print this pagePolicy Barriers for People with Disabilities Who Want to Work, continued
III. Current Federal Reform Efforts
To address the need for continued Medicaid coverage after employment, Congress included Section 4733 in the Balanced Budget Act of 1997, allowing states to raise their Medicaid threshold under Section 1619 of the Social Security Act. This enables SSI recipients to earn up to 250 percent of the poverty level before relinquishing their Medicaid benefits, although they must generally adhere to the existing limitations on savings. Regulations passed by the Health Care Finance Administration (HCFA) allow disability, medical and other expenses to be deducted in this determination, so that individuals with high disability or medical expenses can earn a significant level of income before losing their Medicaid. Only a few states have initiated improved Medicaid coverage under this option.
Proposed Legislation: The Work Incentive Improvement Act of 1999 is currently being considered by the U.S. Congress. The Act, which has received support from the Clinton Administration, creates new options for state Medicaid programs to cover workers with disabilities, continues Medicare coverage and creates a Ticket to Work and Self-Sufficiency Program.
Under the proposed legislation, states would have the option to establish a Medicaid buy-in program to enable workers with disabilities to purchase Medicaid coverage. Individuals are considered to be disabled if they meet the disability eligibility criteria for SSI or SSDI and are considered to be working if they earn at least the federal minimum wage and work the equivalent of at least 40 hours per month. States cannot charge a premium to individuals with adjusted gross incomes (AGI) of 250 percent of the poverty level; states may charge no more than 7 percent of AGI for those with incomes between 250 and 450 percent of poverty level and they may charge up to the full Medicaid cost to individuals whose AGI is up to $75,000. Those with incomes above $75,000 will be ineligible for this program. States who provide Medicaid under these new options can receive grants to establish and operate these programs; the budget authorization amount is $20 million for FY 2000.
The legislative proposal also extends Medicare Part A coverage for 6 years with no premium to SSDI beneficiaries. Those who enroll within the 6 year window can continue receiving Medicare coverage indefinitely. It also establishes an income offset demonstration program to enable SSDI beneficiaries to retain $1 of income for every $2 of earnings, with a study to be conducted by the General Accounting Office to ascertain the costs and impact upon return to work.
The bill also contains a Ticket to Work and Self-Sufficiency Program, which provides that each SSI and SSDI beneficiary would receive a ticket to obtain vocational services. The ticket may be redeemed at any public or private agency, including the state VR program.
Once the individual returns to work, the agency is paid an amount up to 40 percent of the individual's SSI or SSDI payment. The bill provides grants to the state Protection and Advocacy Programs to assist individuals with disabilities in using the ticket. It also establishes grants to other nonprofit agencies to assist consumers in using the new work incentives.
At this writing, the legislation has passed the Senate; the House of Representatives is considering similar legislation.
IV. State Reforms
Because of the Congressional de-emphasis on federal mandates, state governments have begun to implement innovative return-to-work programs. For example, Massachusetts has authorized Medicaid buy-in arrangements for citizens with disabilities under the Common Health program, which enables about 3,500 people with disabilities to work. Other states, such as Minnesota and Oregon, allow low-income residents, including people with disabilities, to buy into a state-sponsored health insurance program. Still others, including Colorado and Maryland, have applied for federal Medicaid waivers to develop innovative approaches for specific target populations. Disabled Californians who receive Temporary Assistance for Needy Families (TANF) are referred directly to the state vocational rehabilitation agency. The SSA has recently awarded funds to develop innovative collaborations between state agencies to promote return to work.
The Robert Wood Johnson Foundation has funded three return-to-work demonstration programs that are particularly noteworthy. The Oregon Department of Human Resources Senior and Disabled Services and Vocational Rehabilitation Divisions, consumers with disabilities, HCFA, SSA, and Oregon employers have formed a collaborative partnership to promote employment. The partnership provides case management, training, continuation of Medicaid coverage, consumer education, and job matching. The target population is severely disabled Medicaid recipients with high-cost healthcare and/or long-term care needs who are motivated and ready to work. Their primary employment barrier is the loss of long-term and other health benefits.
The Vermont Work Incentive Initiative will measure the impact that health and long-term care coverage has on the employment and well-being of rehabilitation clients with disabilities. Six hundred SSDI beneficiaries will be randomly assigned into two groups; half will receive a $2 for $1 SSDI income offset and Medicaid health coverage, and half will receive Medicaid coverage only. All 600 recipients will receive mentor services and benefits counseling. This group of 600 participants will be compared with 600 participants in the New Hampshire Vocational Rehabilitation program who will serve as a control group.
The Wisconsin Health Systems for Workforce Enhancement is a private-public collaboration to test the feasibility of a comprehensive vocational planning system for people with severe physical disabilities. It consists of vocational planning and benefits counseling, health and long-term care coverage and a Medicaid buy-in. The program served people with physical disabilities who live in Dane County, Wisconsin. These three projects have a significant evaluation component to test the efficacy of these new approaches.
In sum, most of the innovative return-to-work programs are taking place at the state level. States are serving as laboratories to test the viability and efficacy of various return-to-work approaches, but there is little information sharing between the states. No central compilation of state return-to-work initiatives exists. If state programs are to impact upon federal policy, and if states are to learn from each other's approaches, more viable means of sharing information, such as a central clearinghouse, should be initiated.
V. Other Policy Recommendations
The following recommendations to promote employment among SSI recipients and SSDI beneficiaries are currently being examined by consumers, Congress and the Clinton Administration. Some are also being implemented through demonstration projects sponsored by federal and state agencies. This section briefly summarizes and evaluates each policy recommendation.
1. Alter the assumption that SSI recipients and SSDI beneficiaries are totally and permanently unable to work by offering training and support during the initial application process, and by redirecting Continuing Disability Reviews (CDR's) toward work and training.
While return to the work force is unlikely for many SSI and SSDI beneficiaries, especially those over 50, those with significant multiple disabilities or those whose disabilities are terminal, evidence suggests that at least some beneficiaries could work, given appropriate training and support. Although the initial eligibility determination should be based upon the applicant's current situation, opportunities for training and education, existing work incentives and other return-to-work strategies should be explored during the eligibility determination process.
Several participants at the NCD hearings testified that CDR's were significant work disincentives, because they were a means to discontinue benefits immediately after the individual attempted to work. Rather than a punitive action precipitated by limited attempts to work, CDR`s could be reoriented to an exploration of whether work would be possible with appropriate support and training. SSI and SSDI applicants could be informed about CDR's during the initial eligibility process and encouraged to begin pursuing education or training. The CDR could explore whether work is possible, given the nature of the disability, in a supportive, non-confrontational manner. Community organizations that promote return to work or independent living could assist in this process.
A reorientation of the eligibility and CDR processes is especially critical for SSI applicants who entered the system as children or at age 18. Education, training or job experience rather than permanent entitlement should be stressed. A shift towards an education-training orientation will become critical as the increasing numbers of children who have become eligible for SSI since 1990 reach adulthood.
The National Academy on Social Insurance (NASI) has made general recommendations in this direction. However, specific details have not been developed and implementation problems still need to be addressed. For example, guidelines will need to be developed for identifying those who may be too severely disabled to work and should be excluded from the CDR process. Strategies will need to be developed to insure that individuals who are opting for education or vocational training are truly interested in employment. And finally, additional administrative resources to augment the CDR process will need to be identified.
2. Enhance and streamline SSDI and SSI work incentives.
The National Council on Disability has recommended a two-for-one income offset for SSDI beneficiaries. This would allow SSDI beneficiaries to keep $50 of benefits for every $100 of income they earn over the current SGA level of $700 per month. This recommendation makes the SSDI work incentive similar to incentives in the SSI program, because it provides a gradual ramp rather than a sudden drop of the SSDI program. SSDI cash payments would be gradually reduced as wages rise, rather than abruptly discontinued. NCD also recommends that beneficiaries continue to be eligible for SSDI benefits as long as they remain disabled, but receive cash payments only during months with low earnings. People with disabilities that allow only intermittent work would not fear permanent loss of benefits if they accepted occasional work.
To simplify and enhance SSI work incentive provisions, NCD recommends that SSI recipients be allowed to keep the first $700 (rather than the first $65) of earned income. After this level of income has been attained, the current two-for-one offset would be instituted, but altered to be collectable quarterly rather than monthly, in $50 rather than $1 increments. This offset would address the distressing overpayment problem SSI recipients face when they return to work. It would simplify work incentive programs and decrease paperwork requirements by replacing current deductions for work expenses and other more complex work incentive provisions.
These recommendations render parity between the two programs, simplify administrative requirements and provide a gradual rather than sudden reduction in SSDI benefits. These reforms would be especially helpful for participants whose disabilities allow only parttime or intermittent work, because their benefit levels would remain more stable. The changes would also benefit college students who wish to work part-time during the school year or gain experience through summer employment.
These recommendations have not been seriously considered by Congress because of the significant cost projections associated with them. In addition to the costs of implementing these changes for current beneficiaries, the Office of Management and Budget (OMB) is concerned that such enhancements could generate an "induced demand." In other words, these changes might induce individuals to apply for benefits they may not have applied for otherwise, thereby increasing the cost still further.
3. Institute a Medicaid buy-in for individuals who return to work.
As noted earlier, another significant return-to-work barrier for participants was the perceived or actual loss of healthcare benefits, including PAS, prescriptions and equipment. The low wages and need for medical benefits for people with disabilities who wished to work part-time point to a broader societal problem-low wages and lack of health coverage for part-time workers in general. Only 18 percent of parttime workers receive healthcare coverage, compared with 72 percent of full-time workers (Tilly, 1996). A Medicaid buy-in for people with disabilities may be an interesting testing ground for broader healthcare reforms for parttime workers without disabilities.
The major obstacle to enacting healthcare reform is securing adequate financial resources. These proposals must be "budget-neutral" to be adopted by Congress (i.e., funds must be identified to pay for whatever increasing costs might occur). In addition to the induced demand problem described above, advocates for the Medicaid buy-in also confront the problem that cost calculations do not include savings to the Federal Government resulting from reductions in other subsidies when recipients return to work. This means that other resources must be identified to pay for the cost of Medicaid expansion.
4. Contract with agencies outside the Social Security system to promote return-to-work.
Lack of information about existing work incentives and medical benefits is a significant return-to-work barrier. SSI and SSDI beneficiaries who have inaccurate or incomplete information about existing work incentives will likely be too fearful of losing benefits to try to return to work.
One proposal to address this information gap is to set aside a specific percentage of SSA's Trust Fund to contract with private nonprofit organizations to educate consumers about the existing work incentives. It is noteworthy that an entire industry of attorneys and advocates has developed to assist people who are applying for benefits because these attorneys can receive a portion of the applicant's retroactive benefits when he or she becomes eligible. Assisting beneficiaries to leave the benefit rolls should be equally as enticing.
5. Provide a choice in rehabilitation providers to SSI and SSDI beneficiaries through "return-to-work" tickets.
To increase funds available for vocational rehabilitation and to provide consumers with a choice in rehabilitation providers, the NASI panel, the Congress and the Clinton Administration have recommended that SSDI Trust Funds be tapped to provide vouchers or tickets for SSI recipients and SSDI beneficiaries who wish to work. Under this plan, individuals would receive a ticket or voucher for rehabilitation services and could redeem their ticket for services through their preferred public or private rehabilitation provider. The agency would be reimbursed a portion of savings to the Trust Fund or the general fund on a performance basis (e.g., when a consumer finds work).
This incentive-based approach builds on the principles of consumer choice and empowerment to foster competition and innovation among providers. The ticket approach would not substitute for the public federal/state rehabilitation system. Rather, it would expand the funds available to people with disabilities for rehabilitation services by allowing them direct access to the Trust Fund. This proposal would also facilitate access to new and innovative services by fostering growth in the private rehabilitation market.
Once an individual finds employment, the agency that holds the ticket would have a tremendous incentive to expediently assist its client in obtaining adaptive equipment or other modifications for the job. Mechanisms could also be developed for consumers to reimburse employers for any needed physical accommodations.
Many consumers prefer that the process for identifying needs and making plans be independent of the agency that provides direct services to insure that the agency's and consumer's self interests are separated (Hagner & Marrone, 1995). Advocates have also suggested a mechanism whereby SSI recipients and SSDI beneficiaries could receive their vouchers directly, managing their own course of rehabilitation without the intervention of an agency, but specific proposals have not been developed.
Several implementation issues would need to be addressed for a ticket proposal to be successful. First, some rehabilitation providers are skeptical about the proposal's success, because costs of rehabilitating clients would be borne by rehabilitation providers up front, with reimbursement months or even years later, when the client returns to work and leaves the rolls. They point to the initial failure of vocational rehabilitation to take advantage of Social Security Trust Funds to rehabilitate their clientele and to the delays and red tape required for cost reimbursement. Others point out that large, well-established agencies with greater resources would have a competitive edge over smaller providers.
Another problem is that providers may not be induced to serve rural areas, due to higher per person costs. In like manner, agencies may have an incentive to "cream" by serving only those with higher benefit levels, or those who have moderate disabilities and who are easier to place. They may also attempt to maximize their rewards by placing their clients in low level positions which require little training or expense.
Advocates of the ticket proposal point out that the new proposal differs from the method by which state rehabilitation agencies are reimbursed from the Trust Fund. Under the new proposal, private rehabilitation providers would be paid based upon a portion of the savings to the Trust Fund, rather than upon service expenditures. This means that they could calculate their payment by subtracting actual expenses from Trust Fund savings, and invest in customers with whom they anticipate making a profit. This system would eliminate the need for complex expenditure reporting requirements, since payment could be easily calculated by the customer's SSI or SSDI check. Advocates of the ticket proposal assert that creaming would not be a significant problem, since the current system rehabilitates such a minute percentage of current recipients. SSI or SSDI recipients who could not find an agency to provide services could still rely on the state vocational rehabilitation agency, which receives federal and state funds to rehabilitate people with severe disabilities.
Other implementation problems would also need to be addressed, such as how clients would receive information about providers, who would assure quality of service and who would provide career guidance and counseling. Despite these unresolved issues, return-to-work tickets would provide additional resources to promote the goal of economic productivity and selfsufficiency while fostering the goals of choice and empowerment for people with disabilities.
6. Compensate employers for the costs of hiring people with disabilities.
To compensate employers for any disability-related costs, a tax credit for actual expenses associated with hiring a person with a disability has been proposed. This credit would augment the existing Business Tax Credit or deduction for removal of barriers under ADA, thus encouraging employers to retain people with disabilities who become disabled. If properly implemented, a tax credit could allay some of the employers' fears about hiring an individual with a disability.
There is little evidence that people with disabilities or their employers know about existing tax credits and exemptions. There is no reason to believe that proposals to enhance tax credits will be more fruitful without significant education or technical assistance. Current proposals are more consistent with the philosophy that people with disabilities are economically productive than existing programs that reimburse employers for a portion of the disabled employee's salary. Current proposals call for reimbursing employers for the actual cost of accommodation, rather than merely for hiring someone with a disability Another advantage of this approach is that employers could receive this assistance for retaining a newly injured or disabled employee, keeping workers with disabilities in the labor force.
VI. Conclusions
Many people with disabilities deemed unemployable by the SSA actually have worked while receiving benefits and potentially could work, at least part-time or intermittently. These individuals fear, and often actually face, significant policy barriers, such as sudden loss of cash benefits, lack of healthcare coverage, and an SSA determination that their disability has ceased if they work more than a few hours a week. The often insurmountable policy barriers these individuals face needlessly keep them out of the workforce.
While some of the programmatic barriers people with disabilities face as they attempt to find and keep work are beginning to be documented, more information is needed. Little is known about which disability and socio-economic groups face which barriers, how those who have successfully used the work incentives have overcome these barriers and what policy changes are necessary to promote work among certain impairment groups.
Notes
1. The amount was raised from $500 to $700 on July 1, 1999.
2. These figures assume that the individual is single, receives the average monthly SSDI payment of $704, housing subsidies for a $600 per month apartment (including rent and utilities) and pays $100 per month in medical expenses not covered by Medicare.
3. It should be noted that the impact of employer tax credits on people with disabilities has not been studied. Findings from studies of unemployed youth and other targeted groups have been extrapolated to people with disabilities.
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This article is from American Rehabilitation, Spring/Summer 1999