options for cash support, health care, and rehabilitation within SSA programs, making it very difficult for beneficiaries to gain financial independence. Ironically, the employment supports that could potentially enable a beneficiary to remain off the disability rolls by returning to work or entering the workforce are not available until after a lengthy determination procedure has been completed, at which point the individual has essentially proved that he or she is unable to work. Indeed, less than one-half of 1 percent of SSI and DI beneficiaries leave the rolls to obtain employment (SSA, 1999; GAO, 1996c).

The problems are well-known and thoroughly documented. Medical advances save lives but increase the number of individuals with functional limitations to a degree that it makes it difficult for them to obtain and maintain employment. Societal and employer attitudes, cyclical fluctuations in the economy, and rapidly changing workplace demands in our information age economy lead to discriminatory practices that arbitrarily, unnecessarily, and sometimes illegally exclude individuals from the workforce. Employers and insurance companies frequently and knowingly design policies and programs that shift the cost of rehabilitating injured workers to public programs. Many of these programs simply pay individuals to remain in a dependent, unemployed status without making any authentic attempt to provide them with the simple services and supports that would enable them to reenter employment and pursue their chosen careers.

The situation for individuals with lifelong disabilities is equally bleak. Special educators, physicians, and clinicians of all types bombard students and their families with misinformation regarding the effect of disability on their long-term employment opportunities. Over time, these myths create unwarranted low expectations that prevent children and adolescents with disabilities from viewing themselves as able workers who can dream about their future careers with excitement and hope. Special education programs and secondary schools fail to prepare students to obtain and succeed in complex jobs in the local economy. The "system" forces students and their families to pursue SSI eligibility as the only path by which they can secure post-school access to employment and residential supports through the home and community-based waiver program, which by definition perpetuates the notion that these otherwise capable individuals are frail, dependent, and unable to maintaining even basic employment.

Even the very programs that are purported to assist individuals with disabilities who are temporarily unable to work often place these individuals in a cycle of dependence. Current benefit amounts merely allow individuals to live at a basic subsistence level, never acquiring enough resources to allow them to pursue occupational or educational goals, and even economically punishing individuals who attempt to earn or save. Tying eligibility for Medicaid or Medicare to eligibility for SSA benefits forces individuals with high-cost medical needs who could otherwise work to choose between pursuing a career and retaining the medical insurance that sustains their very lives. The ponderous complexity of post-entitlement rules and work incentives has forced Congress and SSA to create a large cadre of benefits specialists whose job is to explain to beneficiaries the otherwise incomprehensible rules and regulations that actually exist to facilitate their entry into employment while they receive benefits.

The disability determination process is upsetting, adversarial, and extremely inconsistent. Both the timeliness and the uniformity of SSA's disability determination process leave much to be desired. Decisions often take an extremely long time to process, and individuals who appeal after initially being denied benefits often have to wait nearly another full year before a final hearing decision is reached. Furthermore, there are often significant discrepancies between the initial decisions and those made at the hearings level (GAO, 2004a).

The culture of SSA is not work-friendly. Individuals must spend months or even years convincing SSA that they are unable to work as a condition of eligibility, yet upon receipt of benefits, SSA does a complete about-face and begins to communicate to beneficiaries that work is an expectation for them. Those individuals who do choose to work are frequently penalized. Individuals who obtain employment and conscientiously report their earnings to SSA frequently continue to receive benefits because SSA simply does not devote the resources necessary to track reported earnings and make timely modifications to beneficiary payments. The resulting overpayments create a terrible burden on individuals and frequently on their families, and lead individuals who could otherwise work to remain unemployed to avoid the economic hardship created by overpayments. Benefit overpayments typically lead both to substantial administrative and financial burdens for SSA and to frustration and possible sudden termination of benefit eligibility for beneficiaries. Although recent efforts by SSA have been undertaken to address this issue, numerous challenges remain (Livermore, 2003).

Beneficiaries who attempt to work may actually be threatening their program eligibility and health care. Individuals with very significant disabilities who may wish to make an initial work attempt believe that working even a few hours each week on a trial basis might lead to SSA initiating a CDR that could jeopardize their benefit payments before they have had a chance to establish a stable employment situation. Even transition-aged beneficiaries fear that working while in high school may jeopardize their ability to retain SSI benefits after their age 18 redetermination. Their sincere efforts to prepare for employment after exiting school may actually lead them to be denied the very services and supports that would make employment possible for them. In short, SSA policies seem to communicate to beneficiaries that if they attempt to work and are successful in this effort, somehow they should not have been eligible for benefits in the first place, thereby creating a culture of mistrust and suspicion.

Response of Congress and the Social Security Administration to the Problem

Well aware of the enormity and seeming intractability of this problem, Congress and SSA have initiated multiple efforts to promote employment and return to work among SSA beneficiaries. SSA established the Office of Employment Support Programs (OESP) in the Office of Disability to coordinate employment and return-to-work efforts. In recent years, OESP and the Office of Disability have attempted to implement a number of new initiatives to overcome known problems. They have attempted to revise the traditional SSA vocational reimbursement system, in which state vocational rehabilitation agencies (SVRAs) seemed to have been given a monopoly to provide employment services to beneficiaries by establishing the alternative provider (AP) program. The AP program attempted to increase the involvement of community provider agencies as a competitor to SVRAs in service delivery for beneficiaries. Unfortunately, participation in the AP program was quite low and the outcomes it generated were disappointing. The program has since been subsumed within the Ticket to Work program.

State Vocational Rehabilitation Agencies

SSA has a long history of interaction with SVRAs. Since 1981, SSA has reimbursed SVRAs for services provided to SSA beneficiaries that result in specified employment outcomes. The SSA Vocational Rehabilitation (VR) reimbursement program replaced an even earlier block grant program and was designed to improve program outcomes and accountability. Under the VR reimbursement program, the State Disability Determination Service applied a set of criteria to individuals awarded SSI or DI benefits. Individuals who appeared to be possible candidates for rehabilitation were subsequently referred to the SVRA. SSA beneficiaries selected for referral to the SVRA were required to participate in the VR program or risk benefit suspension. The program also allowed beneficiaries to apply for VR services on their own.

Under the VR reimbursement program, SSA reimbursed an SVRA for the "reasonable and necessary" costs of providing rehabilitation services to an eligible beneficiary. In order for the SVRA to receive reimbursement, the services must have resulted in the individual obtaining employment and achieving earnings at or above the SGA level for nine consecutive months. When an SVRA believed a beneficiary had achieved the earnings criteria, a payment claim was submitted to SSA. States were reimbursed for the actual costs of providing direct services, and administrative and tracking costs were reimbursed based on cost formulas. State agencies were responsible for submitting evidence to SSA to document that the individual had obtained employment and had earnings exceeding SGA for nine consecutive months.

Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA) (P.L. 106-170)

TWWIIA was enacted in 1999 to remove barriers and disincentives to employment for persons with disabilities while increasing consumer control over the delivery of employment and rehabilitation services and supports. The ultimate objective of this legislation was to provide Americans with disabilities with more opportunities to engage in employment and achieve increased financial well-being, while at the same time decreasing their dependence on public benefits. TWWIIA was intended to (1) increase choice for Social Security beneficiaries with disabilities in selecting and obtaining employment and vocational rehabilitation services and supports; (2) remove disincentives associated with having to choose between whether to work or maintain health care coverage; (3) provide a safety net and a mechanism for expedited reinstatement of benefits; (4) implement safeguards regarding CDRs; and (5) expand work incentive supports and protection and advocacy services. TWWIIA provides a number of new program opportunities and work incentives for both SSI and DI beneficiaries, including the following:

1. Ticket to Work and Self-Sufficiency Program
2. Expanded availability of health care services
3. Expedited reinstatement of benefits
4. Postponement of continuing disability reviews
5. Benefits Planning, Assistance, and Outreach Program

The Ticket to Work and Self-Sufficiency Program

The Ticket to Work and Self-Sufficiency Program (TTW) is a voluntary program designed to allow SSI and DI beneficiaries the opportunity to direct their own employment services and choose specific services and providers in order to initiate or return to work. It differs from SSA's traditional vocational rehabilitation reimbursement program, where referrals of beneficiaries and recipients with disabilities went to either a state vocational rehabilitation agency or alternative providers. This program is intended to give consumers control over the types of services they obtain to support them in preparing for or maintaining employment, as well as whom they choose to provide these services and supports.

To implement the TTW program, SSA awarded a Program Manager contract to MAXIMUS, Inc. to inform beneficiaries about the program, recruit Employment Networks (ENs), manage Ticket assignments, resolve disputes among ENs, and manage the payment process. MAXIMUS, Inc. has devoted extensive resources to recruiting and supporting ENs. An EN is any qualified entity that has entered into an agreement with SSA to assume responsibility for the coordination and delivery of employment services to beneficiaries who assign their Tickets to that EN. As the TTW program was originally conceptualized, it was hoped that the TTW program would encourage the participation of employment and community organizations that have not traditionally served the SSA population.

State VR agencies must elect to become ENs if they wish to continue to receive reimbursement from SSA for services provided to beneficiaries. As an alternative to the traditional cost reimbursement payment system, VR agencies have the option of selecting an EN payment structure. ENs may choose to serve Ticket holders under an outcome payment structure in which the ENs receive payments for each month the beneficiary receives no cash benefit, for a period of up to 60 months, or under a milestone payment structure in which the EN receives periodic payments as the beneficiary achieves intermediate goals on the way to zero cash benefit.

Expanded Availability of Health Care Services

The majority of Social Security beneficiaries with significant disabilities will not enter the workforce in full-time positions with medical benefits and therefore face the loss of health care when their earnings ultimately result in the elimination of their cash benefit. Beneficiaries in the past often had to choose between working at substantial levels and keeping their health insurance coverage (Clinton, 1999). The Medicaid buy-in provision of TWWIIA allows states to establish programs in which individuals with disabilities who work purchase Medicaid services, just as if they were purchasing health care benefits through an employer-sponsored program. The buy-in includes several enhancements to the current Medicaid and Medicare programs and removes some of the disincentives that existed in the past with returning to work.

The Medicaid buy-in was first established in the Balanced Budget Act of 1997 (BBA). Through BBA provisions, states could provide Medicaid coverage to working individuals with disabilities who, because of their earnings, could not qualify for Medicaid. The concept of a Medicaid buy-in is to provide a choice for SSI and DI recipients to work and continue to be eligible for long-term supports and services. In states that chose the Medicaid buy-in option, individuals in other Medicaid eligibility categories could choose to move to this new eligibility category if they were working (Scales, Folkemer, and Jensen, 2000).

The Medicaid buy-in option authorized under the BBA was modified and expanded by TWWIIA. Beginning October 2000, states could cover working individuals between the ages of 16 and 65 who, except for earnings, would be eligible to receive SSI benefits on the basis of disability. Unlike limitations under the BBA, TWWIIA does not limit eligibility to people whose incomes are below 250 percent of poverty (Scales, Folkemer, and Jensen, 2000).

Enhanced Work Incentives

TWWIIA also created new work incentives to promote employment opportunities for beneficiaries. Two of the most important are expedited reinstatement of benefits and postponement of Continuing Disability Reviews (CDRs). Expedited reinstatement of benefits is designed to address a major disincentive experienced by many SSI and DI beneficiaries who return to work, have their cash benefits cease, and then, because of their disability, have to stop work at a later point in time. Under the expedited reinstatement of benefits provision, if a person's Social Security benefits have ended because of earnings from work and he or she becomes unable to work due to disability, he or she may request reinstatement of benefits, including Medicare and Medicaid, if applicable, without filing a new application. In this case, beneficiaries must be unable to work because of their medical condition.

An additional disincentive for SSI and DI beneficiaries is the likelihood that work will trigger CDRs, which are conducted periodically to determine if an individual's medical condition has improved sufficiently to terminate disability benefits. Under TWWIIA, SSA cannot initiate CDRs while the beneficiaries are using the Ticket. However, the cash benefits of DI beneficiaries may be subject to termination if their earnings are above SGA. As of January 1, 2002, DI beneficiaries who have been receiving benefits for at least 24 months have not been asked to go through a disability review because of the work they are doing. However, regularly scheduled medical reviews set by the Disability Determination Service could still be performed and benefits could be terminated if earnings are above SGA (SSA, 2000).

SSA's Work Incentives Support Plan

SSA has developed several programs designed to enable beneficiaries to make informed choices about work. One program, the area work incentive coordinators (AWIC), created a new position internal to the agency. The other two programs, Protection and Advocacy for Beneficiaries of Social Security (PABSS) and Benefits Planning, Assistance, and Outreach (BPAO), provide services through agencies and organizations outside the agency. The purpose of these combined programs is to provide work incentive planning and assistance to SSA beneficiaries, conduct outreach efforts to beneficiaries who may be eligible for various SSA programs, and provide advocacy services for individuals participating in SSA programs. Each of these programs is briefly described below.

Benefits Planning, Assistance, and Outreach Program. In response to the underutilization of available work incentives, TWWIIA established a community-based work incentives planning and assistance program designed to disseminate accurate information about work incentives to Social Security beneficiaries while providing them with more choices. SSA has established a program of cooperative agreements and contracts to provide benefits planning and assistance to all Social Security disability beneficiaries, including information about the availability of protection and advocacy services. BPAO increases opportunities for beneficiaries to receive the information and services they need to become employed and possibly attain self-sufficiency.

TWWIIA directed SSA to establish community-based planning, assistance, and outreach programs designed to provide accurate information and assistance on benefit programs and work incentives to SSA beneficiaries. To accomplish this goal, SSA established a program of cooperative agreements with BPAO entities across the United States. The BPAOs provide information and support in the following areas (Brooke, 2002):

• Information and referral - provide basic information in response to inquiries about all federal and state benefit programs, and/or referral to government agencies and other community resources.
• Problem solving and advocacy - solve specific federal and state benefit and work incentive issues. This may involve advocating on behalf of beneficiaries with other agencies.
• Benefits analysis and advisement - provide assessment of real or potential effects of employment or similar changes that will impact beneficiaries' overall financial well-being, and inform them of various options available and the projected outcome of each.
• Benefits support planning - provide direct assistance in the construction of a plan to promote effective monitoring and management of beneficiaries' benefit programs and work incentives.
• Benefits management - provide benefit monitoring and management assistance to recipients who are likely to experience employment, benefits, or other changes that will affect their benefit status, health care, or overall financial well-being.

Approximately half of all individuals served by BPAOs are DI beneficiaries, approximately one-third are SSI beneficiaries, and the remainder are concurrent beneficiaries. Over 85 percent of those individuals were either employed or seeking employment. Approximately 20 percent of individuals receiving services from BPAOs express an interest in assigning their Tickets to an EN (Virginia Commonwealth University, 2005).

SSA Area Work Incentive Coordinators. SSA initially created the position of employment support representative (ESR) to provide an internal source of knowledge and support for field office personnel regarding work incentives and SSA employment-related activities. After implementing a pilot ESR program, SSA concluded that a better approach to delivering this function would be through the creation of a new full-time position, the area work incentive coordinator (AWIC). A key difference between the ESR and the AWIC is that the ESRs dedicated 100 percent of their time to work incentive and employment activities. The AWIC is under the supervision of the SSA area director and may be assigned other duties in addition to work-related responsibilities. AWICs coordinate with BPAO benefits specialists, work incentives liaisons (WIL), and other personnel to provide improved services and information on SSA's employment support programs to beneficiaries who want to begin or maintain employment. The responsibilities of AWICs include coordinating local public outreach efforts on work incentives, overseeing training for personnel at local Social Security offices on SSA's employment support programs, handling sensitive or high-profile disability work-issue cases when appropriate, and monitoring local disability work-issue workloads (SSA, 2004c).

PABSS. The Protection and Advocacy for Beneficiaries of Social Security (PABSS) program is administered by SSA through direct grants to each state-designated protection and advocacy agency. These grants are made for two specific purposes: (1) to provide information and advice about obtaining VR and employment services, and (2) to provide advocacy or other services that a beneficiary needs to secure or regain gainful employment. PABSS is a relatively small program designed to complement and supplement existing protection and advocacy (P&A) programs rather than to create a large new program structure. The program provides P&A services to all eligible SSA beneficiaries and makes available dispute resolution services under TTW. Recent changes have enabled the program to represent beneficiaries in overpayment cases and other SSA administrative activities.

Development of Work Incentives

In recent years, Congress and SSA have implemented a number of work incentives for SSI and DI beneficiaries (SSA, 2000) to reduce the effect of earned income on benefits, either by allowing beneficiaries to keep more of their benefits while working or, as in the case of 1619(b), by permitting a beneficiary to retain Medicaid coverage despite earnings that preclude cash benefits. However, few beneficiaries actually return to work or even attempt to return to work once disability benefits are awarded. In an effort to encourage beneficiaries to become employed, the Federal Government and SSA have made changes in the SSI and DI programs during the past 20 years. These changes, or work incentives, are aimed at reducing the risks and costs associated with the loss of benefit support and medical services as a result of returning to work. Some SSI work incentives are the impairment-related work expenses (IRWE) exclusion; the student earned-income exclusion (SEIE); the Plan for Achieving Self-Support (PASS) program; Medicaid While Working (1619(b)); and expedited reinstatement of benefits. Some DI work incentives are the trial work period (TWP); the extended period of eligibility (EPE); and Medicare for Individuals with Disabilities Who Work. The descriptions of the work incentives described below are taken directly from SSA's "Redbook" (SSA, 2005).

Special SSI Payments for Individuals Who Work, Section 1619(a) - Section 1619(a) allows beneficiaries to receive SSI cash payments even when their earned income (gross wages and/or net earnings from self-employment) is at the substantial gainful activity level. This provision eliminates the need for the trial work period or extended period of eligibility under SSI. To qualify, a beneficiary must have been eligible for an SSI payment for at least one month before beginning work at the SGA level, still be disabled, and meet all other eligibility rules, including the income and resources tests.

Medicaid While Working, Section 1619(b) - Under 1619(b), Medicaid coverage can continue even if earnings alone or in combination with other income become too high for an SSI cash payment. To qualify, a beneficiary must have been eligible for an SSI cash payment for at least one month, still be disabled, still meet all other eligibility rules including the resources test, need Medicaid in order to work, and have gross earned income that is insufficient to replace SSI, Medicaid, and any publicly funded attendant care. The "threshold amount" is the measure that is used to decide whether earnings are high enough to replace SSI and Medicaid benefits and is based on the amount of earnings that would cause SSI cash payments to stop in the beneficiary's state. If gross earnings are higher than the threshold amount for a specific state, the beneficiary may still be eligible if he or she has impairment-related work expenses, blind work expenses, a Plan for Achieving Self-Support (PASS), publicly funded attendant or personal care, or medical expenses above the state per capita amount.

Impairment-Related Work Expenses - Under impairment-related work expenses, SSA deducts the cost of certain impairment-related items and services that a beneficiary needs to work from gross earnings when determining countable earnings. It does not matter if an individual uses these items and services for nonwork activities.

Trial Work Period - The TWP allows beneficiaries to test their ability to work for at least nine months. During the TWP, beneficiaries receive full DI benefits regardless of how high their earnings might be so long as the work activity has been reported and the beneficiary continues to have a disabling impairment. The TWP starts with the first month the beneficiary is eligible for DI benefits or the month in which he or she files for benefits, whichever is later. The TWP continues until the beneficiary accumulates nine months (not necessarily consecutive) in which he or she performed what is called "services" within a rolling 60-consecutive-month period. SSA currently considers work to be services if it results in earnings of more than $590 a month (for the year 2005) or the person works more than 80 self-employed hours in a month.

Plan for Achieving Self-Support - Individuals who receive SSI or who could qualify for SSI are eligible to have a PASS. For example, if an individual has too much income to be eligible for SSI now, using the income to pay PASS expenses may make him or her eligible for SSI. In brief, a PASS must:

• Be designed especially for the beneficiary;
• Be in writing;
• Have a specific work goal that the beneficiary is capable of performing;
• Have a specific time frame for reaching the goal;
• Show what money (other than SSI payments) and other resources will be used to reach the goal;
• Show how the money and resources will be used to reach the work goal;
• Show how the money being set aside will be kept identifiable from other funds;
• Be approved by SSA; and
• Be reviewed periodically to ensure that the plan is actually helping the person achieve progress.

Extended Period of Eligibility - If a beneficiary's disability payments are stopped because he or she worked at the SGA level, the beneficiary may be able to automatically receive benefits again. No new application or disability determination is required. (This is a different rule than the expedited reinstatement provision of TWWIIA.) The earliest benefits can start again is the month after the end of the grace period. (The individual is paid for the first month benefits cease due to SGA and the following two months.) The latest benefits can start again is the 37th consecutive month after the end of the trial work period. If earnings change significantly from month to month, it is possible that benefits could be restarted during this period. Benefits can start again for any month in the period described above in which (1) the beneficiary continues to have a disabling impairment, and (2) the beneficiary's earnings in that month fall below the SGA level.

A DI beneficiary's EPE begins the month after the trial work period ends. For 36 consecutive months, a DI beneficiary in his or her EPE may receive benefits when countable earnings are below the amount currently designated as SGA.

Despite efforts made by SSA and the Federal Government that have led to more favorable conditions for returning to work, most SSI and DI beneficiaries remain on the disability rolls. The work incentives offered by SSA remain largely underutilized; in March 2000, of the total number of eligible working beneficiaries, only 0.3 percent were using PASS, 2.8 percent were using IRWEs, 7.5 percent were receiving 1619(a) cash benefits, and 20.4 percent were receiving 1619(b) extended Medicare coverage (SSA, 2000). The major reasons cited for the extreme underutilization of these work incentives by beneficiaries were (1) few beneficiaries knew that the work incentives existed, and (2) those who were aware of the incentives thought they were complex, difficult to understand, and of limited use when entering low-paying employment (GAO, 1999).

Purpose of the Study

The purpose of this study is to conduct a comprehensive analysis that (1) examines SSA's current efforts to implement its SSI and DI disability programs; (2) documents philosophical, programmatic, and regulatory obstacles that limit the ability of SSA beneficiaries to return to work; (3) identifies evidence-based practices that promote the return to work of working-age beneficiaries of the DI and SSI programs; and (4) recommends the legislative, policy, and regulatory changes that will be necessary to ensure the successful adoption and implementation of evidence-based practices. This report is a compilation of the findings of the study, including recommendations that warrant consideration by policymakers responsible for Social Security disability programs.

The following are the four research questions the study was designed to answer:

1. What are the evidence-based practices that promote the return to work of working-age beneficiaries of the DI and SSI programs?
2. What policy changes are needed, given recent trends in program participation and employment?
3. Are there proven and documented practices that work best for some populations of people with disabilities and not others?
4. Which factors ensure that documented and evidence-based practices could be adapted/adopted by SSA and other entities that seek to ensure the employment of people with disabilities? Which factors prevent adaptation/adoption?

Research Methodology

Appendix A details the research methodology used and the four-step approach taken to implement the study. First, a comprehensive literature synthesis was completed to identify all information of relevance to the proposed study. Second, detailed structured interviews were conducted with key stakeholders, including federal SSA officials, representatives of other federal agencies, consumer and advocacy organizations, service organizations, community service providers, and business representatives. Third, a preliminary list of findings, evidence-based practices, and recommendations based on the literature review and structured interviews was used to develop seven topic papers. These papers were used to facilitate discussion and obtain reaction from participants who were invited to a consensus-building conference at the end of January 2005. Individuals with disabilities, advocacy organizations, service providers, and policymakers who attended the conference had the opportunity to further develop the proposed recommendations that appear throughout the report.

Content of the Report

After the Introduction (Chapter I), the content of the report is organized according to the major trends that emerged from the Consensus Validation Conference:

• The Mission and Purpose of the SSA Disability Benefit Programs - Chapter II
• Beneficiary Perspective and Self-Direction - Chapter III
• Income Issues and Incentives - Chapter IV
• Coordination and Collaboration Among Systems - Chapter V

These four chapters are organized using a similar format. After a brief introduction, each chapter identifies the issues and problems that study participants considered to be the greatest barriers for beneficiaries who are employed or who want to be employed. Previous attempts by Congress and SSA to address these concerns are discussed, both those that have had an impact in the past 15 years and those that have not been successful. Each of the chapters ends with proposed recommendations for consideration by policymakers for changes in the Social Security disability system and in the system of federal, state, and local programs with which SSA collaborates in serving SSI and DI beneficiaries.

Although this study makes no attempt to suggest what a new Social Security definition of disability should be, it identifies in detail the myriad problems created by the current definition used to determine eligibility for disability cash benefits and supports. In Chapter II, a brief explanation is provided of how the disability definition evolved. The policy premises underlying the current SSA disability programs are discussed in the context of recent advances in health care and rehabilitation services, changes in the national economy, and the demographics of the SSA disability population.

Chapter III focuses on the need for work to pay financially and personally for employed beneficiaries who have found that current work incentives do not go far enough to move them beyond poverty or from a near-poverty level of existence. Problems identified include beneficiaries having to define their disabilities in the most negative terms possible to be eligible for benefits, customer service at the local SSA level that needs improvement, problems resulting from overpayments made to working beneficiaries, and health care concerns. The chapter discusses the impact of the Ticket to Work and Work Incentives Improvement Act (TWWIIA), including the Ticket to Work (TTW) and BPAO programs.

Chapter IV identifies a number of disincentives to employment in the current benefit programs, especially the "cash cliff" created by the limitation placed on substantial gainful activity, and the restrictions on asset accumulation in the SSI program. Numerous recommendations are made in this chapter, including post-eligibility elimination of the concept of SGA, expansion of the BPAO program, decreasing the restrictions on assets for SSI beneficiaries, eliminating the waiting period for Medicare benefits for DI beneficiaries, and eliminating marriage penalties.

SSA interfaces with numerous service systems also concerned with the employment and support of individuals with disabilities at the federal, state, and local levels. Chapter V focuses on collaborative interactions with the health care, rehabilitation, employment and training, and education systems, as well as with the business community. In the past 15 years, SSA has been actively engaged in attempting to improve coordination and collaboration with other federal agencies. Yet there continue to be policies among the agencies that work at cross-purposes in promoting employment outcomes for individuals with disabilities. Chapter V includes recommendations for uncoupling Medicare and Medicaid coverage from SSI and DI cash benefit payments. Alternatives to the current systems of health care coverage for beneficiaries are discussed. Also recommended for consideration are changes that would make the Ticket to Work program more functional by promoting collaboration as opposed to competition between state VR agencies and ENs. Additional recommendations attempt to make current TWWIIA programs and provisions more compatible with the One-Stop Career Center system of Department of Labor and more widely used by transitioning youth served by the Department of Education. The final chapter of the report, Chapter VI, is a compilation of the findings, including recommendations that warrant consideration by policymakers responsible for Social Security disability programs.

Introduction

The concept of social insurance is by no means new. Modern social insurance originated in Germany in the late 1800s. These early programs were financed by compulsory contributions and covered all employees, both skilled and unskilled, young and elderly, male and female, and regardless of the state of their health. The hallmark of the early "Bismarck" model was the provision of statutorily fixed entitlements for individuals in employment. These entitlements were calculated in relation to the contributions paid. Because the contributions were mandatory, the worker who met the qualifying conditions was said to have an earned the right to a benefit.

The purpose of this chapter is to provide a brief background on the Social Security disability programs and to describe the fundamental limitations of the programs that relate to eligibility and the ability of the agency to provide return-to-work services and supports to beneficiaries. Also discussed are SSA's current efforts to promote return to work within the current definition of eligibility and policy framework, and a foundation is provided for subsequent chapters describing a comprehensive set of recommendations that will improve return-to-work services and promote employment and economic self-sufficiency among beneficiaries.

Purpose of the Disability Benefit Programs

The major U.S. disability benefit programs trace their history to the Eisenhower Administration of the 1950s. In 1956, after years of public debate, the Social Security Act was amended to add the Social Security Disability Insurance (DI) program. In essence, the DI program began as an early retirement program for older workers whose disabling conditions prevented them from working until pension age. A strict test of disability was ensured through requirements for severity of the condition and a prognosis of prolonged or terminal outcomes. The 1956 definition of disability is still in use today, in both the DI and Supplemental Security Income (SSI) programs. The strict and rigidly applied definition remains unchanged.

The term "disability" means--

(A) inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months (Social Security Act Amendments, 1956).

The very fact that, under the U.S. system, the decision about granting a disability benefit is made prior to, and without any consideration of, referral to rehabilitation reveals the underlying policy premise that severe disability equates to early and permanent retirement from the workforce. Yet, from Social Security's beginnings, there were discussions not only of paying disability benefits but also of providing or requiring rehabilitation prior to the award of cash benefits. Berkowitz (2000) points out that some early designers of our disability programs recommended that Trust Fund money be used to provide rehabilitation services but not cash benefits to insured people who became disabled. The notion that rehabilitation should take precedence over paying benefits was echoed by Roswell Perkins, the Assistant Secretary of Health, Education, and Welfare in the Eisenhower Administration, who said, "The first line of attack on disability should be rehabilitation, in order that people be restored to useful and productive lives" (Berkowitz, 2000, p. 3).

In contrast to the underlying policy premise of the DI program -- income replacement insurance for workers who retire early due to injury or illness -- the SSI program is based on a welfare model. The SSI program was created in 1972 as means-tested cash assistance programs for elderly individuals and people with disabilities who have not worked or who are not expected to work. As such, it was intended to serve as a safety net for individuals who had not acquired the work history necessary to receive assistance under the DI program (Daly and Burkhauser, 2003). While the eligibility criteria have changed somewhat throughout the 30 years of the program, the goals of the program have remained the same.

A Rigorous Test of Eligibility for SSA Disability Benefits

The eligibility criteria for both the DI and SSI programs have always been very rigid. Applicants for both DI and SSI must demonstrate the presence of a severe cognitive or physical impairment. In addition to the presence of a significant impairment, applicants must show that they are not able to perform substantial gainful activity (SGA), currently set at $830 per month, which equates to annualized earnings of $9,960. Thus, only individuals with the most severe disabilities, who are in serious economic need, are able to receive benefits through the program.

Because SSI is a means-tested program, applicants face additional criteria related to current countable assets, which cannot exceed $2,000 for single, nonblind beneficiaries. While SGA has been indexed to the national wage since 2001, the asset limit for these SSI beneficiaries has remained unchanged since 1989 (Kijakazi, 2000). An SSI beneficiary's eligibility or benefit amount can also be affected by any other unearned income received, including other federal and state benefits programs, as well as the income of an individual's spouse or other family members. As a result, the SSI beneficiary population is substantially more economically destitute than it was at the program's inception during the Nixon Administration.

Not only do DI and SSI beneficiaries have to demonstrate acute economic hardship at the point of application, the benefits themselves are very low. For DI beneficiaries, benefit amounts in no way fully replace an individual's lost wages. For "high-earnings" beneficiaries, the wage replacement rate may be approximately 25 percent of prior earnings, compared with 56 percent for "low-earnings" beneficiaries (SSA Office of the Actuary, 2004). For SSI beneficiaries, the current maximum federal payment for an individual before state supplements is $579 per month, or about 73 percent of the federal poverty level for an individual. Given the level of current SSI benefits, a total reliance on these benefits for income support will not enable most individuals to be economically self-sufficient.

The Changing Societal View of Work Disability

When Social Security Disability Insurance was conceived in the 1950s, it was designed to serve individuals age 50 and over who had no expectation of returning to work. The original definition envisions a program structure that divides those who have work potential, and are therefore ineligible, and those who have no work potential and are eligible. A list of very specific medical conditions was established; if the claimant fit into one of these and was not working, disability was determined. If the claimant did not fit into one of these categories, a more individualized assessment was conducted to determine whether the condition prevented the individual from