SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Social Security 
Disability Insurance Return to Work Act of 2016''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Revising disability classifications.
Sec. 3. Requiring periodic continuing disability reviews for certain 
                            beneficiaries.
Sec. 4. Regulations related to disability classifications and CDRs.
Sec. 5. Time-limiting disability benefits for MIE and MIL individuals.
Sec. 6. Encouraging work by MIE and MIL individuals.
Sec. 7. Increased funding for continuing disability reviews.

SEC. 2. REVISING DISABILITY CLASSIFICATIONS.

    Section 221 of the Social Security Act (42 U.S.C. 421) is amended 
by adding at the end the following new subsection:
    ``(n)(1) Not later than 1 year after the date of the enactment of 
this subsection, the Commissioner of Social Security shall establish a 
system for classifying any individual who is determined to be entitled 
to disability insurance benefits under this title or to monthly 
benefits under section 202 by reason of being under a disability in the 
following manner:
            ``(A) An individual shall be classified as `medical 
        improvement expected' if the impairment or combination of 
        impairments causing the individual to be disabled is expected 
        to medically improve to the point where the individual will no 
        longer be disabled in 12 to 24 months.
            ``(B) An individual shall be classified as `medical 
        improvement likely' if the impairment or combination of 
        impairments causing the individual to be disabled is expected 
        to medically improve to the point where the individual will no 
        longer be disabled in 25 months to 60 months.
            ``(C) An individual shall be classified as `medical 
        improvement possible' if the impairment or combination of 
        impairments causing the individual to be disabled is not 
        expected to medically improve to the point where the individual 
        will no longer be disabled in 60 months, but future improvement 
        is possible.
            ``(D) An individual shall be classified as `medical 
        improvement not expected' if the individual has an impairment 
        or combination of impairments that is chronic or progressive 
        with permanent, irreversible structural or functional loss, and 
        for which there is no known effective therapy, treatment, or 
        surgical intervention that could result in medical improvement 
        to the point where the individual is no longer disabled.
    ``(2) In classifying an individual under the system established 
under this subsection, the Commissioner of Social Security shall not 
classify an individual as `medical improvement not expected' solely by 
reason of such individual's age where a lesser classification is 
appropriate.
    ``(3) Notwithstanding section 205(b)(1) or subsection (c)(1) or (d) 
of this section, there shall be no review of, or right to appeal, a 
classification made under the system established under this 
subsection.''.

SEC. 3. REQUIRING PERIODIC CONTINUING DISABILITY REVIEWS FOR CERTAIN 
              BENEFICIARIES.

    (a) In General.--Section 221(i) of the Social Security Act (42 
U.S.C. 421(i)) is amended--
            (1) by amending paragraph (1) to read as follows:
    ``(1)(A) In the case of any individual who has not attained age 63, 
is determined to be under a disability, and is classified as `medical 
improvement possible' or `medical improvement not expected', the 
applicable State agency or the Commissioner of Social Security (as may 
be appropriate) shall, for purposes of determining such individual's 
continuing disability--
            ``(i) if the individual is classified as `medical 
        improvement possible', conduct a review to determine whether 
        the individual remains under a disability during the 5th year 
        following the first month after the individual's waiting period 
        (as defined in section 223(c)(2)); and
            ``(ii) if the individual is classified as `medical 
        improvement not expected', conduct a review to determine 
        whether the individual remains under a disability during the 
        10th year following the first month after the individual's 
        waiting period (as so defined).
    ``(B) In addition to the continuing disability reviews required 
under subparagraph (A) and notwithstanding how an individual is 
classified under the system established by the Commissioner of Social 
Security under subsection (n), if the Commissioner has reason to 
believe that an individual that has been determined to be under a 
disability is not under a disability, the Commissioner may review such 
individual's case at such time and in such manner as the Commissioner 
determines appropriate except that the Commissioner shall not initiate 
a review on the basis of income earned by an individual who is a 
participant in the process established under section 223(l).
    ``(C) Reviews of cases which are required or permitted under this 
paragraph shall be in addition to, and shall not be considered as a 
substitute for, any other reviews which are required or provided for 
under or in the administration of this title.'';
            (2) by striking paragraph (2); and
            (3) by redesignating paragraphs (3) through (5) as 
        paragraphs (2) through (4), respectively.
    (b) Standard of Review for Continuing Disability Reviews.--
            (1) In general.--Section 223(f) of the Social Security Act 
        (42 U.S.C. 423(f)) is amended--
                    (A) in paragraph (4), by striking the period at the 
                end and inserting ``; or'';
                    (B) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) in the case of a continuing disability review under 
        section 221(i), evidence that would be sufficient to support a 
        finding in an initial determination that the individual is not 
        under a disability and is able to engage in substantial gainful 
        activity.''; and
                    (C) in the flush matter at the end, by inserting 
                ``, except that, in the case of a continuing disability 
                review under section 221(i), the Commissioner shall not 
                consider the fact that an individual is engaged in 
                substantial gainful work as part of the process 
                established under subsection (l) as evidence that the 
                individual is able to engage in substantial gainful 
                activity'' after ``secured by the Commissioner of 
                Social Security''.
            (2) Conforming amendment to definition of disability.--
        Section 223(d)(2) of the Social Security Act (42 U.S.C. 
        423(d)(2)) is amended--
                    (A) in subparagraph (A), by striking ``An 
                individual'' and inserting ``Subject to subparagraph 
                (D), an individual''; and
                    (B) by adding at the end the following new 
                subparagraph:
            ``(D) In the case of a continuing disability review under 
        section 221(i), an individual may be found to be under a 
        disability even though the individual is engaged in substantial 
        gainful work as part of the process established under 
        subsection (l).''.

SEC. 4. REGULATIONS RELATED TO DISABILITY CLASSIFICATIONS AND CDRS.

    The Commissioner of Social Security shall promulgate or revise, as 
appropriate, regulations relating to the determination, classification, 
and review of the disability status of individuals who apply for or 
receive disability insurance benefits under title II of the Social 
Security Act and related provisions of agency guidance to carry out 
section 2 and the amendments made by section 3.

SEC. 5. TIME-LIMITING DISABILITY BENEFITS FOR MIE AND MIL INDIVIDUALS.

    Section 223 of the Social Security Act (42 U.S.C. 423) is amended--
            (1) in subsection (a)(1), in the flush language after and 
        below subparagraph (E), by striking ``subsection (e)'' and 
        inserting ``subsections (e) and (k)''; and
            (2) by adding at the end the following new subsection:

                   ``Time-Limited Disability Benefits

    ``(k)(1) In the case of an individual who files an application for 
disability insurance benefits under this section or for monthly 
benefits under section 202 by reason of being under a disability for 
any month that begins on or after the date that is 1 year after the 
date of the enactment of the Social Security Disability Insurance 
Return to Work Act of 2016, is determined to be under a disability, and 
is classified by the Commissioner of Social Security as `medical 
improvement expected' or `medical improvement likely', the termination 
month applicable to the individual shall be--
            ``(A) if the individual has been classified as `medical 
        improvement expected', the 23rd month following the first month 
        after the individual's waiting period (as defined in subsection 
        (c)(2)); or
            ``(B) if the individual has been classified as `medical 
        improvement likely', the 59th month following the first month 
        after the individual's waiting period (as so defined).
    ``(2)(A)(i) For purposes of this paragraph, the term `timely 
reapplication' means an application for disability insurance benefits 
under this section or for monthly benefits under section 202 by reason 
of being under a disability that is submitted--
            ``(I) by an individual who is a recipient of such benefits; 
        and
            ``(II) during the period that is 14 months before the end 
        of the termination month applicable (or most recently 
        applicable) to the individual under paragraph (1) as of the 
        date of such application and ending with the date that is 12 
        months before the end of such termination month.
    ``(ii) Notwithstanding clause (i), the Commissioner of Social 
Security may deem an application for disability insurance benefits 
under this section or for monthly benefits under section 202 by reason 
of being under a disability submitted by an individual who is a 
recipient of such benefits that is submitted after the period described 
in clause (i)(II) to be a timely reapplication if--
            ``(I) the individual can show good cause for why the 
        application was not submitted during such period; and
            ``(II) the application is submitted not later than 6 months 
        before the end of the termination month applicable (or most 
        recently applicable) to the individual under paragraph (1) as 
        of the date of such application.
    ``(B)(i) An individual who submits a timely reapplication and who 
is determined to be under a disability shall be deemed to have 
satisfied the waiting period applicable under subsection (c)(2).
    ``(ii)(I) If the Commissioner of Social Security fails to make an 
initial determination with respect to the timely reapplication of an 
individual who is a recipient of disability insurance benefits under 
this section or monthly benefits under section 202 by reason of being 
under a disability before the end of the termination month applicable 
to the individual as of the date of such reapplication, such individual 
shall continue to be entitled to such benefits until an initial 
determination with respect to such timely reapplication is made.
    ``(II) If the Commissioner of Social Security makes an initial 
adverse determination with respect to the timely reapplication of an 
individual who is a recipient of disability insurance benefits under 
this section or monthly benefits under section 202 by reason of being 
under a disability and such individual files a timely request for a 
hearing under section 221(d), such individual may elect to have the 
payment of such benefits (as well as any other benefits payable under 
this title or title XVIII on the basis of such individual's entitlement 
to such benefits) continue in the same manner and subject to the same 
conditions as an election made under subsection (g).
    ``(C) For purposes of reviewing a timely reapplication submitted by 
an individual who is a recipient of disability insurance benefits under 
this section or monthly benefits under section 202 by reason of being 
under a disability--
            ``(i) the fact that the individual was previously found to 
        be under a disability shall have no evidentiary weight;
            ``(ii) the fact that the individual participated in the 
        process established under subsection (l) may be taken into 
        account for purposes of determining whether such individual is 
        under a disability; and
            ``(iii) subsection (f) shall not apply.''.

SEC. 6. ENCOURAGING WORK BY MIE AND MIL INDIVIDUALS.

    (a) In General.--Section 223 of the Social Security Act (42 U.S.C. 
423), as amended by section 5, is further amended--
            (1) in subsection (a)(2), by striking ``section 202(q) and 
        section 215(b)(2)(A)(ii)'' and inserting ``subsection (l) and 
        sections 202(q) and 215(b)(2)(A)(ii)''; and
            (2) by adding at the end the following new subsection:

     ``Treatment of Work Performed by Certain Disabled Individuals

    ``(l)(1) The Commissioner of Social Security shall establish a 
process whereby an eligible individual who is entitled to a disability 
insurance benefit under this section may elect to return to employment 
and receive an adjusted disability insurance benefit amount (as 
determined pursuant to paragraph (3)).
    ``(2)(A) For purposes of this subsection, the term `eligible 
individual' means an individual who has been classified as `medical 
improvement expected' or `medical improvement likely'.
    ``(B) Participation by an eligible individual in the process 
established under this subsection shall be suspended if such individual 
has no reported wages or self-employment income for the 4 preceding 
calendar quarters (as defined in section 213(a)(1)).
    ``(3)(A) For purposes of subsection (a)(2), the amount of the 
disability insurance benefit provided to an eligible individual who has 
elected to return to employment for any month shall be equal to--
            ``(i) in the case of an individual who has average monthly 
        earnings (as determined under subparagraph (B)) equal to or 
        less than the level of monthly earnings established by the 
        Commissioner to represent substantial gainful activity, the 
        amount otherwise applicable for such individual under 
        subsection (a)(2); or
            ``(ii) in the case of individual who has average monthly 
        earnings (as determined under subparagraph (B)) that are in 
        excess of the level of monthly earnings established by the 
        Commissioner to represent substantial gainful activity, the 
        amount of the disability insurance benefit that would otherwise 
        apply for such individual under subsection (a)(2) reduced (but 
        not below zero) by an amount equal to 50 percent of the excess 
        of such individual's average monthly earnings over the level of 
        monthly earnings established by the Commissioner to represent 
        substantial gainful activity.
    ``(B)(i) The average monthly earnings for an eligible individual 
shall be equal to the quotient of--
            ``(I) the total amount of wages and self-employment income 
        for such individual in any eligible months during the 2 
        calendar quarters (as defined in section 213(a)(1)) that 
        precede the most recently completed calendar quarter, and
            ``(II) the total number of eligible months during such 2-
        calendar-quarter period.
    ``(ii) For purposes of clause (i), the term `eligible month' means 
any month subsequent to the month in which an eligible individual 
became entitled to a disability insurance benefit.
    ``(4) For purposes of paragraph (3)(B), wages and self-employment 
income of an individual shall be determined based on relevant 
information for such individual as provided by the State agency 
responsible for the administration of State unemployment compensation 
law.
    ``(5) For purposes of an eligible individual who has elected to 
return to employment under this subsection, any services performed or 
earnings derived from services during the period of such participation 
shall not be considered for purposes of demonstrating an individual's 
ability to engage in substantial gainful activity under subsection 
(d)(4) and shall not be considered substantial gainful activity for 
purposes of subsection (e).
    ``(6) For purposes of this title, the disability insurance benefit 
received by an individual under this subsection shall not be applied 
for purposes of determining any monthly benefits payable to any other 
individuals entitled to benefits for any month based on the wages and 
self-employment income of such individual.''.
    (b) Conforming Amendment.--Section 221(m)(2)(B) of the Social 
Security Act (42 U.S.C. 421(m)(2)(B)) is amended by inserting ``(unless 
such individual is participating in the process established under 
section 223(l))'' before the period.
    (c) Effective Date.--The amendments made by this section shall 
apply to benefits payable for months beginning after October 1, 2017.

SEC. 7. INCREASED FUNDING FOR CONTINUING DISABILITY REVIEWS.

    Notwithstanding any other provision of law, for any calendar year 
after 2017--
            (1) the Commissioner of Social Security shall determine the 
        amount of any reduction in expenditures from the Federal 
        Disability Insurance Trust Fund (as defined in section 201(b) 
        of the Social Security Act (42 U.S.C. 401(b))) during the 
        preceding calendar year by reason of the provisions of this Act 
        and the amendments made by this Act; and
            (2) 10 percent of the amount determined under paragraph (1) 
        shall be authorized to be made available from the Federal 
        Disability Insurance Trust Fund for continuing disability 
        reviews (as defined in section 201(g)(1)(A) of the Social 
        Security Act (42 U.S.C. 401(g)(1)(A))).
Social Security Disability Insurance Return to Work Act of 2016  This bill amends title II (Old Age, Survivors, and Disability Insurance) of the Social Security Act (SSAct) to: (1) establish specified new disability classifications, and (2) require periodic continuing disability reviews for beneficiaries classified as "medical improvement possible" or "medical improvement not likely." The bill revises the standard of review for termination of disability benefits regarding an individual engaged in substantial gainful work as part of a certain process.  The Social Security Administration (SSA) shall promulgate or revise, as appropriate, regulations relating to the determination, classification, and review of the disability status of individuals who apply for or receive disability insurance benefits.  SSAct title II is amended to: (1) prescribe time limits for disability benefits classified "medical improvement expected" or "medical improvement likely," and (2) direct the SSA to establish a process for an individual entitled to a disability insurance benefit to elect to return to employment and receive an adjusted disability insurance benefit amount. The SSA shall determine the amount of any reduction in expenditures from the Federal Disability Insurance Trust Fund during the preceding calendar year. 10% of that amount shall be made available for continuing disability reviews.
Social Security Disability Insurance Return to Work Act of 2016