"Work Incentives Improvement Act of 1998."

DRAFT Document

This is a concept paper for an initiative Senator Kennedy and I are working on called the "Work Incentives Improvement Act of 1998." Our legislation will give persons with disabilities the tools they need, for as long as they need them, to work.

The bill will be introduced later this month. Legislative language will be unavailable until the introduction. We now have several organizations and Senate offices supporting the bill and hope that yours will join on to ensure that significant work incentive reform becomes a reality this year.

Please send your comments and questions to my Disability Staffperson:

Christopher Crowley

Office of Senator James M. Jeffords

728 Hart Senate Office Building

Washington, D.C. 20510-4503


Thank you for your interest in work incentives. I am confident that this bill will do much to address the current problems people with disabilities have when they try to fully integrate into society.


James M. Jeffords

U.S. Senator

Jeffords/Kennedy -Work Incentive Improvement Act of 1998 (WIIA) 2/26/98

- DRAFT #7.1

WIIA addresses the problem of Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) beneficiaries loss of cash benefits and health insurance following a return to work.

Under current law an individual receiving SSDI and Medicare may return to work and receive cash benefits for a 9 month Trial Work Period, working at the level of Substantial Gainful Activity (SGA), plus a 3 month grace period. In the 13th month of work: (a) the individual loses cash benefits, (b) Medicare Part A continues at no cost, and (3) the beneficiary may purchase Medicare Part B benefits for 39 months following the end of the TWP at the same rate as retired, uninsured Medicare beneficiaries. At the completion of the 39 month period, the beneficiary is allowed to pay for both Part A and Part B at the same rate as retired and uninsured

Medicare beneficiaries.

This is too expensive for many persons with disabilities and few take advantage of the current buy-in.

SSI/SSDI Populations Who Will Benefit

There are four categories of persons with disabilities who would benefit from accessing this new program:

1) 16 to 65 year old work-eligible individuals who are SSDI or SSI beneficiaries and intend to begin, or return to work, and are in need of Personal Assistance Services (PAS);.

2) SSDI applicants who are within the initial waiting period for benefits (0-24 months);

3) long term SSDI beneficiaries who have been on the rolls for 24 months or longer and receive both health care and cash assistance;

4) working persons with disabilities who would otherwise meet the eligibility requirements for SSI/SSDI, based on medical criteria, except for their income status or those who are currently under the SSI 1619 A/B program.

16 to 65 year old non-working, individuals with disabilities

Non-working SSDI or SSI beneficiaries who are work-eligible between 16 and 65 years of age who intend to begin, or return to work, would be able to obtain Personal Assistance Services (PAS). The program would be financed through a capped entitlement and would prioritize services to the 16-25 year old population.

Once a work eligible individual is ready to work, they would be eligible to enter the Opportunity to Fully Integrate Through Occupations Program (OPTIONS).

SSDI Applicants in the waiting period for benefits (0-24 months)

Following determination of eligibility under SSDI, new applicants entering the Social Security system would be offered eligibility to the OPTIONS program. Upon choosing the OPTIONS program, health benefits would be made available, as long as the employer reports that the participant is earning more than SGA.

Those SSDI persons on disability for between 5 and 29 months would suspend their cash benefit payments but become immediately eligible for:

  1. Medicare Part A, free up to 250% of poverty in earned income, and on a sliding-scale premium based on 10 percent of amounts in excess of 250% of poverty.
  2. Medicare Part B for the regular premium amounts paid, and
  3. State Medicaid Work Incentive Waiver buy-in (as established by the WIIA legislation).

If the participant terminates employment for any reason during the waiting period, they would resume their former status in the waiting period, with credit given for the time worked.

If private insurance plans are not available through work or are not equivalent to Medicare, the applicant could remain with Medicare A&B and/or buy into available state Medicaid waiver programs established through provisions in the WIIA bill. Participants would continue to pay Part B premiums but could purchase Medicare Part A on a sliding-scale basis. Available but inadequate private health insurance could be wrapped with Medicare and, if needed PAS and prescription drug services were still not available, with Medicaid for a premium. The Work Incentive Counseling and Assistance Program would educate the beneficiary about his options during this process.

Work Incentive Counseling and Assistance would guide the beneficiary through the process

Long Term Disabled (24 months+)

Those persons on disability for more than 24 months would be eligible for:

(1) Medicare Part A for free up to 250% of earned income, Part A on a sliding-scale premium based on 10 percent of amounts in excess of 250% of poverty;

(2) Medicare Part B for the regular premium amounts paid,

(3) any available state Medicaid buy-in (as established by the WIIA legislation).

(4) An expanded Impairment Related Work Expense (IRWE) Allowance, including the costs of those items necessary for traveling to and from work, durable Medical Equipment (DME) costs, as well as costs associated with the purchase of an automobile.

** The provisions regarding SGA still apply in order to maintain cash benefits.

Work Incentive Counseling and Assistance would guide the beneficiary through the process.

Working Persons With Disabilities

A. By joining the OPTIONS program, SSI/SSDI-eligible working persons with disabilities who, absent their income level/working status, would be eligible for disability benefits based on the medical criteria for eligibility under SSI/SSDI, would be able to purchase Medicare Part A and/or Part B and Medicaid waiver services.

B. SSI beneficiaries who are participating in 1619 A and B will be offered the following benefits, without having to enroll in the OPTIONS program:

(1) To retain their eligibility for Medicaid though their income rises above 250% of poverty and,

(2) To purchase PAS and/or Prescription Drugs under the state Medicaid Work Incentive Waiver, in the event these benefits are not available under their Medicaid state plan.

SSI beneficiaries would also have access to the Work Incentive Counseling and Assistance Program.

Program Structure

Option to Obtain Health Care and Suspend Cash Benefits While Working

Under the WIIA bill, SSDI beneficiaries, with the help of Social Security Field Office personnel would be able to sign an OPTIONS form, waiving disability cash benefits for working persons with a disability who have been in the system for less than 24 months. Long-term beneficiaries would not suspend their cash benefits but would remain under the restrictions of SGA in order to continue to receive benefits. An OPTIONS form would be available at SSA, VR, and job training and referral centers. SSDI beneficiaries could sign at any time following determination.

Those individuals requesting OPTIONS participation and in need of job training, vocational rehabilitation or other services to facilitate their reentry to the workforce would, upon request, be immediately referred (as under current law) to state or private Vocational Rehabilitation providers, or to job training services. Those SSDI individuals who are ready to return to work would be eligible for Medicare Part A and Part B coverage on the month following their disability determination and signing a form.

1619 A and B participants would be considered for benefits under OPTIONS without having to enter the program, as 1619 A and B is considered the work options program for SSI beneficiaries.

Medicare Buy-in

For Medicare Part A, if an OPTIONS participant's adjusted gross income reached 250% of poverty, s/he would pay a portion of the Part A premium, based on 10% of the monthly earned income above 250% of poverty. Premium amounts would be capped at the premium rate for 65+ Medicare beneficiaries. This Medicare Part A buy-in program would be available as long as the individual remained working above SGA. For Part B the recipient would continue to pay the same level of premiums as required under the law.

Amounts would be paid monthly and reconciled at the end of the year by the beneficiary based on 10 percent of earned income above 250% of poverty. Refunds or obligations to the beneficiary would be calculated and distributed by the IRS.

All beneficiaries would have to enroll in employer-sponsored health insurance in order to be eligible for the OPTIONS program.

Medicare Coverage Continuation/Termination

All OPTIONS participants with earned income under 250 percent of poverty would receive free Medicare Part A and Part B for the regular premium amounts paid. Coverage would begin no later than one month following the signing of an OPTIONS form.

If the beneficiary fails to pay premiums for Medicare coverage following a 90 day grace period, and for 180 days where the Secretary determines that there was good cause for failure to pay, Medicare coverage will be terminated on the first day of the month following the periods above.

Note: if an OPTIONS participant in the 24 month waiting period ceased working, or did not begin working, s/he would return to their prior eligibility status before exercising OPTIONS. If an OPTIONS participant has been eligible for more than 24 months and leaves work for any reason, the individual would be presumed eligible for Medicare Part A and B and services under the Work Incentive Services Waiver as defined by the state.

For OPTIONS participants:

State Medicaid Work Incentive Services Waiver

SSDI OPTIONS and SSI 1619 (a) and (b) participants who are in need of additional services would be able to buy-in to a State Work Incentive Services Waiver under Medicaid. If states choose to set up a Work Incentive Services Waiver, PAS and pharmaceutical benefits would be required under the Waiver for eligible participants. States could offer additional services, but PAS and drugs would be the minimum services required for any Waiver. States will set premium amounts on a sliding-scale basis.

If an OPTIONS participant leaves employment for any reason, Waiver coverage could continue under the Work Incentives Services Waiver consistent with state policies and procedures.

State Medicaid Personal Assistance Services (MPAS) for Non-Working, SSI/SSDI eligibles

This would be a mandated service provided through Medicaid and limited to:

A state must prioritize those aged 16-25. This service would be funded through a capped entitlement. Any cost-sharing provisions would be in accordance with state policy.

Private Plans First, Medicare and Medicaid as Payor of Last Resort

OPTION participants would be required to utilize employer-sponsored health insurance plans (when available). Medicare and Medicaid would always be considered the payors of last resort.

Note: In the event that there are exclusionary periods in the employer-sponsored health plan, the obligation to subsidize Medicare premiums would remain a responsibility of the employer during that exclusionary period.

Broadening HCFA Criteria for Approval of Section 1115 Waivers

Language Reads:

In determining budget neutrality under the provisions of Medicaid Section 1115 waivers which are for the purpose of reducing work disincentives for persons with disabilities, the Secretary [of HHS] shall take into account reductions in payments made to persons with disabilities under Title II and Title XVI of the Social Security Act and other reductions in federal expenditures made to, or on behalf of, such individuals when such reduced expenditures are a result of earnings by such persons with disabilities.

Such language would better reflect the cost-savings involved when Section 1115 waivers meet the medical needs of persons with disabilities.

Expansion of Deductible Items Under the Impairment Related Work Expenses

For those OPTIONS participants who are still receiving cash benefits, Impairment Related Work Expenses (IRWEs) would be expanded to include items connected with preparation for, and traveling to and from work, including the cost of a vehicle, orientation and mobility services and Durable Medical Equipment.

The expansion of these items (automobiles, wheelchair motors, etc.) falling under the deduction would provide an incentive for those long term beneficiaries to return to work as they would be more likely to remain below the SGA level and continue to receive cash payments until their income level rises such and cash assistance becomes unnecessary.

Work Incentive Counseling and Assistance Program

The bill directs the Commissioner of Social Security to establish a Work Incentive Counseling and Assistance Program to assist in the outreach for and coordination of the OPTIONS program.

SSA will be directed to educate and provide ongoing personnel development to new and existing work counselors in the community, including public and providers/ counselors in vocational rehabilitation, independent living centers, social services centers, and the social security field offices. Identified counselors will assist the individual in choosing whether to participate in the OPTIONS program as well as assisting in the coordination and interaction of the new work incentives, the disabled consumer, available V.R. and job training services and Social Security to facilitate the individual's eventual return to work.

Sliding Scale Cash Benefit Offset for SSDI Beneficiaries

The Commissioner of SSA may conduct demonstrations to determine the most effective methodology for implementing an earned income offset for SSDI benefits that result in a gradual decrease in cash assistance as earnings increase that are: national in scope; conducted on a state, regional, or national level; conducted by public agencies or private, not-for-profit organizations; using calculations made on other than on a monthly basis; using calculations in increments larger than $1 loss in benefits for each $2 in earned income, e.g., $50 reduction in cash assistance for $100 in earnings; using electronic funds transfer and other information technology to streamline the administration of such offset; and offering beneficiaries information and advice regarding such sliding scale offset through personal computer software.

The all-or-nothing design of the SSDI program prevents most beneficiaries from attempting to go to work. Unlike the SSI program, where recipients who attempt work and lose only $1 in cash assistance for every $2 in earned income and can continue receiving Medicaid acute medical care, personal assistance, and prescription medication coverage (up to State limits), SSDI beneficiaries lose all cash assistance after earnings reach $500 per month (assuming in this example that the Trial Work Period has expired). Further exasperating the situation, SSDI beneficiaries receive free Medicare (which, because it does not cover personal assistance and prescription medications is a lesser benefit than Medicaid) for only 36 months. After then, they pay the full Part A premium, currently $330 monthly, to continue coverage.

The result is that the vast majority of SSDI beneficiaries find that working to their maximum capacity under the current SSDI work incentives rules is so costly that they financially cannot afford to work. They feel that they are financially and medically rewarded for remaining on benefits and punished for attempting work. A difficulty remains in administering the existing sliding scale benefit offset in the SSI program. The demonstrations conducted under this authority shall determine the most effective way of implementing sliding scale benefit offsets using variations in the amount of the offset as a proportion of earned income; the duration of the offset period; and the method of determining the amount of income earned by beneficiaries. Demonstrations shall use state-of-the-art information technology and electronic funds transfer technology to streamline the reporting of data and the implementation of the offsets. In addition, personal computer software shall be developed and made available to beneficiaries, their families, guardians, and advocates, to inform beneficiaries of these new work incentives and to assist beneficiaries in making informed decisions regarding work.

Report and Recommendations to Congress

Not later than 12 months after the date of enactment of the act, the Commissioner of Social Security and the Secretary of HHS shall jointly evaluate and report to Congress on the incentive program and the demonstration projects. Included in this evaluation would be recommendations to Congress for administrative and/or legislative changes to better enable individuals with disabilities to enter or reenter the workforce.

Maintenance of Data/Mandate to Report to Congress the Success of Option Incentives

No later than three (establishment), again at five (progress report) and seven (recommendations as to permanently authorizing the program), Social Security, National Council on Disability in consultation with the Secretary of Health and Human Services and stakeholders would report on data to determine the success of the OPTIONS work incentives. This data will be reported to Congress.

Hold Harmless Provision

If the OPTIONS program is not permanently authorized after ten years, anyone who participated in the OPTIONS program will be reinstated with full SSDI or SSI benefits and their participation in the program will not be used against them in a continuing disability review as evidence that a disability has ceased.

Effective Date/Implementation

Social Security is required to begin to offer these incentives no more than twelve months from the date of enactment into law.