Briefing Book

White House Conference

National Rehabilitation Hospital Research Center Mailing Address: 102 Irving Street. NW Washington, DC 20010-2949 Street Address: 1016 16th Street, N.W., Fourth Floor Washington D.C. 20036 (202)466-1900 Fax (202) 466-1911 STATEMENT BY BONNIE O'DAY, PH.D. The solvency of the Social Security Trust Fund is a matter of critical importance to Americans with Disabilities. The Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) programs provide an important safety net for the 9 million individuals deemed by SSA to be unable to work. These individuals and their advocates must be an integral part of the current Social Security debate. SSI and SSDI beneficiaries must meet and document rigorous disability criteria to establish their eligibility for these programs. However, employment could be a realistic option for many of these individuals if they receive education or training, adaptive equipment, health care, and other support services. If only one-half of one percent of current SSI and SSDI beneficiaries went to work, the Social Security Trust Fund would save $3,500,000,000 over the worklife of these individuals. Providing reforms to enable some beneficiaries the opportunity to return to work is imperative for the solvency of the Trust Fund. Several "work incentive" provisions have been added to the SSI and SSDI programs during the last twenty years, but they are extremely complex, difficult to use, and burdensome to both the Administration and the recipient. SSI recipients can retain $1 of their benefits for every $2 of earnings, deduct impairment related work expenses, and retain Medicaid benefits after earnings become too high to allow SSI cash payments. (Earnings limits are established by each state.) SSDI work incentives include a one-year trial work period; 36 months of extended eligibility for Medicare benefits, a Medicare buy-in program, and deduction of work expenses. But evidence suggests that these work incentives are not well used. The General Accounting Office (GAO) found that about eight percent of SST recipients and one percent of SSDI beneficiaries aged 18 to 64 reported any earnings. Another 1991 study of about 4,400 SSDI beneficiaries found that between 10 and 20 percent knew anything about work incentives under the SSDI program, and almost no one said they were influenced to return to work by these provisions (Hennessey & Mueller, I. 994). Many people with disabilities find that it just doesn't pay to work. SSDI beneficiaries face a $500 earnings "cliff" ($1,050 for blind individuals) that presents a significant impediment to employment. An individual who earns over $500 per month (minus any impairment-related work expenses) will lose their entire SSDI check. This means that an SSDI beneficiary must find a job that pays about $20,000 per year and provides medical benefits, and a blind person must make about $25,000 per year, to profit by earning over the SGA level. The sensible course of action for most people is to remain unemployed, or to keep earnings low enough to retain cash payments. Based upon public hearing testimony, the National Council on Disability (1997) reports that SSDI beneficiaries turn down promotions, refuse increases in hours or overtime, or actually reduce their hours when their wages rise to keep their SSDT benefits. Access to medical coverage is also critical for SSI and SSDI beneficiaries to become employed in larger numbers. The gateway to full medical coverage, including durable medical equipment, personal assistance and prescription drugs, is eligibility for SSI benefits The entanglement of income and medical benefits results in the potential loss of medical coverage when earnings rise and cash benefits are eliminated upon return to work. A Harris Survey of Americans With Disabilities conducted in 1994 found that 3 1 percent of those who are unemployed find loss of health insurance or long-term services to be a work barrier. Ironically, the services and supports that enable an individual to live independently in the community and to sustain employment may be lost if he or she successfully finds a job. Part-time work that is becoming increasingly available and is well suited to people with some disabilities may not be an option due to lack of health care coverage. If health care is covered by the employer, in-home assistance, prescriptions, and adaptive equipment may not be covered, or may not be sufficient to meet the individual's needs. It therefore makes sense for SSI recipients and SSDI beneficiaries to refrain from or restrict employment to maintain publicly funded medical benefits. Recommendations: Enhance SSDI work incentives by offering a $2 for $1 income offset, similar to that offered to SSI recipients, for beneficiaries who earn over $500 per month. This provides a gradual ramp, rather than a sudden drop, off the SSDI program and enables beneficiaries to profit by working. Simplify and enhance SSI work incentive provisions by allowing SSI recipients to keep the first $500 (rather than the current $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 would simplify work incentive programs and decrease paperwork requirements by replacing current deductions for work expenses and other more complex work incentive provisions. Institute a Medicaid buy-in for SSI and SSDI beneficiaries who return to work, thus allowing people to purchase health care coverage. Contract with non-profit agencies to promote employment and to inform beneficiaries about work incentives. The NRH Research Center is a division of the Medlantic Research Institute