SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pathways to Independence Act of 
2007''.

SEC. 2. AUTHORIZATION OF MODIFIED EMPLOYABILITY PLAN FOR INDIVIDUALS 
              WITH DISABILITIES.

    (a) In General.--Section 407(c)(2) of the Social Security Act (42 
U.S.C. 607(c)(2)) is amended by adding at the end the following new 
subparagraph:
                    ``(E) Individuals with disabilities complying with 
                a modified employability plan deemed to be meeting work 
                participation requirements.--
                            ``(i) Modified employability plan.--A State 
                        may develop a modified employability plan for 
                        an adult or minor child head of household 
                        recipient of assistance who has been determined 
                        by a qualified medical, mental health, 
                        addiction, or social services professional (as 
                        determined by the State) to have a disability, 
                        or who is caring for a family member with a 
                        disability (as so determined). The modified 
                        employability plan shall--
                                    ``(I) include a determination that, 
                                because of the disability of the 
                                recipient or the individual for whom 
                                the recipient is caring, reasonable 
                                modification of work activities, hourly 
                                participation requirements, or both, is 
                                needed in order for the recipient to 
                                participate in work activities;
                                    ``(II) set forth the modified work 
                                activities in which the recipient is 
                                required to participate;
                                    ``(III) set forth the number of 
                                hours per week for which the recipient 
                                is required to participate in such 
                                modified work activities based on the 
                                State's evaluation of the family's 
                                circumstances;
                                    ``(IV) set forth the services, 
                                supports, and modifications that the 
                                State will provide to the recipient or 
                                the recipient's family;
                                    ``(V) be developed in cooperation 
                                with the recipient; and
                                    ``(VI) be reviewed not less than 
                                every 6 months.
                            ``(ii) Inclusion in monthly participation 
                        rates.--For the purpose of determining monthly 
                        participation rates under subsection 
                        (b)(1)(B)(i), and notwithstanding paragraphs 
                        (1), (2)(A), (2)(B), (2)(C), and (2)(D) of this 
                        subsection and subsection (d) of this section, 
                        a recipient is deemed to be engaged in work for 
                        a month in a fiscal year if--
                                    ``(I) the State has determined that 
                                the recipient is in substantial 
                                compliance with activities and hourly 
                                participation requirements set forth in 
                                a modified employability plan that 
                                meets the requirements set forth in 
                                clause (i); and
                                    ``(II) the State complies with the 
                                reporting requirement set forth in 
                                clause (iii) for the fiscal year in 
                                which the month occurs.
                            ``(iii) Reports.--
                                    ``(I) Report by state.--With 
                                respect to any fiscal year for which a 
                                State counts a recipient as engaged in 
                                work pursuant to a modified 
                                employability plan, the State shall 
                                submit a report entitled `Annual State 
                                Report on TANF Recipients Participating 
                                in Work Activities Pursuant to Modified 
                                Employability Plans Due to Disability' 
                                to the Secretary not later than March 
                                31 of the succeeding fiscal year. The 
                                report shall provide the following 
                                information:
                                            ``(aa) The aggregate number 
                                        of recipients with modified 
                                        employability plans due to a 
                                        disability.
                                            ``(bb) The percentage of 
                                        all recipients with modified 
                                        employability plans who 
                                        substantially complied with 
                                        activities set forth in the 
                                        plans each month of the fiscal 
                                        year.
                                            ``(cc) Information 
                                        regarding the most prevalent 
                                        types of physical and mental 
                                        impairments that provided the 
                                        basis for the disability 
                                        determinations.
                                            ``(dd) The percentage of 
                                        cases with a modified 
                                        employability plan in which the 
                                        recipient had a disability, was 
                                        caring for a child with a 
                                        disability, or was caring for 
                                        another family member with a 
                                        disability.
                                            ``(ee) A description of the 
                                        most prevalent types of 
                                        modification in work activities 
                                        or hours of participation that 
                                        were included in the modified 
                                        employability plans.
                                            ``(ff) A description of the 
                                        qualifications of the staff who 
                                        determined whether individuals 
                                        had a disability, of the staff 
                                        who determined that individuals 
                                        needed modifications to their 
                                        work requirements, and of the 
                                        staff who developed the 
                                        modified employability plans.
                                    ``(II) Report by secretary.--The 
                                Secretary shall submit an annual report 
                                to Congress entitled `Efforts in State 
                                TANF Programs to Promote and Support 
                                Employment for Individuals with 
                                Disabilities' not later than July 31 of 
                                each fiscal year that includes 
                                information on State efforts to engage 
                                individuals with disabilities in work 
                                activities for the preceding fiscal 
                                year. The report shall include the 
                                following:
                                            ``(aa) The number of 
                                        individuals for whom each State 
                                        has developed a modified 
                                        employability plan.
                                            ``(bb) The types of 
                                        physical and mental impairments 
                                        that provided the basis for the 
                                        disability determination, and 
                                        whether the individual with the 
                                        disability was an adult 
                                        recipient or minor child head 
                                        of household, a child, or a 
                                        non-recipient family member.
                                            ``(cc) The types of 
                                        modifications that States have 
                                        included in modified 
                                        employability plans.
                                            ``(dd) The extent to which 
                                        individuals with a modified 
                                        employability plan are 
                                        participating in work 
                                        activities.
                                            ``(ee) An analysis of the 
                                        extent to which the option to 
                                        establish such modified 
                                        employability plans was a 
                                        factor in States' achieving or 
                                        not achieving the minimum 
                                        participation rates under 
                                        subsection (a) for the fiscal 
                                        year.
                            ``(iv) Definitions.--
                                    ``(I) Disability.--For purposes of 
                                this subparagraph, the term 
                                `disability' means a mental or physical 
                                impairment, including substance abuse 
                                or addiction, that--
                                            ``(aa) constitutes or 
                                        results in a substantial 
                                        impediment to employment; or
                                            ``(bb) substantially limits 
                                        one or more major life 
                                        activities.
                                    ``(II) Modified work activities.--
                                For purposes of this subparagraph, the 
                                term `modified work activities' means 
                                activities the State has determined 
                                will help the recipient become 
                                employable and which are not subject to 
                                and do not count against the 
                                limitations and requirements under the 
                                preceding provisions of this subsection 
                                and of subsection (d).''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2007.

SEC. 3. STATE OPTION TO EXCLUDE SSI APPLICANTS IN WORK PARTICIPATION 
              RATE.

    (a) In General.--Section 407(b)(5) of the Social Security Act (42 
U.S.C. 607(b)(5)) is amended by striking ``at its option, not require 
an individual'' and all that follows and inserting ``at its option--
                    ``(A) not require an individual who is a single 
                custodial parent caring for a child who has not 
                attained 12 months of age to engage in work, and may 
                disregard such an individual in determining the 
                participation rates under subsection (a) of this 
                section for not more than 12 months;
                    ``(B) disregard for purposes of determining such 
                rates for any month, on a case-by-case basis, an 
                individual who is an applicant for or a recipient of 
                supplemental security income benefits under title XVI 
                or of social security disability insurance benefits 
                under title II, if--
                            ``(i) the State has determined that an 
                        application for such benefits has been filed by 
                        or on behalf of the individual;
                            ``(ii) the State has determined that there 
                        is a reasonable basis to conclude that the 
                        individual meets the disability or blindness 
                        criteria applied under title II or XVI;
                            ``(iii) there has been no final decision 
                        (including a decision for which no appeal is 
                        pending at the administrative or judicial level 
                        or for which the time period for filing such an 
                        appeal has expired) denying benefits; and
                            ``(iv) not less than every 6 months, the 
                        State reviews the status of such application 
                        and determines that there is a reasonable basis 
                        to conclude that the individual continues to 
                        meet the disability or blindness criteria under 
                        title II or XVI; and
                    ``(C) disregard for purposes of determining such 
                rates for any month, on a case-by-case basis, an 
                individual who the State has determined would meet the 
                disability criteria for supplemental security income 
                benefits under title XVI or social security disability 
                insurance benefits under title II but for the 
                requirement that the disability has lasted or is 
                expected to last for a continuous period of not less 
                than 12 months.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2007.
Pathways to Independence Act of 2007 - Amends part A (Temporary Assistance for Needy Families) (TANF) of title IV of the Social Security Act to deem individuals with disabilities complying with a modified employability plan to be meeting work participation requirements.

Gives states the option to disregard in determining work participation rates any SSI (Supplemental Security Income) (SSA title XVI) and Social Security disability insurance applicants or recipients.
A bill to amend part A of title IV of the Social Security Act, to reward States for engaging individuals with disabilities in work activities, and for other purposes.