The State of 21st Century

Financial Incentives for

Americans with Disabilities

National Council on Disability

August 11, 2008
National Council on Disability

1331 F Street, NW, Suite 850

Washington, DC 20004

The State of 21st Century Financial Incentives for Americans with Disabilities

This report is also available in alternative formats and on the National Council on 

Disability (NCD) Web site (www.ncd.gov).

Publication date: August 11, 2008

202­272­2004 Voice

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The views contained in this report do not necessarily represent those of the

Administration, as this and all NCD documents are not subject to the A­19 Executive

Branch review process.
 National Council on Disability 

An independent federal agency making recommendations to the President and Congress 

to enhance the quality of life for all Americans with disabilities and their families. 

Letter of Transmittal 

August 11, 2008 

The President 

The White House 

Washington, DC 20500 

Dear Mr. President: 

On behalf of the National Council on Disability (NCD), I am pleased to submit a report titled 

The State of 21st Century Financial Incentives for Americans with Disabilities. We believe 

that this groundbreaking document provides a road map for equality of economic rights for 

people of all abilities, regardless of race or socioeconomic background. 

This NCD report defines or describes financial incentives affecting people with disabilities 

and presents research findings in key areas of people’s lives, such as education and health 

care. It also describes selected state-level innovations affecting asset development and 

wealth accumulation. In addition, the report suggests several strategies for securing 

meaningful employment, career advancement, and benefits needed for daily living and 

accommodations. 

The State of 21st Century Financial Incentives for Americans with Disabilities recognizes 

that the potential for Americans with disabilities to become full citizens cannot and will not 

be realized without a redesign of public policy. To that end, this report offers 

recommendations that can increase opportunities for people with disabilities to become 

fully involved in the economic mainstream of American society. 

We thank you for your leadership in promoting the full participation of people with 

disabilities through your New Freedom Initiative (NFI). The NFI programs have proved to 

be comprehensive and effective in addressing challenges faced by people with disabilities 

in all areas of society. NCD believes that many ideas in this report will help achieve the 

goals of the NFI, and our Council stands prepared to work with you and the Office of 

Domestic Policy in the planning and implementation of cooperative actions on these 

matters. 

Sincerely, 

John R. Vaughn 

Chairperson 

(The same letter of transmittal was sent to the President Pro Tempore of the 

U.S. Senate and the Speaker of the U.S. House of Representatives.) 

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National Council on Disability Members and Staff 

Members 

John R. Vaughn, Chairperson 

Chad Colley, Vice Chairperson 

Patricia Pound, Vice Chairperson 

Milton Aponte, J.D. 

Victoria Ray Carlson 

Robert R. Davila, Ph.D. 

Graham Hill 

Marylyn Howe 

Young Woo Kang, Ph.D. 

Kathleen Martinez 

Lisa Mattheiss 

Lonnie Moore 

Anne M. Rader 

Cynthia Wainscott 

Linda Wetters 

Staff 

Michael C. Collins, Executive Director 

Martin Gould, Ed.D., Director of Research 

Mark S. Quigley, Director of External Affairs 

Julie Carroll, Senior Attorney Advisor 

Joan M. Durocher, Senior Attorney Advisor
 

Sharon M. Lisa Grubb, Special Assistant to the Executive Director 

Geraldine Drake Hawkins, Ph.D., Senior Program Analyst 

Stacey S. Brown, Staff Assistant 

Carla Nelson, Secretary 

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Acknowledgments 

The National Council on Disability thanks the staff and subcontract team of the National 

Disability Institute (NDI) of the National Cooperative Bank Development Cooperation 

(NCBDC) for conducting the research for this report. They include principal investigators 

Steve Mendelssohn, J.D., and Johnette T. Hartnett, Ed.D. (NDI Director of Research 

and Strategic Planning), along with NDI Director Michael Morris, J.D., who contributed 

research, and Carol Harvey, Ph.D., who contributed economic analyses. 

NCD also wishes to acknowledge the contributions of study advisors contacted during 

the early phases of work, including Charlie Hammerman, John Hetterick, Elizabeth 

Jennings, Tobey Partch-Davies, and Robert Zdenek. 

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TABLE OF CONTENTS 

EXECUTIVE SUMMARY ................................................................................................ 7
 

Background................................................................................................................ 7
 

Research Framework................................................................................................. 8
 

Summary of NCD’s Key Findings on Financial Incentives ....................................... 10
 

Summary of NCD’s Major Public Policy Recommendations on 

Financial Incentives ................................................................................................. 16
 

CHAPTER 1: THE TOPOLOGY OF FINANCIAL INCENTIVES FOR AMERICANS 

WITH DISABILITIES: A REVIEW OF THE CURRENT FEDERAL EXPERIENCE IN 

PROVIDING DIRECT, INDIRECT, AND COMMUNITY-BASED FINANCIAL 

INCENTIVES TO AMERICANS WITH DISABILITIES.................................................. 23
 

1.1. Introduction....................................................................................................... 23
 

Current Context............................................................................................... 24
 

Defining Financial Incentives........................................................................... 24
 

Understanding the Incentives of Spending and Tax Entitlements ................... 25
 

Understanding Disability Demographics.......................................................... 29
 

Poverty ............................................................................................................ 30
 

Geography ...................................................................................................... 30
 

Employment and Income................................................................................. 31
 

Diverse Ethnic Backgrounds ........................................................................... 32
 

Social Spending History in the United States .................................................. 32
 

Social Spending and Program Drift ................................................................. 34
 

The Financial Incentives Project...................................................................... 36
 

1.2. Conclusion........................................................................................................ 37
 

CHAPTER 2: RESEARCH FACTORS THAT INFLUENCE THE USE OF FINANCIAL 

INCENTIVES: A REVIEW OF WHAT IS WORKING AND WHAT NEEDS TO 

CHANGE FOR PEOPLE WITH DISABILITIES ACCESSING 

FINANCIAL INCENTIVES ............................................................................................ 39
 

2.1. Context for Review ........................................................................................... 39
 

2.2. Review of the Literature.................................................................................... 39
 

2A – Education................................................................................................ 39
 

2B – Employment............................................................................................ 51
 

2C – Transportation......................................................................................... 61
 

2D – Health Care and Long-Term Services and Supports .............................. 73
 

2E – Income Maintenance and Asset Development........................................ 86
 

2F – Housing ................................................................................................ 106
 

2.3. Conclusion...................................................................................................... 119
 

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CHAPTER 3: RESEARCH OF PROMISING STATE INNOVATIONS........................ 121
 

Introduction ............................................................................................................ 121
 

3.1. Louisiana State Innovation ............................................................................. 123
 

3.2. Missouri State Innovation ............................................................................... 124
 

3.3. Wisconsin State Innovation ............................................................................ 124
 

3.4. Maryland State Innovation.............................................................................. 125
 

3.5. Kentucky State Innovation.............................................................................. 126
 

3.6. Washington State Innovation.......................................................................... 127
 

3.7. Conclusions.................................................................................................... 128
 

CHAPTER 4: A NEW FINANCIAL INCENTIVE FRAMEWORK FOR INDIVIDUALS 

WITH DISABILITIES: A REVIEW OF THE PROPOSED FRAMEWORK, 

APPLICATION TO CASE STUDIES, AND COST-BENEFIT ANALYSIS .................. 131
 

4.1. Introduction to a Conceptual Framework........................................................ 131
 

Seven Key Findings Pertaining to the Proposed Conceptual Framework ..... 131
 

4.2. Principles for a 21st Century Conceptual Framework: Policies 

Optimizing Workers’ Economic Reach (POWER).......................................... 132
 

Financial Incentives Principles ...................................................................... 133
 

Financial Incentives Core Strategies ............................................................. 134
 

4.3. Application of the POWER Framework to Case Studies ................................ 144
 

Case Study 1: Mary: SSI Recipient Attempting to Enter the Workforce ........ 144
 

Case Study 2: Melissa: Working-Age Adult Acquires Disability and 

Starts Her Own Business....................................................................... 156
 

Case Study 3: Parents Raising a Child with Significant Disabilities: 

James, a Teenager................................................................................ 168
 

Case Study 4: Moira: Young Adult with a Disability and 

Not on Public Benefits............................................................................ 170
 

4.4. Cost-Benefit Analysis for the Proposed POWER Framework......................... 176
 

Methodology.................................................................................................. 177
 

Data Sources and Assumptions .................................................................... 178
 

Benefits, Earnings, and Tax Revenue Estimates .......................................... 183
 

Use of Cost-Benefit Analysis in the Regulatory Arena: 

Environmental Regulation...................................................................... 197
 

Application of Cost-Benefit Analyses to Disability Policy Initiatives ............... 200
 

Lessons for Application of Cost-Benefit Analysis to Disability Issues............ 203
 

CHAPTE-R 5: SUMMARY OF FINDINGS AND RECOMMENDATIONS................... 205
 

5.1. Summary of Key Findings on Financial Incentives ......................................... 208
 

5.2 Summary of Major Recommendations According to Federal Leadership....... 210
 

APPENDIX: MISSION OF THE NATIONAL COUNCIL ON DISABILITY................... 215
 

ENDNOTES ................................................................................................................ 219
 

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Executive Summary 

For over half a million people with disabilities, the specific reason they 

never leave home is that they cannot get the transportation they 

need;1

 the current federal regulations force adults with significant 

disabilities to remain in a poverty state.2 

Background 

Limited access to money is one of the most serious problems facing Americans with 

disabilities, according to a recent National Organization on Disability/Harris survey.3

 The 

Federal Government spends large amounts on behalf of people with disabilities in terms 

of health care, education, vocational rehabilitation (VR), transportation, housing, and in 

other areas, whether sources are direct, indirect, or community based (i.e., through 

specialized services, resources, or environmental access). Yet, the knowledge base is 

small regarding the extent, costs, utilization, or impact of these incentives, financial or 

otherwise, on the everyday lives of people with disabilities. 

As disability policy stands today, a child with significant disabilities born in the United 

States in 2007 has little chance of gaining access to assets and escaping poverty, 

despite advances in health care and technology. In part, a major reason for this 

conclusion is the all-or-nothing dichotomy of public policy that continues to view 

disability as the inability to work and that provides needed public assistance only if one 

remains poor and completely dependent on government help. More than 30 years after 

the creation of the federal mandate for a free, appropriate public education for children 

and youth with disabilities, each new generation of parents has higher expectations. 

Parents envision their son or daughter with a disability having a quality of life as an adult 

anchored by job satisfaction, independent living, and the benefits of full participation in 

the economic mainstream. This National Council on Disability (NCD) report, The State 

of 21st Century Financial Incentives for Americans with Disabilities, recognizes 

challenges to meeting such expectations. Without a redesign of public policy, the 

potential for Americans with disabilities to become full citizens with the same access to 

the economic mainstream as Americans without disabilities cannot and will not become 

7
 
a reality. The redesign must create policy that consistently supports individual objectives 

to advance self-sufficiency and economic independence. This NCD research is the third 

in a series (two earlier reports were on Social Security issues4

 and employment 

matters5) building upon prior NCD work on livable communities. This report is part of an 

effort, under the umbrella of inclusive livable communities, to guide future policy and 

practice to advance choice, full community participation, and economic independence 

for people with disabilities. 

Research Framework 

This report introduces a new vocabulary as a way to define financial incentives, track 

their major outcome and impact, and apply this methodology to the study of a number of 

key incentives. It also provides research findings from a review of the literature in six 

selected domains: education, employment, transportation, health care and long-term 

services and supports, income maintenance and asset development, and housing. In 

addition, this report analyzes research on promising state innovations and introduces a 

new framework based on four case studies presented with a cost-benefit analysis. The 

report comprises five chapters. 

Chapter 1 defines the concept of financial incentives for the purpose of this study as an 

intended benefit conferred by Federal Government programs that provide social 

transfers, usually of cash or in-kind services, designed to change behavior, increase 

cash flow, supplement services, and support—but rarely enhance or create—assets. 

This definition differs from the traditional understanding of financial incentives, which 

implies a benefit intended to enhance profit. 

Built upon the aforementioned background information, chapter 1 introduces a topology 

that draws the strands of policy and experience more tightly together to parlay what was 

known about the six selected domains and other spheres of public policy into a coherent 

whole. The proposed topology divides disability-related financial incentives into three 

broad categories: (1) direct funds, which are provided directly to individuals with a 

disability; (2) indirect funds, which are provided to third parties for use in connection with 

8
 
or on behalf of people with disabilities; and (3) community-based funds, which are used 

for developing various kinds of infrastructure and resources that have a specific purpose 

or significant effect on the lives of people with disabilities. 

Chapter 2 presents a review of the literature conducted and condensed into major 

findings in the six life domains—education, employment, transportation, health care and 

long-term services and supports, income maintenance and asset development, and 

housing. Ten years ago, NCD also reported data like the 17 key findings in this 

chapter.6

 The findings have two purposes: to describe barriers, utilization, impact, and 

outcomes of financial incentives; and to add fresh insight and propose a framework for 

revising federal programs incorporating social transfer benefits (such as increased cash 

flow, supplemental services, and supports) that affect the lives of people with 

disabilities. 

Chapter 3 provides the results from research on promising state innovations (direct, 

indirect, or community based) in Louisiana, Missouri, Wisconsin, Maryland, Kentucky, 

and Washington. The selection of each program was based on potential for state- or 

federal-level replication, diverse strategies, and potential to affect people with 

disabilities. Each selected program addressed a different element of the challenges to 

facilitate a more advanced social and economic status for individuals with disabilities 

and their families. Each selected state has adopted policy that may exist in other states 

but has program elements that are unique in terms of public and private participation 

and the leveraging of resources to compound the benefits to the individual and family, 

the community, and the state. 

Chapter 4 sets forth a conceptual framework based on the research findings from the 

first three chapters, a direction for making changes and providing supports to improve 

the daily living and economic status of people with disabilities. Fundamental to 

development of the conceptual framework used in this study is a set of financial 

incentive principles linked to four proposed core strategies for action. The principles are 

seeing financial incentives as a tool linked to Americans with Disabilities Act (ADA) 

goals, making choices available to all people with disabilities, aiming for full community 

9
 
participation, and striving toward universal impact that can boost involvement in livable 

communities for all citizens. Grounded in the identified principles, the conceptual 

framework, called Policies Optimizing Workers’ Economic Reach (POWER), is a 

combination of strategies that modify existing policies and enhance direct, indirect, and 

community-based incentives as a comprehensive blueprint for change. The POWER 

strategies propose modification to federal entitlement policy, modification to tax policy, 

enhancement of direct asset-building options, and enhancement of indirect, communitybased, and employer incentives, including new and expanded tax deductions. The 

POWER strategies in chapter 4 involve individual behavioral and Federal Governmentlevel changes that also will affect the major life domains by encouraging work, income 

preservation, asset building, and awareness raising related to improved access to 

health care, transportation, continuing education, and affordable and accessible 

housing, including home ownership. 

Finally, chapter 5 recapitulates the key findings pertaining to financial incentives and the 

NCD core recommendations for action at the federal level. The findings and 

recommendations are as follows. 

Summary of NCD’s Key Findings on Financial Incentives 

1. Financial incentives are complex and need explanations pertaining to 

definition and type. 

There is no simple definition of financial incentives. While some operational definitions 

might involve disability-based, case, in-kind, or other funding streams as categories of 

financial incentives, this report uses three overarching categories—direct, indirect, and 

community based—according to the topology developed for this research. Efforts to 

gain an understanding of these variations and to account for as many of them as 

possible will contribute to making this research meaningful. 

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2. Financial incentives are underutilized. 

Financial incentives in tax and social policy are multifaceted, used in limited fashion, 

and not well communicated to the public. Examples include limited use of a true assetbuilding and tax-filing opportunity for employed recipients of public benefits and a tax 

deduction for individuals who itemize income tax returns. 

3. Individuals with and without disabilities are denied the opportunity for 

savings and asset growth because of the means testing required to remain 

eligible for many public benefits. 

Well-intentioned public programs sometimes reflect disconnections that reduce their 

effectiveness and put the programs at cross-purposes. The disconnections also render 

a negative impact likely. For example, means-tested eligibility for public benefits 

entitlements (Social Security, Medicaid) denies many individuals with disabilities the 

opportunity to preserve income, save, and build assets. 

4. Low-income wage earners do not benefit from many federal tax 

provisions that promote savings and asset development. 

Financial incentives in tax policy that promote asset building are out of reach to lowincome wage earners who do not itemize. 

5. Direct, indirect, and community-based financial incentives have an 

important impact on people with disabilities and their families. 

Financial incentives across the major life domains (e.g., education, employment, 

transportation, health care and long-term services and supports, income maintenance 

and asset development, and housing) affect people. The impact can be direct, indirect, 

or through community-based entities. 

6. There are no one-size-fits-all financial incentives strategies. 

Americans with disabilities will benefit from existing and new financial incentives 

strategies only through targeted and customized outreach that communicates 

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information, training, and technical assistance in formats that are accessible, 

understandable, and relevant for all ranges of ability. 

7. Financial incentives funding strategies are interrelated. 

None of the financial incentives funding strategies studied for this report operates in 

isolation from the others. One cannot understand housing patterns in the United States 

unless one understands the tax code, the mortgage industry, and the funding for 

automobiles versus mass transit. Similarly, one cannot understand the economic status 

of Americans generally, and of people with disabilities in particular, without reference to 

the educational system of the United States. No single financial incentive directly or 

indirectly can produce a better economic future for individuals with disabilities. Many 

incentives overlap in their goals and together offer a combined and cumulative response 

to the challenges of poverty for Americans with and without disabilities. 

8. Opportunities that encourage and support savings and asset acquisition 

are limited and need to be expanded for people with low incomes who have 

disabilities. 

A meaningful definition of assets in the modern world must go beyond tangible 

possessions such as bank accounts, investments, and real estate. The definition also 

must include resources such as education and health, as well as networked 

connections such as access to expertise and influence. 

The realities of cash flow in the sense of income stream, on the one hand, and assets in 

the sense of tangible and intangible goods, resources, and other types of assets, on the 

other hand, are very different things. Disability-related programs, ranging from entrylevel employment to cash payments in lieu of employment, have been predicated on a 

belief in cash flow/income stream. By contrast, most tax-based policy is predicated on 

cash payments in lieu of employment, in that the policy intentions and effect are to 

increase the size and leverage value of existing assets, particularly capital assets, 

rather than to encourage initial asset acquisition. 

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9. Disability remains an all-or-nothing proposition based on eligibility 

determination and disability definition. 

In public policy, as articulated in the definitions and rules governing almost every law 

and program, disability is an all-or-nothing proposition. Certainly, this is clearest in the 

financial support programs. However, even under laws like the Americans with 

Disabilities Act (ADA), which adopted an enlightened attitude about the ultimate social 

meaning of disability, the notion of disability has been converted into a largely 

jurisdictional issue. If a person is determined eligible for public benefits based on a 

particular definition of disability, then he or she receives benefits A and B. If that person 

is determined ineligible for public benefits based on a particular definition of disability, 

then he or she does not receive benefits A and B. Accordingly, under most program 

models, the existence of disability is correlated with need—need for income support, 

need for services, need for exemption from otherwise applicable requirements, or need 

for supervision and control. 

10. Several financial incentives need modification to provide parity for 

people with disabilities. 

Some financial incentives incorporate a universal approach and offer benefit to a large 

class of individuals with and without disabilities. Some financial incentives require 

modification to provide parity for people with disabilities comparable to their peers 

without disabilities. Comparable opportunities should be based on consideration of the 

extra gateway costs needed to level the playing field for a person with a disability 

because of extra health care costs, assistive technology needs, or other services. 

11. A consensus model is unavailable for evaluating the impact of financial 

incentives. 

There are no adequate or consensus models for evaluating the impact of most financial 

incentives. Even when researchers limit their inquiry to the expenditures and programs 

that have people with disabilities as their conscious, intended, and sole focus, the 

absence of suitable baseline data compounds the lack of evaluative criteria. For a 

variety of reasons, including the small size of cohorts and the lack of comparability in 

13
 
the life circumstances of individuals with disabilities, standard research methodologies 

are insufficient, and observational research fails to overcome the ideological fault lines 

that run through disability policy. 

12. Gateway costs of living with a disability are more expensive than costs 

of living without a disability. 

Function for function (e.g., getting back and forth to work, obtaining education, and 

giving informed consent to a medical procedure), living with a disability costs individuals 

and families more than living without one. This is one reason that disability costs must 

be factored into generic financial incentives in order to portray equal value for people 

with and without disabilities. The gateway costs of living with a disability are unique, 

often high, and rarely taken into account in the design of public programs or the federal 

tax code. 

13. Disability programs are weighted heavily toward the use of resources 

for determination of status and assessment of eligibility. 

Most federal disability programs are weighted heavily and unduly toward the 

determination of status and the assessment of eligibility. Most ADA court decisions 

involve the threshold question of whether the individual has a disability. From the huge 

investment historically made by vocational rehabilitation in determining eligibility and 

need for services to the role of objective test dividing lines in determining levels of 

intellectual disability (often to the detriment of resources for providing the necessary 

services), programs are concerned as much with ferreting out improper benefit as with 

helping people who could benefit. 

14. The conversion of federal financial disincentives to incentives is 

possible. 

The operation of needs-based program limits across a broad range of federal programs 

regarding what beneficiaries can receive creates a major disincentive to work, 

entrepreneurship, or other asset-accumulation activities. This report proposes that, 

through the development of the Policies Optimizing Workers’ Economic Reach 

14
 
 

(POWER) framework, needs-based programs could be converted experimentally from 

disincentives to incentives that help people gain employment and self-sufficiency. 

15. Public accounting practices, especially the practices related to federal 

savings across programs and services, need review. 

Existing public accounting practices do not readily permit the computation of projected 

long-term savings into federal budgeting and appropriations decisions that cut across 

program authorities. Strictly speaking, the Congressional Budget Office (CBO) legally 

would not be permitted to take into account the lifetime savings to the Supplemental 

Security Income (SSI) Program envisioned by the POWER framework in “scoring” the 

program, which cuts across multiple funding authorities. 

16. Definite cost benefits are found when the framework and strategies 

introduced in this report are applied to three of the case studies presented. 

Estimates of disability and health coverage benefits and tax revenue associated with the 

POWER framework that allow for changes in the treatment of disability benefits and 

other financial incentives demonstrate positive cost-benefits over total lifetime earnings. 

17. Cost benefits for Case Study 4 are unknown because scientifically 

reviewed, methodologically valid studies for this purpose are lacking. 

The necessary data were unavailable to support policies and programmatic proposals 

that attempt to address barriers to employment and quality of life for people with 

disabilities. 

For the Federal Government to invigorate programs and policies with financial 

incentives that tap into the potential of people with disabilities, it is necessary to assess 

the economic impacts and measure the behavioral response to policies that seek to 

influence individual behavior and decisions. Methodologically sound cost-benefit 

analyses in the social policy arena require significant time and resources to conduct. 

Observing the complete impact can take years. Research and implementation efforts 

used to assess cost-benefits in the arena of public policy encounter a number of 

15
 
challenges at the federal level. The findings of this report also underscore the need for 

an overhaul of federally funded financial incentives in ways that modify programs and 

expand benefits for people with disabilities. Such is the intent of the POWER 

framework. Indeed, the unveiling and effective implementation of the framework also 

can unleash literal power yet unseen as a 21st century movement supporting more 

people with disabilities than in the past—lifting people from the roles of poverty to the 

ranks of empowerment. 

Summary of NCD’s Major Public Policy Recommendations on 

Financial Incentives 

Disability and its role in the mainstream economy, despite the efforts of ADA since 

1990, still are not considered a “natural part of the human experience.” The potential for 

individuals with disabilities to be integrated fully into the workforce and thus into the 

formal U.S. economy is not understood fully by policymakers or private sector business. 

This report, The State of 21st Century Financial Incentives for Americans with 

Disabilities, is part of the evolutionary journey of disability policy in the United States 

and provides a road map for equality of economic rights for people of all abilities 

regardless of race or socioeconomic background. The following recommendations 

provide a new frontier for the next generation of Americans with disabilities—allowing 

them to participate fully in the economy. 

Recommendation 1: NCD recommends that the Administration create a federal 

interagency workgroup on financial incentives for people with disabilities and 

their families; develop an Executive order calling for all agencies to identify 

policy barriers; and create a time-limited body to facilitate a consistent, 

coordinated, comprehensive, and consumer-friendly approach to advance 

opportunities for full community participation and economic self-sufficiency. 

Implementation Lead: The President and Cabinet members should implement this 

recommendation. The federal agency lead should be the director of the Office on 

Disability, Department of Health and Human Services. Other interagency workgroup 

16
 
members should include the departments of Labor, Housing and Urban Development 

(HUD), Transportation, Education, and Treasury, the Social Security Administration 

(SSA), and representatives from the Department of Health and Human Services 

Centers for Medicare and Medicaid Services. 

NCD urges the President to issue a new Executive order that charges the full range of 

federal agencies with identification of policy barriers and facilitation of a consistent, 

coordinated, comprehensive, and consumer-friendly approach to financial incentives. 

The intent is to advance full community participation and economic self-sufficiency for 

people with disabilities and their families through financial incentives, both directly and 

through third parties in the public and private sectors. The time-limited workgroup (six 

months) would develop an action plan with recommendations for policy and program 

changes that would accomplish the following: 

•	 Increase consumer choice 

•	 Encourage income preservation and asset building 

•	 Improve interagency coordination 

•	 Reduce and eliminate policy barriers to improved economic status and community 

participation 

•	 Provide incentives for private sector support of community access and participation 

in the economic mainstream 

•	 Adopt universal design principles in housing, transportation, public spaces, and 

public accommodations 

•	 Reduce the connection between disability and poverty in the continued eligibility for 

public benefits 

The secretary of the U.S. Department of Health and Human Services would request the 

director of the Office on Disability to chair the workgroup. The final report to the 

President would include recommendations for policy and program changes not limited 

to changes to the federal tax code or entitlement authority. 

17
 
No single agency or policy solution can produce the comprehensive reforms needed to 

align financial incentives that directly and indirectly will support the range of choices 

people with disabilities desire to be fully productive, independent, and active participants 

in the economic mainstream. The workgroup would bring to the table the array of 

agencies needed to transform policy and practice. 

Recommendation 2: NCD recommends that Congress review, introduce, and 

consider adoption of the POWER framework through changes in federal 

legislation pertaining to Social Security, Medicaid, savings, asset building, and 

the relevant aspects of the federal tax code. 

Implementation Lead: Through the committee chairperson, the Senate Finance 

Committee, with its jurisdiction over the federal tax code and entitlement programs, may 

be the logical starting point for a congressional hearing to clarify the current challenges 

that force people with disabilities to remain poor in order to access minimal public 

benefits. Recommended for additional consideration are the House Committee on Ways 

and Means and the House Committee on Energy and Commerce. 

The multiple components of the POWER framework offer the opportunity to advance a 

consistent agenda for a better economic future for individuals with disabilities and their 

families. 

Recommendation 3: NCD recommends that the Department of Education take 

appropriate actions to expand the knowledge available about the cost-benefit 

outcomes of direct and indirect financial incentives and to advance selfsufficiency for people with disabilities. These actions would include the 

establishment of a new Rehabilitation Research and Training Center (RRTC) on 

Financial Incentives to Advance Self-Sufficiency charged to increase the sparse 

knowledge base. 

Implementation Lead: NCD recommends for leadership the U.S. Department of 

Education, with the involvement of the assistant secretary for the Office of Special 

18
 
Education and Rehabilitative Services and the director for the National Institute on 

Disability and Rehabilitation Research (NIDRR). NCD recommends collaboration with 

the assistant secretary for planning and evaluation, Centers for Medicare and Medicaid 

Services, in the Department of Health and Human Services, and the Social Security 

Administration. 

In collaboration with the agencies identified, NIDRR should establish a new RRTC on 

Financial Incentives to Advance Self-Sufficiency. The RRTC would develop new 

methods and measures to help diverse audiences better understand the impact of 

financial incentives and disincentives across federal agency authorities. These impacts 

are related to community inclusion and economic participation for individuals with 

disabilities and their families. 

The research findings indicate how little is known about the impact of financial 

incentives and disincentives for people with disabilities and their families. New 

knowledge and methodologies designed to clarify the potential impact of direct and 

indirect incentives on people with disabilities and their families are needed. Multiple 

federal agencies listed as lead implementers must refine their research priorities to 

focus much-needed attention on evidence-based financial incentives research. The 

outcomes can help policymakers at each level of government make informed decisions 

about resource allocation to support a better economic future on individual and 

community levels for people with disabilities. 

Recommendation 4: NCD recommends that key federal agencies (see below) fund 

demonstration projects that improve capacity for employer and community use of 

financial incentives to advance real economic impact. This work should be 

included in the written plans and annual reports to Congress of each agency. 

Implementation Lead: Senior-level leaders with budget authority should account for 

effective implementation. The collaboration should occur through HUD as it works with 

the departments of Labor, Commerce, Transportation, Education, and Treasury, and the 

Internal Revenue Service (IRS). 

19
 
The research findings of this report document the potential benefits of leveraging 

employer and community interest to advance self-sufficiency and integration of people 

with disabilities and their families. NCD recommends using financial incentives to 

capture employer and housing developer interests that promote positive economic 

impact at individual and community levels, and providing data where not enough is 

known about the cost benefit of indirect financial incentives to advance self-sufficiency 

and economic status of individuals with disabilities. 

A series of demonstration projects coordinated among HUD, the departments of Labor, 

Commerce, Transportation, Education, and Treasury, and the IRS could evaluate the 

benefits of a set of financial incentives that encourage affordable and accessible 

housing design. For example, the evaluative research could study Low-Income Housing 

Tax Credits, job creation with appropriate supports using New Markets Tax Credits, and 

employer support of the cost of transportation, continuing education, and rent subsidies 

leading to home ownership based on expanded tax benefits. 

These projects would allow for community development of diverse supports with public 

and private sector collaboration. These supports stimulated by financial incentives 

would be evaluated for economic impact and cost-benefit, which has not been studied 

previously. The results will support potential policy change and new approaches to the 

much-needed improvement of interagency collaboration at federal, state, and local 

levels. 

Recommendation 5: NCD recommends the establishment of a federally funded 

joint education effort to expand and improve financial education and outreach to 

children and adults with disabilities across economic levels and types of abilities. 

Implementation Lead: At least five federal entities should form a partnership to lead 

implementation of this recommendation. The initial partnership should include the 

Federal Deposit Insurance Corporation, IRS, the departments of Labor and Education, 

and the Social Security Administration. 

20
 
Research findings documented the importance of developing financial literacy in 

children and adults with disabilities. Financial incentives require knowledge and basic 

understanding of money management, credit, and the importance of savings and asset 

accumulation. The creation of individual budgets, access and use of favorable tax 

provisions, and the selection of one or more asset-building strategies require expanded 

emphasis on outreach, education, and training for the targeted population. 

The IRS has been expanding its outreach to low-income workers with disabilities to 

educate and inform eligible individuals about the benefits of the Earned Income Tax 

Credit. The Federal Deposit Insurance Corporation recently produced Money Smart, a 

financial education curriculum, in Braille. However more education and increased public 

awareness are needed. They should include development and dissemination of 

consumer-friendly information through efforts involving the Social Security 

Administration (SSA) and the Department of Labor (DOL) and Department of Education. 

The education should begin in elementary school and continue in multiple venues that 

support adults with disabilities in order to improve the skills that empower and support 

income preservation and asset building. The purpose is to advance real economic 

impact using direct and indirect financial incentives. 

SSA and DOL, respectively, should train employees in the SSA-funded Work Incentives 

Planning and Assistance (WIPA) Program and the DOL-funded Disability Program 

Navigator Program on how to access the full spectrum of financial incentives that could 

benefit people with disabilities. Ongoing technical assistance should be available to help 

support the use of knowledge and to enhance access by people with disabilities. 

Outcomes from implementation of these recommendations could turn financial 

disincentives into incentives. Bold new approaches and directions hold the hope of 

breaking existing patterns and providing a way to eliminate economic and other 

disparities between people with disabilities and those without disabilities. This report 

makes detailed, far-reaching proposals for conducting the necessary demonstrations, 

as highlighted in the five recommendations above and discussed more specifically in 

the full report. 

21
 
22
 
Chapter 1: The Topology of Financial Incentives for 

Americans with Disabilities: A Review of the Current Federal 

Experience in Providing Direct, Indirect, and Communitybased Financial Incentives to Americans with Disabilities 

An individual with a disability is three to four times more likely to live in 

poverty as an individual without a disability.7 

1.1. Introduction 

The federal and state governments and the nonprofit sector spend enormous sums on 

people with disabilities and in connection with disability-related issues—more than $300 

billion annually. Determining the exact amount of such expenditures is difficult. 

To be fully meaningful, an effort for aggregate fiscal or expenditure data collection must 

accomplish three goals. First, it must create expenditure and outcome categories that 

are meaningful to the people receiving, spending, or benefiting from the funds, and that 

resonate with the public’s and legislators’ understanding of the issues. Second, it must 

both allow for comparative assessments of investment in various options and permit 

analysis of the impact of increases or decreases in one area of spending upon costs in 

other areas. Third, it must allow for the creation of outcome criteria that are measurable 

and against which difficult value judgments can be made nonpolitically and 

nonideologically. 

Accomplishing these goals is no easy task. Appropriate baseline data do not exist; 

prospective information-collection procedures are not in place; consensus has yet to 

form around the definition of expenditure categories that make most sense; outcome 

measures are still in their infancy; and outcome criteria are subject to innumerable 

political, economic, and philosophical cross-currents. A building process likely of several 

years’ duration must be put in place before the key questions can be asked and 

answered, and before evidence-based policy and resource allocation decisions truly can 

be made. 

23
 
Current Context 

For a number of years, NCD has published groundbreaking studies that assess the 

status and impact of public policy in major areas of life, such as education, housing, 

health care, long-term services and supports, employment, and transportation. Taken 

together, these and other studies present a broad panorama of government efforts, 

societal conditions, and program strengths and failures. Consistent with a longestablished value framework, a review of these studies as they have been published (or 

updated) provides an unequaled overview of the structure and nature of disability policy, 

and of the way people with disabilities live their lives in this country. 

The strands of policy and experience need to be drawn together more tightly to parlay 

into a coherent whole what is known about education, housing, health care, long-term 

services and supports, employment, transportation, and other spheres. A common 

vocabulary and topology allows assessment of the six areas in combination and also 

allows us to compare, contrast, and integrate findings effectively, and to study overlaps 

and interconnections with new flexibility, facility, and confidence. Issues of definition and 

questions of categorization are certain to arise. Therefore, while extensive details of the 

topology are available on the NCD Web site (www.ncd.gov), definitions essential to this 

research report and information about an economic and demographic context are 

presented below. 

Defining Financial Incentives 

Broadly, financial incentives are defined as benefits that confer economic well-being 

and opportunity. Webster’s Unabridged Dictionary defines an incentive as something 

that promotes or incites greater productivity.8

 The economist Levitt describes incentives 

as “the cornerstone of modern life and that the ability to understand them is the key to 

solving just about any riddle.”9

 Levitt and Dubner write that incentives come in “three 

flavors, economic, social and moral,” but rarely does an incentive represent all three.10 

The most common definition of a financial incentive is a benefit that is intended to 

enhance profit. Financial incentives drive the marketplace for pharmaceuticals, 

insurance companies, health care, and technology industries. The other definition of 

24
 
financial incentives and the one used in this study is the intended benefit conferred by 

Federal Government programs that provide social transfers, usually of cash or in-kind 

services, designed to change behavior, increase cash flow, and supplement services 

and supports, but that rarely enhance or create assets. 

Disincentives also play a large role in understanding financial incentives. An example is 

the current debate about the development of an AIDS vaccine.11 While the Federal 

Government and private industry both are investing resources in research for a vaccine, 

none has been found.12 The problem probably is not a lack of resources from the public 

or private sector but a competing “disincentive” created by profit margins already being 

realized from existing AIDS drugs. Arguably, the profit margins may be too great to 

leverage the relative profitability of a vaccine, although inevitably a vaccine will be 

discovered and marketed for profit. 

Disincentives are rife in disability policy as well. Selected disability policies are at odds 

with advancing independence and productivity. A good example of the consequences of 

conflicting policies is the chronic unemployment experienced by individuals with 

disabilities. Failure is all but guaranteed when an individual with a disability attempts to 

work full time while receiving federal benefits. Federal eligibility and program rules do 

not complement each other across federal disability programs, so the incentives from 

one federal program turn into disincentives when interfaced with another program. 

Misdirected policy and funding of programs that promote “work incentives” that are 

really “disincentives” cannot in truth produce outcomes that include employment. As this 

review will demonstrate, current disability policy does not have unified goals, 

measurable program outcomes, and clear funding expectations that are universal 

across federal agencies and that promote economic independence and self-sufficiency. 

Understanding the Incentives of Spending and Tax Entitlements 

The United States enters the 21st century ill prepared to finance its current spending 

and tax entitlements that benefit low-, middle-, and upper-income Americans with and 

without disabilities.13 Federal spending for all entitlements, whether mandatory or 

25
 
 

discretionary, whether means-tested or not, for retirements, for safety net programs, 

and for tax deductions, is rising and unsustainable.14 Rising costs for health care 

provided by Medicaid and Medicare are at the center of the problem.15 Actuaries are 

reluctant to predict future spending scenarios given the uncertainties of future health 

care costs that continue to rise yearly at double-digit rates. Even though Medicaid 

growth rates have slowed in the past few years, Medicaid accounts for 21 percent of 

total state budgets.16 The comptroller general of the Government Accountability Office 

wrote that incremental reform for entitlement spending is no longer good enough to fix 

the problem.17 

One way to define a problem is to measure it. How a problem is 

measured is more than a rudimentary process of tallying or counting: 

it is a conscious act of inclusion or exclusion. 

—Deborah Stone, The Policy Paradox, 1997, p. 164 

Recent research on federal disability programs highlights the costs of more than 200 

federal disability programs but is silent about the benefits and impact for 34 million 

beneficiaries with disabilities.18 What is known is the Federal Government is spending 

more than $245 billion a year for programs dedicated to individuals with disabilities— 

half of which is for health care programs such as Medicaid and Medicare.19 Evidencebased research to date is thin and does not correlate the impact and costs with 

outcomes clearly and consistently across the wide array of federal programs. Without 

evidence of the impact and outcomes on the lives of individuals with disabilities, 

researchers and policymakers do not know if too much, too little, or just the right amount 

is being spent. Congress and the White House have received research that 

demonstrates the “high risk” and “high costs” of current disability program spending, but 

have not been given research on the “benefits” and “outcomes” for individuals with 

disabilities and their families or for American society as a whole. Congress cannot 

answer these questions fully without cost-benefit research. Federal disability spending 

from a market perspective could be paying for itself because of the overall “benefit” and 

“cost savings” it confers. Certainly, life for the one out of five people in the general 

population (or more than 50 million Americans with disabilities) would look quite 

different given no federal spending or tax entitlements on their behalf. 

26
 
While the value of the emerging disability industry from a market perspective is a 

different question not addressed in this review, it is worth mentioning. Whether growth in 

the private disability market is correlated to growth in federal disability legislation is 

unclear. However, the disability market is here to stay and will expand and produce 

profits as the population ages and prevalence of disabilities rises. 

As this review begins, there are two camps of support for federal financial incentives, 

each with different goals. On the one hand is the support for financial incentives that are 

intended to enhance and increase wealth through tax deductions, such as pension or 

health insurance contributions paid by employers. Primarily, these incentives target 

Americans under age 65.20 On the other hand there is support for financial incentives 

that are intended to supplement or provide cash or in-kind services to a population of 

Americans both over and under age 65, with or without disabilities, who often are poor. 

Unlike the tax incentives, the spending or safety net incentives, given their rising costs 

and increasing roles, are at the center of much federal agency and congressional 

concern. There is much discussion about the costs of these incentives but little 

discussion about what reforms or changes are necessary to ensure sustainable and 

equitable policy well into the 21st century. This chapter will briefly review definitions of 

spending and tax entitlements as well as their economic and historical context to clarify 

their role in this financial incentive research. 

For the purpose of this study, financial incentives are defined as the outcome conferred, 

whether cash or in-kind, on individuals with disabilities, whether positively or negatively 

impacted by government spending and tax entitlements. Eligibility for federal spending 

and tax entitlements is broad for both individuals with and without disabilities: One can 

be a member of a particular group, like a veteran or senior or a homeowner; or one can 

earn a benefit through payroll deductions such as Social Security pension or Social 

Security Disability Insurance. Some entitlements, such as Medicaid, are means-tested 

and require income eligibility tests, versus a program like Medicare whose primary 

entrance criterion is age. 

27
 
 

Some entitlements, such as Social Security and Medicare, are formula based or have 

dedicated revenue streams attached to them that pay benefits without an annual 

appropriation by Congress.21,22 Historically, this authority was granted to “reduce the 

uncertainty of the annual funding cycle through which programs traditionally pass.”23 

Other entitlements, such as Medicaid, Supplemental Security Income, welfare, and 

other safety net programs, require yearly appropriations from Congress to pay benefits 

in accordance with underlying statutes. The House and Senate budget committees 

define entitlements as a combination of “any federal outlay that either requires no 

annual appropriation by Congress or must be appropriated by Congress according to 

the terms of some underlying statute or program legislation.”24 

In addition to the traditional spending entitlements for retirement programs, safety net 

programs, and health care, there are tax entitlements that confer benefits on individuals 

through the tax code and allow for special deductions and credits.25 For example, to a 

homeowner the tax benefit allows deducting mortgage interest; to a builder the tax 

benefit means receiving tax credits for targeting housing units for individuals with 

disabilities; to low-income individuals the tax benefit could mean receipt of the Earned 

Income Tax Credit or participation in a matched savings account; and to an employer 

the tax benefit could mean tax credits for providing pension and health care 

contributions to employees. 

AARP’s policy research division found that “during times of recession entitlement 

spending increases as a share of the GDP [gross domestic product] and declines as a 

share during expansions” and that different categories of entitlements experience 

different growth patterns.26 In the past 15 years the only spending entitlement that has 

increased and that is projected to increase as a share of the economy in the next 10 

years is health care or Medicare and Medicaid. Retirement and safety net programs 

(including SSI, food stamps, social services, and unemployment compensation, to name 

a few) declined by 2.4 percent of the GDP between 1983 and 2001 and are projected to 

decline by 0.3 percent of the GDP by 2021. Health entitlements (Medicare and 

28
 
Medicaid) increased by 1.5 percent of GDP for the same time period and are expected 

to reach 2.5 percent by 2012.27 

AARP researchers found that more than 50 percent of spending entitlements, for the 

population ages 65 and over, go to household units whose annual incomes are below 

$30,000.28 On the other hand, 72 percent of tax entitlements (mortgage interest, child 

tax credit, untaxed Social Security, Earned Income Tax Credit, child care credit, 

charitable contributions, savings and loan income, property tax, real estate tax, and 

medical expenses) go to individuals making over $50,000 and only 22 percent go to 

people making under $30,000. The Earned Income Tax Credit is an exception because 

it is “both a spending entitlement and tax entitlement (because it reduces taxes but also 

results in cash benefits) and if it were excluded more than 82 percent of the tax benefits 

would flow to people with incomes above $50,000.”29 Unlike spending entitlements that 

benefit mainly individuals over age 65, tax entitlements benefit mainly individuals under 

age 65.30 If 82 percent of tax benefits go, not surprisingly, to people with income, then it 

follows that spending programs, to the extent they exist to help the less wealthy, should 

be equally skewed to the poor and individuals with disabilities. 

Understanding Disability Demographics 

The world’s population quadrupled in the 20th century and is predicted to grow by 50 

percent by the end of the 21st century.31 In less than a hundred years, life expectancy in 

the United States increased 30 years, with the fastest-growing age group now in their 

eighties. Along with this unprecedented population growth is the fact that the 

industrialized countries, with the United States in the lead, account for only 20 percent 

of the world’s population but produce about 80 percent of the gross world product.32 As 

the industrialized world ages, it is projected that its productivity will decline as it is forced 

to allocate resources to health care and pensions.33 A number of trends in the United 

States will require significant changes in American social and tax policy, such as the 

reduced number of workers per retiree; reduced fertility rates; the growing challenges of 

the health care workforce; and the low national savings rate. Add to these changes the 

increase of diverse racial and ethnic groups, lack of any national long-term services and 

29
 
 

 

supports policy, rising health care costs, growing numbers of underinsured and 

uninsured Americans, the 25 percent increase in disability since 1990, and the projected 

doubling in the number of elders over the next decade.34 

Poverty 

There were 54 million Americans reporting a disability in 2004; over 20 million of those 

represent families who report having at least one member with a disability.35 Thirteen 

percent of families report having at least one member with a disability, and 25.7 percent 

report having two members with a disability. 

In 2000, 8.7 million people with disabilities were poor, with 17.6 percent age 5 and 

older, compared to 10.6 percent for people without disabilities. Twenty-five percent of 

American children with disabilities (ages 5 to 15) live in poverty compared to 15.7 

percent of children without disabilities. Americans with disabilities between the ages of 

16 and 64 make up the group with the next largest number of people living in poverty, at 

18.8 percent—nearly double the rate for people without disabilities (9.6 percent).36 

Data indicate that the number of all children living in poverty has risen since 2000 to 

17.3 percent, or 12.5 million. Fifty-seven percent of these children live in families 

headed by their mother; 33 percent have no family workers; 33 percent live in families 

with year-round full-time workers; and 26 percent live in families headed by an 

immigrant. The financial incentives that make up the society safety net for children are 

mostly direct (needs-based transfers of cash and noncash benefits) and indirect 

(earnings-based social insurance and tax credits).37 

Geography 

Disability prevalence38 is higher in the South than in the other three regions of the 

United States. Two out of every five people in the South—20.9 percent, or 19.2 million 

people—have a disability, while in the other three regions of the United States one out 

of every five people has a disability. The West is second, with 10.8 million; the Midwest 

is third, with 10.5 million; and the Northeast is last, with 9.5 million people with 

30
 
 

disabilities. For families, disability prevalence is even higher, with 30.8 percent of 

families in the South, or 8.1 million, reporting a member with a disability.39 

Among states, West Virginia has the highest disability rate, with 24.4 percent, followed 

closely by Kentucky (23.7 percent), Arkansas (23.6 percent), Mississippi (23.6 percent), 

and Alabama (23.2 percent). The five states also register higher rates of individual 

disability measures than the rest of the country in sensory (hearing and vision), 

physical, and intellectual disabilities.40 Virginia, Maryland, and Delaware, on the other 

hand, register disability rates significantly below the national rate. The highest disability 

rates were found clustered in the coal-mining areas of Kentucky and West Virginia in 

2000. 

Employment and Income 

Employment favors people without disabilities, with 79.9 percent of working-age men 

between the ages of 16 and 64 employed compared to 60.1 percent of men with a 

disability. Working-age women without disabilities also experience higher employment 

rates of 67.3 percent compared to 51.4 percent for their colleagues with disabilities. The 

employment rates for family householders with disabilities were 53.3 percent, compared 

to 80.7 percent of all family householders.41 

Families with members with a disability had a median income of $39,155, below the 

overall family median income of $50,046 for families without members with a disability. 

The data show that family income changes across disability types. For example, 

families with members with an intellectual disability had a median income of $36,197, 

while families with members with a sensory disability or a physical disability had a 

median income of $36,950. 

Families reporting earnings from wages or salaries in 1999 were 73.1 percent of the 

total for families with members with a disability compared to 84.9 percent for families 

without members with a disability. Families with disabilities were more likely to receive 

31
 
 

income from public programs (42.8 percent received income from Social Security 

compared to 22.5 percent of all families without members with a disability).42 

Diverse Ethnic Backgrounds 

Ethnicity is a strong variable in the poverty and disability mix. Available data indicate 

that an average of 22 percent of African-American, American Indian, and Alaska Native 

families who have members with disabilities live in poverty. The rates are compared to 

8.3 percent of non-Hispanic white families and 12.4 percent of Asian-American, Native 

Hawaiian, and other Pacific Island families.43 Nationally, 28.9 percent of the 72.2 million 

families reported members with a disability. The disability prevalence rate among 

families reporting one or more members with a disability was 38.5 percent for American 

Indian and Alaska Native householders; 35.7 percent (2.9 million) for African-American 

householders; 33.2 percent (2.5 million) for Hispanic householders; 27.1 percent for 

non-Hispanic white householders; and 26.5 percent for Asian-American householders. 

Over the past 30 years, 500,000 to 1 million people have come to the United States 

yearly from other countries. Today, one in 10 Americans is born outside the United 

States, compared to one in 20 just 30 years ago.44 Since the September 11, 2001, 

attacks, the number of people granted legal permanent residence in the United States 

has dropped. For example, the FY 2003 number was fewer than 706,000 (34 percent), 

down from 1.06 million in 2002.45 

Social Spending History in the United States 

For developing countries, the modern age of social spending dawned in the 18th 

century, when less than 1 percent of any one country’s gross national product (GNP) 

was spent on welfare, unemployment, pensions, health, and housing subsidies.46 Today 

in the United States, federal spending on just three social programs, Medicaid, 

Medicare, and Social Security, accounts for 42 percent of all federal outlays—compared 

to 2 percent of federal spending on social programs in 1950 prior to the creation of 

these programs.47 Since the 1950s, the United States’ federal outlays have averaged 20 

percent of the GDP and composition of this spending has changed as well, with 

32
 
 

 

mandatory programs now representing over 50 percent of federal spending compared 

to one-third in the early 1960s.48 

During the time of Adam Smith and Thomas Jefferson, there were practically no social 

programs (education included) for elders, individuals with disabilities, or children except 

for “poor relief.” Although the concept of the government’s taxing its citizens for 

education was discussed, it did not begin until the 19th century in the United States.49 A 

rare exception was the military half-pensions that began during the Revolutionary War 

for veterans permanently disabled by combat-related injuries. It is reported that between 

1880 and 1920, expenditures to provide pensions for aging veterans and veterans with 

disabilities of the Grand Army of the Republic grew to a quarter of federal 

expenditures.50 Spending by towns for individuals who were blind began in the early 

1800s, as did funding for institutions to house individuals with disabilities. 

The United States in FY 2004 reported its largest deficit since the end of World War II at 

$412 billion, representing 3.6 percent of the GDP.51 The Congressional Budget Office 

(CBO) projected the increases that would be needed in the public debt, which results in 

a $2,234 trillion increase52 since 1997 (at the writing of this report the public debt stood 

at more than $9 trillion dollars).53 Mandatory outlays representing over 50 percent of 

federal spending are projected to grow by $339 billion, from $1.385 trillion for FY 2006 

to $1.724 trillion for FY 2010.54 Discretionary outlays were projected to grow by $65 

billion, from $915 billion for 2006 to $980 billion for 2010.55 

The CBO reported that Medicare and Medicaid—the two major health care 

entitlements—consume a growing share of the nation’s economic output, having risen 

from 1.0 percent of GDP in 1970 to 4.2 percent in 2005.56 The CBO provides projections 

and options for slowing spending for both Medicare and Medicaid that involve difficult 

choices and decisions about reductions, whether in the number of beneficiaries served, 

the amount of government support provided, or the types of services provided.57 

Recent findings from a report by NCD on long-term services and supports financing 

showed that there is no long-term services and supports policy for working Americans 

33
 
with disabilities in the United States except for Medicaid, and that new funding 

mechanisms and new policy must be designed to meet the growing needs of individuals 

under age 65 who are working and have disabilities.58 In addition, this report found that 

there are very few data on individuals age 65 and under with lifelong disabilities needing 

personal assistance services, transportation, housing, and services other than the 

functional limitation measurements of activities of daily living and instrumental activities 

of daily living; most research relates to the needs and costs of services for elders. 

Similar to the growth in federal spending over the past 200 years, revenues have grown 

and have fluctuated between 16.1 percent and 20.9 percent of the GDP since 1951.59 

Like the change in spending priorities, the composition of revenues has changed, with 

the major portion coming from social insurance payroll taxes such as Social Security, 

Medicare, unemployment insurance, and retirement programs for federal civilian 

employees, and corporate income taxes and excise taxes decreasing.60 

The growth of social spending over the past 200 years is attributed to aging of the 

population, the rise in average income, and a shift of power and political voice to 

marginal populations (poor) as well as a change in voting rights.61 The United States 

experienced all four conditions in the 20th century as the population and income more 

than doubled, life expectancy increased by 30 years, and the civil rights legislation of 

the 1960s opened the door to voting and disability rights for all Americans. 

Social Spending and Program Drift 

An international study that examined the history of social spending of industrialized 

countries over the past three centuries found that with few exceptions, the distribution 

and redistribution of wealth from “the rich to the poor is least present when and where it 

seems most needed.”62 For example, during the period of 1985–1990, Lindert (2005) 

found that countries that were members of the Organization for Economic Cooperation 

and Development spent 16.3 percent of their GDP for social security or social insurance 

programs, compared to 2.7 percent in developing countries where the need was far 

higher.63 Lindert describes this phenomenon as a “program drift” from “help-the-poor” 

34
 
programs to big, broad social safety nets that give back many benefits to income 

classes that paid the tax originally. 

This “program drift” is evident when one looks at spending and tax entitlements in the 

United States today. The Government Accountability Office (GAO), for example, 

identified a number of federal programs wholly devoted to serving mostly low-income 

individuals with disabilities as “high risk” and calculated the cost conservatively, when 

combined with costs of Medicare and Medicaid, to be over $240 billion.64 The GAO 

surveyed 20 different federal agencies that administer more than 200 disability 

programs (many of which are defined as financial incentives in this research) and found 

that 59 percent of the programs provided indirect support to people with disabilities 

through state grants, while the rest provided direct support to 34 million beneficiaries or 

clients. 

Another study conducted by the Corporation for Enterprise Development, a private 

nonprofit, examined four tax entitlements that benefit homeowners, savers, investors, 

and small-business entrepreneurs. The study estimated that 98 percent of these four 

federal asset-building initiatives totaled $345 billion and benefited individuals and 

households with incomes over $50,000.65 One-third of the assets went to 1 percent of 

Americans who earned over $1 million, and less than 5 percent went to the bottom 60 

percent of taxpayers.66 The top 20 percent with incomes over $81,000 received the 

largest share of tax benefits; the poorest 20 percent of taxpayers received an average 

benefit of $4.24, while 1 percent with incomes $1 million and over netted a benefit of 

$38,107.67 The research found that the “government gives up $642 in revenue for every 

dollar spent on asset-building outlays.”68 

The study did not include asset policies that benefited corporations and included only a 

limited number of policies that benefited individuals. If corporate income tax revenues in 

2004 were $189.4 billion (1.6 percent of GDP), and when combined with state corporate 

tax revenues totaled $225.8 billion (2.1 percent of GDP), one must wonder what the 

benefit amount to corporations would have been if asset policies that benefited 

corporations had been included.69 It is clear that the two entitlements—spending 

35
 
programs viewed mainly as safety net programs and tax spending—provide benefits to 

two very different groups of stakeholders and represent the phenomenon of program 

drift. Although some individuals with disabilities do own homes (less than 44 percent 

and less than 10 percent for people with intellectual disabilities), research shows that 

many do not take advantage of the home mortgage deduction. 

Lindert’s theory of program drift may explain why more than half of federal spending or 

tax entitlements are directed to nonpoor Americans.70 The issue that will face 21st 

century policy analysts will be the struggle to balance market values with social 

values—a dilemma well known to the disability advocacy world. Charlton writes, “It is 

not easy to think about social phenomena in terms of dualities or paradoxes and 

contradictions but reality is complex and contradictory, no matter how much we yearn 

for something simpler.”71 Charlton describes the fundamental paradox facing the 

disability movement as the struggle “to incorporate differences into a strong, unified 

economy while simultaneously differentiating itself in the process.” Martha Minow, a 

Harvard law professor, suggests that the cultural and political focus on identifying 

disability has replicated rather than resolved the conflicting conceptions of individual 

freedom and social meaning.72 It is possible that the focus on the critical issues of 

integration and equal access dominated disability policy over the second half of the 20th 

century and that until now little attention has been paid to the integration and equity 

issues of financial incentives derived from federal spending and tax programs. 

The Financial Incentives Project 

The six subject areas identified for review in this study are education, employment, 

transportation, health care and long-term services and supports, income maintenance 

and asset development, and housing. Chapter 2 addresses these six subject areas and 

identifies and describes key financial incentives that exist in each of them. This chapter 

has established the background to begin formulation of a topology for looking at all 

expenditures, including those expenditures that are defined as incentives. 

36
 
The proposed topology divides disability-related financial incentives into three broad 

categories: incentives involving direct payments (to people with disabilities), indirect 

payments (to third parties for disability-related purposes), and community-based 

expenditures. The community-based category includes services or programs that have 

a direct, intentional, or otherwise significant effect on the lives of people with disabilities 

in some way exceeding or differing from the impact on all other members of the 

community. In each of the six key subject areas, this report identifies and describes 

incentives falling into each of these three categories. 

1.2. Conclusion 

This chapter has introduced and described many of the key financial incentives, such as 

direct, indirect, and community based, to promote the full participation in society of 

people with disabilities. These incentives are grouped in ways that reflect their operation 

in a complex modern society. Some novel concepts have been employed to clarify how 

the incentives operate. 

In attempting to create a flexible framework for understanding the range and impact of 

the incentives that exist today, this chapter lays the groundwork for a new policy 

vocabulary. By creating new categories into which most or all incentives, and for that 

matter disincentives, can be placed, this chapter has sought to create conditions under 

which various approaches, policies, and measures can be effectively compared, and 

through which the relationships among diverse measures, systems, laws, and funding 

streams can be understood integrally. 

Chapter 2 will draw together research findings concerning the effects of these 

incentives, with a view to identifying which are successful and which are not. Chapter 2 

also identifies some of the design features and factors for the proposed conceptual 

framework described in chapter 4. Such factors may have predictive value in 

determining the outcome of a particular incentive. 

37
 
38
 
Chapter 2: Research Factors That Influence the Use of 

Financial Incentives: A Review of What Is Working and What 

Needs to Change for People with Disabilities Accessing 

Financial Incentives 

The economic realities in which economists such as Smith, Richards, 

and Keynes lived are distant worlds away from the one we inhabit at 

the beginning of the 21st century, as indicated in The Next Global 

Stage: Challenges and Opportunities in Our Borderless World. 

(Kenichi Ohmae, 2005, Wharton School Publishing Pearson 

Education, Inc.) 

2.1. Context for Review 

This chapter includes information pertaining to each of the six domains and presents the 

information in terms of an introduction, purpose and method, and findings based on 

available research. With consideration for the limited volume of relevant evidence-based 

research, the information addresses the impact, outcomes, utilization, and challenges of 

financial incentives for individuals with disabilities. 

2.2. Review of the Literature 

2A – Education 

Introduction 

Financial incentives and disincentives have an impact on special education funding and 

practice, whether local, state, tribal, or federal.73 Although substantive, evidence-based 

research exploring special education funding and practice in the United States is limited, 

this review will explore relevant available literature looking at how special education is 

funded in U.S. schools, along with its effectiveness and impact, with an eye toward 

unpacking financial incentives and disincentives as they relate to students with 

disabilities. This review also will look at the effectiveness of special education practice, 

with particular attention to its impact on the representation of students coming from 

39
 
diverse cultural, linguistic, and economic status; students with disabilities in the judicial 

system; and postschool outcomes for special education students. Finally, this review will 

provide recommendations for research, funding, and practice in the broad field of 

special education. 

Purpose and Method 

The purpose of this section is to examine the evidence-based practices that 

demonstrate the impact of education financial incentives on the daily lives of individuals 

with disabilities. The research examines the direct, indirect, and community-based 

impact of education financial incentives. It also looks at whether education financial 

incentives work better for some individuals with disabilities than for others; the gaps in 

access and availability of education financial incentives for individuals with disabilities 

compared to individuals without disabilities; and what policy changes are needed to 

expand use of and participation in education financial incentives for individuals with 

disabilities. The findings from this section will be used to inform the recommendations 

for any changes or reform that will include a framework for congressional, legislative, 

and executive-level involvement. 

2A:1 – The Individuals with Disabilities Education Act (IDEA) 

Although the Americans with Disabilities Act of 1990 and Section 504 of the 

Rehabilitation Act of 1973 have broad application in schools, it is really the federal 

special education law passed in the mid-1970s that has had the most impact on 

students with disabilities.74 Before the early 1970s, students with disabilities in the 

United States either received very poor educational services or were prohibited from 

attending school altogether. Largely as the result of advocacy on the part of parents, 

Congress first codified federal law regarding special education in 1975, with passage of 

P.L. 94-142, known as the Education for All Handicapped Children Act. Over time, this 

law has been changed, modified, and reauthorized several times. In 1990, its name was 

changed to the Individuals with Disabilities Education Act (IDEA), with another major 

reauthorization in 1997.75 The most recent version of the act was reauthorized in 2004, 

40
 
and its name was changed to the Individuals with Disabilities Education Improvement 

Act, attempting to align it with the recent No Child Left Behind legislation.76 

Findings 

A key principle on which IDEA is based is that students with disabilities deserve a “free 

and appropriate public education” (FAPE). This principle was inserted into legislation in 

order to ensure that students with disabilities were no longer excluded from public 

schools—prior to passage of P.L. 94-142, many students with disabilities were not 

receiving education in public schools. In fact, OSEP reports that by 1975, Congress had 

determined that millions of American children with disabilities were still not receiving an 

appropriate education,77 finding that “More than half of the handicapped children in the 

United States do not receive appropriate educational services which would enable them 

to have full equality of opportunity” (Education for All Handicapped Children Act 

(EAHCA), §3(b)(3)). Public Law 94-142 was enacted to remedy this situation by 

requiring that all students with disabilities receive FAPE and by providing a funding 

mechanism to help defray the costs of special education programs (Martin, Martin, & 

Terman, 1996).78 

•	 Along with the FAPE principle is the requirement that students with disabilities be 

educated in the “least restrictive environment” by being included in regular 

classrooms and regular schools (OSEP, 2006).79 

•	 In 2001, approximately 5.2 percent of children ages 3–5 received special education 

and related services in the United States and 12.1 percent of students ages 6–21 

attending school received special education services. 

•	 The number of students receiving special education services in both the group ages 

6–12 and the group ages 13–17 grew during the 1992–2001 period. Forty-three 

percent of students ages 6–12 and 56 percent of students ages 13–17 had two or 

more disabilities. Disabilities included specific learning disabilities, speech/language 

impairments, intellectual disabilities, emotional disturbance, hearing impairments, 

visual impairments, orthopedic impairments, other health impairments, autism, 

41
 
traumatic brain injury, multiple disabilities, and deaf-blindness. Boys represented 

about two-thirds of students with disabilities.80 

2A:2 – Funding of IDEA 

Educational funding has changed substantially since the early 20th century in the United 

States. Then, schools were funded principally by tuition and charity mechanisms. Later, 

local taxes provided public school funding. State funding also was added to the mix to 

assist school districts that were not able to provide a minimum, foundational level of 

funding. Later funding mechanisms sought to establish equitable educational funding 

across poor and wealthy school districts. Currently, with the No Child Left Behind 

(NCLB) Act, both federal and state school funding schemes are tied to learning 

outcomes based on standardized tests.81 NCD is investigating the impact of both IDEA 

and NCLB on the educational outcomes for students with disabilities. 

Findings 

•	 Receipt of funding by states from the Federal Government for special education 

services is conditional on provision of a FAPE in the state for Part B of IDEA. Part C 

of IDEA provides for services for infants and toddlers. According to the 

Congressional Research Service, federal funding of IDEA has grown substantially in 

recent years—over 250 percent between 1995 and 2005—to $11.7 billion in FY 

2005.82 Although there is overall growth in special education funding appropriated for 

FY 2006, K–12 funding actually has gone down slightly.83 

•	 According to data from the Special Education Expenditure Project84 (SEEP), total 

special education funding for students with disabilities in the United States was 

$77.3 billion for school year 1999–2000. 

•	 In constant dollars, SEEP found that the total special education per-pupil cost (which 

includes both special and regular education dollars) rose by 110 percent between 

school years 1968–1969 and 1999–2000. 

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•	 The $77.3 billion total special education funding reflects $12,474 per student 

receiving special education services in the United States for school year 1999–2000. 

The special education per-pupil cost was slightly less than half the per-pupil cost of 

students who were not receiving special education services. Put another way, the 

cost of providing regular and special education services to students receiving special 

education was 1.90 times the cost of providing education services to students not 

receiving special education in school year 1999–2000. This reflects little change 

from the estimated 1.92 times the cost of providing education services to students 

not receiving special education in school year 1968–1969.85 

•	 During the school periods 1968–1969 through 1999–2000, total per-pupil cost for all 

students (both special and regular education) rose 140 percent.86 

2A:3 – Effectiveness and Impact: Evaluating Educational Funding for 

Special Purposes 

Concerns about the effectiveness and impact of educational funding are not new. The 

same concerns have been expressed about the effectiveness and impact of educational 

funding for special purposes, some as early as almost half a century ago.87 Yet there is 

little evidence-based research exploring these concerns. Some argue about what that 

research should explore. A broad exploration of the utility of educational funding in 

general found that it would be helpful to evaluate the effectiveness of individual 

interventions rather than to explore the effects of large educational programs in 

aggregate, because federally funded educational programs allow a great deal of 

grantee flexibility in how to use that funding.88 

Findings 

•	 In spite of large increases in educational funding over the last decade, funding levels 

continue to fall short of what is necessary to address the need. When Congress 

initially enacted special education legislation in the 1970s, it decided that it wanted to 

fund up to 40 percent of the “excess” cost of special education—the cost of 

educating a student with disabilities over and above the cost of educating a student 

43
 
 

without a disability, which was felt then to be approximately twice the cost of 

educating students without disabilities.89 

•	 While Congress has steadily increased its funding levels over time, it has never 

come close to reaching its goal at the 40 percent level. In FY 2005, special 

education funding of Part B of IDEA (both as proposed by the President and as 

actually appropriated by Congress) did not even reach half the excess cost, at only 

18.6 percent. Given a federal appropriation of $10.6 billion for IDEA Part B in FY 

2005, this left a balance of the estimated excess cost for students with disabilities of 

$46.2 billion.90 This balance is borne typically by local school districts already 

overwhelmed by budget shortfalls.91 

2A:4 – Special Education Funding Models 

Funding for special education to local school districts in the United States is provided in 

two different ways. Traditionally, funding is provided through child count—the number of 

students with disabilities is counted in a particular district, and funding provided to the 

district proportional to that number. The other special education funding approach is a 

lump-sum method.92 Child-count funding methods, referred to by some as a bounty 

approach, appear to encourage school districts to label students as having disabilities. 

Findings 

•	 One study done at the Manhattan Institute for Policy Research found a direct 

correlation between child-count funding methodologies and the increase in the 

number of students with disabilities. According to research, lump-sum funding 

methods remove this incentive. While some have argued that the increase in the 

number of students with disabilities reflects either a real increase in the incidence of 

disability or the effect of high-stakes testing, the Manhattan Institute for Policy 

Research study found no such effects.93 

•	 A cross-national comparative study of special education funding practices described 

two different modes of funding: supply-oriented and demand-oriented funding.94 The 

44
 
 

study defined supply-oriented funding mechanisms as the traditional approach to 

funding special education, in which students with disabilities are moved from their 

neighborhood schools to special (“segregated”) schools, where specialized supports 

are congregated. Control of special education funds and resources is held at the 

district, sometimes interdistrict, level, with only limited control at the school building 

level. Researchers saw this funding approach as a disincentive to the inclusion of 

students with disabilities in regular education schools and classrooms. 

•	 The authors then outlined another funding approach, demand-oriented or pupilbound funding, in which funding goes directly to local schools and is completely 

under local school control. Decisionmaking happens much closer to student and 

family, and was described as offering more incentive to at least the physical 

integration (if not necessarily always the social inclusion) of students with disabilities. 

•	 In the countries using a demand-oriented approach, researchers found that parents 

had control over whether students could be included in regular education schools 

and classrooms, and that they could choose between schools (if available). 

Objective criteria for developing budgets for individual students were not developed 

in countries using a demand-oriented approach. Using demand-oriented approaches 

does not mean that inclusion will then be a foregone conclusion, the authors point 

out. 

•	 Voucher approaches have been variously proposed and implemented. With only a 

few exceptions, according to a NCD (2003) study, special education has been left 

out of model voucher programs. Where special education has been included, 

programs may not serve as an appropriate model for replication. Substantial 

research is needed before voucher approaches can be applied broadly in special 

education.95 

2A:5 – Disincentives and Incentives for Inclusion 

A report by the NCD (1995) found that significant state funding barriers prevented 

students with Individual Education Programs (IEPs) from receiving educational services 

in anything but segregated settings.96 In a preliminary study of the cost of inclusion, 

45
 
researchers at the Center for Special Education Finance found similar problems at both 

state and local levels. Education agencies allocated the most funds when special 

education and related services were provided in segregated or separate education 

environments. Such practices created disincentives for educating students with 

disabilities in regular education schools and classrooms. Finance reform that 

encourages educational intervention for all students, funding following students, and 

direct training would support a move away from disincentives.97 Funding reforms alone, 

it was felt, would not be enough to change where students with disabilities receive 

special education services.98 

Findings 

•	 According to the 1995 NCD study on inclusionary education referenced above, 

inclusion was no more expensive, and was perhaps often less expensive, than 

providing education to students with disabilities in segregated settings.99 

Conclusions from data gathered for the Center for Special Education Finance, also 

were that cost savings may be realized as the result of implementing inclusive 

special education services. The studies point out that districts implementing 

inclusion reform did so as a move toward best educational practice rather than to 

100 save money.

2A:6 – Other Funding Streams 

There are roughly 200 programs, across 20 separate federal agencies, providing 

supports and services to people with disabilities, with a funding level of over $120 billion 

in 2003 for programs focused solely on people with disabilities. Of that funding, 8 

percent was spent on education. The Department of Education alone administers 33 

programs either wholly or partially targeted to people with disabilities. Among other 

issues related to these many programs, there are concerns regarding the interaction 

among them.101 

46
 
 

 

Findings 

•	 One study by the Government Accountability Office (1999) looked at the interaction 

between Medicaid (which funds medically related services for students with 

disabilities in schools) and IDEA. The report, which looked at 12 states, found 

problems related to coordination, including identification, documentation, and a lack 

of federal guidance.102 

•	 Another funding stream that impacts students with disabilities comes from the Higher 

Education Act. NCD (2003)103 found little research about the impact of funding on 

the postsecondary education outcomes of students with disabilities. NCD 

encouraged the Federal Government to improve access to postsecondary education 

for students with disabilities. 

•	 The GAO (2005) investigation found differences between the percentages of 

children determined eligible for services (which ranged from 1.3 to 7.1 percent, 

depending on the state). States had differences in assessment and eligibility criteria, 

as well as differences in sources of funding. States were encouraged to concentrate 

on improving efforts to make the transition from Part C to Part B services 

seamless.104 

2A:7 – Rights and Inclusion 

Families and people with disabilities indicate that changes in the IDEA legislation and 

supporting regulations, over time, have moved laws farther away from protecting the 

rights of students with disabilities and their families and closer to protecting the interests 

of school systems. Others have expressed concern that the Department of Education 

has not done enough to ensure that students with disabilities, perhaps especially people 

with the most severe disabilities, receive educational services in the least restrictive 

environment.105 

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Findings 

•	 Based on Office of Special Education Programs (OSEP) information,106 fewer than 

half of students ages 6–21 receiving special education services spent most of their 

time (80 percent or more) in regular education classrooms in 2000, and almost 20 

percent spent more than 60 percent of their school time in segregated classes, 

outside of regular education classrooms. A full 4.2 percent of students with 

disabilities in the 6–21 age range received their education in completely segregated 

settings outside of regular education buildings (residential facilities and other 

separate facilities, or in homebound or hospital environments [terms used in the 

OSEP data]). Students with deaf-blindness, multiple disabilities, and emotional 

disabilities were the most likely to receive educational services in completely 

segregated settings. Even when receiving their education in regular education 

buildings, students with intellectual disabilities, autism, multiple disabilities, deafblindness, and emotional disabilities were likely to spend most of their time in 

segregated classes outside of regular education classrooms. 

•	 The Congressional Research Service also expressed concern that some provisions 

of NCLB may be disincentives to inclusion of children with disabilities, and in conflict 

with the provisions of IDEA. NCLB testing and accountability measures may force 

IEP team decisions that exclude students with disabilities from regular education 

curricula. While regulations have been proposed to address this issue, they have not 

yet been implemented.107 

2A:8 – Overrepresentation in Special Education of Students from Diverse 

Racial and Ethnic Groups and Students from Families Living in Poverty 

Overall, there are significant achievement gaps between whites and students of other 

racial and ethnic groups in U.S. schools. For example, research indicates that 

graduation rates are substantially lower for students from diverse racial and ethnic 

108 groups.

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Findings 

•	 African-American students are much more likely to be identified as having 

intellectual disabilities and emotional disabilities than are whites.109 OSEP data110 

indicate that African-American students are almost three times more likely to be 

labeled as having intellectual disabilities, and well over two times more likely to be 

labeled as having an emotional disability, than all other racial and ethnic groups 

combined. 

•	 African-American students are much more likely to be educated outside of regular 

education classrooms than are students from other racial and ethnic backgrounds.111 

More than twice as many African-American students with disabilities as white 

students spend at least 60 percent of their time in segregated-by-disability 

classrooms. The Special Education Elementary (SEELS) Parent Survey112 found 

that students with disabilities from impoverished backgrounds, and African-American 

students with disabilities, were much more likely to be retained in grade than 

nonimpoverished or white students. 

•	 Based on a review of achievement literature, 14 factors influenced the achievement 

gap between students of different racial/ethnicity groups and income levels.113 Birth 

weight, lead poisoning, hunger and nutrition, reading to young children, television 

watching, parent availability, student mobility, parent participation, rigor of 

curriculum, teacher experience and attendance, teacher preparation, class size, 

technology-assisted instruction, and school safety were found to correlate highly with 

student achievement. All factors influenced the achievement gap between students 

of different racial/ethnic groups and income levels.114 

2A:9 – What Happens after Students with Disabilities Leave School? 

One way of determining the impact of special education on students with disabilities is 

to explore their postschool experiences. What happens to students with disabilities after 

they leave school? What are their lives like? 

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Findings 

•	 One study used data from the National Longitudinal Transition Study (NLTS) of 

Special Education Students conducted in 1987–1991, and the 1988 National 

Educational Longitudinal Study.115 Using a statistical analysis, the 1987–1991 NLTS 

of Special Education Students found that 40 percent of former special education 

students in the 18–26 age range lived at home, were single, were unemployed, and 

were not attending postsecondary education. Many of the remaining former special 

education students were employed, had started families, and had attended 

postsecondary education. 

•	 The President’s Committee for People with Intellectual Disabilities (2004)116 reported 

that as students with intellectual disabilities, especially people between 18 and 21 

years of age, transition from educational opportunities to the world of work they may 

experience situations in which there are conflicts between special education and 

community support funding practices and incentives, limiting their employment and 

training options. Only 15 percent of people with intellectual disabilities attended any 

kind of postsecondary education in 2002.117 

•	 A 2003 Government Accountability Office study118 found several reasons that the 

transition from school to postsecondary employment and living was complicated for 

students with disabilities and their families: they did not have enough information 

about other resources (for example, vocational rehabilitation); service providers had 

inadequate capacity to serve students with disabilities seeking services from those 

resources; and transportation was lacking. 

•	 A qualitative study by the Youth Advisory Committee for NCD found that even when 

adults with disabilities do seek postsecondary education experiences, they are 

unable to obtain the necessary financial aid.119 

2A:10 – A Universal Design for Learning 

One mixed-methods project exploring policy and practice implications of state-level 

reform legislation for students with disabilities and at-risk students found that reforms 

50
 
need to focus on positive outcomes for all students, not just students with disabilities or 

students who were at risk. The same project suggested the need to make appropriate 

professional development resources available for all educators and administrators, not 

just people who teach or administer special education and related services.120 It is 

essential to develop education policy that systematizes shared responsibility for the 

needs of all students and ensures that pre-service and in-service teachers and 

administrators have the knowledge, resources, and experience to deliver differentiated 

instruction to all students.121 Funding and implementation of best educational practices 

must be available to ensure that entitlement. 

2B – Employment 

Introduction 

While the findings in this section focus narrowly on the financial incentives targeted to 

improving and increasing the employment of people with disabilities, NCD had 

previously published a report examining issues, practices, and recommendations 

focused on the employment of people with disabilities. According to data in Kosciulek’s 

2004 report, people with disabilities, compared to their peers without disabilities, remain 

significantly unemployed or underemployed despite such policies as the Rehabilitation 

Act, the Individuals with Disabilities Education Act, and the Ticket to Work and Work 

Incentives Improvement Act.122 

Purpose and Method 

The purpose of this section is to examine the evidence-based practices that 

demonstrate the impact of employment financial incentives on the daily lives of 

individuals with disabilities. The research will include direct, indirect, and communitybased impacts of employment financial incentives. This will include examination of 

whether employment financial incentives work better for some individuals with 

disabilities than for others; the gaps in access and availability of employment financial 

incentives for individuals with disabilities compared to individuals without disabilities; 

and what policy changes are needed to expand utilization of and participation in 

51
 
 

employment financial incentives for individuals with disabilities. The findings from this 

section will be used to inform the recommendations for any changes or reform that will 

include a framework for congressional, legislative, and executive-level involvement. 

2B:1 – Vocational Rehabilitation 

Findings 

By far the greatest federal expenditures in rehabilitation services occur through the 

federal/state vocational rehabilitation (VR) system. 

•	 For all reported VR closures in FY 2003, only 35 percent of closures represented 

successful employment outcomes (defined as completion of an Individual Plan for 

Employment [IPE]), but those closures cost 65 percent of the total funding of 

purchased services. The numerical outcomes for VR closures in FY 2003 show a 

slight decrease from comparable data extracted from the FY 1996 Rehabilitation 

Services Administration 911 database by Berry et al. (2000). People exiting the VR 

system with a successful employment outcome were 36.8 percent of the total; within 

this total, 39.7 percent of transition-aged individuals (ages 16–24) achieved such 

outcomes.123 

•	 During the last 25 years, a significant change in vocational rehabilitation strategies 

involved two parallel transitions of many individuals with severe disabilities. For 

some people with severe disabilities, the transition was from segregated institutions 

to community-based sheltered workshops; for others, it was from sheltered 

workshops to competitive employment, many through the relatively new “supported 

employment” strategy. Blanck, Schartz, and Schartz (2003), in their study of these 

transitions in seven states, indicate again the difficulty in accurate outcome 

measurement because of the use of nonstandard definitions of employment 

outcomes. The researchers found that while sheltered employment was a gateway 

for some individuals with intellectual disabilities into eventual supported employment, 

accompanied by an increase in earnings, this group represented only a small 

proportion of the sampled populations.124 

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•	 Cimera (2000) reviewed 21 studies published since 1980 that investigated the costbenefit ratio of supported employment programs, and found that all reported at least 

some positive benefits (i.e., ratios above 1.0) for federal/state VR dollars spent.125 

•	 Lee, Yoo, and Peters (2003), adapting a similar U.S. economic methodology to 

supported employment programs in Korea that were modeled after American 

developments, emphasized the need for longitudinal studies. Differing cost-benefit 

ratios for supported employment programs were obtained when sufficient time was 

allowed for start-up costs to decrease to annual operating expenses while the 

earnings of program participants grew significantly year by year.126 

•	 A primary source of evaluative data with respect to the vocational rehabilitation 

system derives from the Longitudinal Study of the Vocational Rehabilitation Services 

Program (LSVRSP), as mandated by the 1992 Rehabilitation Act Amendments. The 

Research Triangle Institute conducted a study of the decade 1992–2002 for the 

Department of Education, Rehabilitation Services Administration (RSA). The study’s 

database, final reports, and published research relating to the LSVRSP are available 

on the RSA Web site and through the RRTC at Cornell University 

(www.ilr.cornell.edu/ped/lsvrsp) and the Disability Institute at the University of Illinois 

(http://compaq.ncsa.uiuc.edu:8080/vrsp/do/overview). The availability of this 

database provides researchers and others the opportunity for many research 

studies.127 

•	 The Tashjian and Schmidt-Davis (2000) study reported three key findings. First, the 

average cost for a single study participant was $4,921, almost 20 percent higher 

than the approximate $4,000 cost for the nonsupported employment successful 

completer of an IPE. Second, individuals who obtained a supported employment 

position worked an average of 23 hours per week and earned an average of $4.53 

per hour, compared to other successful consumers with significant disabilities, who 

worked an average of 34 hours per week and earned an average hourly wage of 

$7.20. Third, on average, individuals with intellectual disabilities in supported 

employment earned virtually the same wage ($4.21) as did individuals with 

53
 
 

intellectual disabilities who exited VR services into other forms of employment 

($4.19).128 

•	 We may conclude that, with availability of the RSA 911 database of state vocational 

rehabilitation performance outcomes and the data in the LSVRSP, many research 

questions about the relative costs and benefits of VR programs (e.g., sheltered 

employment, supported employment, and competitive employment) and 

comparability of costs and benefits between state programs can now be addressed. 

2B:2 – Ticket to Work 

The Ticket to Work and Work Incentives Improvement Act of 1999, while it resulted from 

the contributions of many disability researchers and advocates, can trace one clear 

origin to economist Monroe Berkowitz (1997),129 who has long recommended that 

vocational rehabilitation services for Social Security disability recipients be privatized. 

The resulting legislation established a national system of employment networks as 

community-based alternatives to the vocational rehabilitation system, created a national 

system of benefits planning, assistance, and outreach programs, and extended the 

Medicare coverage of individuals returning to work to a new maximum of eight and a 

half years. 

Findings 

•	 The most recent data published by Maximus, Inc. (the Ticket to Work Program 

manager under contract from the Social Security Administration) illustrate the 

lagging effectiveness of this program, which was five years old when this NCD report 

was developed, with Ticket to Work roll-out operations beginning in February 2002. 

•	 The lack of overall success of the Ticket to Work Program, as currently structured, 

was highlighted in a Government Accountability Office report to the Social Security 

Administration (2005). Within the Ticket to Work Program, the small number of 

community-based organizations operating as employment networks (ENs), the small 

number of Ticket to Work holders working beyond substantial gainful activity (SGA), 

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and the small number of actual payments to ENs were cited by both the Ticket to 

Work Advisory Panel (2004)130 and the GAO report. The GAO report called for 

research planning to test more effectively the changes suggested in the Ticket to 

Work Program by the Ticket to Work Advisory Panel and others.131 

2B:3 – Department of Labor: Disability Program Navigators 

The Workforce Investment Act of 1998 (WIA) established, among other programs, 

statewide workforce network councils under each state governor, and a number of 

workforce investment boards, varying by state population size. In turn, each workforce 

investment board was to certify a varying number of One-Stop Centers, in which both 

mandated federal programs and voluntary private-sector partner organizations were to 

be co-located. Included in the WIA legislation was the reauthorization of the 

Rehabilitation Act of 1973 (as amended in the intervening years). This legislation thus 

made each state vocational rehabilitation agency a mandated One-Stop Center 

Program. People with disabilities became eligible in many instances to receive federal 

training and employment benefits outside of their state VR agency. The U.S. 

Department of Labor is responsible for overall WIA program management. 

Findings 

•	 Early program implementation revealed that people with disabilities continued to 

encounter a number of serious barriers to the participation WIA mandates.132 WIA 

Standardized Records Data figures indicate that individuals with disabilities (i.e., 

people who self-report their disability) continue to be underrepresented in the WIA 

programs. However, Holcomb and Barnow (2004)133 indicate that such voluntary 

self-reporting may result in an undercounting of individuals with disabilities actually 

served through the various WIA programs. 

•	 In response to such findings, the Department of Labor and the Social Security 

Administration jointly created the Disability Program Navigator (DPN) Program, a 

$24 million initiative in 17 states where SSA previously implemented employment 

support initiatives. At the writing of this report, 450 Disability Program Navigators 

55
 
 

were serving one or more workforce investment areas in 30 states and the District of 

Columbia. 

•	 Disability Program Navigators are people with training and experience in the 

workforce and rehabilitation systems who are employed by the workforce investment 

boards to work with the One-Stop Centers to enhance interagency program 

coordination and to facilitate access to the various programs for WIA customers with 

disabilities. Morris (2005) made the following preliminary observations from an 

evaluation of the DPN Program nationally.134 

– Enthusiasm for the DPN Program is strong from all levels of participants 

interviewed.
 

– There is more interagency cooperation, with Navigators building infrastructure 

and serving as valuable resources. 

– Participants at all levels want to see the DPN initiative continue and become 

imbedded as a natural position within the One-Stop system. 

– Satisfaction ratings were high: 

•	 Overall satisfaction was 7.54 on a 1–9 scale. 

•	 DPN services exceeded “expectations” (7.01 on 1–9 scale). 

•	 DPN services rated well when compared with an ideal set of services (6.65 on 

1–9 scale). 

•	 In the case of the Colorado WIA system, of the 291,770 recorded job seekers, 

11,379 (3.9 percent) were people with disabilities; of the 1,458 WIA customers 

served by the DPNs, 81.2 percent were people with disabilities. However, while 10.4 

percent of the WIA customers with disabilities received DPN services, only 2.0 

percent and 5.9 percent received WIA training services or WIA main program 

services, respectively. Almost all (91.1 percent) received some service; 67.9 percent 

conducted a job search, and 52.8 percent were referred to a job opening; these 

constitute the WIA “core services,” with the least additional funds invested in the 

individual customer.135 

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2B:4 – Cash Benefits and Work Incentives for Employment 

The two primary cash benefit programs for people with disabilities are Supplemental 

Security Income (SSI) and Social Security Disability Insurance (SSDI). SSI is a “safety 

net” program for recipients whose earned income record is insufficient to have created a 

work history (taxable work for 10 quarters), whose current resources are less than 

$2,000, and whose low income qualifies them. SSI payments derive from the general 

federal treasury. SSDI benefits are paid to beneficiaries with a work history, with the 

monthly amount based by formula upon their previous earnings. SSDI funds derive from 

a trust fund created by each worker’s Federal Insurance Contributions Act (FICA) taxes. 

Table 5 presents current data for these two programs. 

Findings 

•	 Given the interrelationship between the SSDI Program operated by the Social 

Security Administration and the Vocational Rehabilitation Program operated by the 

Rehabilitation Services Administration, the success of these programs in terms of 

employment outcomes is difficult to ascertain. 

•	 However, Berry et al. (2000)136 found that most often services were provided to 

transition-age young people with disabilities (SSI participants) exiting vocational 

rehabilitation programs. According to Hergenrather et al. (2003), “Only 27 percent of 

SSDI beneficiaries received one of the public vocational rehabilitation services. Of 

these, job placement was used by less than 2 percent of beneficiaries. Less than 

one-fourth of one percent (.25 percent) of SSDI beneficiaries returns to work through 

public vocational rehabilitation.”137 

•	 Berry et al. (2000) reported that job-finding services were provided to 57.7 percent of 

SSI participants versus 43.2 percent of nonparticipants, and for job placement 

services, the percentages were 51.8 percent and 33.3 percent, respectively. No 

other analyses of the VR-SSA disability relationship were discovered. 

•	 In a 2004 Congressional Budget Office study, the percentages of disability and early 

retirement were slightly lower for women. Among these SSA disability beneficiaries, 

57
 
 

24 percent of men and 34 percent of women lived with incomes below 100 percent 

of the federal poverty level. Thus, while the SSA disability system was designed 

primarily on the model of the Old Age and Survivors system to serve as a safety net 

for people who had to leave the workforce prior to age 62 due to disability, it still 

leaves between one-fourth of men and one-third of women in poverty.138 

•	 Among people qualifying for SSA disability benefits who are nevertheless able to 

perform work at less than SGA (a dollar-per-month threshold announced annually by 

SSA), the use of three “work incentives” shows a distinct pattern.139 In the period 

1990–2004, the mean number of the following work incentives per state was 

illustrative of a distinct pattern. PASS (Plan to Achieve Self-Support) grew from 44 in 

1990 to a peak of more than 200 in 1994 and 1995, then declined precipitously to 92 

in 1996 and further declined to a low of 32 in 2004. Impairment-Related Work 

Expenses (IRWE) followed a similar pattern, peaking at 195 in 1995 and ending at 

137 in 2004. Blind Work Expenses (BWE) held steady in the high 80s from 1990 

through 1995, then began a gradual decline to 57 in 2004. The declines in these 

three work incentives all followed a strongly worded General Accounting Office 

report (1996).140 Many individuals with disabilities with PASS in 1995 found them 

abruptly rescinded by SSA field offices in 1996, causing financial disruption in those 

individuals’ vocational plans. Such data provide some indication of the trust 

relationship that needs to be established between SSA and individual disability 

beneficiaries when the latter choose to use a work incentive, and the problems 

caused by inadequate program management and precipitous changes. 

2B:5 – Tax Incentives to Employment 

In examining the tax incentives to encourage the employment of people with disabilities, 

review needs to focus on both sides of the labor market equation: the supply side and 

the demand side. Among the tax incentives designed to induce people with disabilities 

to offer themselves for employment (supply), the primary one is the Earned Income Tax 

Credit (EITC). For some undeterminable portion of all returns filed with an EITC claim, 

those taxpayers were able to use their EITC to both offset income tax before credits and 

58
 
receive a cash refund. While the EITC is not targeted specifically to low-income 

taxpayers with earned income who have disabilities, they certainly are included. The 

EITC has enjoyed bipartisan congressional support since its establishment in 1975, and 

has proven among the most successful of all federal programs in raising low-income 

families out of poverty.141 

Findings 

•	 Ten states and the District of Columbia have enacted state EITC programs with 

refundable credits (i.e., even if zero taxes are owed), and five states have enacted 

nonrefundable programs modeled on the federal EITC.142 Low-income workers with 

disabilities can use the Retirement Savings Contributions Credit, which, as a pre-tax 

exclusion, further reduces taxable earned income, and thus increases the EITC.143 

•	 The success of the EITC in motivating low-income individuals to enter the workforce 

also stimulated a mid-1990s proposal for a Disabled Worker Tax Credit (DWTC).144 

The DWTC would provide approximately $1,000 as a refundable credit in addition to 

the EITC, with similar ramp-up provisions (increase in the DWTC with increase in 

earned income up to a ceiling), and then a plateau of DWTC for a range of earned 

income, and then declining DWTC after a certain threshold of earned income is 

passed. Of particular interest, the DWTC was designed to significantly mitigate the 

“income cliff” faced by SSDI beneficiaries whose earned income exceeded SGA 

after the nine-month trial work period and three-month cessation period. 

•	 In the linking of a policy proposal to both a successful IRS program and a 

problematic Social Security Program, the DTWC proposal provides a heuristic model 

for future such proposals. A chronic problem with the entire “patchwork” of cash 

benefits and work incentives for individuals with disabilities has been legislation 

targeted to one agency program, without consideration of how changes in that 

program would affect eligibility criteria and benefits, and so forth, in other programs. 

Finally, in support of policy analyses that led to the Ticket to Work and Work 

Incentives Improvement Act of 1999 (TWWIIA), decision-support software was 

developed by Virginia Commonwealth University under contract from the Social 

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Security Administration. The resulting application, WorkWORLD, enables 

policymakers, academic researchers, and benefits managers at all levels to model 

the system effects of changes in programs from the perspective of the impacted 

individual with disabilities.145 

•	 As employer subsidies, the Work Opportunity Tax Credit (WOTC) and Welfare to 

Work (WtW) are designed to lessen the costs of the perceived productivity gaps of 

the 11 targeted groups of low-income, lower-educated employees. Among the 

targeted groups, three groups (vocational rehabilitation clients, SSI recipients, and 

Ticket to Work employment network ticket holders) focus on people with disabilities. 

In FY 2003, 403,243 certifications were issued to employers by state agencies.146 Of 

this number, 6 percent (down from 8 percent in FY 2002) were SSI recipients; 5 

percent in both FY 2002 and FY 2003 were VR referrals to employers. (Ticket to 

Work holders were only added as a designated group in 2004.) 

•	 As directed by the TWWIIA legislation, the Government Accountability Office (2001, 

2002) studied the usage of the WOTC/WtW, the Architectural/Transportation Tax 

Deduction (IRS Code, Section 190, Barrier Removal), and the Disabled Access 

Credit (IRS Code, Section 144). The GAO reports determined that these three tax 

incentives are underutilized, but noted that IRS does not provide disaggregated data 

on rates of usage by employers among the 11 targeted groups of the WOTC/WtW, 

and does not determine whether barrier removal and accommodations claimed were 

made by an employer for employees with disabilities or to provide greater 

accessibility for customers.147 

•	 Two other perspectives challenge the traditional disability and employment research 

paradigms to become more comprehensive. The first is the asset development 

movement, which focuses upon assets as a key variable in family movement out of 

poverty.148 Among disability advocacy organizations, the World Institute on Disability 

provides its e-newsletter EQUITY and policy studies to professionals in both the 

asset-building and disability communities. Asset-building strategies conflict with the 

resource limits for many benefits programs, especially SSI, which has a $2,000 limit 

for the duration of SSI payments. The growth in application of Individual 

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Development Account (IDA) legislation, at both the federal and state levels, provides 

some lessening of these resource limits, but has yet to overcome fully the SSI 

resource limitation149 beyond the time limits of the IDA Program. 

•	 The second perspective is the Family Economic Self-Sufficiency Standard, created 

by the Wider Opportunities for Women organization as part of a state-by-state 

movement to define what self-sufficiency means in each labor market, and to use 

that standard to measure policy decisions targeted to low-income families and 

individuals. Ultimately, the measure of the various disability employment assistance, 

cash benefits, work incentives, and tax incentives, both for employees and 

employers, is to assist people with disabilities to reach economic self-sufficiency. 

Much research must be done on existing programs’ impacts, and the hypothesized 

systemwide impacts of proposed modifications, before this goal is within reach. 

2C – Transportation 

Introduction 

Transportation is a key factor in the employment options, housing availability, health 

care access, and community living for individuals with disabilities. Assisting people in 

living independent lives, staying out of nursing homes for as long as possible, and 

maintaining steady employment will save more taxpayer money than maintaining 

institutional supports for individuals with disabilities. The private automobile is the 

transportation of choice for most Americans, and the design of the environment has 

contributed to this preference by making many trips difficult or impossible to complete 

by any other means. Even when public or mass transit is available, scheduling, routing, 

financing, capital investment, crowding, and other factors, including inaccessibility, may 

reduce its value for people who would choose to utilize it. 

Purpose and Method 

The purpose of this section is to examine the impact of transportation financial 

incentives on the daily lives of individuals with disabilities. The research will include 

direct, indirect, and community-based impacts of transportation financial incentives. The 

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effort will address whether transportation financial incentives work better for some 

individuals with disabilities than for others; the gaps in access and availability of 

transportation financial incentives for individuals with disabilities compared to individuals 

without disabilities; and what policy changes are needed to expand utilization of and 

participation in transportation financial incentives for individuals with disabilities. The 

findings from this section will be used to inform the recommendations for any changes 

or reform that will include a framework for congressional, legislative, and executive-level 

involvement. 

2C:1 – Direct, Indirect, and Community-Based Impacts of Transportation 

Financial Incentives 

There are many federally funded human service programs that assist people with 

nonemergency medical needs, job training, education, employment opportunities and 

placements, and other supportive services. These programs usually are managed by 

state and local human service agencies, such as departments of social services, 

departments of health and mental health, and area agencies on aging. However, many 

of these agencies’ clients are “transportation disadvantaged”—that is, they are unable to 

provide their own transportation to these services as a result of an age-related 

condition, disability, or income constraints.150 

Findings 

•	 The Federal Government manages 62 separate programs that can fund 

transportation services for individuals who are transportation disadvantaged. The 

Government Accountability Office reports that federally funded transportation 

programs are administered through eight federal departments. There are 23 

programs in the Department of Health and Human Services, 15 in the Department of 

Labor, 8 in the Department of Education, 6 in the Department of Transportation, and 

the remainder in the departments of Veterans Affairs (VA), Housing and Urban 

Development, Agriculture, and Interior. The 62 programs are authorized by 25 

separate pieces of legislation.151 

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•	 The extent of spending for services for transportation-disadvantaged clients is not 

fully known. Only 32 of the 62 federal programs identified by the Government 

Accountability Office track transportation spending in their accounting or information 

systems, or could provide an estimate of transportation spending. For these 32 

programs, federal spending totals $2.5 billion a year. Most of these programs require 

a state or local match for the federal funds, many of them at 50 percent. However, 

some of these programs do allow other federal funds to be used as the match. So, 

even considering only the partial data that is available on human services 

transportation, the combined federal, state, and local annual investment in these 

services is at least $3 billion to $4 billion.152 

•	 Coordination can lead to significant reductions in per-trip operating costs for 

transportation providers. The savings proposed through agency coordination can be 

used to expand services to people or areas not previously served. The potential 

benefits of coordinating human services transportation include the following:153 

– Access to more funds and more sources of funds 

– Higher-quality and more cost-effective services 

– Enhanced mobility and better access to jobs, health care, shopping, and 

community facilities 

– More visible and customer-friendly transportation services that are less confusing 

to access 

2C:2 – Architectural/Transportation Tax Deduction: IRS Code, Section 190, 

Barrier Removal 

Businesses may take an annual deduction for expenses incurred to remove physical, 

structural, and transportation barriers for people with disabilities at the workplace. All 

businesses are eligible. Businesses may take a tax deduction of up to $15,000 a year 

for expenses incurred to remove barriers for people with disabilities. Amounts in excess 

of the $15,000 maximum annual deduction may be depreciated. The deduction is 

available every year. It can be used for a variety of costs to make a facility or public 

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transportation vehicle, owned or leased for use in the business, more accessible to and 

usable by people with disabilities. Examples include the cost of the following:154 

•	 Providing accessible parking spaces, ramps, and curb cuts 

•	 Providing telephones, water fountains, and restrooms that are accessible to people 

using wheelchairs 

•	 Making walkways at least 48 inches wide 

The deduction may not be used for expenses incurred for new construction, or for a 

complete renovation of a facility or public transportation vehicle, or for the normal 

replacement of depreciable property. Small businesses may use the credit and 

deduction together, if the expenses incurred qualify under both sections 44 and 190. For 

example, if a business spent $12,000 for access adaptations, it would qualify for a 

$5,000 tax credit and a $7,000 tax deduction. Although both the tax credit and 

deduction may be used annually, if a business spends more than what may be claimed 

in one year, it cannot carry over those expenses and claim a tax benefit in the next year. 

The amount spent is subtracted from the total income of a business to establish its 

taxable income. In order for expenses to be deductible, accessibility standards 

established under the Section 190 regulations must be met.155 

2C:3 – Federal Funds 

Findings 

•	 The Air Carrier Access Act of 1986 (ACAA)156 imposes nondiscrimination and 

accommodation requirements on most commercial airlines operating in the United 

States. While ACAA is not a benefits law with federal funds appropriated, there are 

funds to support its enforcement by the Department of Transportation (DOT). 

Airlines are obliged to spend some money to comply with the law.157 

•	 Title II of ADA addresses rail and bus transportation. Amtrak, the nation’s passenger 

rail service, receives direct federal support, both for capital and operational 

expenses. Although neither the precise sums in question nor the specificity of 

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appropriations language have yet been reviewed, it is clear that federal financial 

support to a third party (namely, Amtrak) does go toward making intercity rail travel 

more accessible.158 Thus, Title II of ADA applies to this mode of transportation. 

•	 Perhaps the greatest change in this nation’s transportation resources over the past 

generation has been the development of paratransit as a supplement or replacement 

for fixed-route transit for people whose disabilities make the general system 

unusable, despite its accessible design. Paratransit, as operated by local or 

municipal transportation agencies, represents one of the closest approaches to a 

direct transportation subsidy to individuals. The other near approximation to direct 

incentives to individuals is the reduced fares required by federal law to be provided 

to passengers with disabilities on municipal transit systems. Neither paratransit nor 

reduced fare is means-tested. Both are status based, in that the recipient of the 

service or discount must be an individual with a disability (or, in the case of the fare 

subsidy, an individual over the age of 65). Eligibility for paratransit is made on an 

individualized, case-by-case basis. Beyond even individualized eligibility 

determinations, there is a further concept—disliked by many, but legal—called trip 

eligibility.159 With trip eligibility people with disabilities, though eligible in principle, are 

granted or denied the service for particular or types of trips based on purpose of trip, 

destination, or other factors.160 

NCD identified that $2.4 billion was spent on human service transportation, but it is 

estimated that more than 40 of the participating programs do not track transportation 

expenditures. Therefore, the full cost of transportation services is unknown.161 

2C:4 – Financial Incentives for Transportation Work Better for Some 

Individuals with Disabilities than for Others 

Findings 

•	 The U.S. population is aging, and transportation is critical to helping individuals stay 

independent as they age. Access to transportation, whether by automobile or some 

other mode, is considered essential to independent living, allowing individuals to 

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gain access to the goods, services, and social contacts that support their day-to-day 

existence and quality of life. Both the number of older people and their percentage of 

the U.S. population are growing rapidly. Although many elders continue to drive for 

most of their lives, the growing size of the senior population will increase demand for 

alternative transportation services. 

– For example, one study found that more than 600,000 people ages 70 and older 

stop driving each year and become dependent on others for transportation.162 

The increase in the potential pool of elders needing mobility assistance will 

challenge federal, state, and local government agencies’ ability to provide such 

assistance. 

– In 2000, 35 million Americans, or 12.4 percent of the total U.S. population, were 

ages 65 and over, according to the U.S. Bureau of the Census. The Census 

Bureau projects that this group will double to 70 million people by 2030, 

representing 20 percent of the total population. 

– As elders age, their ability to drive, walk, or use public transportation may 

become limited by reduced reaction time; deteriorating night vision; lessening 

ability to climb, reach, or stand; or other physical limitations. 

– To help ensure that transportation-disadvantaged elders have access to health 

and medical care, employment, and other basic services, various federal 

programs provide funds for a range of senior transportation services to state, 

local, and nonprofit agencies that actually provide the services and, in some 

cases, also provide their own funds to support those services.163 

•	 If an individual is on Medicaid and is going to the doctor’s office, he or she might be 

able to take only one type of transportation service in the community. If a person is 

an elder (compared to adults under the current retirement age) and is going to a 

meal service, there might be someone else that provides that ride, but the elder may 

not be able to ride on a vehicle if another person with a disability is going in the 

same direction at the same time, just because of the eligibility rules provided by that 

funding stream.164 

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•	 Inadequate transportation is an even greater obstacle for people with severe 

disabilities. People with somewhat or very severe disabilities are more than three 

times as likely to think transportation is a problem (34 percent and 36 percent, 

respectively) as are people without disabilities (10 percent) and twice as likely as are 

people with slight disabilities (17 percent).165 

•	 Medical care transportation also affects decisions to reside in nursing homes. For 

example, from October 2003 until September 2004, 113 people reported that they 

would like to leave nursing homes in rural Kansas, but entered due to the need for 

transportation to and from medical care. Due to nursing home costs that must be 

paid by individuals, some people who are in a facility for more than 30 days will have 

their home utilities turned off for lack of payment, or will lose a home for lack of 

ability to pay for housing that they would otherwise be able to pay. Then they will 

step onto the Medicaid roster without a likely exit.166 

•	 The employment-related benefits of improving rural transportation options for people 

with disabilities have been demonstrated by a five-year project of the Association of 

Programs for Rural Independent Living (APRIL), funded by the Rehabilitation 

Services Administration, U.S. Department of Education. The purpose of the RSA 

project is to demonstrate effectiveness of a voucher model to provide employmentrelated transportation to people with disabilities who live in rural areas. APRIL 

reports that after the third year of the project, 482 consumers were served. 

Approximately 52 percent, or 250, were unemployed when they entered the project. 

A total of 117 people obtained employment after entering the project. Clearly, federal 

financial assistance for rural transportation is a good investment.167 

2C:5 – Gaps in Access and Availability of Financial Incentives for 

Transportation for Individuals with Disabilities Compared to Individuals 

without Disabilities 

Findings 

•	 The National Organization on Disability (NOD) reported that 30 percent of people 

with disabilities found transportation inadequate, compared to 10 percent of people 

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without disabilities.168 Lack of transportation to and from work among people with 

and without disabilities working full-time or part-time was reported as a barrier as 

well.169 Three out of 10 people with disabilities (30 percent) still have a problem with 

inadequate transportation, and 16 percent cite inadequate transportation as a major 

problem. By contrast, only 1 out of 10 people without disabilities (10 percent) have a 

problem with inadequate transportation, and only 4 percent say it is a major 

problem.170 

• The Washington Post found that MetroAccess, a service that transports riders who 

have disabilities in the Washington area, has had erratic service. “A blind lung 

transplant patient was stranded by MetroAccess four nights in a row this week; a 

Maryland man in a wheelchair waited at a Giant supermarket for four hours and 

called Metro 24 times before a MetroAccess ride finally appeared on Wednesday; 

and on Thursday, a physician said three patients had trouble getting to or leaving his 

D.C. dialysis clinic because of mistakes by MetroAccess.”171 

•	 The presence of a disability is not the only determining factor in whether 

transportation is a problem; income also seems to play a large role. People with 

annual household incomes of $15,000 or less, whether with or without disabilities, 

are much more likely to say transportation is a problem than people with annual 

household incomes of $50,000 or more.172 

•	 The transportation gap between people with disabilities and people without 

disabilities has actually widened by 7 percentage points since 1998, when NOD and 

Harris began collecting this data. Nationally, almost 15 million people in this country 

have difficulties getting the transportation they need. Of these, about 6 million (40 

percent) are people with disabilities. More than 3.5 million people in this country 

never leave their homes. Of these, 1.9 million (54 percent) are people with 

disabilities. About 560,000 people with disabilities indicate that they never leave 

home because of transportation difficulties.173 

•	 In a nation of over 290 million, a Bureau of Transportation Statistics (BTS) survey 

(see note 153) found that almost 15 million people have difficulties getting the 

transportation they need. Nationwide, more than 1 percent of people are homebound 

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because of unmet transportation needs. More than half of the 1.9 million people who 

are homebound are people with disabilities. Many have disabilities that severely limit 

their mobility, such as Alzheimer’s disease, senility, or dementia. However, the BTS 

survey found that for over half a million people with disabilities, the reason they 

never leave home is specifically that they cannot get the transportation they need.174 

2C:6 – Policy Changes Are Needed to Expand Utilization of and 

Participation in Financial Incentives for Transportation for Individuals with 

Disabilities 

Even where public or mass transit is available, scheduling, routing, financing, capital 

investment, crowding, and other factors, including inaccessibility, may all reduce its 

value for people who would choose to utilize it. Accessible transportation often is a 

powerful positive predictor of employment, and of several other important quality-of-life 

indicators, such as political participation, access to entertainment, socializing, and 

religious attendance. Likewise, inaccessible transportation limits the ability of people 

with disabilities to participate in these activities.175 

Findings 

•	 The GAO has made recommendations176 about coordination, and the departments 

of Transportation, Health and Human Services, Labor, and Education have taken 

subsequent actions related to several options outlined therein: 

– The departments of Labor and Education join the departments of Transportation 

and Health and Human Services as members of the Coordinating Council on 

Access and Mobility (Coordinating Council). 

– The members of the Coordinating Council develop and distribute additional 

guidance to states and other grantees that encourages the coordination of 

transportation services. 

– The member departments ensure that the Coordinating Council’s strategic plan 

and each member department’s strategic and annual performance plans have 

long-term goals and performance measures related to coordinating the 

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departments’ programs and improving transportation for transportationdisadvantaged populations. 

– The member departments link their Web sites to the Web site of the Coordinating 

Council and advertise the site in departmental correspondence and other 

outreach opportunities. In addition to these recommendations was the 

identification of several more general options for improving coordination— 

including developing improved leadership and establishing interagency forums at 

the federal, state, and local levels; harmonizing differing federal program 

standards and requirements; and providing financial incentives to encourage 

state or local agencies to coordinate. 

– The departments of Transportation, Health and Human Services, Labor, and 

Education also have taken additional actions related to the other options outlined 

in the GAO report for improving coordination. In December 2003, the four 

departments launched a five-part coordination initiative, “United We Ride,” that is 

designed to help states and communities overcome obstacles to coordination. 

This initiative is designed to provide financial incentives for coordination and 

establish an interagency forum for communication.177 

•	 Programs that can fund incidental transportation services include health and medical 

programs or job-training programs. 

– For example, Medicaid, which is administered by the Centers for Medicare and 

Medicaid Services within the Department of Health and Human Services (HHS), 

spent an estimated $976.2 million on transportation in FY 2001.178 

– In addition, the Community Transportation Association of America identified 

several programs as routinely providing transportation for clients, including WIA 

programs, administered by the Department of Labor, and Vocational 

Rehabilitation Grants, administered by the Department of Education. 

– DOT also funds several programs that focus on the specific transportation needs 

of transportation-disadvantaged populations. For example, Job Access and 

Reverse Commute Grants are aimed at connecting low-income individuals to 

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employment and support services, and the Capital Assistance Program for 

Elderly Persons and People with Disabilities provides financial assistance to 

nonprofit organizations for meeting the transportation needs of elders and people 

with disabilities.179 

•	 The Committee on Transportation and Infrastructure Subcommittee on Education 

and the Workforce, Joint Hearing on Coordinating Human Services Transportation, 

attempted to address the following questions:180 

– What are the obstacles to successful coordination?181 

•	 Obstacles related to shared resources. “Turf control” is a fact of life at all 

levels of politics. Some agencies fear loss of control over the quality and 

convenience of transportation services to their clients, and some clients fear 

changes to their services, such as mixing different populations (e.g., people 

with developmental disabilities and children). Additionally, there are concerns 

about the initial time, effort, and costs required to establish coordinated 

services. 

•	 Obstacles related to programmatic differences. Each federal program has 

specific eligibility requirements and rules that may limit potential partners. 

Program reporting requirements and funding cycles differ, as do some vehicle 

safety and driver qualification standards. Most basically, human service 

program managers are focused on individuals, while transportation officials 

are focused on systems. 

•	 Obstacles related to leadership and commitment. Federal agencies 

provide limited leadership and guidance on coordination. For example, the 

DOT/HHS Coordinating Council on Access and Mobility is not funded, and the 

Council’s Web site is not even linked to the HHS Web site. Many human 

service program managers are not aware of the Coordinating Council or its 

efforts. The Centers for Medicare and Medicaid Services has not provided 

sufficient guidance on how to coordinate Medicaid transportation with existing 

public transit or other transportation resources. The Federal Transit 

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Administration has disseminated coordination guidelines to transit agencies, 

but not to human service officials or programs. 

– What are some potential options to improve coordination?182 

•	 Federal or state program managers could provide financial incentives or 

additional mandates to encourage coordination. An example of financial 

incentives is in Florida, where direct funding is provided for coordination 

planning and operations, and “bonus points” are given in funding applications 

for state grants if services are coordinated. An example of a coordination 

mandate is the DOT Job Access and Reverse Commute Grant program, 

which requires that projects be part of a coordinated public transit-human 

services transportation planning process in order to be eligible for funding. 

•	 Federal agencies could harmonize program eligibility, reporting, safety 

standards, and funding cycles. Legislation and regulations could include 

common language, such as “and others, as space is available,” to explicitly 

encourage and allow coordination of transportation resources. 

•	 Federal and state agencies could provide additional technical guidance and 

information sharing. For example, the membership of the DOT/HHS 

Coordinating Council could be expanded to include other agencies involved in 

providing transportation, and the Council’s Web site linked to HHS, DOL, and 

Department of Education Web sites. Federal agencies could provide 

guidance to states and other grantees to clearly define allowable uses of 

funds and develop cost-sharing arrangements for transportation of common 

clientele. 

•	 The reauthorization of the Transportation Equity Act presents a unique opportunity to 

improve access to transportation for the 56 million individuals with disabilities and 

their families. The Transportation Equity Act (TEA) contains several provisions that 

improve mobility for people with disabilities:183 

– TEA-21 authorizes Project Action, which for 12 years has provided valuable 

technical assistance to transportation providers and people with disabilities and 

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contributed to making transportation one of the most accessible sectors of 

today’s society. 

– As a result of TEA-21, states can use federal surface transportation funds for the 

modification of public sidewalks to comply with ADA. Without accessible 

sidewalks, many people with disabilities are stranded, unable to take advantage 

of the investments made in the accessibility of the transportation system. 

– The most recent reauthorization of TEA-21 added a requirement that 

transportation plans and projects provide due consideration for safety and 

contiguous routes for pedestrians, including the installation, where appropriate, 

and maintenance of audible traffic signals and audible signs at street crossings. 

As a result, states, cities, and counties are beginning to take advantage of 

assistance from the U.S. Federal Highway Administration and the U.S. Access 

Board to make their pedestrian environments accessible for people who are 

blind, visually impaired, or have deaf-blindness. 

– Grants to assist over-the-road bus operators in complying with ADA have 

contributed to more accessible intercity bus transportation for people with 

disabilities. 

– Transit enhancement funds include a set-aside of funds for certain transit 

improvements, including enhanced access for people with disabilities to mass 

transportation. 

2D – Health Care and Long-Term Services and Supports 

Introduction 

Health care and long-term services and supports (LTSS) are critical concerns for the 

disability community. No single federal program or federal agency is charged with the 

responsibility for management, funding, and oversight of LTSS at home and in the 

community. More than 20 federal agencies and almost 200 programs provide a wide 

range of assistance and services to people with disabilities.184 There is no single entry 

point at a community level for individuals with disabilities to learn about and access 

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service and support options. Thus, it is difficult for people to take advantage of existing 

financial incentives related to health care and LTSS. 

LTSS is an issue for elders and for younger individuals with disabilities; any LTSS 

financing and system reform efforts must consider both populations. Although people 

who have disabilities have indicated a preference for receiving LTSS in home- and 

community-based settings, a federal institutional bias exists. Presently, about 1.6 million 

people live in nursing homes, group homes, and other institutional facilities.185 At the 

same time, about 2 million to 2.4 million people are on waiting lists or in need of some 

type of LTSS.186 

Disability advocates are working with the health care industry to create a continuum of 

care, including such services as assisted living, adult day services, and home care. 

Issues include financing, supporting family caregivers, addressing workforce shortages, 

improving the quality of LTSS services, and improving access to transportation and 

housing. The development of a sustainable and affordable LTSS public policy funded 

through innovative private sector assistance and public support will provide security for 

individuals with disabilities.187 

Purpose and Method 

The purpose of this section is to examine the evidence-based practices that 

demonstrate the impact of financial incentives on the availability of health care and 

LTSS for individuals with disabilities. The research will include direct, indirect, and 

community-based impacts of health care and LTSS financial incentives and 

disincentives. The work will focus on whether financial incentives work better for some 

individuals with disabilities than for others; the gaps in access and availability of 

financial incentives for individuals with disabilities compared to individuals without 

disabilities; and what policy changes are needed to expand utilization of and 

participation in health care and LTSS financial incentives for individuals with disabilities. 

The findings from this section will be used to inform the recommendations for any 

74
 
changes or reform that will include a framework for congressional, legislative, and 

executive-level involvement. 

2D:1 – Private Health Insurance and Unpaid Caregivers 

Many individuals with disabilities must rely on sources other than federal or state 

assistance to meet their health care and LTSS needs. The Federal Government should 

strengthen partnerships with these entities. 

Findings 

•	 Forty-two percent of the cost of treating uninsured patients is shifted to private 

insurance.188 As Medicaid becomes more stringent in its requirements for coverage, 

the burden will be placed on private insurers, even if uncovered patients do not seek 

private insurance. 

•	 Managed care plans frequently limit beneficiaries to a closed network of providers. 

Since often there are only a few qualified providers with the specialized skills and 

experience in treating people with specific types of disabilities in a community, 

closed networks create a risk that people with disabilities will not have access to all 

the types of providers they need.189 

•	 Private insurance for long-term care is usually capped at a specific dollar amount, 

provides coverage for only about three years, and is geared toward services and 

supports that cater to diseases of aging and not the needs of everyday working 

Americans with disabilities.190 In addition, only about 10 percent of Americans have 

private long-term care insurance.191 A recent actuarial study found that Americans at 

age 45 are more likely to become people with disabilities than to die, yet the industry 

continues to insure against loss of life rather than against the risk of disability.192 

•	 The estimated benefit of informal caregiving exceeds $200 billion annually. Services 

should be designed to support, not supplant, the role of the family and actions of 

informal caregivers. 

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•	 One suggestion is to conduct a feasibility study of possible new insurance products 

and options regarding relationship to the Medicaid Program to evaluate possible 

strategies to partner an LTSS insurance product with supplementary Medicaid 

coverage for people with disabilities under age 65.193 A feasibility study would need 

to consider price, benefit coverage, caps in coverage, and eligibility for Medicaid 

LTSS, and project market demand and needed incentives to share risk among 

stakeholders: the government, the consumer, and the insurance industry.194 

•	 Nearly three-quarters of individuals ages 18–64 receiving long-term care assistance 

rely exclusively on unpaid caregivers—usually family. Only 6 percent of people ages 

18–64 years rely exclusively on paid assistance.195 

•	 Most states have regulations referred to as the “Nurse Practice Act.” The effect of 

the Nurse Practice Act may bar friends and family members from receiving funds for 

assistance defined as nursing, such as administration of medication, urinary 

catheterization, and gastrostomy tube feedings. States will need to amend their 

regulations so as not to impede the assistance of personal care attendants who are 

not nurses.196 

2D:2 – Medicare and Medicaid 

There is not enough money to pay for any type of public program, expansion of existing 

programs, or long-term care for everyone.197 This was substantiated when President 

Clinton signed the Long-Term Care Security Act in September 2002, establishing the 

Federal Long-Term Care Insurance Program for federal employees.198 The program 

was the result of a three-year study that showed a need for this type of benefit, and it 

became a model for employers across the country.199 Twenty-four states now offer a tax 

credit for residents who own a long-term care policy.200 

Findings 

•	 Medicaid has significant gaps in coverage that can limit the independence of 

individuals with disabilities.201 The gaps in Medicaid coverage include limited 

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coverage for personal assistance services, institutional services, dental care and 

dentures, hearing aids, eye care, foot care, many screening tests, bathroom grab 

bars, and other assistive equipment.202 

•	 Increasingly, states have chosen to eliminate or restrict coverage of a number of 

optional services for their adult Medicaid beneficiaries in order to contain program 

costs.203 States have broad discretion in determining the amount, duration, and 

scope of their covered Medicaid services.204 The distinction as to whether a benefit 

is mandatory or optional is somewhat blurred, regardless of how a benefit may be 

classified in federal law, since services regarded as medically needed are in each 

classification.205 

•	 The growth in Medicaid spending is unsustainable. Eligibility and service pathways 

to the state Medicaid Program have expanded to meet the growing needs of 53 

million low-income, middle-income, and uninsured acute care and LTSS 

beneficiaries, and reflect growing challenges of economic downturns, increased 

health premiums, increased longevity, a low savings rate, and slower wage 

growth.206 States cannot respond to current and future LTSS needs as long as 

health care costs continue to rise by double-digit rates.207 

•	 The cost of long-term care accounts for a large portion of Medicaid spending. Of the 

more than 3.5 million Americans suffering from chronic conditions, severe mental 

illness, or developmental disabilities that necessitate long-term care, 37 percent of 

people receiving Medicaid long-term care benefits are under age 65 and account for 

43 percent of Medicaid long-term care funding.208 

•	 Medicare’s coverage of long-term care is limited to postacute care through its skilled 

nursing facility benefit and home health care benefit.209 Accessing the postacute 

care services and supports through Medicare coverage of skilled nursing facility and 

home health care benefits is crucial to enabling millions to avoid far more costly 

hospitalization and long-term institutionalizations.210 

•	 In 2000, Medicaid paid for 45 percent of the total amount spent on long-term care in 

the United States.211 In FY 2004, total federal and state Medicaid expenditures on all 

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long-term care reached $100.5 billion and accounted for 35.7 percent of all Medicaid 

spending.212 

•	 “Dual eligible” make up 24 percent of the cost of both Medicaid and Medicare.213 

Dual eligible are individuals who meet the requirements for both Medicaid and 

Medicare because of age and disability. The Robert Wood Johnson Foundation cofunded the long-term care study, which found that dual eligibles are most likely to be 

female, widowed, living alone, and with lower incomes than other elderly Medicare 

enrollees.214 The study also found that among this population there are widespread 

shortfalls in access to long-term care. Among people surveyed, 56 percent reported 

serious consequences resulting from a lack of needed assistance, including falling 

out of bed, not being able to bathe, and soiling themselves.215 This is an indication of 

how much vulnerable populations rely on Medicare and Medicaid, as well as the 

insufficiency of these programs in meeting the needs of the dual eligible. 

•	 LTSS is not portable across states. The fiscal health of each state and its ability to 

provide the necessary match to draw upon federal Medicaid resources determine 

the scope and array of the current LTSS system for low-income Americans with 

disabilities. Therefore, the personal assistance needs of an individual in one state 

may be similar to those of an individual in another state, but the availability of 

services and funding may vary dramatically.216 

2D:3 – Waiver Authority 

States currently operate more than 250 distinct waiver programs.217 Waivers enable 

states to design programs that meet the unique needs of individuals with disabilities. 

Waiver programs are the fastest growing segment of Medicaid, with expenditures and 

number of people covered increasing annually by more than 10 percent.218 These 

waiver programs constitute the principal way that states can offer services and supports 

that are consumer centered and promote independence and community participation 

among people with disabilities. 

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Findings 

•	 Three federal initiatives that have demonstrated success are Real Choice System 

change grants, Independence Plus initiative, and Home and Community-Based 

Services (HCBS) waivers.219 The Real Choice System change grants have been 

awarded to 238 recipients to foster systematic changes to enhance 

independence.220 States are using these grants for personal assistance services, 

direct service worker shortages, transitions from institutions to the community, 

respite service for caregivers and family members, and better transportation 

options.221 

•	 Similarly, SSA has waiver authority it can grant to states on a case-by-case basis to 

modify existing policies and procedures and encourage testing alternative policies 

and procedures that promote independence and self-sufficiency for individuals with 

disabilities and their families. 

•	 On May 9, 2002, Tommy Thompson, secretary of the Department of Health and 

Human Services, unveiled the Independence Plus initiative in response to Executive 

Order 13217, in which HHS promised to provide states with simplified model waiver 

and demonstration application templates that would promote person-centered 

planning and self-directed service options.222 

– Independence Plus is based on the experiences and lessons learned from states 

that pioneered consumer self-direction. Two national pilot projects demonstrated 

the success of these approaches in the 1990s: the Self-Determination project in 

19 states that focused primarily on the Home and Community-Based Services 

Section 1915(c) waivers, and the Cash and Counseling project in three states 

that focused on the Section 1115 demonstrations. These programs allowed 

service recipients or their families the option to direct the design and delivery of 

services and supports they received, with the goals of avoiding unnecessary 

institutionalization, experiencing higher levels of satisfaction, and maximizing the 

efficient use of community services and supports.223 

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– The Centers for Medicare and Medicaid Services (CMS) is consolidating the 

existing Independence Plus template into a new Web-based Section 1915(c) 

application with instructions. The consolidation enables the expansion of a 

variety of self-directed options in existing waivers; consistent participant 

protections across all waiver programs; minimal administrative burden to states; 

an easier waiver amendment process; and improved communication of 

expectations for quality.224 

– There are 11 approved Independence Plus waivers in 10 states, and several 

states are working with CMS to submit proposals.225 

•	 In response to the increasing costs of nursing facility care and the institutional bias 

that was part of the initial authority in 1970, home health services became a 

mandatory benefit.226 In 1981, Congress authorized the HCBS waiver authority.227 

The Section 1915(c) waiver, named after the section of the Social Security Act that 

authorized it, allows states to provide services not usually covered by Medicaid to 

keep a person from being institutionalized. Home and community-based services 

(other than room and board) for specific eligible populations are now part of waiver 

programs in all 50 states. 

•	 In addition to the HCBS waiver authority, there is a Section 1115 waiver authority. 

Section 1115 of the Social Security Act provides CMS broad authority to support 

experimental, pilot, or demonstration projects to test new ideas related to the 

financing and delivery of medical and supportive services. A proposed experiment or 

demonstration under Section 1115 of the Social Security Act must be a program 

model that had not been tested previously and could not be conducted within the 

boundaries of a more limited waiver authority, such as the HCBS waiver. A Section 

1115 waiver must be budget neutral over the life of a project, typically five years. In 

other words, the model cannot be expected to cost the Federal Government more 

than it would cost without the waiver. A number of states with current Section 1115 

demonstration projects are testing managed care approaches covering acute and 

long-term care services. Other states are using Section 1115 authority to test self80
 
 

directed support plans, individual budgets, and the hiring of family members to 

provide services.228 

•	 States may offer a variety of services to participants under an HCBS waiver program 

and are not limited in the number of services that can be provided. To be eligible 

under a specific HCBS waiver, an individual must meet targeting and service criteria. 

Targeting criteria may involve age, diagnosis, or condition. Most states have multiple 

waivers targeted to different groups, such as people with traumatic brain injury, 

people with AIDS, and people with intellectual and developmental disabilities. 

•	 States must demonstrate that waiver services are being provided only to individuals 

who are eligible for institutional placement. Equivalent criteria for waiver services 

and for institutional placement stem from the SSA waiver program’s primary 

purpose, which is to offer alternatives to institutional placement.229 

2D:4 – Future Considerations 

Findings 

•	 The National Academy of Social Insurance Study Panel on Long-Term Care (LTC 

Study Panel) found that three tenets should guide the long-term care system of the 

future: 

– The needs of individuals should determine the kinds of services available. 

– Service delivery should preserve the autonomy of the people receiving services. 

– The costs of services should be shared equitably among individuals, families, 

and the society. Services should be similarly available and affordable regardless 

of the state in which a person lives.230 

•	 The LTC Study Panel also found that nearly 10 million Americans need help with 

basic tasks of living, such as bathing, eating, dressing, or walking, or with other 

activities that maintain their independence, such as shopping, cooking, or cleaning. 

More than 80 percent of people who need care live in their communities, not in 

nursing homes, and nearly 40 percent of them are under age 65. 

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•	 The LTC Study Panel found that the current long-term care system falls far short of 

meeting reasonable expectations in several ways:231 

– Unmet needs. Many people receive inadequate care. Nationally, 20 percent of 

people living in the community and needing services get less help than they 

need. As a result, they are more likely to fall, soil themselves, or be unable to 

bathe or eat. 

– Burden on caregivers. Unpaid caregivers play a critical role in the system but 

often pay an economic, physical, and emotional toll. Workers in the formal longterm care system labor under difficult conditions and low wages, frequently 

without fringe benefits. 

– Financial jeopardy. The cost of long-term care can impose financial hardship or 

even spell financial catastrophe for many families. Few people have any type of 

insurance against the expense of long-term care, which can reach $26,000 a 

year at home and more than twice that amount in an institution. 

– Limitations in Medicaid. The federal-state Medicaid Program finances long-term 

care only for people who are or have become impoverished. Its benefits vary 

widely from state to state, and it requires some people who need help to move to 

institutions, when they would much rather live in their communities. 

– Quality problems. Serious quality problems persist in some nursing homes, partly 

as a result of inadequate staffing. Quality in noninstitutional settings is also a 

concern. 

– Demographic challenges. The long-term care system is unprepared to meet the 

demands that the baby boom generation will impose upon it. The coming 

demographic shift also will exacerbate staffing shortages. 

•	 The LTC Study Panel identifies two promising approaches. Expanded federal 

financing could take one of two forms: 

– Universal approach. One option, modeled on Social Security, would provide 

everyone access to a basic, limited, long-term care benefit, supplemented by 

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private insurance for people who can afford it, and enhanced public protection for 

the low-income population. 

– Means-tested approach. Another option would establish a national floor of 

income and asset protection that would reform or replace Medicaid’s coverage of 

long-term care. People could purchase private long-term care insurance to 

protect a larger amount of assets. 

•	 Further expansion of the federal role in long-term care financing faces significant 

obstacles. Congressional deliberations and debate among other policymakers focus 

on the scope of government, the roles of public support and private responsibility, 

and levels of spending and taxation. According to the LTC Study Panel, the public 

seems more receptive toward mixed public/private financing mechanisms than to 

fully public solutions. 

•	 The LTC Study Panel also suggests that long-term care financing should include 

initiatives to promote the purchase of long-term care insurance, provide public 

coverage of catastrophic costs, mandate financial contributions to prefund long-term 

care, and provide more comprehensive public coverage.232 

•	 LTSS needs among people from diverse racial and ethnic groups are greater than in 

the current U.S. majority population. The issues of poverty, lack of insurance, and 

continued segregation from affordable and consistent health care will increase the 

future needs and costs for LTSS for nonwhite populations in the United States, 

which are projected to make up 50 percent of the American population by 2050.233 

•	 Better medical care has increased the life expectancies for the disabled, so there will 

be more people living with disabilities and requiring health coverage for a longer 

period.234 The result is that the composition of the Medicaid caseload is expected to 

shift toward an increasing proportion of elderly and disabled, the most expensive 

categories. 

•	 Some believe that progress in the treatment of disabling conditions may eventually 

reduce the need for long-term care. Others suggest that the projected longer life 

span will mean individuals will experience more years of disability before death. 

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•	 There are precedents of successful programs for consumer-directed long-term care. 

For the past 30 years, the Veterans Administration has operated the Housebound 

and Aid and Attendance programs, which provide additional cash benefits to 

qualified veterans or their surviving spouses if they require ongoing personal care 

services, are housebound, or require nursing home services. This cash benefit 

provides the veteran with additional monthly income to purchase needed services 

and supports. There are no federal restrictions on how this additional cash benefit 

may be used. The veteran with a disability can determine how to spend the benefit; 

for example, he or she can hire friends or family members to provide personal care 

services. Two of the most common types of consumer-directed approaches are the 

individualized budget and direct cash:235 

– In an individualized budget, the state establishes a total dollar value for the 

services needed by the individual. The state contracts with an organization, such 

as a Medicaid provider, to track the individual’s budget and, in some cases, to 

employ the direct care workers who are selected by the consumers. However, 

the consumer has discretion over what services he or she will receive and how 

much that direct care worker will be paid. 

– In the direct cash approach, the state also establishes a total dollar value for the 

services the consumer needs; however, the cash allotment goes directly to the 

consumer rather than the provider. The consumer recruits, hires, and manages 

the direct care worker. The direct care worker is employed by the consumer, 

does not have to be a certified Medicaid provider, and is not required to have a 

written contract with the state.236 

• The Olmstead decision determined that states had a legal obligation to serve 

individuals with disabilities in a setting that reflected their preferences. States’ 

responses to the decision have focused attention on increasing the capacity of 

Medicaid HCBS as an alternative to institutions such as nursing homes, and 

developing options that respond to consumer preferences. However, state budget 

shortfalls and declining revenues have affected the level of implementation.237 

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•	 There is concern about fraud and abuse in consumer-directed programs. However, 

many consumer-directed programs include policies and procedures to minimize 

fraud and abuse and maintain accountability for public funds, such as approving the 

consumer’s plan for using the funding, tracking utilization of services, other forms of 

monitoring, and collecting receipts. Kevin Mahoney, national program director for the 

Cash and Counseling demonstration, after three and a half years, found “no major 

instances of fraud and abuse.” The final report on the program in three original 

states (Arkansas, New Jersey, and Florida) noted that “Abuse of the allowance was 

almost nonexistent in the three Cash and Counseling programs.”238 

•	 Health care costs for mental illnesses in America are unknown, and the prevalence 

rate of mental illnesses is growing. The mental illness category is projected to rank 

number two after heart disease and replace cancer by 2010 as having a greater 

impact on death and disability.239 Medicaid is the principal public payer for mental 

health services and represents 36 percent of the $48 billion in spending.240 It is 

unclear what the future LTSS needs and costs will be for people with mental 

illnesses. 

•	 The public overestimates the help that is available from public disability insurance 

programs like SSDI and other state-mandated short-term programs. Workers 

compensation benefits cover only disabilities caused by injury or illness arising on 

the job, which accounts for only 4 percent of disabilities. 

•	 There is a lack of data regarding the costs of LTSS for children and adults with 

disabilities. LTSS for people 65 years and younger includes many nonmedical 

services and supports such as personal assistance, assistive technology, financial 

management, housing, transportation, and nutrition.241 

•	 AmeriWell is a model suggested by NCD to cover the LTSS costs of all 

Americans.242 AmeriWell is a prefunded, mandatory, long-term services and 

supports model that provides all Americans of any age with coverage from birth 

based on criteria of risk and functioning, not category of disability. AmeriWell delinks 

LTSS from Medicaid and Medicare, creating its own governing agency, regulations, 

oversight, and congressional committee. The contributions of individuals and 

85
 
families, the private sector, and the Federal Government fund AmeriWell. A penny 

pool is established through private stock transactions to supplement LTSS costs for 

impoverished and vulnerable Americans previously served under Medicaid and 

Medicare.243 

2E – Income Maintenance and Asset Development 

Income Maintenance 

Depending on one’s definition, income maintenance and income replacement may 

represent the largest category of identifiable federal expenditures targeted to people 

with disabilities. Though varying in detail based on the prevailing assumptions at the 

time of enactment, all these programs take as their point of departure certain 

assumptions about the association of disability, in its own right or as mediated by 

inability to work, with poverty.244 

Income maintenance or replacement programs can be divided into two basic groups: 

programs that provide cash and programs that provide in-kind assistance. 

Purpose and Method 

The purpose of this section is to examine the evidence-based practices that 

demonstrate the impact of income maintenance financial incentives on the daily lives of 

individuals with disabilities. The research will include direct, indirect, and communitybased impacts of income maintenance financial incentives. Examination will include 

whether income maintenance financial incentives work better for some individuals with 

disabilities than for others; the gaps in access and availability of income maintenance 

financial incentives for individuals with disabilities compared to individuals without 

disabilities; and what policy changes are needed to expand utilization of and 

participation in income maintenance financial incentives for individuals with disabilities. 

The findings from this section will inform the recommendations for any changes or 

reform. In turn, the recommendations will include a framework for congressional, 

legislative, and executive-level involvement. 

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2E:1 – Social Security Disability Insurance 

SSDI is one of the two key underpinnings of this nation’s social insurance system. 

Available to workers who have paid into Social Security245 and to their dependents, 

SSDI replaces income for people rendered unable to work by reason of disability prior to 

normal retirement age. Benefit levels are predicated on meeting the SSA definition of 

disability, which includes both a diagnosis, a prognosis that the condition will last for at 

least a year or result in death, and a determination of the individual’s inability to work.246 

Although not means-tested, this linkage to the ability to gain income through work 

amounts as a practical matter to the equivalent of means testing in many cases. Benefit 

levels are linked to the amount of time the individual has worked, and to the individual’s 

wages or self-employment income during that time.247 

Findings 

•	 Although SSDI is vital to millions of American families, it is hard to characterize it as 

an incentive. Despite the suspicions of many about SSDI, it is unlikely that people 

would deliberately seek to become people with disabilities (as opposed to claiming 

falsely to have a disability) in order to qualify for SSDI. In the end, the program is a 

community resource, designed to ensure stability and prevent destitution and rapid 

downward mobility.248 

– A key factor in understanding the role of SSDI as an incentive or disincentive in 

the lives of people with disabilities is its linkage to health insurance. Most people 

receiving SSDI also are eligible for Medicare. 

– While some SSDI recipients will be able to maintain private sector insurance, 

assuming they had it when they worked, through the coverage of a spouse at 

work, for a period of time through their former employment coverage under the 

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) (subject to 

full assumption of the premiums and a 2 percent administrative fee)249 or through 

other affiliations, Medicare is as crucial as cash benefits in the lives of many 

SSDI recipients. 

87
 
– It is this close connection, resulting as it does in the potential loss of insurance 

coverage if work is obtained that does not include comparable insurance 

coverage, that perversely cements the relationship and the destructive dichotomy 

between disability and work in American public policy.250 

•	 Of the 41 million Medicare beneficiaries, approximately 6 million under the age of 65 

received Medicare on account of disability status in 2003.251 According to recent 

research based on new SSDI beneficiaries in 1995 who qualified upon their own 

work record, 11.8 percent died within the waiting period for Medicare. The study 

estimated hypothetical Medicare costs for the first 24 months of SSDI entitlement to 

be $10,055 in 2000 dollars per person. 

– Costs varied substantially by diagnostic group. If the person died during the 

waiting period, costs were estimated to be $25,864; if the person recovered, 

costs were estimated to be $1,506.252 One study suggested that eliminating the 

24-month Medicare waiting period would cost $5.3 billion, while another study 

estimated the cost at $8.7 billion. The reasons for differences in the estimates 

are the following: 

•	 The $5.3 billion used 2000 dollars while the $8.7 billion is in 2002 dollars. 

•	 The $5.3 billion estimate is only for SSDI beneficiaries who qualified under 

their own work record, while the $8.7 billion estimate includes adult offspring 

and surviving spouses of people with disabilities. 

•	 Each study used substantially different estimation methodologies. Neither of 

these estimates included the cost of the prescription drug benefit that started 

in January 2006.253 

•	 When it was first created, the SSDI Program probably was effective in its legislative 

objective to replace a portion of income lost due to a qualifying disability. However, 

because of the many changes that have occurred since 1956, the program design 

does not optimally meet the needs of people with disabilities. 

– For example, advances in technology and legislation like ADA have opened the 

workplace and made it more accessible to all people. 

88
 
– In addition, many disabilities that in the past might have been permanent, 

completely, or severely limiting may now be treatable and accommodated 

because of advances in medicine and technology. These changes have made 

some aspects of the current disability program outdated. 

– The GAO expressed a similar conclusion when it recently placed all federal 

disability programs on its high-risk list. SSA is exploring how to reshape the SSDI 

Program in the future to reflect these changes and how to improve the 

processing of disability claims, which can be lengthy.254 

2E:2 – Supplemental Security Income 

SSI derives from many of the same premises as SSDI, but with several key differences. 

SSI extends the safety net to all people with disabilities regardless of age, and to all 

senior citizens regardless of disability, who meet its strict income- and resourceeligibility standards. SSI also differs from SSDI in being strictly means-tested, beyond 

the fact or the capacity for earnings. Unearned income is taken into account in 

determining eligibility and benefit amounts, as are savings, along with employment. 

Lastly, SSI differs from SSDI in being linked not to Medicare but to Medicaid, meaning 

that the state plays two important roles in it that are not paralleled with SSDI. These 

roles are that the state may or may not add a state supplement to the standard SSI 

payment (the federal benefit rate) and that the state, through its discretion in 

administering the Medicaid Program, will determine to a large degree exactly what 

health services an individual will receive. For people whose route to eligibility comes 

through disability rather than age, monitoring disability status as well as economic 

status is a standard component of the program.255 

Findings 

•	 The SSI Program is not, however, free of major design flaws, including the following: 

– The disability determination process does not ensure that the right people get 

benefits on a timely basis. 

89
 
 

 

 

– The complex rules related to income and assets make it difficult to pay people 

the correct amount. 

– Many of the medical listings that are used as part of the disability determination 

process do not recognize advances in medicine that would enable individuals to 

work. 

– The vocational information used as part of the disability determination process is 

out of date.256 

– The GAO expressed a similar conclusion when it recently placed all federal 

disability programs on their high-risk list. 

– Despite the drawbacks in program design noted above, the SSI Program, with its 

nationally uniform standards and payment levels, is a considerable improvement 

over its predecessor programs.257 

•	 The SSI Program does not always effectively reach its intended beneficiaries.258 In 

2002, $2.7 billion, or 8 percent, of all SSI payments were improper. There are 

inconsistencies across states and between Disability Determination Services (DDS) 

and Offices of Hearings and Appeals in decisions about whether someone is a 

person with a disability. A Lewin Group study has shown that within individual DDSs, 

examiners come to different decisions on the same types of cases.259 

– SSA is working to reduce inconsistency. SSA has developed both short-term and 

long-term strategies. 

•	 The short-term strategy includes early screening of hearings for on-the-record 

decisions, using a short form for fully favorable decisions, and deploying 

speech recognition and video teleconferencing technology to hearings 

offices.260 

•	 For the long term, the SSA commissioner has developed a new approach to 

disability determinations that focuses on making the right decision as early in 

the process as possible.261 This approach is predicated on the successful 

implementation of SSA’s new electronic disability system. 

90
 
 

 

•	 The major findings of the 2005 Annual Report of the Supplemental Security Income 

Program are the following:262 

– By 2029, the end of the 25-year projection period, the federal SSI recipient 

population is estimated to reach 8.7 million. 

– The projected growth in the SSI Program over the 25-year period is largely due 

to the overall growth in the U.S. population. 

– The rate of participation is projected to vary somewhat by age group, with the 

overall participation of the age groups 65 or older projected to decline and the 

participation of the under-65 age groups projected to increase slightly. 

– The number of federal SSI recipients remained essentially level at 2.2 percent of 

the total U.S. population in 2004, and is projected to increase gradually to 2.4 

percent of the population by 2029. 

– Federal expenditures for SSI payments in calendar year 2005 were estimated to 

increase by $2.2 billion to $36.4 billion, an increase of 6.4 percent from 2004 

levels. 

– In constant 2005 dollars, federal expenditures for SSI payments are projected to 

increase to $45.8 billion in 2029, a real increase of 1.1 percent per year. 

– When compared to the gross domestic product, federal SSI expenditures are 

projected to decline over time, from the current level of 0.29 percent of GDP in 

2004 to 0.24 percent of GDP by 2029. 

2E:3 – Ticket to Work and Work Incentives Improvement Act of 1999 

Thousands of people with disabilities and their advocates shared enthusiasm that 

TWWIIA would greatly expand employment opportunities for people on the SSA 

disability rolls,263 providing an alternative to direct income maintenance for individuals 

with disabilities. Three years after enactment of the law, it is clear that TWWIIA is 

faltering. The Ticket to Work and Self-Sufficiency Program (Ticket Program) is failing to 

recruit the anticipated numbers of new employment service providers, called 

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Employment Networks (ENs). In addition, ENs are serving only a fraction of the 

beneficiaries thought to be interested in participating in the Ticket Program. Nearly 

1,000 providers have enrolled in the program, but only about one-third of programs 

operating have accepted any tickets.264 

Findings 

•	 The SSA Ticket to Work Advisory Panel has urged Congress and the SSA 

commissioner to take quick action on the following issues: 

– Ticket Program as a supplemental funding source. ENs are uncertain about 

whether and how they can use funds from other public sources to serve ticket 

holders and have chosen not to actively participate in the Ticket Program 

because of fear of losing other stable funding sources. 

– EN payment system. Two problems in the EN payment system discourage the 

active participation of many providers: 

•	 The payment system places too much financial risk on ENs. 

•	 The payment system provides significantly lower reimbursements to ENs for 

serving SSI recipients than for serving SSDI beneficiaries. 

– Adequacy of provider incentives. Because little is known about outcome 

payments for providers, TWWIIA authorizes the SSA commissioner to review, 

refine, and alter the payment system to ensure that it provides adequate 

incentives for ENs to serve beneficiaries and produce savings to the program. 

Despite major problems with the payment model, no alterations have been made 

to the original program payment system. The commissioner has established an 

advisory group on adequacy of incentives to assist SSA with the design of a 

workable payment system, including financial incentives to serve four groups of 

beneficiaries with special needs that were referenced in the legislation. 

– EN payment claims administration. Two factors compound the financial risk and 

working capital problems of Employment Networks: 

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•	 Long-term tracking of beneficiary earnings is labor intensive and 

administratively burdensome for ENs. 

•	 Often there are long delays in processing EN claims for payment. 

– Marketing to ENs and to beneficiaries. To date, there is no national marketing 

plan for the Ticket Program, and the program is not well understood by the vast 

majority of beneficiaries or by people who influence a beneficiary’s decision to 

attempt work. ENs spend considerable time explaining the program and 

dispelling misconceptions. In addition, the lack of marketing contributes to the 

insufficient demand for EN services. However, SSA has been awarded contracts 

to support development of a strategic marketing plan and EN marketing and 

recruitment efforts. The Ticket to Work Advisory Panel has made numerous 

recommendations to the commissioner on this issue in past reports. 

– EN training and communication. Inadequate training, technical assistance (TA), 

and timely information is available to ENs. Existing TA and training resources are 

inadequate, nonuniform, piecemeal, uncoordinated, and of varying quality, with 

no coordinated means for ENs to identify and share best practices.265 

2E:4 – Financial Incentives for Income Maintenance Work Better for Some 

Individuals with Disabilities than for Others 

Work disability is a costly problem in the United States. In 1988, for example, the costs 

of work disability included $22 billion in SSDI payments, $11 billion in SSI payments to 

people who are blind and people who have other disabilities, $19 billion in Medicaid 

expenditures, and $27 billion (1987) in workers compensation payments (Employee 

Benefit Research Institute, 1990).266 

Findings 

•	 Marjorie L. Baldwin and William G. Johnson, in Dispelling the Myths about Work 

Disability, describe four principles (related to prevalence of disability types, onset of 

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disability, factors impacting employment outcomes, and wage differences) that 

contradict common misconceptions of disability and working:267 

– The most frequent types of disabilities are not present at birth or are the result of 

traumatic accidents. Instead, they are musculoskeletal conditions, such as 

arthritis, or cardiovascular conditions, typically caused by chronic degenerative 

processes that increase as people age. Among younger age groups, mental 

illnesses form the most prevalent disability category. 

– Most workers with disabilities did not have disabilities as children and were not, 

therefore, subject to discrimination in education or employment at the time of 

entry into the labor market. 

– The ability of a person with a disability to work does not depend solely on the 

nature of his or her disability and the quality of medical care received. Many other 

factors, including characteristics of the worker and usual job, attitudes of 

employers, labor market conditions, and the availability of workplace 

accommodations, are important determinants of employment outcomes for 

workers with disabilities. 

– There are large wage differentials between workers with and without disabilities 

that are not explained entirely by health-related differences in productivity. 

Although productivity differentials are one important factor explaining the wage 

differentials, employer discrimination also contributes to the low wage rates of 

workers with disabilities. 

•	 People with Down syndrome and other people with significant disabilities depend 

largely upon SSI to augment their income, and upon Medicaid to pay for their health 

expenditures. Today, opportunities have increased for this population to show their 

capacity and desire to become productive contributors to their communities through 

meaningful employment. Both SSI and Medicaid, however, have caps so that when 

people with significant disabilities earn too much money or accumulate too many 

resources, they are no longer eligible for these programs.268 The job market for 

people with disabilities, although improving, is not stable. As a consequence, many 

people with significant disabilities269 choose not to work to their full capacity for fear 

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of losing their benefits. Adults with significant disabilities could earn no more than 

$860 a month in gross wages in 2006 or they would lose their SSI eligibility. This cap 

prevents people with significant disabilities from pursuing and obtaining employment 

opportunities that would provide more financial independence. They are forced to 

remain in low-paying jobs under the current regulations. They can have no more 

than $2,000 in total resources or they will lose their SSI eligibility.270 This fact 

prevents them from saving money or investing in a home of their own. Families 

cannot bequest or give resources in the name of an individual with significant 

disabilities, since most often these are counted toward the $2,000 eligibility cap. 

Thus, the current regulations force adults with significant disabilities to remain in a 

state of poverty.271 

•	 A recommended solution is to subtract Impairment-Related Work Expenses (IRWE) 

after countable income is determined in SSI payment calculations. Individuals who 

are blind subtract their work-related expenses after countable income is determined. 

This means that they can reduce their countable income by twice as much as people 

with other disabilities. The smaller the countable income calculation, the larger the 

SSI benefit payment will be.272 

• Advocates for patients with inflammatory bowel disease (IBD) believe that the SSA 

process for determining eligibility for disability insurance may treat some claimants 

unfairly.273 As a result of perceived unfair treatment regarding eligibility 

determination, claimants with IBD believe they are likely to be denied benefits at the 

initial decision and reconsideration levels, making it necessary for them to appeal to 

the SSA hearings level to have their claims allowed. 

– However, the GAO found that while claimants with IBD are somewhat less likely 

to be allowed SSDI benefits than claimants with other disabilities, their 

experiences applying for disability benefits are not unique, and SSA has efforts 

under way that may address some claimant concerns. 

– To help ensure that all claimants are informed of and provide SSA with 

information needed to assess fairly how disabilities limit claimants’ ability to work, 

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the GAO recommends that SSA emphasize the types and importance of 

information claimants must submit for their claim. 

– SSA agreed with the GAO’s recommendations, but thought that some 

perspectives the GAO provided on evaluating IBD claims were not relevant, and 

that the GAO’s characterization of one finding went too far. 

2E:5 – Gaps in Access and Availability of Financial Incentives for Income 

Maintenance for Individuals with Disabilities Compared to Individuals without 

Disabilities 

Median household income of (working-age) men without disabilities increased by 9.4 

percent and median household income of women without disabilities increased by 12.6 

percent between 1989, the peak year of the 1980s business cycle, and 2000, the peak 

year of the 1990s business cycle.274 In contrast, the median household income of men 

with disabilities fell by 2.9 percent and the median household income of women with 

disabilities fell by 5.6 percent over the period.275 

Findings 

•	 The proximate reason for the dramatic difference in the fortunes of the working-age 

population with and without disabilities was the dramatic divergence in their 

employment rates over the period.276 

– The employment rate of men without disabilities was “procyclical” (i.e., followed 

the business cycle), declining during the recession years of the early 1990s but 

then growing over the later recovery years. 

– In contrast, the employment rate of men with disabilities declined both over the 

recession years and over the recovery years of the 1990s. 

– The long-term growth in the employment rate of women muted some of the 

cyclical effects on their employment rate. The employment rate of women without 

disabilities rose during both the recession and recovery years but rose much 

more during the growth years. Women with disabilities experienced declines in 

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their employment rate over the entire period (despite the increase in median 

household income), although the decline was smaller over the growth years. 

– The failure of the employment rates of both men and women with disabilities to 

increase during the growth years of the 1990s business cycle (after 1992) was a 

complete reversal of the procyclical behavior of their employment rates over the 

1980s business cycle. 

•	 The GAO found that lifetime earnings, the incidence of disability, and mortality are 

three key factors that influence the taxes individuals pay into the Social Security 

system and the benefits they receive.277 Lifetime earnings factor directly into the 

Social Security benefits formula, which is designed to replace a larger proportion of 

pre-retirement earnings for low-income earners than for higher-income earners. 

Additionally, the probability of being on the disability insurance rolls affects the 

expected value of benefits. People with disabilities start receiving benefits earlier. 

The third factor, mortality, affects the benefits received relative to taxes paid 

because it determines the number of years a person will pay taxes and receive 

benefits.278 

•	 Differences by race in the relationship between taxes paid and benefits received 

under Social Security are due mainly to differences in lifetime earnings, the 

incidence of disability, and mortality among the groups.279 In the aggregate, AfricanAmericans and Hispanics have higher disability rates and lower lifetime earnings, 

and thus as a group tend to receive greater benefits relative to taxes than whites. 

However, whites with low lifetime earnings or high disability rates also receive 

greater benefits relative to taxes than their higher-income counterparts or those 

without disabilities. Higher benefits relative to taxes paid are associated with lower 

lifetime earnings and higher disability incidence.280 

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2E:6 – Policy Changes to Expand Utilization of and Participation in Financial 

Incentives for Income Maintenance for Individuals with Disabilities 

Findings 

Structural weaknesses in the SSDI and SSI programs have prevented the agency from 

offering return-to-work services when they may help most—soon after a person 

becomes identified as having a disability.281 Some federal programs other than SSDI 

and SSI also face the challenge of providing services in a timely fashion. For example, 

38 percent of the programs that provide employment-related assistance to people with 

disabilities reported that ensuring timely provision of services and benefits was a 

challenge.282 

•	 Similarly, despite the VA’s recent progress in reducing its disability claims workload, 

it will be difficult for the agency to cope with future workload increases due to several 

factors, including increased demand for services linked to military conflicts and 

federal legislative mandates. Almost half the programs that provide employmentrelated assistance and 54 percent of the programs that provide medical care 

reported that planning for growth in the demand for assistance was a challenge.283 

•	 The GAO recommends that the commissioner of Social Security develop a 

comprehensive strategic plan to ensure the reliability and usefulness of the data the 

agency collects. SSA should take the following steps to improve its data reliability 

and usefulness:284 

– Establish a cost-effective internal control strategy for ensuring the reliability of 

data in electronic disability records that would include both front-end controls on 

data entry and a tracking and feedback system for back-end verification of the 

electronic records. 

– Take steps to review the usefulness of the types of information collected and 

consider whether additional types of information could improve program 

oversight. This effort could include a survey of users of electronic disability data. 

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•	 In August 2004 and January 2005 the GAO found the following:285 

– SSA has made progress implementing and evaluating the Ticket Program, but 

the agency has had limited success in achieving the program’s goals of 

expanding beneficiaries’ choice of service providers and increasing beneficiaries’ 

efforts to work and become self-sufficient. Although SSA experienced delays with 

the initial distribution of tickets, the agency finished distributing tickets to eligible 

beneficiaries throughout the nation in September 2004. As part of 

implementation, SSA also has contracted for extensive assessments of its 

program’s performance. Despite SSA’s completion of key implementation 

activities, it has had limited success achieving its goal to encourage service 

providers to join the program and provide services to beneficiaries. 

– The Ticket Program’s ability to achieve its goals has been hindered by several 

factors, according to the Ticket to Work Advisory Panel,286 researchers, and 

service providers. First, service providers believe that the program’s payment 

system does not provide adequate compensation for the administrative costs of 

participating. Second, participation of eligible beneficiaries has been limited by 

the lack of ENs, the lack of outreach to provide information about the program, 

and the lack of incentives to encourage beneficiaries to participate. 

– GAO also reported that the Ticket to Work Advisory Panel and others have 

suggested numerous changes to improve the Ticket Program. They believe that 

reforming the payment system is critical to expanding participation. In addition, 

they suggest numerous changes to reduce the administrative burden for service 

providers, such as having SSA provide additional services, guidance, and 

information to providers.287 

– SSA faces several challenges as it tries to improve the Ticket Program’s ability to 

achieve its goals. Although SSA has made some administrative changes to the 

program, the agency recognizes that additional changes are needed. However, 

SSA has deferred other reforms until it has performed additional assessments on 

changes that it believes could be costly. 

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Asset Development 

2E:7 – Demographic and Trend Characteristics of Asset Development Impact for 

People with Disabilities 

Introduction 

The field of asset development has emerged as the “third pillar” of social policy intended 

to complement income support from public benefits programs and social services for 

low-income Americans. Asset building for people with disabilities is viewed as a way to 

complement (not replace) income support and to foster income preservation from public 

and private benefits programs. 

Assets have many possible meanings, but as a general concept, assets are rights or 

claims related to property, both tangible and intangible. Such rights or claims are 

enforced by cultural expectations and formal laws and regulations. Assets can be 

invested or otherwise made active to generate returns. Broadly conceived, assets can 

refer to anything that has this potential for positive returns. The research demonstrates 

that asset ownership is a good thing and that individuals who have assets live longer, 

are healthier, and have more education than individuals without assets. For the purpose 

of this research, assets are defined as capacities and resources that enable individuals 

with disabilities and their families to identify, choose, and implement activities that 

sustain and enhance their quality of life and improve their long-term economic, social, 

and psychological well-being. Assets can be separated into the following three 

categories that represent direct, indirect, and community-based incentives:288 

1. Individual financial and nonfinancial assets: money and savings; stocks, 

bonds, and other financial securities; real and personal property, machines, 

equipment, tools, assistive technology, durable household goods, and other 

components of production. 

2. Human capital assets: skills, knowledge, and experience gained from education 

and training. 

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3. Gateway assets: formal and informal community assets, cultural capital, and 

social capital that consist of the value of access to family and social contacts, 

education, transportation, communications, the political process, organizations, 

health care, and credit and expert advice (such as tax and financial advice).289 

Findings 

•	 Americans acquire assets through many channels besides work. Ownership of 

assets for many Americans often comes from sources other than income from 

work.290 The research on assets describes family of origin, geography/environment, 

education, ethnicity, class, inheritance, personality, and even legislation enacted 

more than a hundred years ago, such as the Homestead Act, as strong predictors of 

asset ownership in the 21st century.291 More than 55 percent of people with 

disabilities are “asset poor” (live at the federal poverty level and have only enough 

resources for three months).292 

•	 People with disabilities often are unemployed or under employed, or live with fixed or 

capped incomes. Examples are the three and a half million adults with disabilities 

receiving federal Supplemental Security Income (SSI) benefits equal to monthly 

incomes of $512 in 2000.293 

•	 The research shows that, fewer than 10 percent of individuals with intellectual 

disabilities and fewer than 50 percent of individuals with disabilities are home 

owners. In reality, many low-income Americans survive through substantial help 

from families, hard work, their community and religious affiliations, and income 

support and social services from the government and private charities.294 

•	 Americans with disabilities represent one-third of American families (29 million out of 

72 million families) and are likely to be twice as likely to be poor compared to their 

neighbors without disabilities.295 Individuals with disabilities who are poor represent 

almost 18 percent of the Americans age 5 and older; among Americans age 5 and 

older without disabilities, individuals who are poor comprise 11 percent of the 

population. Twenty-five percent of American children with disabilities (ages 5 to 15) 

live in poverty, compared to 15.7 percent of children without disabilities. Americans 

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with disabilities between the ages of 16 and 64 make up the next largest number of 

people living in poverty, at 19 percent—nearly double the rate of individuals in the 

same age range without disabilities. 

•	 Americans who live in the South are more likely to be poor and have a disability than 

people living in other locations in the United States. Disability prevalence is higher in 

the South, with two out of every five living with a disability; in the other three regions 

of the United States, one in five live with a disability.296 

•	 American employment opportunities favor individuals without disabilities. Seventynine percent of working-age men between the ages of 16 and 64 are employed, 

compared to 60.1 percent of working age men with a disability. Working-age women 

without disabilities experience employment rates of 67.3 percent, compared to 51.4 

percent for their colleagues with disabilities. The employment rates for people with 

disabilities who were heads of families were 53.3 percent, compared with 80.7 

percent of all people who were heads of families. 

•	 Families with members with a disability had a median income of $39,155 compared 

with the overall family median income of $50,046 for families without members with 

disabilities. For example, families with members with mental disabilities had median 

incomes of $36,197, and families with members with a sensory or physical disability 

had median incomes of $36,950.297 In 1999, among families that had members with 

a disability, 73.1 percent of the families had earnings from wages or salaries, 

compared to 84.9 percent of families without members with disabilities. Families with 

members with disabilities were more likely to receive income from public programs 

(42.8 percent of the families that had members with a disability received income 

from Social Security compared to 22.5 percent of families without members with 

disabilities). 

•	 Global demographic changes will impact disability policy in the United States. The 

world’s population quadrupled in the 20th century and is predicted to grow by 50 

percent by the end of the 21st century.298 Life expectancy in the United States has 

increased 30 years in less than a hundred years, with the fastest growing age group 

now in their 80s. Life expectancy for people with disabilities has increased as well, 

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and the population of individuals with disabilities under age 65 has increased 25 

percent. The future economics of the country is uncertain and is projected to 

challenge the social system of spending entitlements for individuals with disabilities, 

approaching $300 billion for 2005. 

•	 Americans from diverse racial and ethnic backgrounds have a higher prevalence of 

poverty and disability than the general population. American Indian and Alaska 

Native householders made up 38.5 percent; for African-American householders the 

prevalence rate was 35.7 percent; for non-Hispanic white householders the 

prevalence rate of disability was 27.1 percent; for Asian householders the 

prevalence rate was 26.5 percent; and for Hispanic families the prevalence rate of 

disability was 33.2 percent reporting one or more members with a disability.299 Some 

people with disabilities who have low incomes have more barriers300,301 than other 

people to achieving home ownership or accumulating assets. 

•	 Realizing the American dream of home ownership and economic self-sufficiency has 

not been a reality for most working low-income Americans. Outcome data from the 

American Dream Demonstration, which studied the savings behavior and use of 

financial instruments and services of thousands of low-income working Americans, 

did not include account holders with disabilities.302 

2E:7A — Utilization of Tax and Financial Services 

Historically, when the tax code was written and federal disability policy, such as 

Medicaid and Supplemental Security Disability Insurance, was drafted, there was no 

thought that asset development would ever apply to individuals with disabilities, who 

were mostly hidden from society and not in the mainstream workforce. The overarching 

notion of disability as limitation and need was the norm, with poverty as its most 

outstanding asset well into the second half of the 20th century. Steven Mendelsohn, a 

noted attorney and disability tax expert, found that even today the word disability 

appears most frequently with the word death in the Internal Revenue Code and noted 

that “Americans should be embarrassed at reinforcing these associations and recognize 

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the ongoing harm they do to the contemporary efforts to bring people with disabilities in 

to mainstream American life.”303 

Despite the progress made over the past 50 years in advancing the rights of individuals 

with disabilities to be educated, to work, and to live independently, much progress is still 

needed. Working Americans with disabilities are three times as likely to be in poverty as 

their colleagues without disabilities. For Americans with disabilities to take ownership of 

their futures, the following key factors need to be addressed: 

•	 Chronic poverty that promotes exclusion and limits participation in mainstream 

American life 

•	 Unemployment and underemployment due to the lack of meaningful education and 

training for jobs beyond entry level 

•	 High school dropout rates that are highest for young men with disabilities 

•	 Lack of access to affordable long-term services and supports for everyday living and 

work 

•	 Absence of health care providers who understand disability and its medical 

components 

•	 Lack of housing that is accessible and affordable 

•	 Lack of transportation that is accessible, reliable, affordable, and central to where 

people with disabilities live 

•	 Lack of community integration, evidenced by the high prevalence of loneliness and 

isolation experienced by individuals with disabilities 

•	 Outdated disability policy that discourages work and savings 

•	 Lack of knowledge about the relationship of public benefits to earned income and to 

savings opportunities, such as matched savings accounts and the Earned Income 

Tax Credit 

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The enduring nature of these chronic conditions results in obstacles to building income 

preservation and self-sufficiency for Americans with disabilities. 

Findings 

•	 Financial institutions have conducted and reported little research on the financial 

service needs, use, and activities of individuals with disabilities. Historically, the 

banking industry has paid little attention to disability as a market segment. The ways 

in which individuals with disabilities manage their finances (checking and savings 

accounts), plan for retirement, make investments, and do their everyday banking are 

unstudied.304 In addition, little information is known about the accessibility of various 

financial services except for the recent evolution of voice-activated ATMs, which for 

the first time in history made banking privacy and independence available to millions 

of Americans who are blind.305 

•	 The National Federation of Community Development Credit Unions has developed a 

national work committee with aggressive disability outreach in order to bring 

disability awareness and financial services and disability education to its national 

network of more than 230 credit unions.306 

•	 The tax filing behavior and use of the IRS free tax services by individuals with 

disabilities is unstudied. Historically, the IRS has not collected data on individuals 

with disabilities and their utilization of and access to a wide array of free tax 

preparation services, which include walk-in clinics, 800 numbers, and Web sites. 

•	 Americans with disabilities underutilize tax provisions. The National Organization on 

Disability (NOD)/Harris survey found that 83 percent of people with disabilities never 

claimed available tax credits and or deductions related to work.307 Less than half of 

people with disabilities who own homes claim the home mortgage interest deduction, 

often because of their low income, failure to itemize, and lack of knowledge. 

•	 The EITC is a true asset-building opportunity that is underutilized by working 

individuals with disabilities on public benefits. A Ford study that examined the needs 

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of taxpayers with disabilities found that only 25 percent filed for the EITC and that 

few understood the benefits of filing taxes even when not required to by law. 

2F – Housing 

Introduction 

Being part of the community and living as independently as possible are among the 

most important values and goals shared by disability advocates and people with 

disabilities and their families. A home of one’s own—whether rented or purchased—is 

the cornerstone of independence for people with disabilities. However, across the 

nation, people with disabilities face a crisis in the availability of decent, safe, affordable, 

and accessible housing. Today, many people with disabilities still live in large, 

congregate facilities or other inappropriate places such as institutions. Approximately 

750,000 people with developmental disabilities live with aging parents (one of whom is 

over age 65).308 For people who use wheelchairs or other mobility devices, finding 

housing with even basic accessibility features (e.g., an entrance with no steps) ranges 

from daunting to impossible. This difficulty is magnified in rural areas where there is a 

scarcity of any rental housing and new units rarely are developed. In addition, the 

designation “for elders only” of almost half a million units of Department of Housing and 

Urban Development (HUD)-funded public and assisted housing over the past 12 years 

has had a devastating impact on people with disabilities.309 

Purpose and Method 

The purpose of this section is to examine the evidence-based practices that 

demonstrate the impact of housing financial incentives on the daily lives of individuals 

with disabilities. The research will include direct, indirect, and community-based impacts 

of housing financial incentives. The examination will address whether housing financial 

incentives work better for some individuals with disabilities than for others; the gaps in 

access and availability of housing financial incentives for individuals with disabilities 

compared to individuals without disabilities; and what policy changes are needed to 

expand utilization of and participation in housing financial incentives for individuals with 

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disabilities. The findings from this section will be used in chapter 4 to inform the 

recommendations for reform that will include a framework for congressional, legislative, 

and executive-level involvement. 

2F:1 – Discrimination against Home Seekers with Disabilities 

Overcoming the preconceptions of service providers and housing professionals 

regarding the capabilities of people with disabilities has been a challenge. Often, service 

providers are accustomed to promoting supported living programs as the best option for 

people with disabilities. In addition, housing agency professionals often have fears and 

misconceptions that make them hesitate to work with people with disabilities.310 

Similarly, with respect to the well-established and better-known criteria for physical 

accessibility, grounds exist for concern over whether the value to people with disabilities 

is being maximized regarding the housing subsidies in question. Without attention to 

needs-based program limitations on the ability of potential purchasers to aggregate 

down payments or meet even subsidized mortgage commitments, and without attention 

to integration of key infrastructural elements such as transportation, accessible 

commercial facilities, health care, or other community-based resources, use of 

subsidies may be limited. Faced with a perceived lack of coordination among housing, 

transportation, economic development, and health care planners and programs, a 

possible question is whether the number of individuals with disabilities who can benefit 

from these subsidies is as large as it might be. 

Findings 

In June 1999 the U.S. Supreme Court in the Olmstead v. L.C. decision made it clear 

that ADA protects people with disabilities from being confined unnecessarily in 

restrictive settings such as nursing homes or institutions.311 The ADA “integration 

mandate,” with the support of President George W. Bush and his Administration, 

requires each state to develop “comprehensive effective working plans” to expand the 

availability of housing and other community-based supports. Such planning efforts must 

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respond to the needs of individuals with disabilities both at risk of as well as living in 

public institutions and nursing homes.312 

In Discrimination against Persons with Disabilities: Barriers at Every Step, researchers 

from The Urban Institute of Washington, DC, found widespread discrimination against 

individuals with disabilities seeking rental property.313 The report states, “Deaf testers 

seeking rental housing were significantly less likely to be able to speak to a housing 

provider than were their hearing counterparts about available units.”314 

In addition, the study found that “16 percent of rental housing providers who indicated 

that they had units available for the wheelchair user refused to make or allow for 

reasonable unit modifications, and about 19 percent of people who had on-site parking 

refused to make the reasonable accommodation of providing a designated accessible 

parking space.”315 The researchers also found that wheelchair users experience 

significant levels of adverse treatment with respect to housing availability. In 5 percent 

of tests, the rental housing provider told the tester without an obvious disability that a 

unit was available while telling the tester with a disability that no units were available.316 

Nationwide, over 4 million individuals with disabilities depend on SSI as their sole 

source of income ($552/month, 2003), pricing them out of housing markets. Since 1992, 

Congress has authorized housing agencies to exclude people with disabilities from 

certain properties designated as housing for elders only, resulting in a loss of over 

300,000 units nationwide. Federal budget authority almost doubled from 1976 to 2002 

($1.2 trillion to $2.1 trillion), while HUD budget authority declined by 41 percent. In many 

local communities, housing subsidies (rental vouchers) go unused because of 

escalating rental rates and landlord disinterest.317 

In a 2004 report funded by the HHS Center for Mental Health Services/Substance 

Abuse and Mental Health Services Administration (CMHS/SAMHSA) Bazelon Center for 

Mental Health Law researchers found that the rental market has been unresponsive to 

the needs of home seekers with psychiatric disabilities ever since the advent of 

deinstitutionalization in the 1960s.318 The report claims that “In many states, people with 

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mental disabilities have been, and continue to be restricted to the least attractive parts 

of a community—to neighborhoods where housing often is relatively inexpensive and 

unsafe.”319 

The report also contends that little has changed in the “not in my back yard” (NIMBY) 

attitude.320 It states that the privatization of mental health housing has had effects that 

“will not be easily rectified without a major infusion of federal and state funding and an 

overhaul in the way states regulate these homes and coordinate agencies involved in 

human services delivery.”321 

For people with disabilities, discrimination plays a significant if unspecified role in 

obtaining housing. Every two years, the Technical Assistance Collaborative (TAC) and 

the Consortium for Citizens with Disabilities (CCD) Housing Task Force publish a study 

comparing SSI incomes with fair market rents. What TAC found in the latest study was 

the housing crisis for people with disabilities receiving SSI is worse than ever.322 People 

with disabilities receiving SSI have extremely low incomes. SSI as income equals just 

18 percent of median income, nationally. A person receiving SSI will need to pay 105 

percent of his or her income to afford a modest one-bedroom apartment. Therefore, 

there clearly is a need for some type of government services. For a studio apartment, 

the news is not much better: a person receiving SSI would need to pay 89 percent of his 

or her income.323 In some urban areas, where rents are extremely high, it is even worse. 

In some rural areas the situation is not as bad, but housing still is not affordable.324 

The 2002 National Cooperative Bank study325 found not one housing market in the 

country where a person receiving SSI could rent an apartment affordably. “Affordably” 

means that a person pays 30 percent of his or her income on rent and utilities. The 

income that SSI provides is equal to a wage of approximately $3.43 an hour. The 

researchers also found that rent rose twice as fast as the SSI cost of living. The bottom 

line is the only way a person with a disability can bridge this affordability gap is to 

access housing subsidies.326 

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2F:2 – HUD Programs 

There are two types of federal affordable housing programs. The first are housing 

subsidy programs that provide rent or operating support to a project or apartment that 

typically allows the tenant to pay between 30 to 40 percent of income on rent. The 

second are capital programs that provide resources to help fund capital development of 

affordable multifamily rental projects. Some of these programs provide either subsidy or 

capital funding. Capital programs include programs covered under the consolidated plan 

requirements of HUD. These programs provide block grants to states and Local 

Housing Authorities through the HOME Program, the Community Development Block 

Grant Program, the Housing Opportunities for Persons with AIDS Program, and the 

Emergency Shelter Grants Program. An additional capital program is the Low-Income 

Housing Tax Credit Program. It provides tax credits that developers can use to raise 

equity to fund the development of affordable rental housing.327 

Findings 

•	 The largest housing program, Housing Choice Voucher Program—a Section 8 

program—is funded at approximately $800 million a year and administered by 2,600 

Public Housing Agencies (PHAs) nationally. The program is available in every 

locality from either a state, regional, or local PHA. It provides participants with a rent 

subsidy to identify a house in the local market. The subsidy amount is based on the 

household’s income and the cost of housing in the local market. Typically, the 

participant will pay between 30 and 40 percent of income on rent. The PHA will pay 

the difference between the established rent and the tenant’s rent share.328 

– During the past few years, many PHAs have had a poor success rate in using 

their vouchers. HUD has implemented a policy pushing PHAs to use it or lose it. 

This gives the federal entity an opportunity to partner with PHAs, because they 

are looking for eligible people to use these subsidies. In addition, PHAs that do 

not have a high utilization rate, defined as 97 percent or greater, are not eligible 

to apply for new vouchers. The utilization rate is the percentage of vouchers that 

the PHAs have under lease.329 

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– Since 1997, HUD has issued more than 60,000 new vouchers, which are 

targeted to people with and without disabilities within programs managed at the 

state or local level. More than 470 PHAs throughout the country have targeted 

the disability vouchers.330 

•	 To the extent that fair housing laws are vigorously enforced, including through the 

levying of maximum fines for their violation, fair housing laws can represent a 

financial incentive to people with disabilities. Faced with a real risk of incurring costs 

for violating the law, building designers, owners, rental agents, and others are less 

likely to engage in discriminatory practices. In turn, the supply of available housing is 

be expanded, hence bringing down the price.331 

•	 Virtually all adults with disabilities receiving SSI benefits who do not have 

government housing assistance qualify under federal guidelines as households with 

“worst case” housing needs. Worst case housing needs are defined as the need to 

pay more than 50 percent of income for housing costs, or the need to live in severely 

substandard housing. A 1996 HUD report indicates that people with disabilities are 

more likely than elders or family households to experience both these housing 

problems.332 

•	 The information in Priced Out in 1998333 is directed at federal housing policymakers 

and the nation’s affordable housing officials. During the early 1990s, the Federal 

Government made no effort to assess accurately the housing needs of people with 

disabilities. Recent estimates have been more realistic, including numbers in a 1999 

HUD report which documented that 25 percent of the 5.4 million households in the 

United States with worst case housing needs—approximately 1.4 million 

households—were people with disabilities.334 Statistics published by HUD in March 

1998 document that people with disabilities assisted through HUD programs have an 

average annual income that is about 20 percent less than the income of elderly 

households receiving HUD assistance.335 

•	 Section 8 of the U.S. Housing Act of 1937 (42 U.S.C. 1437f) authorizes housing 

assistance to aid families with low income in renting safe and decent housing. 

Housing assistance payments are limited by fair market rents (FMRs) established by 

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HUD for different areas. In the Housing Choice Voucher Program, the FMR is the 

basis for determining the “payment standard amount” used to calculate the 

maximum monthly subsidy for an assisted family.336 In general, the FMR for an area 

is the amount that would be needed to pay the gross rent (shelter rent plus utilities) 

of privately owned, decent, and safe rental housing of a modest (nonluxury) nature 

with suitable amenities. In addition, all rents subsidized under the Housing Choice 

Voucher Program must meet reasonable rent standards. 

•	 To a limited extent, federal housing subsidies still include some rental subsidies that 

allow people with low income, and in some cases expressly allow people with low 

income who have disabilities, to pay for rental housing that they could not otherwise 

afford. The role of such subsidy and voucher programs has steadily declined.337 

Even when such programs were a more prominent component of national housing 

policy, and to the extent that they remain in use in conjunction with other 

programs,338 recognition of the issues facing people with disabilities appears to have 

focused on only one dimension of access. That is to say, while economic eligibility 

standards recognize the limited income and resources of many people with 

disabilities, there has never been in the Section 8 (or Section 811) program any 

recognition that factors other than income, age, or family size need to be taken into 

account in determining the amount of subsidy or the kind of housing that would be 

appropriate. Thus, these programs have not included sufficient elasticity to reflect 

possible needs for additional space, or the heightened costs imposed on affordability 

by the scarcity of accessible dwellings.339 It seems likely that the value of direct 

financial incentives, or of indirect incentives, has been significantly undermined or 

limited by this failure. 

•	 While it is clear that people with disabilities are represented among people with low 

income, whose access to housing has been enhanced by this financial incentive to a 

third party, nothing in the law itself rewards developers for designing or building in 

ways that would make facilities more accessible than what the law minimally 

requires. Many approaches could be fashioned that, consistent with well-understood 

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precepts of tax administration, would encourage accessibility and heightened 

outreach to people with disabilities. 

2F:3 – The Role of Medicaid and Social Security in Combining Housing and 

Supportive Services for Individuals with Disabilities 

In response to the increasingly higher costs of nursing facility care and the institutional 

bias that was part of the initial authority, home health services in 1970 became a 

mandatory federal benefit.340 In 1981, Congress authorized the Home and CommunityBased Services waiver authority.341 The Section 1915(c) waivers, named after the 

section in the Social Security Act that authorized them, allows states to provide 

services, not usually covered by the Medicaid Program, to keep a person from being 

institutionalized. Home and Community-Based Services (other than room and board) for 

specific defined eligible populations are now part of waiver programs in all 50 states. 

In addition to the HCBS waiver authority, there is a Section 1115 waiver authority. 

Section 1115 of the Social Security Act provides CMS broad authority to support 

experimental, pilot, or demonstration projects to test new ideas related to the financing 

and delivery of medical and supportive services.342 

2F:4 – Limited Equity Cooperatives 

Limited equity cooperatives (LECs) are an option for populations that require an 

alternative to home ownership or renting. Cooperative housing can create a sense of 

community without the negative impacts of institutionalization or group living.343 

Findings 

•	 In a report by the City University of New York Graduate Center, the following criteria 

were found to be necessary for the success of LECs:344 

1. Sponsoring organizations, financial institutions, and regulatory bodies must 

develop offering plans, purchase and maintenance terms, and governance and 

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taxation structures that make the LEC investment a prudent one for low-income 

families. 

2. Conveying property in good condition is essential. When this is not feasible, 

property should be conveyed only to residents who want to purchase and are 

prepared to make the necessary sacrifices. 

3. Shareholder education and leadership development training are critical and must 

continue throughout the life of a LEC. 

4. The specific housing market and economic conditions of an area dictate different 

regulatory and financing arrangements. 

•	 In one study in New York City that surveyed 3,000 residents, LECs were found to be 

the most “reasonable” in cost when quality of housing was considered. Among co-op 

members, 7 out of 10 members found their monthly costs to be “very reasonable.” 

LECs scored highest on ratings of “repair quality and management characteristics, 

including quickness, durability quality information, availability and employees.”345 

2F:5 – Ownership Programs 

The programs that today chiefly characterize federal housing policy, as described in 

detail in several NCD reports over the past five years,346 emphasize home ownership as 

the primary goal of federal involvement, and as the primary measure of policy success. 

These programs take two basic forms. They include programs, many administered 

under Section 202, for the construction or renovation of housing that is then made 

available to appropriate buyers under variously subsidized conditions. In some cases 

the programs also involve direct subsidies or rent-to-own demonstrations. For many 

people with disabilities, a lack of financial resources, restrictive social service policies, 

and accessibility needs put home ownership out of reach. 

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Findings 

•	 The HomeChoice initiative, a program recently developed by the Federal National 

Mortgage Association (Fannie Mae), is intended to help individuals with disabilities 

overcome these obstacles and achieve dreams of owning a home. HomeChoice has 

made grants of $50 million over three years to 11 states and the District of 

Columbia.347 

– HomeChoice is an experimental mortgage product using modified lending 

standards developed specifically for the initiative. Borrowers who are eligible for 

the program are people with disabilities, including individuals who have courtappointed guardians and families who have a member with a disability living with 

them.348 

– Alabama, California, the District of Columbia, Massachusetts, Michigan, 

Minnesota, Missouri, New Mexico, New York, Oregon, Washington, and Texas 

received grants from Fannie Mae for HomeChoice projects. Each has created its 

own policies and procedures, and has structured its program somewhat 

differently. Some focus on serving particular disability communities, and certain 

programs provide only financing for home renovation—not new construction 

projects.349 

– Common to each project, however, is the involvement of a coalition of 

representatives of the housing and social service fields, and from the public, 

private, and nonprofit sectors. The coalitions pool their resources to help 

borrowers obtain financial assistance for down payments, closing costs, and 

accessibility or general repairs; they also provide foreclosure prevention help and 

any necessary social services. In addition, each program provides home 

ownership education and counseling to prepare borrowers for the responsibility 

of owning a home.350 

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2F:6 – Policy Changes to Expand Utilization of and Participation in Housing 

Financial Incentives for Individuals with Disabilities 

Findings 

•	 Many people with severe disabilities require supports or units with a higher degree of 

physical accessibility than is available in the private market. By limiting Section 811 

funding solely to tenant-based vouchers, the Administration proposes a major 

change in the targeting of the Section 811 Program—away from people with severe 

disabilities, who have the most significant housing needs. This proposal will relegate 

these individuals to institutions, nursing homes, or homeless shelters.351 

•	 At a disability policy seminar in 2005 titled “Housing for People with Disabilities: The 

Crisis,” participants included The Arc, the American Association on Mental 

Retardation (now the American Association on Intellectual and Developmental 

Disabilities), the Association of University Centers on Disabilities, United Cerebral 

Palsy, and the National Association of Councils on Developmental Disabilities. 

Participants proposed encouraging Congress to increase Section 811 funding by at 

least $129 million in FY 2006 to restore the program to its FY 2004 funding level and 

to require HUD to reinstate the capital advance/production component of the 

352 program.

– In addition, participants examined the Administration’s FY 2006 budget requests: 

a total of $15.9 billion for the Section 8 Housing Choice Voucher Program, $14.1 

billion of which is for voucher renewals. No funding is proposed for 

new/incremental vouchers targeted to people with disabilities. This request will 

fund approximately 2 million vouchers—only 94 percent of the vouchers currently 

administered by PHAs. Full funding would allow PHAs to use all vouchers 

authorized by Congress. Prior to FY 2004, Congress fully funded all vouchers, 

including (from 1997 to 2001) vouchers targeted to people with disabilities. Since 

2004, PHAs have not had sufficient funding to use all of their authorized 

vouchers.353 

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– The seminar group made the following recommendations to Congress: 

1. Increase funding for the Section 811 Supportive Housing for Persons with 

Disabilities Program by at least $129 million to restore the program to its FY 

2004 level ($249 million) and require HUD to reinstate the program’s capital 

advance/production component. 

2. Ensure that the Housing Choice Voucher Program is adequately funded so 

that current Section 8 voucher holders will retain their vouchers. 

3. Oppose any proposals that would block-grant the Section 8 Housing Choice 

Voucher Program. 

•	 Ann O’Hara and Emily Miller, in their study Going It Alone: The Struggle to Expand 

Housing Opportunities for People with Disabilities, report their findings354 about 

needs pertaining to state and local funding priorities, PHAs, information sharing on 

federal housing programs, home ownership, and expanding access to affordable 

housing. Among the findings are the following points: 

– State and local housing officials do not give a high priority to the housing needs 

of people with disabilities. Only 10 percent of state/local housing officials, 18 

percent of PHAs, and 26 percent of state/local housing finance agencies have 

made housing for people with disabilities a high priority for funding in their 

communities.355 

– Most PHAs are not working with the disability community to expand housing 

options. HUD data indicate that only 10 percent of all PHAs collaborated with the 

disability community each year to seek new Section 8 vouchers for people with 

disabilities.356 In addition, the HUD data showed the following: 

•	 Most disability organizations have not established relationships or 

partnerships with affordable housing providers and funders. Only 16 percent 

of home ownership coalitions and only 22 percent of CCD members and 

affiliates had formed partnerships with PHAs to expand access to Section 8 

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vouchers. On a more positive note, 48 percent of home ownership coalitions 

serving people with disabilities had formed partnerships with government and 

nonprofit housing agencies—progress that should eventually improve the 

outcomes of HomeChoice and Home of Your Own coalitions. 

•	 The disability community’s knowledge of key federal housing programs and 

policies that can assist people with disabilities is very limited. Only 14 percent 

of CCD members and affiliates have an understanding of HUD regulations, 

only 19 percent know about the PHA Plan and its impact on the Section 8 

Program, and only 41 percent know that Section 8 rent subsidies can be used 

to expand home ownership as well as rental housing opportunities. On a 

more positive note, 62 percent of CCD members and affiliates know that new 

Section 8 vouchers are available to help people with disabilities. 

•	 The disability community has very limited knowledge of Fannie Mae housing 

programs targeted to people with disabilities. Most organizations were not 

aware of the full array of Fannie Mae products available to assist people with 

disabilities, including HomeChoice, Community Living Program, and 

Retrofitting Mortgage. In fact, only 9 percent knew about all three products: 27 

percent knew only about HomeChoice, 3 percent knew only about the 

Community Living Program, and 2 percent knew only about the Retrofitting 

Mortgage. 

•	 Many disability organizations do not understand how participation in HUD’s 

Consolidated Plan process can help expand home ownership and rental 

housing for people with disabilities. At the time of the survey, only two home 

ownership coalitions had assisted 60 or more households with disabilities to 

purchase a home. Both these coalitions have the active participation of state 

and local housing officials, housing counseling agencies, and private lenders 

in the coalition model. The majority of coalitions had assisted fewer than 30 

households, and two were just getting started and working to help their first 

household. 

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•	 Most home ownership coalitions serving people with disabilities have 

achieved only modest results in terms of the number of people who have 

become homeowners. 

•	 With more housing knowledge, capacity, and technical assistance, disability 

organizations can help expand access to affordable housing. Of the 21 

disability organizations that had learned how to apply for HOME or 

Community Development Block Grant funds, 14 reported success—a 67 

percent success rate. A similar rate (56 percent) was achieved by disability 

organizations seeking Federal Home Loan Bank Affordable Housing Program 

funds for down payment assistance or rental housing production. This finding 

underscores the future potential for better housing outcomes from within the 

disability community, provided their housing knowledge and capacity issues 

can be addressed.357 

2.3. Conclusion 

Chapter 2 has presented an overview of findings from the literature and analyzed the 

state of current research and the impact on existing federal programs to promote 

enhanced independence and community participation for people with disabilities 

through direct and indirect financial incentives. The review of the literature on what is 

working and changes that are needed to advance self-sufficiency for the target 

population sets the stage for the design of a 21st century policy framework that 

maximizes the use of financial incentives to promote changes in behavior at individual, 

family, and community levels. 

What is perhaps most striking is the paucity of evidence-based research on cost-benefit 

calculations, which would justify continuation of progressive public policies and the 

improvement and adjustment of other public policies that serve as barriers to the 

advancement of social and economic inclusion in mainstream community life for 

individuals with disabilities and their families. Little effort, if any, has been focused on 

analyzing and calculating the benefit of indirect financial incentives that make 

communities more livable for everyone. The intersection of universal design of housing, 

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education, transportation, employment, and technology access and use that would 

benefit people with and without disabilities in a “livable community” is not yet a focus of 

evidence-based research design. Little is understood of costs saved in individual social 

programs as a result of the livable community construct, and even less is known about 

the cost-benefit ratio for people with disabilities. 

Finally, the new tools and strategies of the past 20 years, such as the EITC, IDAs, and 

financial education, developed by Congress to help workers with low incomes, are just 

beginning to be marketed through outreach to people with disabilities. 

The results describe financial disincentives and other federal tax and social policies that 

are inconsistent with the principles of ADA and the focus of this study. To improve 

economic status and community participation for people with disabilities, all existing 

policy levels must be evaluated based on the preferred valued outcomes of 

independence, inclusion, and the advancement of economic freedom. 

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Chapter 3: Research of Promising State Innovations 

Introduction 

In creating a 21st century framework for federal authorized direct and indirect financial 

incentives to positively impact people with disabilities and their families, it also is 

important to examine innovations that are being implemented by state governments. 

States in the past 10 years have become important originators of social policy reforms 

that respond to challenges related to affordable housing, welfare and work, access to 

health care, and transportation. The purpose of this chapter is to identify, document, 

and assess selected promising state innovations in policy design and implementation of 

direct and indirect financial incentives that are contributing to improved social and 

economic participation in community life for individuals with disabilities and their 

families. 

Each state-authorized program was selected according to four criteria: (1) each of the 

selected state initiatives was authorized by the state legislature and as a result has a 

clear statutory authority; (2) each state program shows potential for replication by other 

states and at a federal level; (3) the selected program responds to a different element of 

the challenges to facilitate a more advanced social and economic status for individuals 

with disabilities and their families; and (4) each selected state has adopted policy that 

may exist in other states. However, the six states that were selected have program 

elements that are unique in terms of public and private participation and the leveraging 

of resources to compound the benefits to the individual and family, the community, and 

the state. 

Table 1 identifies the six selected states—Louisiana, Missouri, Wisconsin, Maryland, 

Kentucky, and Washington—the program area, legislative authority, administering 

agency, year of implementation, and types of incentives. 

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Table 1: Study States 

State Program Legislation 

Administering 

Agency 

Year 

Enacted 

Type of 

Incentive 

Louisiana Education 

Student Tuition 

Assistance and 

Revenue Trust 

(START) Savings 

Program 

S.B. 690 

Act 332 

S.B. 271 

P.L. 174-1997 

Louisiana 

Tuition Trust 

Authority 

(LATTA) 

1995 Direct 

Missouri Long-Term 

Services and 

Supports 

Assistive 

Technology 

Program 

S.B. 721 

P.L. 191-862 

Missouri 

Assistive 

Technology 

(MoAT) 

Council 

2000 Direct 

Wisconsin Employment 

Medicaid Buy-In 

Program, 

also called: 

Medicaid 

Purchase Plan 

(MAPP) 

Act 9 (1997) 

A.B. 152 

Wisconsin 

Medicaid 

2000 Direct 

Maryland Transportation 

Statewide Special 

Transportation 

Assistance 

Program 

(SSTAP) 

H.B. 758 

P.L. 106-417 

Maryland 

Mass Transit 

Administration 

(MTA) 

2001 Indirect/ 

Community 

Based 

Kentucky Housing 

Universal Design 

Program 

H.B. 289 

H.B. 382 

Kentucky 

Housing 

Corporation 

(KHC) 

1993 Indirect 

Washington Asset 

Development 

Individual 

Development 

Accounts 

S.B. 5469 

WAC 388-470-

0045 

Office of Trade 

and Economic 

Development 

(OTED) 

2000 Direct 

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All the state programs explained in this chapter have the potential for expansion and 

replication to better address each of the life domains of individuals with disabilities. 

More detailed information about each state innovation is available via the NCD Web 

site: www.ncd.gov. An overview of each program is presented here. 

3.1. Louisiana State Innovation 

Louisiana’s Student Tuition Assistance and Revenue Trust (START) Savings Program 

encourages families to save for the postsecondary education of their children and 

grandchildren. Parents, grandparents, and legal guardians may establish a college 

savings account to benefit their child or grandchild.358 The feature that makes the 

START Savings Program unique among savings plans is that, for the average family 

that has less than $100,000 in annual income, the State of Louisiana will award an 

incentive to save by matching a percentage of the family’s annual deposits. Deposits 

into individual accounts are pooled, invested, and professionally managed by the state 

treasurer.359 This is an important gateway to an education for individuals with 

disabilities, whose finances often are stretched to cover additional health care costs. 

The problem for many Americans is that escalating tuition costs make it increasingly 

difficult to access a college education. Over the past 10 years, the price of a year of 

college at a four-year public institution has increased 36 percent—10.5 percent in 2006 

alone.360 Affording these costs is especially challenging for families with few resources. 

Many individuals with disabilities and their families are forced to redirect resources to 

health care and other supports. Programs like START can provide a vehicle to finance 

college for people with disabilities who might otherwise be priced out of higher 

education. 

Obtaining a postsecondary education usually is not only a necessary step in securing a 

well-paying job, but often is a vital step in achieving security, acquiring assets, and 

building wealth. For example, college graduates are more likely to have jobs with 

benefits, such as health insurance and retirement plans—two key pillars of economic 

well-being.361 Therefore, financial access to higher education is crucial in enabling 

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people with disabilities to gain independence. Louisiana has led the nation in access to 

higher education by offering matching funds for its 529 Plans, and by promoting 

inclusion of beneficiaries who most need tuition assistance. Other states can greatly 

assist their residents with disabilities through a similar approach to college savings. The 

matched savings features of the program also could be adopted at a national level. 

3.2. Missouri State Innovation 

Missouri has a well-developed and well-funded assistive technology program as part of 

its long-term services and supports initiative for individuals with disabilities. The 

program includes ongoing training and accountability aspects, as well as the supports 

and services. The cost of the program is spread to all users of communicative devices 

through a tax to general phone services to cover the training, maintenance, and 

hardware to make the assistive technology program effective.362 

Missouri has developed a complex network of loan programs and standards for entities 

accepting state funds to support full access to assistive technology for individuals with 

disabilities. On a national level, the expanded role of state Public Service Commissions 

could be authorized with adoption of the broader mandate to promote 

telecommunications and Internet access with appropriate products and services. The 

linkages to the entity in each state authorized by the federal Assistive Technology Act 

and the state Public Service Commissions also merit further exploration of ways to 

enhance the social and economic freedom of individuals with disabilities. 

3.3. Wisconsin State Innovation 

Wisconsin’s Medicaid Buy-In Program differs from other states’ plans in that Wisconsin 

provides an incentive for continued work effort by providing Medicaid Buy-In Program 

coverage during temporary periods of unemployment and before an individual finds a 

job as well. Wisconsin calculates separate payment obligations for earned and 

unearned income, with proportionately smaller premiums assessed on income derived 

from work. The fear of losing Medicaid coverage makes many people with disabilities 

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reluctant to find employment, despite the greater financial security it may offer them. 

Wisconsin’s program allows individuals to work and keep their health care, which has 

led to a large number of participants’ enrolling in the program. 

The primary strategies available to control costs within a Medicaid Buy-In Program are 

the following:363 

1. Limit enrollment to people with higher levels of earnings. 

2. Establish an unearned income limit. 

3. Impose premiums or other cost sharing. 

Many states, Wisconsin included, have been actively developing programs to promote 

competitive employment for people with disabilities. Buy-In programs (enabling people 

with disabilities who have increased earned income to obtain Medicaid eligibility) have 

become a key component of state efforts. States are implementing Buy-In programs 

(and related programs and supports) not as welfare programs, but as programs that 

help states make productive use of all their human capital resources. Many 

policymakers support Buy-In programs as a means to increase the participation of 

workers with disabilities as productive citizens of states. Such programs are seen as a 

means to “enhance a state’s economic status; not simply as a means to enhance 

access to health care.”364 

The Wisconsin-proposed waivers from SSA offer important new ideas about potential 

strategies to increase income preservation and asset growth for individuals with 

disabilities who return to work. Evaluation of these approaches to advance selfsufficiency and evidence of favorable outcomes will offer important new ways to 

encourage federal adoption and national replication. 

3.4. Maryland State Innovation 

Maryland’s Statewide Special Transportation Assistance Program (SSTAP) is an 

example of an effective approach to the transit and paratransit needs of individuals with 

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disabilities. In many areas across Maryland, jobs and job seekers are far apart, often 

across county and city lines. This gap is even wider for people with low income. In 

addition, many companies across the state face a shortage of workers, especially entrylevel employees.365 

With this in mind, the Maryland Mass Transit Administration (MTA), in conjunction with 

Governor Paris Glendenning’s Coordinating Committee for Human Services 

Transportation, worked with local jurisdictions to develop Maryland’s Job Access and 

Reverse Commute Program. This program has allowed the state to develop 

transportation services to meet local community needs and link workers with job 

opportunities. A map describing projects funded through the state’s Job Access and 

Reverse Commute Program is available.366 

Through the SSTAP, Maryland has taken steps to greatly improve paratransit service 

for residents with disabilities, while exploring methods to reduce reliance on paratransit 

by enabling greater access to fixed-route transit. Maryland’s approach to transportation 

for individuals with disabilities increases their independence and access to means of 

asset development, including education and employment. 

3.5. Kentucky State Innovation 

Kentucky has taken a “carrot and stick” approach to its housing policy through its 

Universal Design Program. In order to receive funding or subsidies from the Kentucky 

Housing Corporation (KHC), builders are required to follow guidelines designed to 

ensure accessibility and ease of movement for individuals with mobility challenges. 

KHC’s universal design policies have wide support from the legislature, and from the 

people they are designed to serve. People with disabilities have a wide range of 

housing needs and preferences. In recent years, people with disabilities and their 

advocates, supported by the U.S. Supreme Court’s 1999 Olmstead v. L.C. decision, 

have focused on the right of people with disabilities to live as independently as possible. 

This has led to increased targeting of tenant-based vouchers (both federal vouchers 

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and vouchers secured by the HOME Program) for people with disabilities. States can 

better serve the housing needs of their citizens by leveraging funding and tax credits as 

incentives to build accessible housing, following Kentucky’s model of universal design. 

At a federal level, lessons learned from Kentucky’s pairing of financial incentives with 

universal design requirements for single and multifamily development could be adopted 

for nationwide replication. HUD, which funnels housing financing to the states, and the 

U.S. Treasury, which distributes low-income housing tax credits to the states, could 

require the adoption of universal design standards. 

3.6. Washington State Innovation 

Washington is the first state in the nation to specifically address the needs of individuals 

with disabilities in its Individual Development Accounts legislation. The State of 

Washington matches savings that are deposited into IDAs by individuals with low 

income. The state includes a provision for people with disabilities by allowing the funds 

to be used for assistive technology. 

By allowing IDA funds to be used for assistive technology, the state supports the asset 

development of individuals with disabilities, enabling them to earn and save income. It is 

necessary that IDA dollars not become a penalty against Medicaid and SSI eligibility in 

order for the program to be widely utilized by people with disabilities. The Washington 

State Legislature recently approved amendments to the state IDA Program. These 

amendments increase funding and expand the assets for which an individual can save, 

to include assistive technology and automobiles. The Washington Department of 

Vocational Rehabilitation will be requesting a waiver from Social Security so that non– 

Assets for Independence Act IDAs will not be considered as resources, nor will they 

affect benefits for individuals on Supplemental Security Income.367 

More research needs to be conducted on the success of state IDA programs in fostering 

financial stability and independence for people with disabilities. States can replicate 

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Washington’s program by explicitly including people with disabilities among other 

groups that are disproportionately affected by poverty in their IDA programs. 

At a federal level, a compelling case can be made to amend the Assets for 

Independence Act to allow for the additional asset-building goals of purchasing 

technology, funding transportation, or paying for home improvements. These goals 

would enhance the level of participation of people with disabilities. 

3.7. Conclusions 

The innovative state strategies of direct and indirect financial incentives presented in 

this chapter offer diverse opportunities to establish or amend existing federal policies 

based on current experience. It is clear that no single solution effectively addresses all 

life domains for individuals with disabilities. It is imperative to find ways to combine 

these innovative state policies and programs to allow for greater financial security, 

improved access to housing and education, better health care, and sufficient 

transportation to promote community participation. 

Each state above has embraced principles of self-determination with varying degrees of 

choice and control. This has led to expanded opportunity for greater numbers of people 

to manage and direct public and private resources. These six states were selected 

because they have an ongoing, intensive, comprehensive planning process that 

involves a full range of stakeholders—from state officials to providers to advocates and 

people with disabilities themselves—and the commitment and support of the governor 

and legislature. 

Each state has recognized the importance of financial incentives to change thinking and 

motivate a change in behavior by multiple stakeholders. For the individual and family, 

direct financial incentives are offered to stimulate saving for lifelong housing needs and 

asset development that will advance economic status and community participation. For 

developers and a range of service providers, financial incentives are offered that will 

change the design of housing and transportation systems. These financial incentives 

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will indirectly benefit individuals with disabilities and their families and also enhance 

opportunity for social, civic, and economic engagement in more livable communities. 

An equally compelling finding from the analysis of the six state examples is the variety 

of approaches to funding the financial incentive. In a majority of the examples, there is 

recognition of the merits of cost sharing to accomplish the identified social objective. In 

each of the examples, the state will allocate public resources contingent on leveraging 

individual or other private resources. Whether the vehicle is an individual account for 

education or is the buy-in to continued access to Medicaid benefits, there is a clear 

intent of shared responsibility in the interest of the individual, family, and public. 

The Missouri example is yet another alternative approach in the public interest that 

spreads the cost of communication access across all users of telecommunications 

services to benefit individuals with disabilities who have additional needs. Finally, 

Kentucky, using a “carrot and stick” approach, succeeds in advancing public policy to 

expand availability of accessible housing by tying the requirements to public financing 

for development. 

As key stakeholders examine NCD’s proposed conceptual framework for the 21st 

century of direct, indirect, and community-based financial incentives to advance the 

social and economic freedom of Americans with disabilities, the state lessons in 

innovative policy and program development will offer important choices for adoption to 

stimulate national replication. 

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130
 
Chapter 4: A New Financial Incentive Framework for 

Individuals with Disabilities: A Review of the Proposed 

Framework, Application to Case Studies, and Cost-Benefit 

Analysis 

4.1. Introduction to a Conceptual Framework 

In 2004, the President’s Committee for People with Intellectual Disabilities explained the 

following in its Report to the President: 

Historically, public assistance in exchange for enforced poverty and 

the absence of freedom is a bad deal—one that fails all parties to the 

arrangement; people with intellectual disabilities, their families and the 

American people. A great challenge before the United States 

government and society is to will a public safety net that permits 

people with intellectual disabilities to pursue economic and personal 

freedom and leads them to achieve the goal in a systematic way.368 

The research conducted for this study on financial incentives reviewed and analyzed 

public policy across all the major life domains: education, employment, transportation, 

health care and long-term services and supports, income maintenance and asset 

development, and housing. In each area, the research team focused on barriers and 

facilitators to the advancement of greater economic independence and a better 

economic future for individuals with disabilities and their families. The analysis produced 

seven overarching findings that provide a platform to develop a 21st century conceptual 

framework in keeping with the core principles of ADA to promote full community 

participation, independent living, and economic advancement. 

Seven Key Findings Pertaining to the Proposed Conceptual 

Framework 

1. Financial incentives in tax and social policy are complex, poorly communicated, 

and underutilized. 

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2. Means-tested eligibility for public benefits entitlements (Social Security, 

Medicaid) deny many individuals with disabilities the opportunity to preserve 

income, save, and build assets. 

3. Financial incentives in tax policy that promote asset building are out of reach to 

low-income wage earners who do not itemize. 

4. Financial incentives across the major life domains (e.g., education, housing, 

employment, and health care) impact people with and without disabilities directly 

and indirectly through third-party community-based entities and employers. 

5. Americans with disabilities will benefit from existing and new financial incentives 

strategies only through targeted and customized outreach that communicates 

information, training, and technical assistance in formats that are accessible, 

understandable, and relevant for all ranges of ability. 

6. There is no single financial incentive that either directly or indirectly can produce 

a better economic future for individuals with disabilities. Many incentives overlap 

in their goals and together offer a combined and cumulative response to the 

challenges of poverty for Americans with and without disabilities. 

7. Some financial incentives incorporate a universal approach and offer benefit to a 

large class of individuals with and without disabilities. Some financial incentives 

require modification to provide parity for people with disabilities compared to their 

peers without disabilities. 

4.2. Principles for a 21st Century Conceptual Framework: 

Policies Optimizing Workers’ Economic Reach (POWER) 

NCD has a strong record of accomplishment in the development of policy 

recommendations that have been enacted into law and regulation. From advocating for 

the passage of ADA to being a leading voice for change related to emergency planning 

132
 
and response, NCD consistently has raised expectations for individuals with disabilities 

and their families about public responsibility to advance the benefits for all within livable 

communities. There is no other single disability policy that quite captures the 

inadequacies of existing civil and human rights for Americans with disabilities as does 

the topic of asset development. For many Americans, tax and social policy supports 

building assets in multiple ways. For many Americans with disabilities, tax and social 

policy not only fails to support asset-building objectives, it actually prohibits such 

activities and outcomes. 

To create a conceptual framework that sets a clear direction and supports increasing 

economic status for people with disabilities, NCD first lays out a set of overarching 

principles and then proposes core strategies. The conceptual framework has been 

identified as Policies Optimizing Workers’ Economic Reach (POWER). There is no 

single financial incentive that will make the difference. In fact, it is a combination of 

strategies that both modify existing policies and enhance indirect community-based and 

employer incentives that can provide a comprehensive blueprint for change. 

Financial Incentives Principles 

A. Financial incentives form a tool for public policy to advance the ADA goals of 

equality of opportunity, independent living, and economic self-sufficiency. 

B. Individuals with disabilities, regardless of age, economic status, or type of 

disability, and their families should have a range of choices to benefit from 

financial incentives across life domains. 

C. Direct and indirect financial incentives overlap in terms of opportunity to benefit 

from fuller community participation. 

D. Disability-specific financial incentives must be complemented by financial 

incentives with more universal impact than allowed by existing policy in order to 

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encourage access and use by people with and without disabilities in livable 

communities across life domains. 

Financial Incentives Core Strategies 

This section describes each of the POWER strategies, identifies the elements 

suggested for implementation, and explains challenges that people with disabilities face 

in navigating the major life domains. The section also details how implementation of the 

proposed POWER provisions would alter existing public policy. POWER strategies A 

through D and their corresponding elements are as follows. 

POWER STRATEGY A: Modification to Entitlement Policy – Encourage work, 

income preservation, and asset building through changes to entitlement policy. 

Four elements are suggested for implementation, as follows: 

A1) Raise resource limits for SSI to $20,000 and index it annually for inflation 

thereafter with no loss of benefits for five years of working at or above 

substantial gainful activity (SGA). 

A2) Enact an earnings offset for SSDI beneficiaries that parallels the work 

incentives for SSI. 

A3) Modify income and resource limits through simplified Medicaid Buy-In that 

allows work and access to health care for five years regardless of income 

level. 

A4) Expand Plan for Achieving Self-Support (PASS) to allow for savings for home 

ownership or any asset-building goal including the purchase of assets that will 

generate income in later years. 

The work disincentives inherent in SSDI and SSI are well known and need limited 

discussion here. Barriers are identified in NCD’s Social Security report titled The Social 

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Security Administration’s Efforts to Promote Employment for People with Disabilities: 

New Solutions for Old Problems (http://www.ncd.gov/newsroom/publications/2005/ssapromoteemployment.htm). Any new model, if it seeks to promote employment, must 

address the barriers in new and innovative ways. 

SSDI, and SSI to a lesser extent, express a bifurcated notion of employment as an allor-nothing concept. An individual is deemed either able or unable to work—a situation 

that has resulted in provisions that lead to precipitous declines or total loss of cash 

benefits as income is earned. The widely recognized problem is that these declines 

occur with a speed and at a slope that result in benefits being lost before income is 

sufficient to replace them, and certainly before income streams from employment are 

stabilized and reasonably assured of continuity. 

The POWER conceptual framework proposes provisions that lengthen the period over 

which cash benefits decline, reduce the steepness of the slope of benefit loss, and more 

realistically reflect the experience of people seeking to enter or to return to work. Two 

alternative approaches are offered for consideration. The first is no loss of cash benefits 

for a five-year period and the second is a gradual reduction of cash benefits. 

A1) Raise resource limits for SSI to $20,000 and index it annually for 

inflation thereafter with no loss of benefits for five years of working at or 

above SGA. 

Raising the resource limits for SSI would encourage individuals with disabilities to save 

and build assets. Funds set aside in individual accounts toward a specific asset-building 

goal such as purchase of a home, transportation, or a business start-up would be 

exempt from any resource limit. 

A2) Enact an earnings offset for SSDI beneficiaries that parallels the work 

incentives for SSI. 

The alternative approach would involve not time but income. Under this approach, 

benefits would fall by a specified amount as income rises, so that, for example, once 

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earnings from employment equaled pre-employment benefits, benefit levels would fall 

by 20 percent. When earnings from employment reached double the original benefit 

level, the cash payments might decrease by an additional 20 percent, and so on. This 

could occur over a short or long period of time, depending on the upward mobility and 

career structure of the employment. In any event, the earnings should be secure to 

some reasonable degree. A one-time consulting contract or a temporary job after years 

of unemployment or a probationary position should not be enough to trigger the 

reduction. 

A3) Modify income and resource limits through simplified Medicaid BuyIn that allows work and access to health care for five years regardless of 

income level. 

Health insurance benefits are in some respects a bigger issue in the disincentives 

context than are cash benefits. Potentially, their economic value dwarfs that of cash 

payments. Although there have been several attempts to attenuate the risk of benefit 

loss under the Medicare or Medicaid programs, the net result appears to be 

impenetrable complexity. Here again, a simple and clear experimental solution is 

required and proposed in the POWER conceptual framework. 

Health insurance should be maintained without any complexity or other source of worry 

for at least the first five years of employment, or until comparable private sector 

coverage is obtained. In the event such coverage is not forthcoming, the existing 

coverage should be continued indefinitely. Different administrative approaches will exist 

under the Medicare and Medicaid programs for bringing this about. Under Medicaid, 

which would be the primary coverage at issue for SSI recipients, expansion and federal 

responsibility for the Medicaid Buy-In Program would appear to be the optimal solution. 

Such a solution provides a consistent benefit option regardless of where a person lives 

and works and reduces costs to states that have been reluctant to expand the Medicaid 

Buy-In option for fear of their expanded responsibility to cover their share of costs. 

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A4) Expand PASS to allow for savings for home ownership or any assetbuilding goal including the purchase of assets that will generate income in 

later years. 

The fourth element of POWER Strategy A allows for expanded utility of the PASS work 

incentives provisions to encourage long-term income preservation and asset building. 

The purchase of a home and the creation of equity over time is an important assetbuilding strategy that is out of reach of most current SSI beneficiaries. The greater 

flexibility of purpose to establish a PASS with the complementary lifting of the low 

ceiling for resources, with the individual still eligible for SSI benefits, offers a clearer 

path to a better economic future. 

POWER STRATEGY B: Modification to Tax Policy – Modify tax policy to encourage 

work, income preservation, access to health care, transportation, continuing education, 

home ownership, and other asset-building goals. 

B1) Bundle and revise Business Tax Credits for more efficiency and use 

(Disabled Access Credit, Architectural/Transportation Tax Deduction [barrier 

removal], and Work Opportunity Tax Credit). 

B2) Revise the Impairment-Related Work Expenses (IRWE) exemption so that it 

applies to any reasonable expense incurred for the purpose of employment. 

B3) Revise Medical Expense Deduction threshold requirements and waive the 

need for deductibility. 

B4) Amend 529 Plans created exclusively for families with children going on to 

higher education to include purposes and goals other than saving for higher 

education that meet the needs of families that have children with disabilities. 

Three major provisions of the Internal Revenue Code are designed to stimulate the 

hiring of people with disabilities. GAO studies referenced throughout this report have 

found them ineffective, underutilized, and widely unknown. Indeed, this finding suggests 

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there is reason to doubt that any tax-based incentives could materially improve the 

employment picture for Americans with disabilities. Moreover, there are people who 

question whether tax provisions aimed at achieving this goal may not have the 

paradoxical effect of reinforcing antiquated notions of disability and preserving 

undesirable attitudes and stereotypes. Pending development of a wholly new tax 

model—which is beyond the scope of this research—it is nevertheless useful to suggest 

incremental measures by which the impact of the existing tax provisions could be 

enhanced. 

B1) Bundle and revise Business Tax Credits for more efficiency and use 

(Disabled Access Credit, Architectural/Transportation Tax Deduction 

[Barrier Removal], and Work Opportunity Tax Credit). 

DISABLED ACCESS CREDIT: The Disabled Access Credit is a provision designed 

mainly to encourage small businesses to provide public accommodations to customers 

or clients with disabilities. It can be used for assistive technology, specialized 

employment-related services such as readers or interpreters, and other 

accommodations and auxiliary services as well. Its use in this latter regard has been 

hindered by several IRS interpretations of the law that drastically limit its scope in ways 

never contemplated by the drafters, according to the legislative history. One challenge 

is that ADA applies only to employers with 15 or more employees, and as a result, the 

IRS has determined that the credit should not be available to smaller employers since 

their accommodations cannot be mandated by the law. This interpretation contradicts 

the fact that the maximum size of an eligible business is 30 full-time employees or under 

$1 million per year in gross receipts. Nothing in the legislative history suggests 

Congress intended to place a lower limit on the number of employees. Additionally, the 

definitions of eligible expenditures need to be clarified to make clear that the purpose of 

the expenditure, rather than the a priori nature of the item or service, will be 

determinative. Finally, the current limitation in the amount of the credit to 50 percent of 

the first $10,000 in eligible expenditures should be eliminated. 

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ARCHITECTURAL/TRANSPORTATION TAX DEDUCTION (BARRIER REMOVAL): 

This is an arcane provision that needs to be revised substantially. It allows specified 

capital expenses to be converted into deductible ones, meaning that instead of being 

amortized or depreciated over a number of years, they are accelerated by being taken 

in the year incurred. The definition of qualifying expenses is narrow and outdated, 

however. If the provision is to have any meaning, the scope and definition of eligible 

expenses must be broadened, the provision must be melded with the Disabled Access 

Credit, and the guidelines used to determine whether claimed expenses qualify for the 

deduction must be updated. Ideally, the provision should be eliminated, merged into an 

expanded access credit, and available to all businesses, with gradual phase-out based 

on business size or profit levels. 

WORK OPPORTUNITY TAX CREDIT: This tax credit provides hiring incentives for a 

number of hard-to-employ groups. Two groups, predominantly oriented toward 

disability, are included: SSI recipients and people referred by state VR agencies. This is 

an arbitrary and narrow slice of the job-seeking population with disabilities. Albeit 

perhaps in totally different capacities, people seeking to return to work with their former 

employers, should again benefit the employer with use of the credit. The credit currently 

targets only first-year wages, thus giving no incentive for retention or advancement in 

employment. The proposed change would allow a continuing benefit to the employer for 

up to three years. 

Individual income tax provisions also play a role. Two are particularly worth noting: the 

IRWE and the Medical Expense Deduction. 

B2) Revise the IRWE exemption so that it applies to any reasonable 

expense incurred for the purpose of employment. 

IRWE is an underutilized tax deduction that allows individuals to claim an itemized 

deduction for certain costs incurred “in connection with the place of employment.” 

Interpretations of this provision are few, but it was intended to pay the costs of attendant 

services at the place of employment. IRWE has been used more broadly, and needs to 

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be clarified to explain that it applies to any reasonable expense incurred for the purpose 

of employment. The expense could and should include the pro rata costs of homebased personal assistance services on days when an individual uses such assistance to 

prepare for and go to work. Modifications to IRWE also should include the add-on costs 

of transportation attributable to the disability. Whatever costs IRWE does or does not 

include, it will continue to be of little value to most people with disabilities as an itemized 

deduction without modifications. Fewer than 40 percent of taxpayers itemize, and such 

expenses are likely to be incurred disproportionately at the outset of employment, when 

income against which to offset the deduction is at its lowest. Accordingly, an above-theline deduction, not subject to the ability to itemize, should be substituted. This 

adjustment or credit should be subject to carryover, meaning that it can be carried 

forward or backward for a specified number of years, so as to provide maximum 

leverage to the taxpayer. 

B3) Revise Medical Expense Deduction threshold requirements and 

waive the need for deductibility. 

Many disability-related costs, including costs of equipment and services used in 

employment, qualify for the Medical Expense Deduction. Much assistive technology 

(however and wherever used), service animals, and other costs fall into this category. 

The tax case law is replete with examples of items granted deductibility by reason of 

their purpose or their features, reflecting an intention to overcome or mitigate the 

consequences of a physical disability. However, this case law is little known or 

understood, even by many tax professionals. One reason may be that the Medical 

Expense Deduction is hard to claim. Once again, itemization is required, but in addition, 

one’s allowable medical expenses must exceed 7.5 percent of adjusted gross income 

(AGI) before they are deductible. This means that a certain proportion of such costs 

likely will be lost, unless one has enough medical expenses from other sources to meet 

the AGI threshold before taking assistive technology (AT) or other disability-related 

costs into account. Accordingly, at least so far as disability-related costs involved in 

achieving a level playing field are concerned, the requirements for a threshold and the 

need for deductibility should be waived. Need is not apparent for broadening the scope 

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or definition of what is deductible, although much need for professional and public 

education on these points remains. From the legal standpoint, all that is required is that 

the conditions for obtaining the tax benefit be modified. Because timing also is a factor 

here, the new above-the-line deduction or credit should benefit from the flexibility that 

carryover would afford. 

B4) Amend 529 Plans created exclusively for families with children going 

on to higher education to include purposes and goals other than saving for 

higher education that meet the needs of families that have children with 

disabilities. 

There are a number of additional ways the tax law could advance economic 

independence with and for employment of people with disabilities. The personal 

development accounts paralleling accounts for education under Section 529 of the 

Internal Revenue Code present one example. The proposed POWER framework would 

allow families with children to save for purposes other than postsecondary education to 

create a better economic future. Examples of what would be allowed include start-up of 

microenterprise; purchases for assistive technology or transportation; and savings for 

nondegree education and training. This amendment would advance the full participation 

in society and self-sufficiency of young people with disabilities transitioning into 

adulthood by allowing them and their families to save and plan for the future. 

POWER STRATEGY C: Enhance Direct Asset Building – Encourage savings and 

asset building through direct opportunities. Utilize individual budgets, matched savings 

plans, financial education, and cross-agency collaboration to leverage resources and 

advance social and economic status. 

C1) Expand and refine Individual Development Accounts to meet the 

needs of people with disabilities. 

This can be accomplished through several steps. Include transportation and technology 

as a purpose for saving. Provide incentives to encourage a private match to federal 

funds. Allow private and state-authorized and -funded IDAs to adopt federal IDA rules 

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that exclude counting the resources for purposes of continued eligibility for public 

benefits. Require financial education to be conducted in accessible locations with 

accessible content and be accessible online. 

C2) Encourage financial education as part of an individual’s education 

and work plans. 

This would include IEPs, Transition Plans, Plans for Employment through VR, and the 

Workforce System. 

C3) Issue an Executive order to federal agencies for cross-agency 

collaboration and coordination. 

The order would identify responsible parties and timeframes. First, create a time-limited 

task force that includes these agencies and departments: Education (Office of Special 

Education and Rehabilitative Services/RSA), Labor, SSA, Treasury, HHS, Centers for 

Medicare and Medicaid Services, IRS, Transportation, Office of Management and 

Budget, VA, Commerce, HUD, and Small Business Administration. Set a time limit of six 

months to identify policy and practices barriers and propose interagency solutions and 

cross-program and funding authorities. In addition, create a task force chaired by the 

Department of the Treasury and the Office on Disability at HHS to lead the interagency 

collaboration. 

C4) Simplify implementation of individual budgets. 

Key components are cross-agency work. Invite SSA, the Department of Education and 

its Rehabilitation Services Administration, departments of Education, Labor, Health and 

Human Services CMS, and Substance Abuse and Mental Health Services 

Administration (SAMHSA) to collaborate in developing a cross-agency template that 

simplifies the implementation of unified individual budgets that promote selfdetermination and person-centered plans for adult living. The strategy would allow 

savings and asset-building rewards that permit an individual to keep 50 percent of what 

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he or she does not spend in an individual budget. The savings must relate to a specific 

asset-building objective in an individualized plan. 

POWER STRATEGY D: Enhance Indirect, Community-Based, and Employer 

Incentives – Provide incentives to employers and communities to offer individuals with 

disabilities indirect benefits that promote affordable and accessible housing, assetbuilding strategies, and a road map out of poverty. 

D1) Consider revision of housing design standards. 

In two requirements, HUD would (a) adopt universal design standards developed by the 

Access Board; and (b) require that the adoption of universal design standards become a 

condition for any entity that receives HUD financing for single or multifamily dwellings. 

D2) Require a qualified allocation plan set-aside for 20 percent of units. 

All units receiving Low-Income Housing Tax Credits (LIHTCs) should adopt new 

universal design standards and reserve 20 percent of units to be affordable to 

individuals with disabilities who are at or below 30 percent of average median income 

(AMI). 

D3) Establish a New Markets Tax Credit. 

Require each federally funded project that is creating jobs to document job creation, 

outreach and recruitment efforts, and the number of people with disabilities hired. 

D4) Provide employer transportation and housing deductions. 

Employers receive a tax deduction for the costs of assisting employees with disabilities 

with transportation and first-time home ownership. 

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D5) Demonstrate a tax aid program for Americans with disabilities. 

The federal government would provide free tax assistance and filing services to millions 

of Americans with disabilities. Use this process as a gateway for other asset-building 

opportunities. In addition, build financial and tax education and financial services 

infrastructure. 

D6) Establish employer-matched education accounts. 

Allow employees who contribute up to $500 to an education and training account to 

receive a tax credit for their contribution. Allow an equal match from their employer that 

would be deducted from corporate income taxes. Individuals must earn less than 

$25,000 to be eligible for the benefit. 

4.3. Application of the POWER Framework to Case Studies 

The next step in the research design was its application to four individual situations. 

Three of the four case study profiles (numbers 1, 2, and 4) represent the real 

experiences of people with disabilities. Case study 3 is based on a composite picture of 

experiences that represent a significant number of families raising a child with 

developmental disabilities. In each case study, the current experience of the individual 

and/or family is described and then contrasted with the experience that might be 

possible if POWER were applied. 

Case Study 1: Mary: SSI Recipient Attempting to Enter the Workforce 

Mary is 30 years old. She has a disability and has never held a job. She is receiving SSI 

($603 a month), which is the federal benefit rate for calendar year 2006. In Mary’s state 

(Indiana) there is a state supplement of $85 that she is receiving, bringing her monthly 

cash benefit to $688. Mary has no other income and receives no other cash benefits, 

but she does receive Medicaid and other in-kind benefits that will be discussed later. In 

her state, receipt of SSI benefits automatically confers entitlement to Medicaid. 

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Mary has been offered a 25-hour-a-week job. She wants to accept the position, but she 

is worried. Apart from all the concerns that accompany embarking on a new career, 

Mary, as a person with a disability, confronts an additional and very distinct concern. If 

she takes the 25-hour-a-week job, paying $5.15 an hour, her benefits will be 

jeopardized. She understands that as an SSI recipient she will be subject to benefits 

reductions because of any other income, earned or otherwise. 

Broadly speaking, Mary understands that her cash benefits will be reduced by roughly 

$1 for every $2 she earns over the first $85 of income per month. She further 

understands that should her benefits be reduced to zero, her Medicaid (her only source 

of health care) could be jeopardized as well. 

But Mary also understands that there are various provisions in the law, called work 

incentives, that could reduce or prevent these adverse consequences of employment. 

Before she can find out about them, she does an initial computation of what her benefits 

would be if she simply starts work. 

PRE-INCENTIVES COMPUTATION: Mary’s first problem is that she will be paid 

weekly, and she knows that SSI computes income, resources, and benefits on a 

monthly basis. Not knowing that the standard calculation is 4.3 weeks per month (and 

even that can be disrupted by actual payroll dates for weekly or biweekly employees), 

she decides to divide her annual wage by 12. Figuring $5.15 an hour, 25 hours a week, 

times 52 weeks (she assumes she is paid for holiday, vacation, and sick days) she 

comes up with a salary of $128.75 per week, or $6,695 per year, which when divided 

according to her common-sense formula is estimated at $557.91 per month. Mary 

suspects it is permissible or even necessary to round off, so she does, to $558. Of 

course, had it occurred to Mary to round off her weekly income to $129, then her 

monthly income would be $559 (based on 52 weeks times $129, which equals $6,708, 

divided by 12). 

Mary wonders if it is not a little absurd to try to grind the gears of income and expenses 

this finely. Well, Social Security does, so she guesses she must as well. 

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BENEFITS REDUCTIONS: Mary now calculates her benefits loss—first without 

reference to the even more mysterious work incentives. She first adds her $558 wages 

plus her $688 SSI payment. That would be great; it would be $1,246. But she then 

begins the further computation as she understands it, including how much of her first 

$85 of income will be “disregarded,” meaning that it will not be included in “countability,” 

which is SSA’s term for income. Countable income is to the SSA recipient what taxable 

income is to the taxpayer. 

Mary’s remaining income from her wages after the $85 disregard is $473 per month. 

She knows she will lose half of that, or $236.50. She subtracts $236.50 from her $688 

SSI payment and is left with $451.50. She knows she can round off, but she is not sure 

whether to round up the $451.50 or the $236.50. She decides to round up her benefit, 

so is left with an SSI benefit of $452. Adding this $452 to her wage of $558, she comes 

up with monthly gross revenue of $1,010 from all sources. 

NET GAIN: So how much better off is Mary’s bottom line? She started with $688 a 

month and now, after working 25 hours a week (an average of 108 and a third hours per 

month [call it 108]) ends up with $1,010. This is a gain of $322 a month. For 108 hours 

of work, it comes out to $3 an hour. Before taxes, work expenses, clothing, and 

transportation on the downside, and these work incentives on the upside, this is less 

than the federal minimum wage. 

INSURANCE: Mary learns that her future employer provides contributory health 

insurance to her coworkers. She is told, however, that she would not be eligible until 

expiration of a six-month waiting period. In any event, inquiry of the personnel and 

benefits office reveals that the particular health services she needs to keep her disability 

under control either are not covered or, if covered, are subject to a low dollar limit (or 

cap). “At least,” Mary sighs gratefully to herself, “I have Medicaid. While far from ideal, it 

allows me to get the basics of specialty services that I need.” 

Mary understands that if her cash benefits were to cease, her Medicaid might be thrown 

into jeopardy. As a minimum-wage worker, she has little immediate prospect of seeing 

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her SSI cash benefits zeroed out, but she does look forward to steady pay increases 

and promotions through her hard work and eagerness to learn. 

Mary calculates that if her salary were to reach $1,461 a month (at 25 hours a week, 

about $13.50 an hour, but less per hour if her hours are increased), her benefits would 

be reduced to zero. That $1,461 would represent twice her full SSI payment plus $85. 

At the $1 for $2 reduction rate, a countable income of $1,376 would eliminate $688 in 

SSI—her whole payment. Meanwhile, at least pending these work incentives, she 

knows that for every dollar her salary goes up, she effectively will bring home 50 cents 

more. 

OTHER INTERIM CALCULATIONS: Whatever her gross salary, Mary is of course not 

taking home an average of $558 a month in wages or anything close to it. Her gross pay 

is reduced by 7.65 percent for her Social Security and Medicare tax ($42.69 a month), 

by one-dependent federal and state withholding exemption ($55.80 a month), and by 

other mandatory exactions (workers compensation and short-term disability—totaling 

$5.58 a month). These deductions total $104, leaving her net wage, before work 

incentives, at $454. 

RESOURCES: Mary would like to save for education. She knows that grants, VR 

support, and other third-party sources may be available, but she also knows that they 

would not cover the entire cost of college, especially when needed AT and personal 

assistant services (PAS) are added to the mix. She is willing to work for $3 an hour 

(even $2.02 an hour after taxes) if she can save the money toward an education. She 

knows that it will take a while, but realizing that SSI limits her countable resources to 

$2,000, Mary wonders if there is any point. Fortunately, as a determined person, she 

decides she will find out about and use the work incentives if she can. 

If Mary lived in one of the 11 so-called Section 209b states, where Medicaid does not 

come along automatically with SSI eligibility, then even more complexity would arise. 

The next case study will involve a person residing in one of those 11 states. Since Mary 

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is in no immediate jeopardy of losing all her benefits, her Medicaid is safe. Therefore, 

the scenario will not depict her looking into how to protect this vital noncash benefit. 

Mary’s immediate problem can be understood on two levels. First, she needs to find 

someone who can help her understand the work incentives. She has looked at the 

Social Security Administration’s Web site, finding both the Code of Federal Regulations 

and the Program Operations Manual System. These are the sources of the governing 

rules, she knows, but to her, an ordinarily intelligent high school graduate, they are 

written in incomprehensible legalese, even in the supposedly simplified examples, and 

they use terminology, cross-references, and qualifiers that are totally unfamiliar to her. 

At length she concludes sadly that she would have about as much luck figuring out what 

to do with these sources as she would by checking a medical textbook in order to 

perform do-it-yourself surgery. 

Mary figures that perhaps her cousin, an accountant, can help her. After all, doesn’t she 

help people with their taxes? However, her cousin works only for people who can pay 

her, and even for a family member she cannot help Mary because she does not know 

anything about the subject. She suggests that maybe the local Certified Public 

Accountant association has a pro bono division. Another cousin who is a lawyer also 

has no relevant knowledge. 

But Mary’s VR counselor has heard that various benefits counseling resources exist in 

the community. The VR counselor has some acquaintance with the subject but is not 

permitted to give official advice beyond the scope of the VR Program. Leaving aside all 

the twists and turns, Mary eventually comes into communication with the WIPA Program 

(formerly Benefits Planning Assistance and Outreach). 

WORK INCENTIVES: Mary, at length, makes her way to a knowledgeable and patient 

benefits counselor who could help her. She tells Mary of two key provisions that might 

help. The first is IRWE, which can reduce Mary’s countable income by the amount of 

expenses that she incurs in order to work. In Mary’s case there are two immediate 

expenses: her $104 in taxes and the $5 per day she spends for parking her modified 

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vehicle. Because she works five days a week, with an estimated 20 days missed a year 

for vacation and holidays on which she does not travel to work, the taxes ($1,248) plus 

the parking total $2,448 a year, or $204 a month. Subtracting this from her countable 

income brings the number down to $269 ($473 minus $204). At $269, her SSI benefits 

reduction is only $134.50, making her SSI payment $553.50 or $554. That $554 plus 

her $558 monthly income yields a gross cash flow of $1,112. With the $104 in taxes 

subtracted from her monthly income, as well as her benefits reduction, Mary’s net cash 

flow is reduced to $1,008 per month. She thus is no worse off for having paid the taxes, 

because SSI has made up the difference, but she is no better off either. This is how it 

will be with all IRWE. 

These are the expenses that Mary knows she will incur when she starts work. Her 

benefits counselor needs to do further research on whether any allocation for mileage, 

lunches, or other costs also might be excludable from countability. Other expenses from 

which Mary would benefit include some incidental AT devices and training in the use of 

such devices. The counselor subsequently will factor in these expenses, but Mary’s 

biggest problem is the dawning realization that even if she can save more money as a 

result of the work incentives, it still may not be worth the trouble, since her savings (or 

resources) are limited to $2,000. 

That is why Mary is so excited to hear about the other work incentive—PASS. Mary’s 

counselor explains that by setting aside designated funds in a separate account for 

specified self-support activities and goals to be achieved over a “reasonable” period of 

time, Mary can exclude more of her income and, more important, potentially can save 

far more than $2,000, which under PASS would be excluded from resource countability. 

The costs of maintaining the account also will be excludable from income, but Mary 

does not know the status of any interest that she might earn. 

Mary also learns that PASS is subject to approval by the SSA. She understands that a 

regional work incentives team (or cadre) will review her application, and that a lengthy, 

complex form, the SSA 545, must be used to make the application. Upon obtaining the 

form, she finds there are a number of troubling aspects. 

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For one thing, she does not have a specific vocational objective at this early point. She 

knows that higher education correlates with income, and that a college degree generally 

grants access to a wide range of jobs and to various sorts of upward mobility. However, 

SSA seems to expect Mary to specify a vocational objective. It is against this specified 

objective that the viability of all her proposed savings, expenditures, and time frames 

will be assessed. Against some standard of feasibility or suitability, SSA experts also 

will adjudicate Mary’s request by considering the factor of suitability for someone with 

her disability. Mary resents the notion that total strangers should have the right to sit in 

judgment of her and control her life this way, but she knows she has no choice. 

There are some things that Mary does not know. Generally, she does not know if SSA 

takes into account the overall correlation between education and income in calculating 

whether approval of her plan is likely to save the government money over the course of 

her working life, an estimated 30 years. She certainly does not know how SSA decides 

what work people with her disability are capable of doing, or how SSA would factor in 

the possibilities resulting from an education that she has not yet received, with a major 

she has not yet picked, and an occupational goal she will now quite probably have to 

fabricate. 

In addition, Mary knows that, independent of her school choices, changes in her income 

or work expenses could change the plan, or necessitate its change. With events that are 

known to her, Mary understands it will be possible to amend the plan, and she would do 

this if, for example, the four years and six months she postulated for school (a full fouryear academic course plus six months to find a job) needs to be changed. This change 

could happen if she is required to take a reduced course load. But how long will she 

need to work before she is ready to quit her job and go to school full-time, or would it be 

better for her to try to work part-time while going to school part-time? These questions 

all have powerful economic aspects, but they involve so much more. Mary’s benefits 

counselor does not feel qualified professionally to advise her on anything beyond the 

legal and benefits-related dimensions. Mary’s VR counselor can tell her only the rules of 

the VR Program. 

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As Mary is considering her options, some unforeseen developments occur that 

complicate her decisionmaking even further. Mary lives in subsidized housing. She 

discovers that in a Section 811 project or a Section 202 subsidized project, she pays 30 

percent of her “adjusted income” toward the costs of her rent. If her countable wages 

also are treated as part of countable income for HUD purposes (a different legal test 

than SSI uses), then her rent will go up and further reduce her net gain. With SSI 

countable income of $454, her housing cost could rise by $136 a month. This shrinks 

her net monthly cash flow to about $870, or just $192 more than she was getting with 

SSI alone. 

What about the food stamps that Mary also has been using? Most jurisdictions would 

not curtail her food stamp allotment as long as her income remained below the federal 

poverty level, and the hope is that Mary’s is one of those jurisdictions. Otherwise, 

potentially a third of her average $100 worth of food stamps per month could be at risk. 

If this were the case, her real net cash flow would go down by the $33 a month 

necessary to replace this in-kind benefit. 

Mary is fortunate in one regard. She does not need low-income home energy heating 

assistance. If she did, and if it were tightly tied to income, then an increase in her 

income, from whatever source, might lead to a decrease in that subsidy too. But Mary’s 

housing project pays for utilities. 

Because of her total dependence on SSI and other programs for sustenance, Mary has 

qualified for lifeline telephone service, partially subsidized under the Federal Universal 

Service Fund. This gives her a guaranteed minimal amount of local phone service for 

about $10 a month. She cannot determine whether her increased income and resources 

will disqualify her; her phone company’s special needs center leaves her on hold for an 

hour and its Web site does not say. But she calculates that if she were to be 

disqualified, her basic phone bill would go up to $22 a month, or an increase of $12. 

And with respect to housing, food stamps, utilities, and, potentially, phone, Mary knows 

only too well that increases in her income will result in increases in her pro rata costs, 

but on a slope that may be far too steep for her to climb. 

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Disdaining to calculate how much money she actually will have left, and motivated by 

the desire for economic autonomy above all else, Mary nevertheless determines to 

press forward. She realizes first of all that she will need to devote inordinate time to 

recordkeeping, accounting, time frames, and of course reporting to SSA. She has been 

told that SSA operates along several parallel tracks, meaning that sometimes reported 

earnings are not immediately or correctly credited to one’s account, or that self-reported 

earnings are not properly credited. Because this could lead to erroneous allegations of 

income concealment, Mary needs to decide whether to take everything to her Social 

Security office in person (which costs time and money) and get a signed receipt, or to 

mail each item “return receipt requested” (which also costs money but takes less time). 

She does not think the costs of these precautions will be excludable from income. Mary 

realizes that even if she can prove she delivered documents, she cannot prove what 

was in them. She has heard many horror stories from friends and acquaintances, but 

has to trust that most of the time most systems work, even though the stakes are so 

high when they fail. 

But Mary’s problems are not yet fully revealed. She learns that the SSA regional work 

incentives team has the right to ask her questions about her PASS before approving it, 

and that the team has the power to reject or question her choice of vocational objective. 

What bothers her, now that she has decided to choose accounting as her career goal, is 

that the time frame for the cadre’s decision is not entirely clear. Someone tells Mary it 

might be two weeks. Meanwhile, Mary’s prospective employer, who will be claiming the 

Work Opportunity Tax Credit in connection with Mary’s first $6,000 of first-year wages, 

is anxious that she start working immediately. Mary knows that her PASS can be 

approved retroactively to her employment’s start date, but what if it is rejected? Not only 

will she suffer the already-discussed drop in her monthly SSI, but she fears she will be 

hit with an overpayment assessment. She will not be charged with fraud since she did 

report her earnings, but an overpayment is an overpayment, fault or no fault. If she is 

charged with an overpayment (in the event her PASS is rejected utterly), she probably 

could appeal and get it set aside, but she has been told that under an obscure provision 

of the tax law she would be liable for taxes on the amount of any overpayment claim 

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that Social Security waives. It seems that “debt forgiveness” is includable in gross 

income for tax purposes. 

Mary takes time to weigh the options, perhaps only a few hours too long—but too long it 

is. Her prospective, now erstwhile, employer reluctantly informs her that the offer has 

been retracted. 

Disconsolate, Mary shows signs of discouragement and despair. Her excitement about 

employment potential fades. She stops talking to friends and family about her dreams 

and begins to withdraw from people in general. She finds herself unable to sleep 

through the night and begins sitting in front of the television countless hours each day. 

She feels sad each day and cries without knowing why. The complexity of the current 

rules and the limited support systems available to provide individualized advice to help 

her make informed decisions are not responsive to Mary’s needs. 

Case Study 1: Application of the POWER Framework to Mary’s Situation 

There are four parts of POWER that would encourage both work and savings for Mary. 

The most relevant is the raising of resource limits for continued SSI eligibility for a fiveyear period (see Element A1, p. 124). Mary would be allowed to retain her full SSI 

benefits (assuming she remains otherwise eligible, of course) and save any or all of her 

earnings toward self-support goals, which need not be specified in advance. 

Under current law, the objectives for which a PASS can be approved, and hence the 

nature of permissible expenditures and the objectives of the expenditures, must be 

employment related. For people with limited education, limited skills, poor work 

experience, or limited stamina, the prospects of self-sufficiency through employment, 

while always worth pursuing, are statistically slim, even where the PASS mechanism 

can be brought to bear. Data regarding the proportion of people receiving approved 

PASS proposals and leaving the benefits rolls after one, five, or ten years are not yet 

available, but anecdotal evidence suggests that the number is only slightly larger than 

the overall number of SSI recipients who become independent through work. This is 

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particularly unfortunate since PASS users are likely among the most sophisticated and 

most determined of SSI recipients. 

The decline in employer-sponsored fringe benefits, including health care and pensions, 

and the erosion of the entry-level job market contribute to the deterioration in upward 

mobility through employment for people with disabilities. Given this trend, policymakers 

need to understand that entry-level employment is unlikely to enable Mary to relinquish 

benefits. Policymakers may decide to reduce or strip her benefits, and may be 

indifferent to the hardship this will cause, but that is a very different way of solving the 

program cost-escalation problem. What policymakers must recognize, especially in an 

era when any thought of a property or contract right in employment has been 

abandoned, is that upward mobility must involve access to assets as well as access to 

employment. Allowing Mary to save from her earnings without restrictions sets the stage 

for both. 

From the technical standpoint, there are several alternative ways the new disregard 

(raising the resource limit) could be implemented. Mary (and individuals in similar 

circumstances) need to have assurance of freedom from a monthly review that could 

result in a reversal of all her hopes and efforts. Additionally, she must have no incentive 

to conceal income, as some recipients, regrettably, have felt compelled to do. 

If Mary were able to save all her $6,708 a year for five years, she would emerge with a 

nest egg of $33,540, not counting interest. At the end of five years, that money would 

remain untouchable. If she needed to continue receiving cash benefits, the standard 

rules would apply to subsequent earnings and aggregations, but the $33,540 would be 

hers, perhaps for education, perhaps for AT acquisition, job-related or otherwise, 

perhaps for the down payment on a home. 

Under current law, Mary potentially could put all or most of her earnings in a PASS, but 

she could not use them to buy a capital asset such as a home or an annuity. If she 

worked, she could not use her earnings to fund an IRA or employer-sponsored 

contributory retirement plan. 

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When Mary was living under the old system, one of the things she heard whispers about 

was the Individual Development Account. She learned that IDAs represented a way to 

set aside earnings, as well as matching funds, for use in meeting a variety of personal 

objectives. Home ownership was included among the permissible objectives of the IDA, 

but the IDA aggregation upper limit of $10,000 was too small to hold out much hope of 

propelling Mary into the asset-ownership sector. The IDA could be used to capitalize a 

business start-up, but not for employment. It could, however, be used for postsecondary 

education. So there was no coordination between PASS and IDAs. 

If, as part of the POWER proposal, access to IDA and PASS plans could be unified and 

combined with the removal of artificial barriers between permissible usage, account 

administration requirements, time frames, and eligibility, the results could contribute 

significantly to the reconfiguration of social benefits as asset-development strategies in 

the ownership society. What is especially attractive about the IDA in this connection is 

the leverage it offers through the use of matching funds. With such funds available on a 

tax-favored basis, the nest egg could grow substantially. 

And what are the odds that the amount that could be saved from Mary’s wages for a 

self-actualizing, asset-development goal would be limited to the $33,540? Freed from 

worries about keeping her income down, able to work more hours or accept raises, 

there is every reason to believe that Mary will be able to earn a great deal more. 

Evidence for this likelihood can be found throughout the fabric of current economic and 

social policy assumptions. Incentive models, used increasingly to structure choices in a 

variety of settings, are predicated upon exactly these assumptions (see Element B2, p. 

125 ). Tax policy, favoring the liberation of larger and larger amounts of income and 

capital, is predicated on the related assumptions that greater reward will spur greater 

effort and that such effort will redound to the benefit of the entire economy and society. 

These policies have by any measure produced excellent results for people who already 

own assets. Why should they not be deployed with similar benefits on behalf of people 

who yet aspire to that status? 

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Available data suggest that approximately 15 percent of SSI recipients are employed, 

yet fewer than 1 percent of beneficiaries leave the rolls for economic self-sufficiency 

reasons (www.SSA.gov).369 The existing system of work incentives does not work. 

Fewer than 1 percent of SSI recipients are utilizing PASS plans to preserve income and 

set aside resources for a work-related goal. POWER offers Mary a work incentive that is 

simpler to understand and that makes it easier to be a participant than does the existing 

system of limits, law, and reductions. Mary’s unlimited earnings accumulation for five 

years enables her to set measurable and meaningful asset-building goals. The extra 

cost to the government is already there as Mary, without pursuing employment, simply 

continues to collect her monthly cash benefit. The baseline costs are already there. 

By itself, a proposal such as this, if it allowed 1 percent of people who utilized it to get 

off the benefit rolls, would more than pay for itself over their average working lives. 

Meanwhile, during the five years, any potential excess in SSI expenditures would be 

partially offset by income and payroll taxes paid by and on behalf of Mary, by sales 

taxes paid by her on portions of her wages devoted to consumption, and by related 

benefits associated with retention of Medicaid. 

For Mary to get the full benefit of her permissible savings, coordinated reforms will need 

to be implemented in related in-kind benefits programs. Most notably, for the duration of 

the five years, amounts Mary saved from employment or from matching-funds 

contributions to IRAs should not be taken into account in determining her adjusted 

income for housing subsidy purposes. In simplifying the administration of SSI and 

housing programs, it is likely that the changes recommended here will result in cost 

savings to several major public sector service systems as well. 

Case Study 2: Melissa: Working-Age Adult Acquires Disability and 

Starts Her Own Business 

At 42 years of age, Melissa led a quiet life in a good job. The existence of people with 

disabilities, and the issues facing them in day-to-day life, had rarely impinged upon her 

consciousness. If she thought about people with disabilities at all, it was with sympathy 

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bordering on pity when she watched a telethon and celebrities asked her to contribute 

funds to find a cure. All that changed one day. She heard the screeching of brakes, but 

the impact occurred before she even had time to turn to look. In the hospital and the 

rehabilitation facility in the weeks and months to come, Melissa went through despair, 

rage, denial, and then acceptance of her new status in the world. 

At last, Melissa was declared medically ready and stabilized to return to her New York 

home. Her hospital and rehabilitation costs had been covered substantially by her 

employment-based insurance, but with her sick leave (which had provided income) 

exhausted, her health insurance having reached its cap, and the possibilities of 

returning to her former position as a construction worker considered infeasible, 

economic concerns rapidly joined emotional ones as Melissa faced her future. 

Melissa’s colleagues in the building trades rallied to support her and helped modify her 

apartment, including the public portions of the building needed for entrance and exit and 

the laundry facilities. The landlord initially had objected to modifications in the public 

spaces on the ground that they would make other tenants feel uncomfortable, but the 

landlord relented when promised that the original design would be restored, also at no 

cost, if Melissa moved. 

Melissa found herself living on her savings, after her short-term disability benefits 

ceased and while the waiting period for SSDI ticked off on the clock. Learning about SSI 

and understanding that it typically included Medicaid coverage, Melissa thought of 

applying for this program, which would be available immediately if she met its eligibility 

criteria. Unfortunately, because she still had savings well in excess of $2,000, she was 

told that she would not qualify for SSI unless she entered into a spend-down agreement 

or unless some other means could be found of exempting her savings, although 

shrinking, from “countability.” 

Various strategies for sheltering her resources were suggested to her, but none seemed 

appropriate. IDAs and IRWE were predicated upon the receipt of earnings, and Melissa 

had none. Use of the PASS might allow her to establish a savings process for future 

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self-support purposes, but then the money would no longer be available to meet her 

ongoing routine cash flow needs. Though she would receive monthly SSI payments 

once she qualified, these payments, without augmentation from her savings, would not 

be enough to meet her needs, including needs for goods and services that she 

regarded as indispensable to her care but that likely would not be covered under the 

state Medicaid Program or, as she learned from a knowledgeable benefits counselor at 

her local independent living center, under any of the state’s existing Medicaid waivers. 

Someone pointed out to Melissa that if she owned her home as opposed to renting it, 

then its value would be excluded from countability. She thought about using her savings 

as the down payment on a home, but then, just as with the spend-down, she would 

have to use what was left to pay the mortgage and would in all too short a time find 

herself without resources for meeting future goals that, with the passage of time and the 

clearing of her mind, might emerge as viable options. 

But finally, Melissa obtains SSDI, and with it a monthly payment of approximately 

$1,200. In addition, withdrawal from her remaining savings at the rate of about 4 percent 

of their value per year, allows her to subsist at current modest levels. Her life is austere, 

but she has kept her home, her dignity, and a reasonable measure of autonomy. What 

will come next? 

Goals and Obstacles 

By degrees Melissa comes to realize that her economic and personal prospects are not 

good unless something changes dramatically. She would like to get a job and feels she 

can work, but what could she do? Contacting the state VR agency, she undergoes 

various eligibility determinations, skills tests, and other assessments, and at length is 

deemed eligible for services, but her state is operating under an order of selection. She 

qualifies for services by reason of meeting the “most significant” disabilities criteria, but 

none of the training and placement opportunities known to the agency seems to interest 

her or makes full use of her skills. 

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At length Melissa determines that self-employment represents her best option. 

Inventorying her skills, she realizes that a computer-based enterprise, utilizing her 

blueprint-drafting and other construction management skills, represents the best 

pathway to independence. Little does she know that the Social Security Administration 

may have other ideas. 

Melissa knows that she will need capital to start and sustain her business until a client 

base can be developed. But her problem remains how to get the initial funding 

necessary to purchase computers and other home-based equipment she will need and 

begin marketing activities. Three potential sources of this seed money come to her 

attention: her state VR agency, an equipment loan through the state program operated 

under the Assistive Technology Act, and a small-business loan guaranteed by the Small 

Business Administration. 

Melissa learns that it makes a huge difference how she obtains these funds. If she 

obtains cash grants or loans, even if they are to be converted quickly into purchases, 

they are subject to treatment as income. While income per se will not jeopardize her 

SSDI payments, provided the income is unearned, Melissa is given to understand that 

her intended use of these funds could constitute an assertion by her that she is able to 

work. That in turn could jeopardize her monthly benefit, which is an all-or-nothing 

payment, depending on her eligibility status. 

Though Melissa is not in immediate jeopardy of losing her monthly benefit, let alone her 

irreplaceable Medicare health coverage that comes with SSDI, she now understands 

that she may face real risks if she begins to earn income that exceeds a certain limit. 

Unless she can shield her income from countability, she will risk being deemed 

financially ineligible for benefits if her income exceeds SGA in at least nine months 

during a rolling 60-month period, thus deeming her capable of working. 

Arranging to obtain her loans through direct third-party purchase of the work-related 

equipment she needs, rather than as cash, Melissa is able to begin her business. Her 

equipment has not given her all that she will need, since specialized drafting software, 

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enhanced fiber optic connections, and other expensive resources also will be 

necessary, but Melissa begins to earn a small income from her first few contracts. A 

friend tells Melissa that she will be entitled to nine months of trial work before the 

amount of her earnings can become an issue, and before SSA will consider the 

question of whether she is capable of engaging in SGA. But what Melissa does not 

understand is that the monthly income that constitutes SGA, an estimated $900 as 

indexed for inflation this year, is not the same amount of income as will result in a month 

of trial work being charged to her record. The amount required for a month of trial work 

is far less. 

Realizing the imprecision and complexity of rules and the precariousness of her 

situation, Melissa becomes all the more determined. As a result of hard and disciplined 

work, she is able to raise her earnings to the SGA level. But now she must be 

additionally concerned that her benefits will be jeopardized, and that income that 

exceeds the SGA level by as little as $1 could jeopardize her entire benefit for the 

month, and potentially her eligibility for benefits in subsequent months. 

What can Melissa do? She still does not have enough money for the equipment she 

needs to put her venture on a self-sustaining basis, but she risks losing the monthly 

cash payment she still needs long before she is capable of reliable self-support. 

Melissa now begins to learn about Social Security work incentives. While these 

incentives vary between SSDI and the Supplemental Security Income (SSI) Program, 

Melissa learns that the key one for her under SSDI would be IRWE. Under the IRWE 

provision, Melissa can set aside her earnings for the purchase of work-related 

equipment or for meeting other work-related goals. By use of IRWE, the income setaside is not taken into account in determining her countable earnings, so Melissa will be 

able to remain under the income ceiling, at least for a while. 

However straightforward this all may be in principle, practical difficulties immediately 

begin to emerge. Because earnings are calculated on a monthly basis, Melissa faces 

the problem created by the way her earnings are received. In some months she 

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receives no payments at all, while in others, depending on when contract milestones are 

achieved or when client’s fiscal departments happen to pay invoices, her income seems 

quite large. Averaged out, it is exactly what she expected and exactly what SSA 

expects, but the number of months required to reach the mean can vary. 

As a result, several times Melissa has been threatened with benefit cutoff (which would 

occur after a three-month grace period following the determination of her ability to work) 

due to her earnings. She has managed, but only at considerable emotional, temporal, 

and monetary cost, to have these adverse determinations reversed. The experience has 

left her shaken, however, and not entirely unwilling to consider concealment of earnings 

or funds for what she regards as highly regrettable but necessary reasons. 

Melissa never before has been mistrustful of government, especially of a benefit 

programs such as Social Security, but despite having avoided economic ruin, the 

experience has left her guarded and suspicious. The costs of this attitude, to her and to 

the effective administration of the public programs in question, are impossible to 

quantify, but they are eminently real and significant. 

Despite recurring accounting problems due to timing discrepancies, Melissa perseveres. 

Her business grows slowly, as do her savings, which eventually will be put toward 

fulfillment of her professional potential. Melissa learns of a business incubator in her 

area (i.e., a business development center or business locator), but because her 

business is home based she learns she is not eligible for its services and cannot readily 

utilize its resources. One benefit for which she would be eligible is participation in a local 

IDA Program. This would offer an alternative means for sheltering and accruing needed 

funds. Perhaps another option would involve another way, if she had earnings that 

exceeded the SGA level and that did not necessarily need to be put toward the AT. But 

far from being an alternative or adjunct capital accumulation mechanism, for Melissa the 

IDA proves to be no savings mechanism at all, because the goals of the local IDA 

Program, consistent with the governing federal statute, include business start-up or 

establishment, but do not clearly allow business expansion. Melissa seeks guidance on 

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this but cannot get the authoritative guarantees that her now perhaps overly cautious 

nature has caused her to need. She is left with IRWE. 

As important as Melissa’s SSDI has been her Medicare. Though she joins an 

association of small businesses, she is unable to obtain any sort of private coverage 

that would come close to meeting her needs. Accordingly, retention of Medicare will be 

a key concern even should her income continue to rise. It now has become difficult to 

justify enough of a set-aside of funds to meet work-related needs. She still requires 

some new access equipment, but she can afford it out of her earnings and still will be 

left with income that exceeds the SGA amount. 

As she faces a periodic and continuing disability review (of her eligibility), Melissa 

searches for some way to decouple her Medicare from her SSDI cash payments. She 

learns that several mechanisms indeed exist for doing this, and that even if her 

Medicare were to be curtailed it would be possible to reinstate both it and cash benefits 

on an expedited basis in certain cases, using the extended period of eligibility provisions 

of the law. But any interruption of coverage is simply too risky. 

The best solution seems to come out of the Ticket to Work and Work Incentives 

Improvement Act. Melissa learns that SSDI recipients participating in the Ticket 

Program ultimately can retain Medicare coverage for as long as eight and a half years. 

But this avenue, too, seems blocked to her, for she cannot find a suitable employment 

network to accept her “ticket.” First, she is neither employed nor seeking employment, 

but already gainfully, if fragilely, self-employed. The local ENs want to help people get 

jobs. Second, due to deterioration of her functional capabilities (i.e., health), the service 

she most needs through the EN is further help with environmental-control equipment 

(ECU), including equipment to facilitate alternative methods of accessing her computer 

system. SSA has questioned the strict work-relatedness (and hence the income 

excludability) of this equipment, characterizing it as a personal expense instead. SSA’s 

position in this regard derives further momentum from IRS’s recent determination, in an 

audit of her prior year’s return, that some of the equipment costs Melissa claimed as 

business expenses should have been treated as medical expenses. 

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In any event, the ECU would cost more than the EN’s anticipated profit from cashing 

Melissa’s ticket under either of the available ticket payment systems. Accordingly, as 

appears to be their prerogative within the law, they all decline to work with her. 

Melissa now finds that she could obtain a catastrophic care policy. Utilizing a health 

savings account (HSA), the exorbitant costs of even this coverage could be brought 

down to a net figure that would be barely tolerable, but catastrophic costs are not her 

immediate concern. Rather, it is the routine costs of the specialized services and the 

continuity she needs that are the issue. Neither Medicare nor any other known source 

would allow her to avail herself of catastrophic care coverage. Fearful that the next SSA 

eligibility review will result in a determination that she is capable of engaging in SGA, 

based partly on her productivity and partly on her income, Melissa reluctantly concludes 

that her only safe course of action is to scale back her business and reduce her income 

below the SGA level. 

At Melissa’s next SSA continuing eligibility review, she is suspected of manipulating her 

earnings in order to remain eligible. She successfully refutes this allegation, continues 

working productively but at a far lower level than she would like or indeed than she is 

capable of working, but she keeps her health insurance. Melissa is no quitter. She is a 

survivor in every sense of the word, but the system has forced her to make choices that, 

in the aggregate, appear to make no sense from any policy point of view. Worse yet, 

they are not even conscious choices made by society after coherent deliberation. They 

are the accidental consequences of multiple program interactions and input lacking any 

mechanism for taking one another into account. 

Case Study 2: Application of the POWER Framework to Melissa’s Situation 

Life for Melissa under the POWER proposal would of course be quite different. 

Following her accident, her entitlement to any federal income support in the nature of 

SSDI and any medical insurance in the form of Medicare would depend on some 

assessment of the related variables of medical condition and present ability to make a 

living. For purposes of the POWER framework proposal, the nature of the initial 

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eligibility assessments would not need to change. Strategies identified in the POWER 

framework focus on what is involved in the retention or subsequent loss of benefits, 

especially for people like Melissa who acquire disabilities after periods of time in the 

workforce. 

So far as her return to productivity and her self-sufficiency are concerned, the question 

is the same as is confronted in all work-incentives analyses: Do the nature, extent, and 

rate of benefit loss correlate effectively with the acquisition of economic and social 

resources needed to replace the benefits? In Melissa’s case, as the “before POWER” 

scenario has shown, again, that they do not correlate. 

Applying Strategy A – Entitlement Policy 

Melissa has encountered three recurrent problems. The basic problem, which will not be 

discussed here because it is ubiquitous, is that of overwhelming legal and administrative 

complexity. That problem can be solved by simplifying the rules and procedures to 

enhance the interest in and use of specific work incentives. Each layer of reform that 

has been imposed on the SSDI system going back to 1981 has been undermined to 

some degree by the additional burdens of complexity, implementation inconsistency, 

and overall uncertainty that have been added to the decision process for program 

administrators and recipients alike. Essentially, suspending the application of means 

testing for five years (once a few simple, easily understood, and readily knowable 

conditions are met) cuts through the complexity to the maximum degree possible. NCD 

recommends suspension of means testing for only five years. Thus, initially the changes 

are limited to an experimental population and expose the government and the taxpayers 

to limited, indeed to minimal, financial risk during the time its benefits and implications 

are being studied. 

Applying Strategy B – Element B3, Medical Expense 

Turning to Melissa’s individual problems, two remain. One is universal. This is the loss, 

threatened loss, or feared loss of health insurance coverage (in this case, Medicare) 

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under circumstances where the combination of ongoing medical need plus the 

unavailability of alternative private coverage makes this risk unsustainable. 

Once again, a POWER proposal cuts through this problem by offering a simple 

guarantee of the continuation of Medicare for five years. This guarantee is subject to 

Medicare’s continued availability, possibly as a buy-in pursuant to the payment of a 

reasonable income-based premium thereafter (and without the complexities associated 

with current provisions allowing its retention for a potential eight and a half years under 

the Ticket to Work Act). 

Melissa’s final problem is the most specific to her personal circumstances. The twofold 

problem is at once the most easily resolved and the most intractable of the issues facing 

her in returning to productivity through gainful work. She is a person who to some 

degree has skill and a potential to develop a small business, and she can to some 

degree decide on the rate at which that business grows. Yet, the Social Security 

Administration, not alone among major programs, is poorly aligned, if not ill disposed, to 

maximize her ability to do this at the rate she sees fit. 

Her first problem was how to amass the capital needed to start her small business 

without being deemed to have income suggestive of the ability to work, or without 

risking being found capable of engaging in SGA. The five-year grace period would solve 

this problem and eliminate this worry. Her acquisition and use of capital for developing 

her small business would be irrelevant, as would be the rate at which her business 

expands and the levels of taxable income it yields. Continuing disability reviews likewise 

would not take place, and the moratorium on them currently contained in the ticket 

should be applied. 

Melissa’s second Social Security-specific problem was that the rules governing IRWE 

and other work incentives and income/resource-sheltering opportunities were crafted to 

enable her to start her business but not to grow it, or not to grow it to a point where she 

could sustain herself without benefits. Recall that once her income was sufficient that 

deduction of the cost of work-related expenses no longer brought that income below the 

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SGA level, Melissa found herself in a vicious bind. Every expansion of her business, 

every additional dollar of profit, exposed her to greater risk. The loss of benefits would 

leave her in a financially perilous position long before her business had ramped up 

sufficiently to equalize the harm. 

Applying Strategy B – Tax Policy Element B2 

Here, too, POWER offers a simple solution premised on the assumption that if left free 

of such risks for five years, Melissa will be in a position such that all benefits can be 

scaled down and eliminated. The result should be long-term savings to the public. 

One other area of concern here relates to tax law. Although POWER includes changes 

to the tax law, discussion has not included the disproportionately burdensome effects of 

current law upon Melissa’s prospects. Under current law, a number of the business tax 

benefits that small businesses utilize would not be available to her, while the value of 

some others, though technically available to her, would be lost. 

With respect to business tax benefits that would be unavailable, Melissa, though her 

business has fewer than 15 full-time employees (it has just one), would not be allowed 

to claim the Disabled Access Credit, unless part of her home were used exclusively for 

meetings with clients or customers. Melissa does not have clients come to her home. 

She conducts her negotiations, meetings, and site reviews via the Internet. 

Without going into the intricacies of why the IRS has restricted application of the tax 

credit on behalf of small firms with fewer than 15 employees, it is enough to note that 

were the tax credit available to Melissa, it could greatly facilitate her ability to acquire 

the equipment she needs to grow her fledgling enterprise. That is good for everyone, 

even for her competitors, if one believes in the discipline of competition in the free 

marketplace. 

Other provisions such as the Architectural/Transportation Tax Deduction (barrier 

removal) also are unavailable for technical reasons stemming from their out-of-date 

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premises. Any serious governmentwide effort to return people with disabilities to the 

mainstream economy will need to confront these issues. POWER addresses the issues 

in detail. 

Ambiguities in the treatment of certain medical or business expenses present further 

problems. In one scenario, Melissa’s costs for ECU technology for use in her home 

business were denied tax deductibility as business expenses. This ruling is plausible, 

albeit bad policy, under current law. But it is equally possible that a different auditor 

could, under current law, have denied Melissa even a medical deduction for her ECU 

and other access expenses. Moreover, even where a personal deduction is allowed, its 

value may be severely limited if the cost was met out of savings rather than out of 

current earnings, because an itemized deduction is available only against current 

income. For someone like Melissa, who was not necessarily relying totally on current 

income, and for someone who was starting or growing a small business with loan 

capital, the problem would be the same. The POWER framework also offers Melissa the 

benefits of expanded eligibility for IRWE to nonitemizers and a change in the threshold 

trigger to be able to utilize the Medical Expense Deduction with a corresponding 

definition of coverage that includes other disability-related expenses such as assistive 

technology. 

An emerging new tax issue relates to the role of the New Markets Tax Credit. 

Specifically, it relates to the means available to link small businesses owned and staffed 

by people with disabilities, particularly home-based businesses in targeted communities, 

to the benefits of the law. Under POWER, Melissa might benefit from location of her 

business in such an empowerment zone. 

In conclusion, the premise undergirding Melissa’s scenarios, before and after POWER, 

is that the expenditure of potentially additive public funds over the short term will yield 

long-term savings in program costs as well as other measurable benefits to society. 

Even if these measures cannot be proved in advance to result in these benefits, their 

actual cost relative to projected benefit is sufficiently small under the demonstration 

program model as to make the risk well worth taking. 

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Case Study 3: Parents Raising a Child with Significant Disabilities: 

James, a Teenager 

Robert and Jill Robbins live in Hampton Roads, Virginia, with their three children. Their 

oldest child, James, who at the start of this scenario is 16 years old, was born 

prematurely and has multiple physical and intellectual challenges. Through persistence 

and advocacy, James’s parents have been successful in negotiations with their local 

school system. The result has been that James attends his neighborhood school and 

participates in regular classes with students without disabilities with the support of an 

aide whose duties include helping James use a communication device. James and his 

parents are involved in secondary school transition planning for postschool adult living. 

Based on family assets and income, James is not eligible for SSI benefits or Medicaid. 

The Robbinses estimate that extra costs of health care, including purchase of assistive 

technology items that were not included in James’s Individual Education Program (IEP) 

through the school system, are in excess of $12,000 annually. The health care and 

assistive technology costs also were beyond the scope of group coverage provided 

through Mr. Robbins’s employer. The Robbinses started 529 Plan accounts for their two 

other children to plan ahead for college education. However, as part of his involvement 

in IEP team transition planning, James has indicated that he would like to work after 

high school. With input from James about his preferences and interests, the parents’ 

postsecondary expectations are that his school training and transition planning have 

prepared him to find employment after he ages out (at age 22) of public education under 

the provisions of IDEA. Based on the level of their son’s functional assistance needs, as 

middle-aged parents who are primary caregivers, the Robbinses also are concerned 

about where James will live, how he will maintain a personal assistant for daily living 

activities (including morning preparations for travel to a workplace), and who will be 

responsible for helping him with a number of other matters after they are deceased. 

Mr. and Mrs. Robbins would like to set aside funds for James for his adult years but are 

worried that any assets will count against him in determining eligibility for SSI and 

Medicaid and other public benefits when James is an adult. From friends, they have 

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heard that it is not a reasonable expectation for James to work and become selfsufficient. Other families explained to the Robbins family that they also should be 

concerned about possible loss of health benefits and disincentives to employment and 

asset building inherent in means-tested public benefits. Yet, consistent with their son’s 

communications to them, the Robbinses persist in their belief that someday James will 

be a business owner and home owner. Struggling with the extra costs of raising a child 

with significant disabilities, there are millions of families like the Robbinses, who are 

unsure of their child’s path to a better economic future in his/her adulthood. 

Case Study 3: Application of the POWER Framework to James’s Situation 

Based in part on the expectations that James will become a contributing member of his 

community, the Robbins family would benefit from multiple features of the proposed 

POWER framework. In accordance with amendments to 529 Plans, families with a child 

who has a significant disability would be allowed to set aside, with favorable tax 

consequences, funds for purposes other than postsecondary education. The Robbins 

family will set aside funds in a 529 Plan for James’s purchase of assistive technology 

and the start-up of a business. 

The Robbins family also would benefit from changes to the Medical Expense Deduction 

in two ways. The definition of medical expenses under the POWER framework is 

clarified to include coverage of the costs for the purchase of assistive technology, home 

and vehicle modifications, personal assistance services, and respite care in addition to 

the traditional expenses covered under the Medical Expense Deduction. In addition, the 

threshold of allowable medical expenses, which currently must exceed 7.5 percent of 

adjusted gross incomes, would be eliminated. The more broadly defined medical 

expense and long-term supports deduction would be available regardless of whether 

the taxpayer itemized deductions. 

As soon as James turns 18 years old, he will be eligible for both SSI and Medicaid, and 

under the POWER framework with the raised resource limits for SSI, he will be 

encouraged to work and save. The changes to the Medicaid Buy-In would encourage 

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James to earn more income and save for the start-up of a business and the purchase of 

a home. Regardless of income level, James would be able to work for five years before 

being concerned about health benefits. 

James also would be encouraged to create a PASS to preserve income and Social 

Security benefits while setting as a goal to advance his self-sufficiency the start-up of a 

business and the purchase of his first home. Under the POWER framework, James 

would not need to create a PASS until after his first five years of work. James also can 

earn and save without current income and resource limits for the first five years. 

Disincentives to savings and building assets have been eliminated by applying POWER. 

James also would benefit from the blending and braiding of funds in an individualized 

person-centered plan. He also might benefit from careful management of resources in 

his individual budget that leads to spending less than the allocated amount of funds. In 

addition, with the application of POWER, James would keep 50 percent of what he 

saves for his selected asset-building objectives of purchasing, technology, and 

transportation. Of course, as IDEA requires, throughout all the planning for transition 

from secondary school to postschool living, the IEP team must involve James and 

consider his interests and input. 

Case Study 4: Moira: Young Adult with a Disability and Not on Public 

Benefits 

Moira is a bright young college graduate seeking employment in the corporate financial 

analysis field. Although her academic credentials are stellar, she has found that her 

visual disability has presented obstacles, both expected and unexpected. As a 

statistician, Moira understands that the effect of the expected obstacles, which may or 

may not amount to discrimination, is to change the sample size of available employers, 

reducing the pool of otherwise available and suitable companies through the selfselective exclusion of company representatives who discriminate. But Moira, ever the 

optimist, knows that many firms remain and that with time and patience she will find a 

job. 

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What Moira had not, but perhaps should have, anticipated were the environmental and 

infrastructural problems confronting her, not only as a job seeker but potentially as a job 

holder. These are problems of accessible transportation and housing, and of other 

dimensions of access. 

Moira lives downtown, in an area that is reasonably well served by mass transit—a 

major factor in her choice of location, since she cannot drive. The fact that it is a 

neighborhood with relatively low rents also was a consideration. Moira reasoned that 

the web of metropolitan buses converging on the area would assure her of 

transportation to and from a future work location. 

But the county, anxious to spend more money on prison building, and reacting to federal 

cutbacks, has begun curtailing bus service, reducing schedules on all routes and 

terminating service entirely on some others. Moira gets a job offer, but under the new 

bus schedules, it would take her three hours to get to work and three hours to get home, 

and if any one bus were late by more than six minutes in reaching its transfer point, she 

would miss the connection and have to add another hour to her trip. Moira attempts to 

obtain paratransit service but is denied because she is not physically incapable of using 

mass transit. Moira then tries to find someone with whom she could ride-share or 

carpool, but no one else at the company lives anywhere near her area, and it would 

take anyone who picked her up at least a half-hour out of the way. Taking a bus to a 

meeting point is possible, but the only viable meeting points are in desolate locations, 

and Moira understandably is afraid. Her own neighborhood’s teeming streets are one 

thing, but desolate areas quite another. 

With deep regret, Moira is forced to decline the job offer. Angry, she appeals to the 

transit agency to restore one particular bus route that would have allowed her to take 

the job. By leafleting in her neighborhood and along the former bus route, she is able to 

gather data suggesting that, although the user base for the line was not large, virtually 

all the people who would use it would be doing so to get to and from work. The transit 

agency is unimpressed, stating tersely that it is not an employment support program 

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and that fairness requires that route decisions be based on ridership demand only, not 

on some assessment of which riders are worthier than others. 

Moira uses simple principles to construct a chart showing that, by dividing the cost of 

the mass transit service by the number of jobs made possible or saved, taking into 

consideration the taxes generated by the workers and other factors, the economy would 

benefit by reinstating the service. But the mayor and city council indicate they have no 

control over the transit agency, which is an independent authority. 

Despite her low rent, Moira believes that, from the asset accumulation standpoint, she 

would be better off as a home owner. Fortunately, she receives a small inheritance that 

is just enough to make a down payment on a suitable home. Finding one in the leafy 

suburbs proves problematic, again because of transportation reasons, but eventually 

she finds one that is seven blocks from a monorail station. The only trouble is that to get 

there she has to cross a new kind of traffic circle that is extremely dangerous because 

of uninterrupted vehicle traffic flow. 

Moira petitions the local government to install lights or certain other technology that 

would make the crossing safer. Claiming to have no money and no legal obligation, the 

government refuses her request, instead offering to put up a humiliating sign on the 

curb warning motorists: DRIVE SLOWLY, BLIND PERSON NEARBY. Moira declines the offer. 

Her research discloses that federal law and state traffic or building codes do not purport 

to cover this situation, although requirements bear upon major new projects paid in 

whole or in part with federal funds. On behalf of all pedestrians, elders, and people with 

various disabilities, she appeals to the voters, running for City Council on a personfriendly platform. Unfortunately, Moira is defeated and moves back downtown. 

At length, Moira finds another house in a new development. Its control features, 

including heating, cooling, kitchen appliances, cable-readiness, and so forth, are all 

hardwired. All are inaccessible, utilizing flat-panel, digital controls that cannot be 

accessed by a person lacking vision—indeed, by a person lacking vision and motor 

skills and good coordination between them. It is all the latest in high tech, but it would 

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cost upwards of $20,000 to tear out and replace, and Moira just does not have that 

much extra money, especially since she now is living on her small inheritance while 

looking for a job. 

Finally Moira finds a job. Joyously, eagerly, she begins work, after a one-and-a-halfhour bus trip, but problems arise because the firm’s local area network is not fully 

compatible with the screen-reader software she uses, and because the company 

utilizes spreadsheets and other graphic materials that screen-readers cannot access. 

While readers can be hired to help access them, the productivity losses cannot be made 

up easily. The firm says that it would investigate systematic retrofitting of the information 

technology system if tax subsidies were available. Moira finds that the Disabled Access 

Credit, which would be the most obvious subsidy, would not cover the case for technical 

reasons. The barrier removal deduction is not relevant because all it does is convert 

capital to ordinary expenses; since this retrofit, unlike building modifications, would be a 

routine deductible cost anyway, nothing is gained by applying the deduction. However, 

Moira learns that it does not apply anyway. In the end, because the firm insists on some 

advantage beyond the mere routine deductibility of the expense—some sort of 

acceleration or tax credit that does not exist—nothing is done. Moira toils on, below her 

potential, doing the best she can, doing good work but nothing that on its face would 

justify the advancement she truly deserves. 

Moira hopes for the day when society’s institutional arrangements will gain the flexibility 

to allow her to be the fully engaged and productive person she knows she can be. She 

has the company of many people in similar circumstances across the country waiting 

with her. 

Case Study 4: Application of the POWER Framework to Moira’s Situation 

If the POWER framework were introduced, Moira’s opportunities and resources to 

achieve economic self-sufficiency, productive employment, and a higher quality of life 

would be greatly increased. In particular, a number of the proposals made under 

Strategy B and Strategy D would prove very valuable. Presently, Moira is not 

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participating in any public financial or medical assistance programs, so the measures 

discussed under Strategy A would have no immediate applicability to her situation. The 

measures in Strategy C will come into play after she secures employment. 

Applying Strategy B – Modification to Tax Policy 

Because employment seems to be the main issue facing Moira, discussion of the 

proposed employer tax incentives represents a point of departure. Moira was unable to 

work at her level of competence, or indeed to achieve the upward mobility of which she 

was capable, because it was not in her employer’s financial interests to invest in the AT 

she needed. By combining and revising the three employer tax provisions—Disabled 

Access Credit, barrier removal deduction, and Work Opportunity Tax Credit—the 

availability of instrumental tax subsidies could be assured. In particular, allowing the 

Disabled Access Credit for businesses of all sizes, combining the Disabled Access 

Credit and the barrier removal deduction, and clarifying that a demonstrable purpose to 

promote accessibility is the criterion for gaining the tax benefit, two key goals could be 

achieved. All equipment intended for accommodation purposes would be eligible for the 

benefit, and all firms, whether treating their equipment purchases as capital or ordinary 

expenses, would receive the benefits of converting the cost into a credit. 

It seems likely that under the circumstances described, Moira’s employer would be 

willing to purchase the necessary devices. If not, the changes proposed to IRWE and 

the Medical Expense Deduction might enable Moira to buy the AT herself. Though her 

income remains limited, the opportunity to deduct the costs of work-related AT without 

having to itemize deductions could make the difference. Or, if the deduction is too large 

to be absorbed by her income for the year, then she could carry the unused portion 

forward or back to the following or to the preceding year. 

Applying Strategy D – Indirect, Community-Based, and Employer Incentives 

The POWER framework could have helped Moira get her job. If the Work Opportunity 

Tax Credit were available for the hiring of all unemployed people with disabilities, not 

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just people referred by state VR agencies or members of families receiving various 

forms of government cash payments, Moira and her employer could avail themselves 

of it. 

In connection with Moira’s ambition for promotion, the availability of the credit to support 

upward mobility, through its provision for the first year of work in a new position with the 

same employer involving a significant increase in salary, would again increase the 

comfort level for both parties. 

While she is primarily focused on employment, Moira’s problems reflect the fact that 

employment cannot be studied in isolation from transportation and housing. Many of the 

POWER framework proposals would affect these variations of Moira’s situation as well. 

Moira also might benefit from an employer-matched education account to continue to 

build her skills for career advancement. 

Although almost every homeowner in this country is aware of the central role of the tax 

law in the financial equation of ownership and mortgage, fewer people stop to think 

about the numerous ways that public money is involved in every phase of the real 

estate industry. It seems little enough to ask that developers—in return for generous 

depreciation provisions, tax-favored use of the bonding authority to create investment 

capital, waiver of local real estate taxes, occasionally even the use of eminent domain 

to acquire parcels—be expected to incorporate minimal standards of accessibility for all 

units in single and multifamily developments. The POWER framework incorporates the 

principles of universal design as a requirement for all publicly subsidized development. 

Such a requirement should incorporate beneficial accessible design standards for the 

built environment but also extend to technology access and use that reduces or 

eliminates barriers to environmental control and communication. 

Over time, tax-based and other measures that reward and encourage the building or 

modifying of housing units in accordance with principles of accessibility will make 

accessible housing more affordable by increasing supply. Greater choice of location 

also will follow. 

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For the time being, Moira’s choice of housing is limited, in part by the inaccessibility of 

fixtures and appliances and by the proximity to public transit. There is little that tax 

policy can do directly to increase the availability of transit services, but there is much it 

can do, and indeed has already done, to meet the mobility needs of Moira and other 

people whose lack of transportation places them at a disadvantage. Under current law, 

qualified fringe benefits that employers can deduct and that employees can receive tax 

free include certain transportation-related benefits, such as mass transit subsidies and 

in some cases free parking. If the disability-related add-on costs of commuting to and 

from work were similarly treated, or if such costs could be brought within the ambit of 

the revised Disabled Access Credit, the ability and willingness of employers to provide 

or help provide alternative arrangements likely would be increased. If, in addition, a 

share of costs that Moira might pay were deductible under the revised IRWE category 

(commuting costs currently are not deductible, even if resulting from a disability), then 

the resources for finding some viable strategy might be at hand. 

Taken together, the provisions discussed here would affect Moira’s life in ways that are 

positive for her and beneficial to society and the national economy. All are triggered by 

work, and all reward employers and employees who demonstrate an entrepreneurial 

spirit. 

4.4. Cost-Benefit Analysis for the Proposed POWER Framework 

This report provides estimates of disability and health coverage benefits and tax 

revenue implications associated with changes in the treatment of disability benefits and 

other financial incentives designed to encourage people with disabilities to work, to 

accumulate financial assets, and to attain and maintain financial security for three case 

scenarios discussed above: 

•	 Case Study 1, concerning a young woman living in Indiana (Mary) who receives SSI 

and who begins to work for the first time at age 30, at a part-time, minimum-wage 

job. 

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•	 Case Study 2, concerning a middle-aged woman (Melissa) who lives in New York 

and who, at age 42, is awarded SSDI benefits for a disability acquired through injury. 

•	 Case Study 3, concerning a young man (James) who lives in Virginia and has 

received SSI benefits since childhood. The scenario introduced him as a 16 year old 

involved in secondary school transition planning; now, at the age of 22, James has 

completed his education and is ready to enter the workforce. He takes a minimumwage job working 30 hours per week. 

Before the presentation of estimates, the report describes the methodology, data 

sources, and underlying assumptions essential to estimates of benefits and tax impacts 

for each case study. 

Methodology 

For each case, the calculation included some or all of the following: 

•	 Annual disability benefits (SSI or SSDI) 

•	 Annual health coverage (Medicare or Medicaid) payments made by federal/state 

government for health services received during the year 

•	 Annual earnings, where applicable370 

•	 Annual federal income taxes paid, where applicable 

•	 Annual FICA contributions (employee and employer) 

•	 Annual employer federal unemployment tax payments 

•	 Annual state income taxes paid 

•	 Annual employer state unemployment tax payments 

Annual benefits, earnings, and tax revenues are estimated over a range of years 

beginning with the start of (or return to) employment and ending at age 64. All benefits, 

earnings, and tax revenue estimates are calculated in real terms (2007 dollars), with no 

adjustment for inflation. Benefits, earnings, and tax revenues estimated over the 

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specified number of years, as required by the analysis, are reported at their present 

discounted value in 2007. There is no general agreement as to what discount factor 

should be used, particularly for public policy analysis. The Office of Management and 

Budget (OMB) recommends a rather conservative discount rate of 7 percent (OMB, 

1992)371 but also suggests that other discount factors be used as a sensitivity check. 

The selected discount rates for this study were 4 percent, 7 percent, and 9 percent. 

Data Sources and Assumptions 

Data to develop these estimates were obtained primarily from those published by the 

Social Security Administration and Centers for Medicare and Medicaid Services, as well 

as from other state and Federal Government sources. 

Disability Benefits 

Annual disability benefits are calculated for each case for each year from the initial case 

study age to age 65. For SSI recipients, estimates of SSI benefits also are made for the 

case study subject’s remaining lifetime (past age 64). All disability benefits are 

expressed in real (2007) dollars, with no adjustment for inflation. 

SSI benefits for Case Study 1 and Case Study 3 subjects (Mary and James) are set at 

the 2007 federal monthly benefit of $623 per individual, and annualized over 12 months. 

Neither Indiana (state of residence for Case Study 1, Mary) nor Virginia (state of 

residence for Case Study 3, James) provide an SSI supplement administered by the 

Social Security Administration to its SSI recipients; eligibility for state-funded 

supplements in these states is restricted to residents of licensed residential facilities 

(Indiana) or those in assisted living residences or adult foster care arrangements 

(Virginia). 

SSDI benefits for Case Study 2 (Melissa) are set at $1,200, with payments beginning in 

2007, at a level deemed to be consistent with Mary’s work experience and earnings 

history. 

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Health Coverage Benefits 

Average annual Medicaid benefits for Case Studies 1 and 3 are calculated using statespecific data on mean Medicaid outlays for beneficiaries with disabilities in 2003 from 

the FY 2006 Medicaid Statistical Information System state summaries maintained by the 

Centers for Medicare and Medicaid Services. These data are available online at 

www.cms.hhs.gov/DataCompendium. The July CPI—Consumer Price Index—for 

medical services (for all urban areas) is used to calculate an average annual 

reimbursement rate for 2006 (this, of course, assumes that any changes in Medicaid 

payments are due to price changes only, and not to changes in utilization rates among 

the Medicaid population of people with disabilities). The assumption is based on 

actuarial reports (obtained from the 2005 Annual Report of the Boards of Trustees of 

the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust 

Funds).372 Expense calculations indicate medical service costs increased by 4 percent 

between 2006 and 2007, to arrive at an average annual Medicaid payment amount of 

$17,803 in Indiana and $13,846 in Virginia per beneficiary with a disability. 

Average annual Medicare benefits are calculated using data for aggregate Medicare 

fee-for-service reimbursements for hospital and SMI—Supplementary Medical 

Insurance—services paid for the SSDI population, divided by an unduplicated count of 

SSDI beneficiaries enrolled in either or both of these services. These data were 

obtained from Table 2.1 (Enrollees) and Table 3.2 (Reimbursements) from the Medicare 

and Medicaid Statistical Supplements, published by the Centers for Medicare and 

Medicaid Services, in Health Care Financing Review and available online at 

www.cms.hhs.gov/MedicareMedicaidStatSupp/. Fee-for-service reimbursements are 

used because fewer than 10 percent of SSDI beneficiaries are enrolled in Medicare 

managed care plans. Using these data, calculations result in an average annual 

reimbursement per enrollee for 2004, the most recent date available. The July CPI for 

medical services (for all urban areas) is used to calculate an average annual 

reimbursement rate for 2006 (this, of course, assumes that any changes in Medicare 

reimbursement amounts are due to price changes only, and not to changes in utilization 

rates among the SSDI Medicare population). The assumption is based on actuarial 

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reports (obtained from the 2005 Annual Report of the Boards of Trustees of the Federal 

Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds), that 

indicate medical service costs increased by 4 percent between 2006 and 2007, to arrive 

at an average annual reimbursement amount per SSDI enrollee of $7,901. 

In most instances, the expectation would be that health care expenditures vary with age 

and other factors over time. However, no models or bases are available for 

incorporating the impact of age, gender, or specific medical conditions to develop likely 

Medicare or Medicaid expenditure scenarios for case study subjects. Thus, in this 

report, average public expenditures on health care for each of the case study subjects, 

in real terms, stay constant over their remaining work lives. 

Life Expectancy 

Estimation of lifetime benefits for Case Studies 1 and 3 require some assumption of life 

expectancy. Estimates provided by SSA, Office of the Chief Actuary (2005),373 are used. 

Life expectancy estimates are provided at birth and at age 65. This study elects the 

conservative approach and uses life expectancies at birth. This is a prudent assumption 

in light of the fact that what effect, if any, each subject’s disability may have on his or 

her longevity is unknown. 

Earnings 

For the case study subjects on SSI (Case Studies 1 and 3), the assumption is that these 

individuals obtain part-time employment initially at the federal minimum hourly wage of 

$5.15. These calculations are based on a further assumption that legislation to raise the 

minimum wage passed by Congress early in 2007 would be signed by President Bush 

on July 1, 2007. This legislation provides for an increase in the minimum wage to $7.25 

per hour, phased in over a two-year period. Based on the phase-in schedule specified in 

this legislation, an assumption is that the hourly minimum wage will rise to $5.85 on 

September 1, 2007, or 60 days after the legislation is signed into law. One year later 

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(September 1, 2008), the minimum wage rate increases to $6.55 per hour; another year 

later (September 1, 2009), the minimum wage rate increases to $7.25 per hour. 

Once the minimum wage reaches its maximum rate in 2009, the assumption is hourly 

wage increases for the study subjects, based on anticipated productivity gains. 

Productivity gains are estimated using the real-wage differential assumptions (defined 

as the difference between nominal wage growth and inflation) utilized by the Social 

Security Administration in its actuarial studies (Social Security Administration, 2005).374 

However, deliberations about the anticipated legislation were unresolved as of January 

15, 2008, at the time of this publication. 

Federal Income Tax 

Federal income taxes paid by subjects in Case Studies 1 and 3 are estimates using tax 

rates effective in 2006, assuming that subjects are single but are not filing as head of 

household, that they take the standard deduction of $5,150, and that they each have 

one exemption ($3,200). Their only taxable source of income is their earnings375 and the 

only tax credit that they qualify for is the EITC. Federal income tax payments grow over 

time as income (earnings) grows. 

FICA Taxes 

By law, 6.2 percent of all earnings (up to $97,000 in 2007) comprise the employee’s 

Social Security contribution; another 1.45 percent is withheld from earnings for 

Medicare. Employers are required to match this contribution. FICA taxes (combined 

Social Security and Medicare contributions) are calculated at 7.65 percent of earnings 

for employees. However, the employer’s payroll tax contributions (an additional 7.65 

percent of earnings paid) reduce taxable business income, which offsets some of the 

tax revenues generated by this FICA payroll tax. 

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Federal Unemployment Tax Act 

By law (Federal Unemployment Tax Act, or FUTA), employers are required to contribute 

to the cost of unemployment insurance for workers in their state. This payroll tax 

amounts to 6.2 percent of all wages paid to their employees (on the first $7,000 of 

wages paid).376 However, since most of this contribution is offset by a tax credit on 

income taxes paid by businesses, the effective unemployment tax rate for most 

employers is 0.008 percent. 

State Income Taxes 

Both Indiana and Virginia levy income taxes on their residents. In each state, the 

starting point for the tax calculation is the adjusted gross income calculated for each of 

the study subjects. State-specific adjustments to income for exemptions and deductions 

are required in order to arrive at taxable income. Similar to the federal tax process, 

calculation for this study used tax rates effective in 2006, assuming that subjects are 

single, that they take the standard deduction applicable in each state ($3,000 in Virginia; 

no standard deduction in Indiana), and that they each have one exemption ($1,000 in 

Indiana; $900 in Virginia). Their only taxable source of income is their earnings,377 and 

the only tax credit that they qualify for is the state’s EITC or its equivalent. State income 

tax payments grow over time as income (earnings) grows. 

State Unemployment Taxes 

Employers also contribute to state unemployment insurance funds. State unemployment 

tax rates can vary with such factors as the number of employees, size of the payroll, 

and past layoff history (indicating the probability that employees will require 

unemployment insurance payments in the future). The requirement to pay state 

unemployment taxes applies to most, but not all, employers in a given state.378 

In Indiana, state unemployment tax is charged to the first $7,000 of earnings for each 

employee, at a starting rate of 2.7 percent. This rate may be adjusted later, based on 

the employer’s layoff history. For estimation purposes, an assumption is that the study 

182
 
 

subject’s employer is liable for paying state unemployment taxes and that the employer 

tax rate is 2.7 percent. 

In Virginia, new employers pay 2.5 percent in tax in employee earnings (up to $7,000 in 

annual earnings). One year later, the employer becomes eligible for a computed tax rate 

(ranging from 0 percent to 6.2 percent), based on their layoff history and benefits paid to 

laid-off workers. For estimation purposes, the application is made of a state 

unemployment tax rate of 2.5 percent to the first $7,000 of earnings reported for the 

Case Study 3 subject in each year of his employment. 

Benefits, Earnings, and Tax Revenue Estimates 

The estimated benefits, earnings, and tax revenue impacts associated with earnings are 

provided below for the three case studies. For each case, the estimate includes the 

following: 

•	 Total benefits (disability and health coverage benefits) that would be paid out over 

the remaining benefit life of the case study subject. For Case Studies 1 and 3, which 

involved SSI benefits, the remaining benefit life is estimated in two parts: 

– The remaining work life of the subject through age 64 

– The postretirement years, defined as age 65 through the subject’s expected life 

expectancy 

•	 For Case Study 2, an SSDI recipient, the remaining benefit life is defined as the 

subject’s work life. 

1. Total benefits paid under Scenario 1, where disability benefits cease five years 

into the subject’s remaining work life. Disability benefits would cease immediately 

after five years, while health coverage benefits would transition out based on 

current extended health care coverage provisions (extended period of eligibility 

for Medicare benefits and continued Medicaid coverage under Section 1619[b]). 

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2. Total benefits savings under Scenario 1. For the SSDI recipient in Case Study 2, 

this estimate is simply total benefits paid out over the remaining work life 

(Scenario 1) minus total benefits paid for five years only (Scenario 2). For SSI 

recipients, total SSI benefits paid out over remaining work life only (Scenario 1a) 

as the baseline for measurement of benefit savings. 

3. Total benefits paid under Scenario 2, where disability benefits remain in place for 

the first five years into the case study subject’s life and are then phased out over 

the next five years. This phase-out of disability benefits proceeds as follows: 

• Year 6: Receive 70 percent benefits 

• Year 7: Receive 45 percent benefits 

• Year 8: Receive 25 percent benefits 

• Year 9: Receive 15 percent benefits 

• Year 10: Receive 10 percent benefits 

Health coverage benefits continue into the future, based on current regulations 

extending health care coverage for Medicare and Medicaid beneficiaries who 

work. 

4. Total benefits savings under Scenario 2, calculated as (1) minus (4) for Case 

Study 2 and (1a) minus (4) for SSI recipients. 

For Case Studies 1 and 3, which address SSI beneficiaries and workforce entry, the 

estimated earnings are calculated over the remaining work lives of the subjects and the 

estimated federal and state taxes that will be collected from these earnings. 

Case Study 1 (Earnings and Tax Estimates) 

The case study involves Mary, a 30-year-old woman with a disability who lives in 

Indiana and who has never worked. She receives Supplemental Security Income 

payments at the federally mandated monthly rate of $623 in 2007, and is eligible for 

184
 
Medicaid coverage. She takes a part-time job at the current federal minimum wage of 

$5.15 per hour, and works 25 hours per week. For estimation purposes, an assumption 

is made that this employment position continues until she reaches age 65. Mary’s life 

expectancy, given that she was born in 1976, is about 77 years. 

Table 2 provides estimates of SSI and Medicaid benefits that Mary will receive over her 

estimated life span of 77 years. Total remaining lifetime SSI benefits for Mary, 

discounted back to 2007 using a 4 percent discount rate, are $158,455. Of these, 

$139,537 are benefits that would be paid out over her remaining work life (that is, up 

through age 64); the remaining $18,918 is the present discounted value (at 4 percent) of 

the SSI benefits that would be paid to her at age 65 through age 77. Associated 

Medicaid benefits are $388,681 over her entire remaining lifetime, with $332,286 

associated with her remaining work life and $56,395 estimated as benefits that she 

would receive postretirement. Similar interpretations apply to SSI and Medicaid benefits 

estimates discounted at 7 percent and 9 percent. 

Estimates of benefits impacts and savings over Mary’s working life under two alternative 

benefits scenarios are presented in table 3. If Mary were to receive her SSI benefits for 

only five years (2007 through 2011), she would receive only $33,282 in SSI benefits 

(expressed at their present value discounted at 4 percent). Thus, the benefits savings 

under this scenario, defined as total working lifetime SSI benefits ($139,537) less five 

years of benefits ($33,282) is $106,255. Note the use of work life benefits, rather than 

total lifetime benefits, as baseline here. This reflects the underlying premise of this 

scenario that the continuation of SSI benefits for five years after the onset of 

employment will enable Mary to work steadily from age 30 through age 64, thus building 

up credit toward Social Security Old-Age and Survivors Insurance (OASI) benefits. 

These OASI benefits will provide some offset to SSI benefits savings. At the same time, 

if these benefits are not very low, Mary still may qualify for SSI benefits. The net 

benefits picture postretirement is not clear-cut. In this study, the use of work life as the 

baseline for benefits scenarios provides a conservative estimate of SSI benefits savings 

for Mary. 

185
 
Likewise, extending SSI benefits for more than five years after employment, with a 

gradual phase-down between years 6 and 10, results in a total of $42,633 in SSI 

benefits paid out. This results in lifetime SSI benefits savings of $96,904 (the difference 

between total work life SSI benefits of $139,537 and the $42,633 in benefits paid out 

under Scenario 2). Note that there is no change in Medicaid benefits paid out under 

either Scenario 1 or Scenario 2. While Mary is working and is not receiving SSI benefits, 

her earnings never exceed her state’s 2007 earnings threshold for Medicaid benefits 

under Section 1619(b). 

Earnings and tax revenues generated as a result of continued employment until age 65 

are provided in table 4. The present value of Mary’s lifetime earnings from age 30 

through age 64, discounted at 4 percent, is $194,155. She will pay $1,278 in federal 

income taxes over her work life and $5,813 in state income taxes. Her employment will 

generate a total of $29,706 in FICA revenues; 50 percent of these are paid by her 

employer and 50 percent are paid by Mary. Her employer also will pay a total of $8,100 

in federal unemployment taxes and $3,528 in state unemployment taxes over the 

course of her employment—all values expressed in terms of their present discounted 

value (4 percent). Total federal tax revenues generated by her employment total 

$39,804, while state tax revenues total $9,341. Her post-tax earnings, which exclude 

her portion of all tax revenues generated by her employment, come to $172,058 

(discounted at 4 percent). Table 4 provides analogous earnings and tax revenue 

estimates for discount rates of 7 percent and 9 percent. 

Finally, the assumption is that Mary’s SSI benefits end after five years of employment 

(that is, under Case Study 1, Scenario 1). Assuming a 4 percent discount rate, it would 

take six years beyond this initial five-year period to accrue sufficient SSI benefits 

savings to match SSI benefits expenditures during the first five years. Comparable time 

periods using 7 percent and 9 percent discount rates are eight years and nine years, 

respectively.379 

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TABLE 2: LIFETIME SSI AND MEDICAID COSTS: CASE STUDY 1 (Mary) 

(2007 Dollars) 

Discount Rate: 4 percent Discount Rate: 7 percent Discoun

SSI Medicaid Total SSI Medicaid Total SSI 

Total benefits ages 30–77* 158,455 388,681 547,136 102,649 250,766 353,415 81,730 

Total benefits paid during work life (ages 30–64) 

139,537 332,286 471,823 96,797 230,507 327,304 78,998 

Total benefits paid in retirement (ages 65–77) 

18,918 56,394 75,312 5,852 20,259 26,111 2,742 

*Mary’s assumed life expectancy is 77. 

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TABLE 3: WORK LIFE SSI AND MEDICAID COSTS AND SAVINGS: CASE STUDY 1 (Mary) 

(2007 Dollars) 

Discount Rate: 4 percent Discount Rate: 7 percent Discount 

SSI 

Medicaid Total SSI Medicaid Total SSI M

Total benefits ages 30–64 139,537 332,286 471,823 96,797 230,507 327,304 78,998 Scenario 1: Benefits paid 33,282 332,286 365,568 30,653 230,507 261,160 29,079 Scenario 1: Lifetime benefits savings 

106,255 0 106,255 66,144 0 66,144 49,919 

Scenario 2: Benefits paid 42,633 332,286 374,919 38,313 230,507 268,820 35,810 Scenario 2: Lifetime benefits savings 

96,904 0 96,904 58,484 0 58,484 43,188 

Scenario 1: SSI benefits paid over first five years only. Medicaid extended until remaining work life, as meet the Section 1619(b) threshold. Scenario 2: SSI benefits phased out over second five years. Mediremaining work life, as earnings never meet the Section 619(b) threshold. 

188
 
TABLE 4: EARNINGS AND TAX PAYMENT ESTIMATES: CASE STUDY 1 (Mary) 

(2007 dollars) 

4 percent 7 percent 9 percent 

Total lifetime earnings (ages 30–64 years) 194,155 129,998 103,876 

Federal tax revenues attributable to earnings 

Federal personal income tax revenues 1,278 140 (237) 

FICA taxes paid (by employer and employee) 29,706 19,890 15,893 

FUTA taxes paid (by employer) 8,100 5,619 4,586 

Total federal tax revenues* 39,804 25,649 20,242 

State tax revenues attributable to earnings 

State income tax revenues 5,813 3,854 3,060 

State unemployment taxes paid (by employer) 3,528 2,447 1,997 

Total state tax revenues* 9,341 6,301 5,057 

Total federal and state revenues generated* 49,145 31,950 25,299 

Total post-tax earnings 172,058 115,933 92,997 

*Does not include possible business income tax revenue offset attributable to higher 

payroll tax expenses. 

189
 
Case Study 2 (Earnings and Tax Estimates) 

Melissa is a 42-year-old woman who has sustained a disabling injury and has qualified 

for SSDI. Table 5 presents estimates of benefits savings (SSDI and Medicare) 

associated with two benefits scenarios in this NCD study. 

If she remains on the SSDI rolls until she reaches age 65, when she presumably would 

be eligible for Social Security retirement benefits, her total SSDI benefits would come to 

$208,169, discounted at 4 percent. Her associated health coverage benefits under 

Medicare total $114,218. 

Of these total lifetime SSDI benefits, $58,337 are received in the first five years. If SSDI 

benefits ceased after five years due to earnings in excess of the substantial gainful 

activity level, Medicare benefits would continue for an additional 8.5 years. Thus, 

Medicare benefits under Scenario 1 include a total of 13.5 years of benefits, or $78,012 

(discounted at 4 percent). If SSDI benefits were to cease after five years, total lifetime 

SSDI benefits savings would amount to $149,832, and Medicare benefits savings would 

total $36,206. 

Similarly, if SSDI benefits are phased out between the sixth and tenth years, SSDI 

benefits paid out over 10 years are estimated at $76,349; Medicare benefits over 18.5 

years would total $98,731. This phase-out of SSDI benefits, with its associated impact 

on Medicare eligibility, would provide benefits savings of $131,821 in SSDI benefits and 

$15,488 in Medicare benefits, both discounted at 4 percent. Similar estimates using 

discount rates of 7 percent and 9 percent are also provided in table 5. 

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TABLE 5: LIFETIME SSDI AND MEDICARE COSTS AND SAVINGS: CASE STUDY 2 (Melissa) 

(2007 Dollars) 

Discount Rate: 4 percent Discount Rate: 7 percent Discount 

SSDI Medicare Total SSDI Medicare Total SSDI M

Total benefits ages 42–64 208,169 114,218 322,388 156,712 85,985 242,697 132,450 

Scenario 1: Benefits paid 58,337 78,012 136,349 53,435 64,489 117,925 50,506 Scenario 1: Lifetime benefits savings 

149,832 36,206 186,038 103,277 21,496 124,772 81,944 

Scenario 2: Benefits paid 76,349 98,731 175,080 68,190 77,492 145,682 63,471 Scenario 2: Lifetime benefits savings 

131,821 15,488 147,308 88,522 8,492 97,015 68,979 

Scenario 1: SSDI benefits paid over first five years only. Medicare extended for 8.5 years thereafter. 

Scenario 2: SSDI benefits phased out over second five years. Medicare extended for 8.5 years beginn

191
 
Case Study 3 (Earnings, Benefits, and Tax Estimates) 

This case study focuses on James—introduced at age 16 who has received SSI 

payments since turning 18 and now, at age 22, is ready to enter the workforce. James 

currently receives the federally mandated minimum SSI payment of $623 per month, 

with no state supplement. James now lives in Virginia and begins working 30 hours per 

week at a minimum-wage job. As in Case Study 1, the assumption is that James works 

continually in this type of position until he reaches retirement age. James’s life 

expectancy, given that he was born in 1985, is 70 years. 

In table 6 are estimates of SSI and Medicaid benefits reveal what James could receive 

over his estimated life span of 70 years. Total remaining lifetime SSI benefits for James, 

discounted back to 2007 using a 4 percent discount rate, are $159,549. Of these, 

$152,292 are benefits that would be paid out over his remaining work life; the remaining 

$7,257 is the present discounted value (at 4 percent) of the SSI benefits that would be 

paid to James between age 65 and age 70. Associated Medicaid benefits are $295,494 

over his entire remaining lifetime, with $282,054 associated with his remaining work life 

and $13,440 estimated as postretirement Medicaid benefits. Similar estimates are 

provided for discount rates of 7 percent and 9 percent. 

Estimates of benefits impact and savings over James’s working life under the two 

alternative benefits scenarios are presented in table 7. If James were to receive SSI 

benefits for only five years (2007 through 2011), he would receive $33,282 in SSI 

benefits (expressed at their present value discounted at 4 percent). Thus, the benefits 

savings under this scenario, defined as total working lifetime SSI benefits ($152,292) 

less five years of benefits ($33,282) is $119,010. Again, in application of POWER, work 

life benefits used, rather than total lifetime benefits, are the baseline here. 

Likewise, extending SSI benefits for more than five years after employment, with a 

gradual phase-down between years 6 and 10, results in a total of $42,633 in SSI 

benefits paid out. This results in lifetime SSI benefits savings of $96,904 (the difference 

between total work life SSI benefits of $139,537 and the $42,633 in benefits paid out 

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under Scenario 2). As with Case Study 1, there is no change in Medicaid benefits paid 

out under either Scenario 1 or Scenario 2. 

Earnings and tax revenues generated as a result of continued employment until age 65 

are provided in table 8. The present value of James’s lifetime earnings from age 30 

through age 64, discounted at 4 percent, is $236,897. He will pay $6,967 in federal 

income taxes over his work life and $6,313 in state income taxes. His employment will 

generate a total of $36,246 in FICA revenues; 50 percent of these are paid by the 

employer and 50 percent are paid by James. His employer also will pay a total of 

$8,206 in federal unemployment taxes and $3,565 in state unemployment taxes over 

the course of his employment; all values expressed in terms of their present discounted 

value (4 percent). Total federal tax revenues generated by his employment total 

$51,419, while state tax revenues total $9,897. James’s post-tax earnings, which 

exclude his portion of all tax revenues generated by his employment, come to $226,841 

(discounted at 4 percent). Earnings and tax revenue estimates for discount rates of 7 

percent and 9 percent also are provided in table 7. 

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TABLE 6: LIFETIME SSI AND MEDICAID COSTS: CASE STUDY 3 (James) 

(2007 Dollars) 

Discount Rate: 4 percent Discount Rate: 7 percent Discoun

SSI Medicaid Total SSI Medicaid Total SSI M

Total benefits ages 22–70* 159,549 295,494 455,043 102,921 190,615 293,536 81,849 

Total benefits paid during work life ages 22–64 

152,292 282,054 434,346 100,978 187,017 287,995 81,025 

Total benefits paid in retirement ages 65–70 

7,257 13,440 20,697 1,943 3,598 5,541 824 

*James’s assumed life expectancy is 70 years. 

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TABLE 7: WORK LIFE SSI AND MEDICAID COSTS AND SAVINGS: CASE STUDY 3 (James) 

(2007 Dollars) 

Discount Rate: 4 percent Discount Rate: 7 percent Discou

SSI Medicaid Total SSI Medicaid Total SSI 

Total benefits ages 22–64 years 

152,292 282,054 434,346 100,978 187,017 287,995 81,025 

Scenario 1: Benefits paid 33,282 282,054 315,336 30,653 187,017 217,670 29,079 Scenario 1: Lifetime benefits savings 

119,010 0 119,010 70,325 0 70,325 51,946 

Scenario 2: Benefits paid 42,633 282,054 324,587 38,313 187,017 225,330 35,810 Scenario 2: Lifetime benefits savings 

109,659 0 109,659 62,665 0 62,665 45,215 

Scenario 1: SSI benefits paid over first five years only. Medicaid extended over remaining work life, as 

meet the Section 1619(b) threshold. Scenario 2: SSI benefits phased out over second five years. Mediremaining work life, as earnings never meet the Section 1619(b) threshold. 

195
 
 

 

 

 

 

 

 

TABLE 8: EARNINGS AND TAX PAYMENT ESTIMATES: CASE STUDY 3 (James) 

(2007 Dollars) 

Discount Rate 

4 

percent 

7 

percent 

9 

percent 

Total lifetime earnings (ages 22–64) 236,897 157,402 120,372 

Federal tax revenues attributable to earnings 

Federal personal income tax revenues 6,967 4,046 2,925 

FICA taxes paid (by employer and employee) 36,246 24,083 19,182 

FUTA taxes paid (by employer) 8,206 5,657 4,606 

Total federal tax revenues* 51,419 33,786 26,713 

State tax revenues attributable to earnings 

State income tax revenues 6,313 3,749 2,815 

State unemployment taxes paid (by 

employer) 3,565 2,364 1,897 

Total state tax revenues* 9,878 6,113 4,712 

Total federal and state revenues generated* 61,297 39,899 31,425 

Total post-tax earnings 226,841 143,914 113,337 

*Does not include possible business income tax revenue offset attributable to higher 

payroll tax expenses. 

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Case Study 4: How to Monetize Policy/Program Impacts for Assessment 

Purposes 

Cost-benefit analysis provides a framework for identifying, organizing, measuring, and 

comparing the costs and benefits, broadly defined, of any proposed regulation, policy, 

or program. The primary question that this analysis seeks to answer is: Do the 

aggregate benefits to be achieved equal or exceed all costs associated with a 

new/altered regulation or policy? Properly done, cost-benefit analyses consider all costs 

and benefits, with some recognition that costs and benefits are not evenly distributed 

across various stakeholders in society. Aggregation of all benefits and all costs for 

comparison purposes requires the ability to measure these costs and benefits in 

monetary terms. However, intangible impacts, or costs and benefits that cannot be 

easily measured in monetary terms, also should be recognized and reported. 

Additionally, not all costs and benefits accrue to stakeholders who are affected directly 

by the proposed regulation, program, or policy; third parties also may be affected, 

positively or negatively. These indirect costs and benefits also should be measured and 

considered. 

For more than 25 years, the Federal Government actively has espoused the use of 

some comparative analysis of costs and benefits to assess new regulatory initiatives380 

and, somewhat more recently, to assess the impact of policy or programmatic changes 

in health and welfare programs. The following methodologies and tools are examined 

briefly to explore their efficacy when applied to disability-related issues. 

Use of Cost-Benefit Analysis in the Regulatory Arena: Environmental 

Regulation 

The Environmental Protection Agency uses cost-benefit analyses when considering 

new regulations or when periodically reviewing existing regulations. To assess and 

measure benefits associated with implementing a more stringent air quality standard for 

a specific pollutant, analysts typically rely on existing studies that allow some estimation 

of the impact of the change in air quality on some outcome. 

197 
A relatively straightforward application of this process can be used to assess agricultural 

(crop) impacts associated with changes in air quality. There is a broad range of plant 

pathology studies, conducted in carefully controlled laboratory conditions, that provide 

detailed dose-response information on how specific types of plants respond when 

exposed to a specified air pollutant at a specified level. These dose-response functions 

can be applied on a grander scale to predict the expected increase or decrease in yields 

for specific crops under alternative ambient air quality standards. Applying these doseresponse functions to area-specific data on acreage planted with each type of crop, and 

valuing projected changes in crop yields at market prices, will provide monetary 

estimates of the impact of changing regulations on the agricultural sector. 

Note that this measurement of the potential benefits associated with increasingly 

stringent air quality standards begins with a scientific, laboratory-based measurement of 

how the outcomes (crop yields) are likely to respond to a change in ambient air quality. 

A straightforward approach is available for valuing these changes, using marketestablished prices. The benefit associated with improved air quality—higher crop 

yields—also is well defined. Assessing the impact of changes in air quality on people is 

not as easy. 

One might expect that improved air quality (resulting from more stringent ambient air 

quality standards) would result in better health among the population, measured as 

fewer deaths from respiratory-related causes and lower incidence/prevalence of acute 

or chronic respiratory conditions. To assess the impact of a change in air quality 

standards (or to compare the relative effects of a range of standards) on human 

mortality and morbidity (both acute and chronic), the investigator could look for 

epidemiological studies that would allow investigators to measure the (quantifiable) 

health effects associated with changes in air quality. To be useful for replication, these 

studies would have to produce a plausible dose-response curve or function that could 

be applied to the alternative air quality standards under consideration. In other words, 

the investigator would need to use results from existing studies to predict, for a given 

198 
increase/reduction in an air quality standard, the likely decrease/increase in mortality 

and morbidity rates associated with that change. 

These impacts must then be assigned a dollar value. This can be done in various ways. 

Increases or decreases in pollution-related deaths can be valued using statistical value 

of life measures or other measures. Morbidity effects can be valued as increases or 

decreases in direct medical expenditures, work loss days, and reduced activity days. 

Work loss days and reduced activity days also must be assigned a monetary value, 

typically reflecting prevailing average wages (or some portion thereof for a reduced 

activity day). Census data can be used to extrapolate these impacts to county or other 

local-level populations, and these smaller-area estimates can be combined for a 

national estimate. 

This brief summary about the use of epidemiological studies to assess benefits 

associated with changes in air quality standards and regulations hides a multitude of 

difficulties. It would be a rare event indeed to find an epidemiological study that is 

perfectly suited, in methodological and technical terms, to the task at hand. The scope 

and breadth of the cost-benefit analysis is limited to the specific types of health effects 

measured in these studies; there may well be other effects for which no suitable prior 

studies exist. There also may be other personal benefits to cleaner air, including 

reduced soiling/cleaning expenses and aesthetic benefits; these are not captured by 

these epidemiological studies (although there may be other evidence to support 

estimates of these benefits). 

The economic literature can provide an alternative approach to measuring benefits for 

improvements in air quality by measuring the willingness to pay (WTP) for this 

environmental amenity. Early, crude WTP studies (using hedonic wage and hedonic 

property value models) postulated that local differences in average wage levels or in 

property values reflected, in part, differences in air quality that could be measured as 

the ambient levels of specific air pollutants. The portion of the wage or property value 

differential attributable to differential exposures to a specific pollutant could be used to 

measure willingness to pay to avoid this exposure. Once again, this estimate can be 

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extrapolated over the entire population, building up from area-specific estimates, to 

arrive at a national estimate. This approach, conceptually, includes all the perceived 

benefits associated with cleaner air; however, it is not clear that WTP measures can 

adequately measure all benefits. While there have been further developments in 

approaches to conceptualizing and measuring WTP over the last 20 years, information 

has not been made available regarding their application to environmental regulation. 

The comments in the report concentrate on applications of cost-benefit analysis to 

environmental regulation to measurement of benefits, based on limited experience. Cost 

estimates typically are developed from an engineering basis, looking at specific sources 

of pollution and determining what equipment or other costs would be incurred to bring 

emissions from each source into compliance with more stringent emissions standards. 

Engineers sometimes use a narrow concept of costs, compared to economists, who 

look at the impact of (and possible costs and benefits associated with) changes. For 

example, changes in plant production process and for the global market, changes in 

possible standards would be very difficult to measure, and would require a highly 

stylized and simplified conceptual model with some loss of “real world” conditions. 

The EPA can utilize cost-benefit analysis in its regulatory decision process because 

there exists some scientific basis in vetted and published academic research, however 

imperfect, for measuring the impact of changes in air quality standards on some 

important outcomes. The proposed changes in air quality standards also do not attempt 

to elicit changes in human behavior, and do not require such changes among the 

population at large for their successful implementation. The situation is different when 

one considers policies or regulations that directly affect human behavior or that are 

designed to influence human behavior in some way. 

Application of Cost-Benefit Analyses to Disability Policy Initiatives 

Using cost-benefit analysis to assess proposed disability policy initiatives is no easy 

task. First, in contrast to the example of the use of cost-benefit analyses in setting or 

evaluation of air quality standards, there is little, if any, hard research that directly 

200 
measures or documents how the target population (people with disabilities) will react or 

be affected by the implementation of specific policy initiatives. For example, suppose 

that implementation occurs during a transition period where SSI or SSDI benefits are 

maintained or phased out rather than entirely cut off once earnings eligibility levels are 

exceeded. Will this motivate and assist people with disabilities to seek employment and 

develop earnings capacity that will enable them to sustain themselves in the long run 

without receipt of disability benefits? No data or studies are available to answer this 

question, quantify the impacts, and conduct a cost-benefit analysis. 

Another example reports a fair amount of evidence (from survey statistics and from 

anecdotal sources) that the lack of accessible transportation is a barrier to employment 

for at least some people with disabilities. But much remains unknown about this 

population. How many people with disabilities are affected? What are their specific 

transportation needs (which will vary depending on type or severity of disability, 

geographic location, employment location and work days/hours, and the availability of 

accessible transit options)? What types of transportation solutions would help at least 

some of these people obtain and sustain gainful employment? Would the gains to 

individuals and society as a result of a specific transportation solution equal or exceed 

the costs of that solution to implement and maintain? Some interesting insights may be 

gained by looking at evaluations of recent federally funded initiatives to address the 

needs of a range of transportation-disadvantaged groups, including people with 

disabilities, but only if program data can identify users with a disability. Data or studies 

to answer the questions posed above were unavailable for this report. 

In general, if existing studies or data could be used to construct a valid cost-benefit 

analysis for programs or policies that address social needs or attempt to induce some 

sort of behavioral change for the population with disabilities, the situation would be 

considered highly unusual. The definition and measurement of this target population is 

hampered by a lack of consistency across existing studies in how disability is defined. 

And certainly the identification of what constitutes disability can and should change, 

depending on the policy issues under consideration. But this remains a key 

201 
methodological barrier that impedes any attempt to contrast, compare, and possibly 

generalize from findings across existing studies that purport to examine the same 

behavior or answer the same questions. 

More to the point, there are no scientifically reviewed, methodologically valid studies or 

other empirical evidence available from which costs and benefits can be extrapolated 

for most policy prescriptions and programs relevant to disability issues. There are good 

and compelling reasons for this. To assess the economic impacts of policies that seek 

to influence individual behavior and decisions, there is need to observe and measure 

the behavioral response to these policies. Methodologically sound cost-benefit analyses 

in the social policy arena require significant time and resources to conduct; it also can 

take years to observe the complete impact. The experience of the welfare reform 

experiments conducted between late 1980s and the mid-1990s can provide some 

lessons here. 

Section 1115 of the Social Security Act allows the secretary of Health and Human 

Services to waive specific provisions of this act within individual states for the purpose 

of implementing and charting the effectiveness of these waivered program elements 

and policies. During the 1980s, the Federal Government encouraged states to use this 

waiver process to develop and test new initiatives at the state level to reduce the 

number of recipients of Aid to Families with Dependent Children (AFDC), ease the 

transition into the labor market for AFDC recipients, and otherwise improve the lives of 

AFDC recipients and their families. Between 1987 and 1996, HHS approved 83 waiver 

applications. Each of these approvals required a rigorous analysis of the costs, benefits, 

and impacts of the waivered program elements, and typically imposed a specific 

methodology for conducting this evaluation. The costs of these evaluations were borne 

by the Federal Government. 

The methodology of choice for most of these evaluations was an experimental design in 

which welfare recipients were selected at random and placed into two groups. One 

group, the experimental group, would be treated under the new (waivered) welfare 

program or rules. The other group, the control group, would not be subject to the new 

202 
rules; the old rules would apply to this group. Differences in measurable outcomes 

(such as employment, earnings, educational attainment, and other programmatic 

objectives) could be attributable to programmatic differences. Differential costs and 

benefits in program elements and administrative costs could be calculated and 

compared as well. Nonexperimental methods (typically pre- or post-analyses of time 

series data) were approved in a few cases where state officials argued that an 

experimental design was not appropriate or not feasible. 

The use of experimental methods in social policy research is more easily described than 

implemented. In the context of the welfare reform experiments described above, it 

typically was very difficult to implement and maintain control conditions for the very 

small number of welfare recipients who were selected at random to be treated under the 

former program rules and regulations. These experiments also were designed typically 

to extend over several years (the typical evaluation had a five-year time frame) to allow 

sufficient time for clients to complete job training and other program requirements and 

for behavioral impacts to materialize and be observed. This long time frame added to 

the costs of these evaluations. This also is a long time in terms of the political process. 

Policymakers and political interests typically want answers more quickly, particularly 

when an election beckons. For example, New Jersey was the first state to implement a 

family cap provision in its welfare program, in October 1992. By the following summer, 

in the heat of a gubernatorial election campaign and before the federally mandated 

program evaluation began, the state released statistics purportedly showing a decline in 

births among women on welfare. The family cap clearly was working, only 10 months 

after it went into effect! 

Lessons for Application of Cost-Benefit Analysis to Disability Issues 

A cost-benefit analysis for any proposed policy or program cannot be done without 

methodologically valid empirical evidence on how the target population for that policy or 

program is affected. This evidence is just not available for policies and programmatic 

proposals that attempt to address barriers to employment and quality of life for people 

with disabilities. However, past history indicates that if an issue matters to the Federal 

203 
Government (as was the case with welfare reform), the Federal Government is willing to 

invest significant funds into economic evaluations of various policy proposals. 

Design and implementation of methodologically sound studies to measure the impacts, 

costs, and benefits of proposed policies to assist people with disabilities is no easy task, 

and the identified issues only scratch the surface regarding what should be addressed. 

But it is clear that specific studies must be designed and initiated to gather and analyze 

impacts, costs, and benefits of specific disability policy proposals. These studies must 

use appropriate methodologies. Perhaps small-scale studies or studies that are 

confined to a specific location or subject to other restrictions can be designed, which 

can then be generalized to broader populations of interest. The study design should 

ensure that all material costs and benefits (direct and indirect, and tangible and 

intangible) are covered, and a sufficient time must be allowed to observe a behavioral 

response to the program or policy. 

204 
Chapter 5: Summary of Findings and Recommendations 

This report creates a four-part conceptual framework POWER, based on the research 

findings from the first three chapters, to set a clear direction for supporting increased 

economic status for people with disabilities. Real-life case studies and a cost-benefit 

analysis applying the POWER framework depict how a combination of strategies might 

modify existing public policies. The proposed actions can enhance indirect, communitybased, and employer incentives to provide a comprehensive blueprint for change. 

The POWER framework also recognizes the complexity and scope of changes needed 

to secure the full benefits of encouraging work, income preservation, and asset building 

for individuals with disabilities and their families. The range of legislative amendments 

for consideration will affect tax policy and the entitlement authorities under Social 

Security and Medicaid, in addition to the federal tax code, including the existing tax 

incentives to employers and asset-building provisions. 

In the four changes proposed to Social Security and Medicaid, access to health care 

would continue for five years regardless of new income levels to reduce disincentives to 

work and asset building. The changes to Social Security rules would offer multiple 

options to encourage income preservation and asset growth. Recommended changes 

include the following: 

1. Raise resource limits for SSI to $20,000 and index it annually for inflation 

thereafter with no loss of benefits for five years of working at or above SGA. 

2. Enact an earnings offset for SSDI beneficiaries that parallels the work incentives 

for SSI. 

3. Modify income and resource limits through simplified Medicaid Buy-In that allows 

work and access to health care for five years, regardless of income level. 

205 
4. Expand PASS to allow for savings for home ownership or any asset-building 

goal, including the purchase of assets that will generate income in later years. 

In addition, the proposed revisions to the tax code include four changes that will help 

people with disabilities and their families level the playing field of community 

participation. The proposed tax code changes support work outcomes and allow tax 

considerations of costs associated with living with a disability; the changes also call for 

improvements in the existing tax incentives to employers. Such changes would 

consolidate and expand code provisions to encourage hiring and accommodating 

workers with disabilities. Another proposed change involving a modified 529 Plan would 

allow and encourage families to save to benefit their children with disabilities who may 

not go on to higher education but have other asset-building goals. 

1. Bundle and revise Business Tax Credits for more efficiency and use (Disabled 

Access Credit, Architectural/Transportation Tax Deduction, and Work 

Opportunity Tax Credit). 

2. Revise the IRWE exemption so that it applies to any reasonable expense 

incurred for the purpose of employment. 

3. Revise Medical Expense Deduction threshold requirements and waive the need 

for deductibility. 

4. Amend 529 Plans created exclusively for families with children going onto higher 

education to include purposes and goals that meet the needs of families with 

children who have disabilities. 

The POWER framework’s proposed focus on savings and asset building through 

amendments to the Assets for Independence Act involve expanding and refining 

opportunities for people with disabilities through IDAs and Medicaid-funded Individuals’ 

Budgets. The POWER framework also recognizes the importance of financial literacy to 

206 
understand and use credit effectively and manage a budget. These critical skills should 

be taught in grades K–12 and continue to be developed for adults with disabilities. 

1. Expand and refine IDAs to meet the needs of people with disabilities. 

a. Include transportation and technology as a purpose for saving. 

b. Provide incentives to encourage private match to federal funds. 

c. Allow private and state-authorized and state-funded IDAs to adopt federal 

IDA rules, which exclude counting the resources for purposes of continued 

eligibility for public benefits. 

d. Require financial education to be conducted in accessible locations with 

accessible content and be accessible online. 

2. Encourage financial education as part of an individual’s education and work 

plans: IEPs, Transition Plans, Plans for Employment through VR, and the 

Workforce System. 

3. Simplify implementation of individual budgets. 

a. Invite SSA, the Department of Education and its Rehabilitation Services 

Administration, the departments of Education and Labor, CMS, and 

SAMHSA to collaborate in the development of a cross-agency template 

that simplifies the implementation of unified individual budgets that 

promote self-determination and person-centered plans for adult living. 

b. Allow savings and asset-building rewards that permit an individual to keep 

50 percent of what he or she does not spend in an individual budget. The 

savings must relate to a specific asset-building objective in an 

individualized plan. 

The last part of the POWER proposals for change focuses on indirect financial 

incentives made available though an employer or a housing developer. The five areas 

affected are as follows: 

207 
1. Housing Design Standards 

a. HUD should adopt universal design standards developed by the Access 

Board. 

b. HUD should require that the adoption of universal design standards 

become a conditional requirement for any entity that receives HUD 

financing for single or multifamily dwellings. 

2. Qualified Allocation Plan Set-aside for 20 Percent of Units: All units receiving 

LIHTCs should adopt new universal design standards and reserve 20 percent of 

units to be affordable to individuals with disabilities who are at or below 30 

percent of AMI. 

3. New Markets Tax Credit: Require each federally funded project that is creating 

jobs to document job creation, outreach and recruitment efforts, and the number 

of people with disabilities hired. 

4. Employer Transportation and Housing Deductions: Allow a tax deduction to 

employers for the costs of assisting employees with disabilities with the costs of 

transportation and first-time home ownership. 

5. Employer-Matched Education Accounts: Allow employees who contribute up to 

$500 to an education and training account to receive a tax credit for their deposit. 

Allow an equal match from their employer that would be deducted from corporate 

income taxes. Individuals must earn less than $25,000 to be eligible for the 

benefit. 

This report concludes with a brief review of the key findings and recommendations for 

action by essential Administration, congressional, and federal agency leaders. 

5.1. Summary of Key Findings on Financial Incentives 

1. Financial incentives are complex without consensus on definition, and need 

explanations about various types such as disability-based, cash and in-kind, direct, 

indirect, or community-based funding streams. 

208 
2. Financial incentives are underutilized. 

3. Individuals with and without disabilities are denied the opportunity for savings and 

asset growth because of the means testing to remain eligible for many public benefits. 

4. Low-income wage earners do not benefit from many federal tax provisions that 

promote savings and asset development. 

5. Direct, indirect, and third-party financial incentives have an important impact on 

people with disabilities and their families. 

6. There are no one-size-fits-all financial incentives strategies. 

7. Financial incentives funding strategies are interrelated. 

8. Opportunities for low-income individuals with disabilities that encourage and support 

savings and asset acquisition are limited and need to be expanded. 

9. Disability remains an all-or-nothing proposition based on eligibility determination and 

disability definition. 

10. Several financial incentives need modification to provide parity for people with 

disabilities (i.e., making opportunities available comparable to those available to their 

peers without disabilities). 

11. A consensus model is unavailable for evaluating the impact of financial incentives. 

12. Gateway costs of living with a disability are more expensive than costs of living 

without a disability. 

13. Disability programs are heavily weighted toward the use of resources for 

determination of status and assessment of eligibility. 

209 
14. The conversion of federal financial disincentives to incentives is possible. 

15. Public accounting practices, especially the practices related to federal savings 

across programs and services, need review. 

16. Definite cost benefits are found when the framework and strategies introduced in 

this report are applied to three of the case studies presented. 

17. Cost benefits for Case Study 4 are unknown because scientifically reviewed, 

methodologically valid studies for this purpose are lacking. 

5.2 Summary of Major Recommendations According to Federal 

Leadership 

For the Administration: 

Recommendation 1 – NCD calls for an Executive order that identifies actions for 

federal agencies, including the following: 

Department of Health and Human Services/Office of Director of Disability and the 

Centers for Medicare and Medicaid Services 

Department of Labor 

Department of Housing and Urban Development 

Department of Transportation 

Department of Education 

Department of the Treasury 

Social Security Administration 

210 
The Administration should create a federal interagency workgroup on financial 

incentives for people with disabilities and their families; develop an Executive order 

calling for all agencies to identify policy barriers; and create a time-limited body to 

facilitate a consistent, coordinated, comprehensive, and consumer-friendly approach to 

advance opportunities for full community participation and economic self-sufficiency. 

For Congress: 

Recommendation 2 – NCD proposes actions by the Senate Finance Committee, 

House Ways and Means Committee, and House Energy and Commerce Committee. 

Congress should introduce and consider adoption of the POWER framework set forth in 

this report. It should accomplish the work by making appropriate changes in federal 

legislation pertaining to Social Security, Medicaid, savings, asset building, and the 

relevant aspects of the federal tax code. 

For Federal Agencies: 

Recommendation 3 – NCD advises that NIDRR take the lead and work in partnership 

with other federal agencies to raise the level of awareness about financial incentives 

and people with disabilities and their families. In preparation, the following lead 

agencies for implementation should consider how to refocus their evidence-based 

research efforts to include financial incentives. 

Department of Education, Office of Special Education and Rehabilitative 

Services/NIDRR 

Department of Health and Human Services, Centers for Medicare and Medicaid 

Services/Assistant Secretary for Planning and Evaluation 

Social Security Administration 

Expand the volume of and access to knowledge about the cost-benefit outcomes of 

direct and indirect financial incentives that advance self-sufficiency for people with 

211 
disabilities, including the establishment of a new financial incentives Rehabilitation 

Research and Training Center to add to the sparse knowledge base. 

Recommendation 4 – NCD identifies actions needed to increase awareness and 

utilization of the financial incentives and benefits supported by federal funding. 

In partnership, the following key federal agencies need to fund collaborative/interagency 

demonstration projects aimed to improve capacity for employer and community use of 

financial incentives and to advance tangible economic impact; examine the affects of 

applying selected financial incentives with attention to support through tax credits, 

affordable and accessible housing, transportation, continuing education, and related life 

essentials; and include this work in all agency performance plans and annual reports to 

Congress. 

Department of Housing and Urban Development 

Department of Commerce 

Department of Education 

Department of Transportation 

Department of the Treasury 

Internal Revenue Service 

Recommendation 5 – NCD recommends that the federal agencies identified below 

expand and improve financial education opportunities and outreach to children and 

adults with disabilities across economic levels and types of abilities. 

Federal Deposit Insurance Corporation 

Internal Revenue Service 

212 
Department of Labor 

Department of Education 

Social Security Administration 

Through the use of direct and indirect financial incentives, federal agencies can have a 

key role in advancing real economic impact. A consumer-friendly education and 

information effort needs to apprise low-income workers with disabilities about their 

potential eligibility for financial incentives such as the Earned Income Tax Credit. SSA, 

the Department of Labor, and the Department of Education should engage in work to 

support opportunities for improving the skills linked to empowerment, income 

maintenance, and asset building among people with disabilities. 

213 
214 
Appendix: Mission of the National Council on Disability 

Overview and Purpose 

The National Council on Disability (NCD) is an independent federal agency with 15 

members appointed by the President of the United States and confirmed by the U.S. 

Senate. The purpose of NCD is to promote policies, programs, practices, and 

procedures that guarantee equal opportunity for all individuals with disabilities 

regardless of the nature or significance of the disability and to empower individuals with 

disabilities to achieve economic self-sufficiency, independent living, and inclusion and 

integration into all aspects of society. 

Specific Duties 

The current statutory mandate of NCD includes the following: 

•	 Reviewing and evaluating, on a continuing basis, policies, programs, practices, and 

procedures concerning individuals with disabilities conducted or assisted by federal 

departments and agencies, including programs established or assisted under the 

Rehabilitation Act of 1973, as amended, or under the Developmental Disabilities 

Assistance and Bill of Rights Act, as well as all statutes and regulations pertaining to 

federal programs that assist such individuals with disabilities, to assess the 

effectiveness of such policies, programs, practices, procedures, statutes, and 

regulations in meeting the needs of individuals with disabilities. 

•	 Reviewing and evaluating, on a continuing basis, new and emerging disability policy 

issues affecting individuals with disabilities in the Federal Government, at the state 

and local government levels, and in the private sector, including the need for and 

coordination of adult services, access to personal assistance services, school reform 

efforts and the impact of such efforts on individuals with disabilities, access to health 

care, and policies that act as disincentives for individuals to seek and retain 

employment. 

215 
•	 Making recommendations to the President, Congress, the Secretary of Education, 

the director of the National Institute on Disability and Rehabilitation Research, and 

other officials of federal agencies about ways to better promote equal opportunity, 

economic self-sufficiency, independent living, and inclusion and integration into all 

aspects of society for Americans with disabilities. 

•	 Providing Congress, on a continuing basis, with advice, recommendations, 

legislative proposals, and any additional information that NCD or Congress deems 

appropriate. 

• Gathering information about the implementation, effectiveness, and impact of the 

Americans with Disabilities Act of 1990 (ADA) (42 U.S.C. § 12101 et seq.). 

•	 Advising the President, Congress, the commissioner of the Rehabilitation Services 

Administration, the assistant secretary for Special Education and Rehabilitative 

Services within the Department of Education, and the director of the National 

Institute on Disability and Rehabilitation Research on the development of the 

programs to be carried out under the Rehabilitation Act of 1973, as amended. 

•	 Providing advice to the commissioner of the Rehabilitation Services Administration 

with respect to the policies and conduct of the administration. 

•	 Making recommendations to the director of the National Institute on Disability and 

Rehabilitation Research on ways to improve research, service, administration, and 

the collection, dissemination, and implementation of research findings affecting 

people with disabilities. 

•	 Providing advice regarding priorities for the activities of the Interagency Disability 

Coordinating Council and reviewing the recommendations of this council for 

legislative and administrative changes to ensure that such recommendations are 

consistent with NCD’s purpose of promoting the full integration, independence, and 

productivity of individuals with disabilities. 

•	 Preparing and submitting to the President and Congress an annual report titled 

National Disability Policy: A Progress Report. 

216 
International 

In 1995, NCD was designated by the Department of State to be the U.S. government’s 

official contact point for disability issues. Specifically, NCD interacts with the special 

rapporteur of the United Nations Commission for Social Development on disability 

matters. 

Consumers Served and Current Activities 

Although many government agencies deal with issues and programs affecting people 

with disabilities, NCD is the only federal agency charged with addressing, analyzing, 

and making recommendations on issues of public policy that affect people with 

disabilities regardless of age, disability type, perceived employment potential, economic 

need, specific functional ability, veteran status, or other individual circumstance. NCD 

recognizes its unique opportunity to facilitate independent living, community integration, 

and employment opportunities for people with disabilities by ensuring an informed and 

coordinated approach to addressing the concerns of people with disabilities and 

eliminating barriers to their active participation in community and family life. 

NCD plays a major role in developing disability policy in America. In fact, NCD originally 

proposed what eventually became ADA. NCD’s present list of key issues includes 

education, transportation, emergency preparedness, international disability rights, 

employment, foster youth with disabilities, vocational rehabilitation, livable communities, 

and crime victims with disabilities. 

Statutory History 

NCD was established in 1978 as an advisory board within the Department of Education 

(P.L. 95-602). The Rehabilitation Act Amendments of 1984 (P.L. 98-221) transformed 

NCD into an independent agency. 

217 
218 
Endnotes 

1

 U.S. Department of Transportation, Bureau of Transportation Statistics. Transportation 

difficulties keep over half a million at home. Retrieved April 2006; January 2008, from 

www.bts.gov/publications/issue_briefs/number_03/html/transportation_difficulties_keep_ 

over_half_a_million_disabled_at_home.html. 

2

 Skoto, B., et al. (2006, January). Creating an economic future for adults with Down 

syndrome: An analysis of Social Security and Medicaid regulations. Commissioned by 

Madeleine Will, National Down Syndrome Society (NDSS). 

3

 National Organization on Disability. (2000). 2000 N.O.D./Harris survey of Americans 

with disabilities (Study No. 12384). New York: Author. 

4

 National Council on Disability (NCD). (2005, November). The Social Security 

Administration’s Efforts to Promote Employment for People with Disabilities: New 

Solutions for Old Problems. Washington, DC. Author. 

5

 NCD. (2007, October 1). Empowerment for Americans with disabilities: Breaking 

barriers to careers and full employment. 

6

 NCD. (1997, September 24). Removing barriers to work: Action proposals for the 

105th Congress. 

7

 Beaulaurier, R. (2001). The financial vulnerability of people with disabilities: Assessing 

poverty risks. Journal of Sociology and Social Welfare, 28(1), 139–162. 

8 Webster’s Unabridged Dictionary (p. 966). (2001). (2nd ed.). Random House: New 

York. 

9

 Levitt, D., & Dubner, S. (2005). Freakonomics: A Rogue Economist Explores the 

Hidden Side of Everything. New York: William Morrow. 

10 Ibid. 

11 Solomon, J. (2005, December 26). Companies not seeking AIDS cure. Deposition of 

Dr. Edmund Tramont, AIDS Director, National Institutes of Health. Associated Press, 

Valley News. 

12 Ibid. 

13 Ibid. 

14 Smith, R., et al. (2005, December). The long-term budget outlook. Washington, DC: 

Congress of the United States, Congressional Budget Office. 

15 NCD. (2005, December). The state of 21st century long-term services and supports 

(LTSS): Financing and systems reform for Americans with disabilities. 

www.ncd.gov/newsroom/publications/2005/longterm_services.htm. 

16 Pew Center on the States. (2006). Special report on Medicaid 2006: Bridging the gap 

between care and cost. www.pewcenteronthestates.org. 

17 NCD. (2005, December). 

219 
18 U.S. Government Accountability Office (GAO). (2005). Federal disability assistance: 

Wide array of programs need to be examined in light of 21st century challenges. GAO05-626. Washington, DC: GAO. 

19 Ibid. 

20 Gist, J. R., & Verma, S. (2002). Entitlement spending and the economy: Past trends 

and future projects. Washington, DC: AARP, Public Policy Institute. 

21 Peterson, P. G. (1999). The age wave. New York: Time Books, Random House. 

22 Peterson, P. G. (1996). Will America grow up before it grows old? New York: Random 

House. 

23 Gist & Verma. (2002). 

24 Peterson, J. P., & Howe, N. (1988). On borrowed time: How the growth in entitlement 

spending threatens America’s future (p. 79). San Francisco: Institute for Contemporary 

Studies. 

25 Gist & Verma. (2002). 

26 Ibid., p. 7. 

27 Gist & Verma. (2002). 

28 Ibid. Please review pp. 8–9 of Gist & Verma for more in-depth analysis of the 

“expanded income” definition used as well as figures 6 and 7 for distribution of federal 

spending entitlements by income class, 65+ population, and the year 2000. 

29 Ibid. 

30 Ibid. 

31 Shackleton, R., & Foertsch, T. (2005). Global population aging in the 21st century and 

its economic implications. Washington, DC: Congress of the United States, 

Congressional Budget Office. 

32 Ibid. 

33 Ibid. 

34 Gist & Verma. (2002). 

35 U.S. Census Bureau, U.S. Department of Commerce Economics and Statistics 

Administration. (2005, July). Disability and American families: 2000 (p. 6). 

36 U.S. Census Bureau. (2003, March). Disability status: 2000 (p. 10). Census 2000 

Brief. C2KBR-17. 

37 Burke, V. W., Gabe, T., & Falk, G. (2005). Children in poverty: Profile, trends and 

issues. CRS Report for Congress, RL 32682. Washington, DC: Congressional 

Research Service, Library of Congress. 

38 Based on the noninstitutionalized population ages five and older. 

39 U.S. Census Bureau. (2005, July). 

220 
40 Ibid. For example, in Mississippi, 4.8 percent of people reported a sensory disability, 

compared to a national rate of 3.6 percent; 11.3 percent reported a physical disability, 

compared to a national rate of 8.2 percent; and 6.4 percent reported a mental disability, 

compared to a national rate of 4.8 percent. 

41 Ibid. 

42 Ibid. 

43 Ibid. 

44 Jezewski, M. A., & Sotnik, P. (2001). Culture brokering: Providing culturally 

competent rehabilitation services to foreign-born persons. Buffalo, NY: Center for 

International Rehabilitation Research Information and Exchange (CIRRIE), State 

University of New York, University at Buffalo. 

45 Michigan Policy Institute. (2004, October). Immigration facts: Legal immigration to 

U.S. still declining. No. 9. 

46 Lindert, P. H. (2005). Growing public: Social spending and economic growth since the 

eighteenth century. New York: Cambridge University Press. 

47 Smith, R., et al. (2005, December). 

48 The President’s Budget. (2006, February 7). 

www.whitehouse.gov/omb/budget/fy2008/budget.html. 

49 Lindert. (2005). 

50 Longman, P. (1996). The return of thrift: How the coming collapse of the middle-class 

welfare state will reawaken values in America. New York: Free Press. 

51 Keith, R. (2005). Budget reconciliation legislation in 2005 (p. 8). Congressional 

Research Report for Congress, RL 33132. Washington, DC: Congressional Research 

Service, Library of Congress. 

52 Office of Management and Budget. (2005, February 7). Budget of the United States 

government, FY 2006, Historical Tables, Table 7.3 (pp. 121–24). 

53 U.S. National Debt Clock (2008) The Outstanding Public Debt as of January 14, 

2008, at 04:41:17 PM GMT was $9,203,960,254,308.93. The National Debt has 

continued to increase an average of $1.48 billion per day since September 29, 2006. 

Retrieved January 14, 2008, from http://www.brillig.com/debt_clock/
 

54 The President’s Budget (2006, February 7). 

55 Ibid. 

56 Ibid. 

57 Ibid. 

58 Hartnett, J. H., & Morris, M. (2005). A new model for community economic 

development and individual and family asset building for persons with disabilities. 

National Disability Institute and NCB Development Corporation. 

59 Smith et al. (2005, December). 

221 
60 Ibid. 

61 Lindert. (2005). 

62 Ibid. 

63 Ibid., p. 15. 

64 GAO. (2005). GAO-05-626. 

65 Woo, L. G., Schweke, F. W., & Buchholz, D. E. (2004). Hidden in plain sight: A look at 

the $335 billion federal asset-building budget (p. 4). Washington, DC: Corporation for 

Enterprise Development. 

66 Ibid., p. 1. 

67 Ibid., p. 12. 

68 Ibid., p. 1. 

69 Corporate income tax rates: International comparisons. (2005, November). 

Washington, DC: Congress of the United States, Congressional Budget Office. 

70 Peterson & Howe. (1988). 

71 Charlton, J. I. (1998). Nothing about us without us: Disability oppression and 

empowerment (p. 153). Berkeley and Los Angeles: University of California Press. 

72 Minow, M. (1997). Making all the difference. Ithaca and London: Cornell University 

Press. 

73 Parrish, T. (1993). State funding provisions and least restrictive environment: 

Implications for federal policy. CSEF Brief #2. Palo Alto, CA: Center for Special 

Education Finance. Parrish, T. (1995). Criteria for effective special education funding 

formulas. Palo Alto, CA: Center for Special Education Finance. Parrish, T. (1995). Fiscal 

issues related to the inclusion of students with disabilities. CSEF Brief #7. Palo Alto, CA: 

Center for Special Education Finance. 

74 Rea, P., & Davis-Dorsey, J. (2004). ADA in the public school setting: Practitioners’ 

reflections. Journal of Disability Policy Studies, 15, 66–69. 

75 U.S. Department of Education. (2000). Twenty-second annual report to Congress on 

the implementation of the Individuals with Disabilities Education Act. Washington, DC: 

Author. 

76 Apling, R., & Jones, N. (2005). The Individuals with Disabilities Education Act (IDEA): 

Interactions with selected provisions of the No Child Left Behind Act (NCLBA). 

Washington, DC: Congressional Research Service, Library of Congress. 

77 U.S. Department of Education. (2000). Annual Report to Congress on the 

Implementation of the Individuals with Disabilities Education Act. Washington, DC: 

Author. 

78 Martin, E., Martin, R. & Terman, D. (1996, Spring). The Legislative and Litigation 

History of Special Education. Special Education for Students with Disabilities 6(1). 

Princeton University & Brookings Institute. www.futureofchildren.org/pubsinfo2825/pubs-info_show.htm?doc_id=72440. 

222 
 

79 U.S. Department of Education. (2006, October 30). Annual Report to Congress on the 

Implementation of the Individuals with Disabilities Education Act. Washington, DC: 

Author. 

80 U.S. Census Bureau. (2003, March). 

81 Ramirez, A. (2003). The shifting sands of school finance. Educational Leadership, 

60(4), 54–57. 

82 Apling, R. (2005). Individuals with Disabilities Education Act (IDEA): Current funding 

trends. Washington, DC: Congressional Research Service, Library of Congress. 

83 Irwin, P. (2006). K–12 education programs: Recent appropriations. Washington, DC: 

Congressional Research Service, Library of Congress. 

84 Chambers, J., Perez, M., Socias, M. , Shkolnik, J., and Esra, P. (2004, May). 

Educating students with disabilities: Comparing methods for explaining expenditure 

variation. Washington, DC: U.S. Department of Education, Office of Special Education 

Programs (OSEP). 

85 Chambers, J., Parrish, T., & Harr, J. (2004). What are we spending on special 

education services in the United States, 1999–2000? Palo Alto, CA: Center for Special 

Education Finance. 

86 Ibid. 

87 Kidd, J. (1958). Special education: Fulfillment of a promise. Elementary School 

Journal, 58, 454–56. 

88 Birman, B., & Porter, A. (2002). Evaluating the effectiveness of educational funding 

streams. Peabody Journal of Education, 77(4), 59–85. 

89 Chambers, et al (2004). Note that data from the Special Education Expenditure 

Project (SEEP) show the cost of providing services to students with disabilities at 

approximately twice the cost of education for a student without disabilities (averaging 

more than $12,000 vs. $6,556). 

90 Apling & Jones. (2005). 

90 Irwin, P. (2006). 

91 Kusler, M. (2003). The imperative of fully funding IDEA. School Administrator, 60(3), 

47. 

92 Greene, J., & Forster, G. (2002). Effects of funding incentives on special education 

enrollment. New York: Manhattan Institute for Policy Research. 

93 Ibid. 

94 Pijl, S., & Dyson, A. (1998). Funding special education: A three-country study of 

demand-oriented models. Comparative Education, 34, 261–79. 

95 NCD. (2003). School vouchers and students with disabilities. Washington, DC: 

Author. 

96 NCD. (1995). Making Schools Work for All of America’s Children. Washington, DC: 

Author. 

223 
97 Parrish, T. (1993). Parrish, T. (1996). Special education finance: Past, present, and 

future. CSEF Brief #8. Palo Alto, CA: Center for Special Education Finance. 

98 O’Reilly, F. (1995). State special education funding formulas and the use of separate 

placements for students with disabilities: Exploring linkages. CSEF Brief #7. Palo Alto, 

CA: Center for Special Education Finance. 

99 NCD. (1995). 

100 McLaughlin, M., & Warren, S. (1994). Resource implications of inclusion: 

Impressions of special education administrators at selected sites. CSEF Policy Paper 

#1. Palo Alto, CA: Center for Special Education Finance. 

101 GAO. GAO-05-626. 

102 GAO. (1999). Medicaid and special education: Coordination of services for children 

with disabilities is evolving. GAO/HEHS Report GAO-00-20. Washington, DC: Author. 

103 NCD, Youth Advisory Committee. (2003, September 15). Students with Disabilities 

Face Financial Aid Barriers College and Graduate Students Share Their Stories and 

Policy Recommendations. Washington, DC: Author. 

104 GAO. (2005). Individuals with Disabilities Education Act: Education should provide 

additional guidance to help states smoothly transition children to preschool. GAO-06-26. 

Washington, DC: Author. 

105 NCD. (1994). Inclusionary education for students with disabilities: Keeping the 

promise. Washington, DC: Author. 

106 U.S. Department of Education. (2000). 

107 Apling & Jones. (2005). 

108 Livingston, A., & Wirt, J. (2005). The condition of education 2005 in brief. 

Washington, DC: National Center for Education Statistics. Swanson, C. (2004). Who 

graduates? Who doesn’t? A statistical portrait of public high school graduation, class of 

2001. Washington, DC: Urban Institute Education Policy Institute. 

109 American Youth Policy Forum and Center on Education Policy. (2002). Twenty-five 

years of educating children with disabilities: The good news and the work ahead. 

Washington, DC: Author. 

110 U.S. Department of Education, Office of Special Education Programs. (2003) The 

25th Annual Report to Congress on the Implementation of the Individuals with 

Disabilities Education Act, Vol.1, Section 1 (2003) Washington, DC: Author. 

111 Livingston & Wirt. (2005). 

112 SEELS Appendix A, August 11, 2004, Info and Reports, SRI International. (2004). 

113 Barton, P. (2003). Parsing the achievement gap: Baselines for tracking progress. 

Princeton, NJ: Educational Testing Service. Barton, P. (2004). Why does the gap 

persist? Educational Leadership, 62(3), 8–13. 

114 Barton, P. (2004). Why does the gap persist? Educational Leadership, 62(3), 8–13. 

224 
115 Wells, T., Sandefur, G., & D. Hogan. (2003). What happens after the high school 

years among young persons with disabilities? Social Forces, 82, 803–32. 

116 President’s Committee for People with Intellectual Disabilities. (2004). A charge we 

have to keep: A road map to personal and economic freedom for people with intellectual 

disabilities in the 21st century. Washington, DC: Author. 

117Ibid. 

118 U.S. General Accountability Office. (2003, July). Special education: Federal actions 

can assist states in improving postsecondary outcomes for youth. (GAO report GAO-03-

773). Washington, DC: Author. 

119 Youth Advisory Committee of the National Council on Disability. (2003). Students 

with disabilities face financial aid barriers: College and graduate students share their 

stories and policy recommendations. Washington, DC: National Council on Disability. 

120 Furney, K., Hasazi, S., & Clark-Keefe, K. (2005). Multiple dimensions of reform: The 

impact of state policies on special education and supports for all students. Journal of 

Disability Policy Studies, 16, 169–76. 

121 Furney, K., Hasazi, S., Clark-Keefe, K., & Hartnett, J. (2003). A longitudinal analysis 

of shifting policy landscapes in special and general education reform. Exceptional 

Children, 70, 81–94. 

122 Kosciulek, J. (2004). Research applications of the Longitudinal Study of the 

Vocational Rehabilitation Services Program. Rehabilitation Counseling Bulletin, 47(3), 

173–80. 

123 Berry, H. G., Price-Ellingstad, D., Halloran, W., & Finch, T. (2000). Supplemental 

Security Income and vocational rehabilitation for transition-age individuals with 

disabilities. Journal of Disability Policy Studies, 10(2), 151–65. 

124 Blanck, P., Schartz, H. A., & Schartz, K. (2003). Labor force participation and income 

of individuals with disabilities in sheltered and competitive employment: Cross-sectional 

and longitudinal analyses of seven states during the 1980s and 1990s. William and 

Mary Law Review, 44, 1029ff. 

125 Cimera, R. E. (2000). Improving the cost efficiency of supported employment 

programs. Journal of Disability Policy Studies, 11(3), 145–51. 

126 Lee, D. Y., Yoo, B. J., & Peters, R. (2003). Cost-benefit analysis of a supported 

employment program: An experience in Korea. Journal of Rehabilitation, 69(1), 46–52. 

127 Kosciulek. (2004). 

128 Tashjian, M. D., & Schmidt-Davis, H. (2000, April). Vocational rehabilitation 

experiences among individuals who achieved a supported employment outcome. A 

longitudinal study of the Vocational Rehabilitation Services Program. Final Report. 

Research Triangle Institute, Contractor. Retrieved on December 21, 2005, from 

www.ilr.cornell.edu/ped/lsvrsp. 

129 Mashaw, J., Reno, V., Burkhauser, R., & Berkowitz, M. (1997). Disability, work, and 

cash benefits. Industrial and Labor Relations Review, 50(4), 690–692. 

225 
130 Ticket To Work And Work Incentives Advisory Panel. Advice report to the Congress 

and the commissioner of the Social Security Administration: The crisis in EN 

participation—A blueprint for action. Retrieved January 9, 2008, from 

http://www.ssa.gov/work/panel/panel_documents/reports.html. 

131 GAO. (2005). Social Security Administration: Better planning could make the Ticket 

Program more effective. GAO-05-248. Washington, DC: Author. 

132 Social Policy Research Associates. (2004). FY 2002 WIASRD [Workforce 

Investment Act Standardized Record Data] Data Book. Oakland, CA: Social Policy 

Research Associates. Thomas, D. F., Menz, F. E., & Rosenthal, D. A. (2001). 

Employment outcome expectancies: Consensus among consumers, providers, and 

funding agents of community rehabilitation programs. Journal of Rehabilitation, 67(3), 

26–34. 

133 Holcomb, P., & Barnow, B. (2004). Serving people with disabilities through the 

Workforce Investment Act’s One-Stop Career Centers. Washington, DC: Urban 

Institute. 

134 Morris, M. (2005, November). Disability Program Navigator initiative: DPN evaluation 

plan. Printed copy of PowerPoint presentation. Washington, DC: National Disability 

Institute. 

135 Ibid. 

136 Berry, H., D. Price-Ellingstad, W. Halloran, and T. Finch. (2000). Supplemental 

Security Income and vocational rehabilitation: Early work experiences among transitionage individuals with disabilities. Journal of Disability Policy Studies 10(2): 151–165. 

137 Hergenrather, K. C., Rhodes, S. C., McDaniel, R. S., & Brown, C. D. (2003). Job 

placement: The development of theory-based measures. The Journal of Rehabilitation, 

69(4), 27–35. 

138 Congressional Budget Office (CBO). (2004). Disability and retirement: The early exit 

of baby boomers from the labor force. Washington, DC: Author. 

139 SSA work incentives enrollment, 1990–2004. (2005). Data Note #3. Boston: Institute 

for Community Inclusion, University of Massachusetts-Boston. www.StateData.info. 

140 GAO. (1996). PASS program: SSA work incentive for disabled beneficiaries poorly 

managed. GAO/HEHS-96-51. Washington, DC: Author. 

141 Greenstein, R. (2005). The Earned Income Tax Credit: Boosting employment, aiding 

the working poor. Washington, DC: Committee on Budget and Program Priorities. 

Retrieved December 21, 2005, from www.cbpp.org/7-19-05eic.htm. 

142 Johnson, N. (2001). A hand up: How state Earned Income Tax Credits help working 

families escape poverty in 2001. Washington, DC: Center on Budget and Policy 

Priorities. 

143 Internal Revenue Service (IRS). (2003, February 25). Retirement savings 

contributions credit. Tax Tip 2003-40. Retrieved February 3, 2006, from 

www.irs.gov/newsroom. 

226 
144 Burkhauser, R. V., Glenn, A. J., & Wittenberg, D. C. (1997). The Disabled Worker 

Tax Credit. In Reno, V. P., Mashaw, J. L., & Gradison, B. (1997), Disability: Challenges 

for social insurance, health care financing and labor market policy. Washington, DC: 

National Academy of Social Insurance (available through Brookings Institution Press). 

145 Hill, M. L., Ruth, D. J., Banks, P.D., Troxell, J.L., Carlson, R. M., Hine, M. J., & 

Jones, S.W. (2003). WorkWORLD benefit planning decision support system: Assisting 

people with disabilities to find earnings and work incentive solutions to low income and 

health care problems while benefiting taxpayers and government policy implementers. 

Employment Support Institute, Virginia Commonwealth University. Retrieved April 18, 

2005, from www.workworld.org. Ruth, D. (1996). WorkWORLD as a policy analysis tool. 

Employment Support Institute, Virginia Commonwealth University. Retrieved April 18, 

2005, from www.workworld.org. 

146 Levine, L. (2005). The Work Opportunity Tax Credit (WOTC) and the Welfare-toWork Tax Credit (WtW). RL30089. Washington, DC: Congressional Research Service. 

Retrieved December 19, 2005, from www.opencrs.com. 

147 GAO. (2001). Work Opportunity Tax Credit: Employers do not appear to dismiss 

employees to increase tax credits. GAO-01-329. Washington, DC: Author. GAO. (2002). 

Business tax incentives: Incentives to employ workers with disabilities receive limited 

use and have an uncertain impact. GAO-03-39. Washington, DC: Author. 

148 Sherraden, M. (1991). Assets and the poor: A new American welfare policy. New 

York: M.E. Sharpe. Sherraden, M. (2000). Asset building policy and programs for the 

poor. St. Louis, MO: Center for Social Development, Washington University. 

149 Leydorf, D., & Kaplan, D. (2001). Use of Individual Development Accounts by people 

with disabilities: Barriers and solutions. Policy Brief. Oakland, CA: World Institute on 

Disability. 

150 Committee on Transportation and Infrastructure, Subcommittee on Education and 

the Workforce, Joint Hearing on Coordinating Human Services Transportation. May 

2003. www.house.gov/transportation/fullhearings/05-01-03/05-01-03memo.html. 

151 GAO. (2003, May 1). Transportation-disadvantaged populations: Many federal 

programs fund transportation services, but obstacles to coordination persist. Testimony 

before the committees on Transportation and Infrastructure and Education and the 

Workforce. House of Representatives. 

152 Ibid. 

153 Ibid. 

154 U.S. Department of Labor. (2002). Tax incentives for providing business 

accessibility. http://www.dol.gov/odep/pubs/fact/tifpba.htm 

155 Ibid. 

156 49 U.S.C. §41705. 42 CFR §382 (1986). 

157 NCD. (2003). National disability policy: A progress report. 

www.ncd.gov/newsroom/publications/2003/progressreport_final.htm. 

227 
158 Ibid. 

159 Ibid. 

160 Ibid. 

161 Ibid. 

162 Foley, D. J., Heimovitz, H. K., Guralnik, J. M., & Brock, D. B. (2002). Driving life 

expectancy of persons aged 70 years and older in the United States. American Journal 

of Public Health, 92(8), 1284–1289. 

163 GAO. (2004, August 30). Transportation- disadvantaged seniors: Efforts to enhance 

senior mobility could benefit from additional guidance and information. GAO-04-971. 

Washington, DC: Author. www.gao.gov/new.items/d04971.pdf. 

164 Ibid. 

165 NOD. (2000, May). N.O.D./Harris 2000 survey of Americans with disabilities. 

www.nod.org/index.cfm?fuseaction=page.viewPage&pageID=1430&nodeID=1&Feature 

ID=609&redirected=1&CFID=4041484&CFTOKEN=2142693. 

166 NCD. (2005, June 13). The current state of transportation for people with disabilities 

in the United States.www.ncd.gov/newsroom/publications/2005/pdf/current_state.pdf. 

167 Ibid. 

168 Hartnett, J., & Helfer, B. (2004, March 18). Transportation: The vehicle to getting 

there. 2004 Disability Navigator Training Program, Audio Conference Series. Law, 

Health Policy & Disability Center, University of Iowa. 

www.disability.law.uiowa.edu/dpn/docs/2003-04ac_dpnacs/03182004/ 

audioconference20040318.doc. 

169 Ibid. 

170 NOD. (2000, May). N.O.D./Harris 2000 survey of Americans with disabilities. 

171 Layton, L. (2006, January 14). Disabled riders stranded by Metro. Washington Post 

(pp. A1, A10). 

172 Ibid. 

173 U.S. Department of Transportation, Bureau of Transportation Statistics. 

Transportation difficulties keep over half a million at home. 

174 Ibid. 

175 Ibid.
 

176 GAO. (2004, February 24). Transportation-disadvantaged populations: Federal 

agencies are taking steps to assist states and local agencies in coordinating 

transportation services. Washington, DC: Author. www.gao.gov/new.items/d04420r.pdf. 

177 Ibid. 

178 Ibid. 

179 Ibid. 

228 
180 Committee on Transportation and Infrastructure, Subcommittee on Education and 

the Workforce, Joint Hearing on Coordinating Human Services Transportation. (May 

2003). www.house.gov/transportation/fullhearings/05-01-03/05-01-03memo.html. 

181 Ibid. 

182 Ibid. 

183 NCD. (2003, May 1). Testimony of David Wenzel. 

www.ncd.gov/newsroom/testimony/2003/wenzel_5-01-03.htm. 

184 NCD. (2005, December), p. 17. 

185 Ibid., p. 13. 

186 Ibid., p. 17. 

187 Ibid., p. 14. 

188 Pew Center on the States. (2006). 

189 Henry J. Kaiser Foundation. (2005, February). Navigating Medicare and Medicaid 

2005. Prepared by Bob Williams, et al. Washington, DC: Kaiser Foundation. 

189 Ibid. 

190 NCD. (2005, December). 

191 Ibid. 

192 Ibid. 

193 Ibid., p. 35. 

194 Ibid.
 

195 O’Shaughnessy, C. (2003, May 14). Long-term care chart book: Persons served, 

payors and spending. CRS #RS21518. Washington, DC: Congressional Research 

Service. 

196 Tritz, K. (updated 2004, February 27). Long-term care: Consumer directed services 

under Medicaid. CRS #RL32219. Washington, DC: Congressional Research Service. 

197 Edlund, B. J., et al. (2003, May 31). Long-term care planning for baby boomers: 

Addressing an uncertain future. Online Journal of Issues in Nursing, 8(2), Manuscript 2. 

www.nursingworld.org/ojin/topic21/tpc21_2.htm. 

198 Ibid. 

199 Ibid. 

200 Ibid. 

201 Ibid. 

202 Ibid. 

203 Smith, V. K., & Moody, G. (2005, February). Medicaid in 2005: Principles and 

proposals for reform. Prepared for the National Governors Association. Lansing, MI: 

Health Management Associates. 

229 
204 Ibid. 

205 Ibid. 

206 Ibid., p. 22. 

207 Ibid. 

208 Pew Center on the States. (2006). 

209 Henry J. Kaiser Foundation. (2005, February). 

210 Ibid.
 

211 Centers for Medicare and Medicaid Services (CMS). (2005, April 27). Testimony of 

Mark B. McClellan, M.D., Ph.D., Administrator, before the Subcommittee on Health, 

House Committee on Energy and Commerce, hearing on long-term care and Medicaid: 

Better quality and sustainability by giving more control to people with a disability. 

212 Ibid. 

213 Komisar, H. L., et al. (2005, Summer). Unmet long-term care needs: An analysis of 

Medicare-Medicaid dual eligibles. Inquiry Journal, 42(2), 171–182.
 

214 Ibid. 

215 Ibid. 

216 Ibid., p. 25.
 

217 www.cms.hhs.gov/medicaid/1915c/. 

218 GAO. (2003, June). Long term care, federal oversight of growing Medicaid home and 

community-based waivers should be strengthened. Washington, DC: Author. 

219 CMS (2005, April 27). 

220 Ibid.
 

221 Ibid. 

222 www.cms.hhs.gov/IndependencePlus/. 

223 Ibid. 

224 Ibid. 

225 New Hampshire [§1915(c) new waiver, approved 12/16/02, effective 1/1/03]; South 

Carolina [§1915(c) new waiver, approved 3/11/03, effective 5/1/03]; Louisiana [§1915(c) 

new waiver, approved 4/24/03, effective 4/24/03]; North Carolina [§1915(c) new waiver, 

approved 12/23/03, effective 1/1/04] [§1915(b)/(c) new waiver, approved 10/6/04, 

effective 4/1/05]; Florida [§1115 amendment to Cash and Counseling, approved 

5/30/03, effective 5/30/03]; Maryland [§1915(c) new waiver, approved 10/21/04, 

effective 7/1/05]; California [§1115 new demonstration, approved 7/30/04, effective 

8/1/05]; Delaware [(§1915(b)/(c) new waiver, approved 11/12/04, effective 12/1/04]; 

New Jersey [§1115 amendment to Cash and Counseling, approved 12/15/04, effective 

date pending receipt of Operational Protocol]; Connecticut [§1915(c) new waiver, 

approved 1/14/05, effective 2/1/05]. 

230 
226 P.L. 90-248, 81 Stat. 821. (1968). 

227 Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35). 

228 Home and Community-Based Services: Medicaid research and demonstration 

waivers, chart of state participation. (2004, November). 

www.pascenter.org/demo_waivers. 

229 Section 4442.5(B)(5) of the State Medicaid Manual. 

230 Burke, S., Feder, J., and Van de Water, P. (eds.). (2006). National Academy of 

Social Insurance (NASI) Study Panel Reports on Long-Term Care. Developing a better 

long-term care policy: A vision and strategy for America’s future. Washington: DC: 

NASI. 

231 Ibid. 

232 Ibid. 

233 Ibid., p. 21. 

234 Smith & Moody. (2005, February). 

235 Merlis, M. (1999, September). Financing long-term care in the twenty-first century: 

Public and private roles. Washington, DC: Institute for Health Policy Solutions. 

236 Ibid. 

237 www.ncsl.org/programs/health/forum/olmsreport.htm. 

238 Mathmatica. (2003, January 1). Lessons from the implementation of Cash and 

Counseling in Arkansas, Florida and New Jersey. 

www.cashandcounseling.org/search?TextIndex=abuse+funds. 

239 NCD (2005, December), p. 21. 

240 Ibid. 

241 Ibid., p. 29. 

242 Ibid., p. 21. 

243 Ibid. 

244 Mendelsohn, S. (2006, June). Personal communication. 

245 Social Security Administration (SSA). Retrieved January 15, 2008, from 

www.ssa.gov/dibplan/dqualify.htm. 

246 Ibid.
 

247 Mendelsohn, S. (2006, June). 

248 Ibid.
 

249 COBRA, §87 and §88. www.dol.gov/ebsa/faqs/faq_consumer_cobra.html. 

250 Mendelsohn, S. (2006, June). 

231 
251 Wittaker, J. M. (updated July 15, 2005). Security Disability Insurance (SSDI) and 

Medicare: The 24-month waiting period for SSDI beneficiaries under age 65. CRS 

Report for Congress, RS22195. Washington, DC: Congressional Research Service. 

252 Ibid. 

253 Ibid. 

254 Ibid. 

255 Mendelsohn, S. (2006, June). 

256 Ibid. 

257 GAO. (2003, February). A new approach to disability determination. The Social 

Security definition of disability. 

258 Ibid. 

259 GAO. (2004, July). 2003 SSI Annual Report, Section II.C. FY 2005 APP, at 20. 

260 Ibid. 

261 Ibid. 

262 SSA. (2007). SSI Annual Statistical Report 2005. 

http://www.ssa.gov/policy/docs/statcomps/ssi_asr/2005/index.html.
 

263 Ticket to Work and Work Incentives Advisory Panel, SSA. (2004, 

February)..www.ssa.gov/work/panel/panel_documents/pdf_versions/CrisisEnParticipatio
 

n.pdf. 

264 Ibid. 

265 Ibid.
 

266 Baldwin, M. L., & Johnson, W. G. (1998). Dispelling the myths about work disability. 

In T. Thomason et al., eds, New approaches to dualities in the workplace. Ithaca, NY: 

Cornell University Press. 53–55. 

267 Ibid.
 

268 Skoto, B., et al. (2006, January). 

269 Ibid.
 

270 Ibid. 

271 Ibid. 

272 Ibid. 

273 GAO. (2005, May). Social Security Disability Insurance, SSA actions could enhance 

assistance to claimants with inflammatory bowel disease and other impairments. GAO05-495. Washington, DC: Author. www.gao.gov/new.items/d05495.pdf. 

274 Ibid. 

232 
275 Burkhauser, R., Daly, M., and Houtenville, A. (2001). How working age people with 

disabilities fared over the 1990s business cycle. In Peter P. Budetti, Richard V. 

Burkhauser, Janice M. Gregory, and H. Allan Hunt, eds. Ensuring health and income 

security for an aging workforce. Kalamazoo, MI: W.E. Upjohn Institute for Employment 

Research. 291–346. 

276 W.E. Upjohn Institute for Employment Research. (2003). The decline in employment 

of people with disabilities: A policy puzzle. Stapleton, D., & Burkhauser, R. (Eds.). 

Kalamazoo, MI: Upjohn Institute. 

www.ilr.cornell.edu/ped/dep/files/2001PolicyInstitute_SampleChapter.pdf. 

277 GAO. (2003, April). Social Security and minorities: Earnings, disability incidence, and 

mortality are key factors that influence taxes paid and benefits received. GAO-03-387. 

Washington, DC: Author. 

278 Ibid. 

279 Ibid. 

280 Ibid. 

281 GAO. (2004, December 10). SSA’s disability programs: Improvements could 

increase the usefulness of electronic data for program oversight. GAO-05-100R. 

Washington, DC: Author. 

282 Ibid. 

283 Ibid. 

284 Ibid. 

285 GAO. (2005). Social Security Administration: Better planning could make ticket 

program more effective. Congressional Briefing. GAO-05-248. 

286 The GAO 2005 report included a review of past recommendations from the advisory 

panel. 

287 GAO. (2005). 

288 Hartnett, J. (2006). 

289 Mendelsohn, S. (2006). Role of the tax code in asset development for people with 

disabilities. Disability Studies Quarterly, 26(1). www.dsq-sds.org. 

290 Farmer, P. (2005). Pathologies of power: Health, human rights, and the new war on 

the poor. Berkeley: University of California Press. 

291 Dohan, D. (2003). The price of poverty: Money, work, and culture in the Mexican 

American barrio. Berkeley: University of California Press. 

292 NCD. (2005, December). 

293 Herb, M., Miller, E., & O’Hara, A. (2000, June). Housing Crisis Continues Findings 

from Priced Out in 2000. In Opening Doors, Issue 14. 

294 Andersen, M. L., & Collins, P. H. (eds.). (1992). Race, class, and gender. Belmont, 

CA: Wadsworth. 

233 
 

295 U.S. Census Bureau. (2003, March), p. 10. 

296 U.S. Census Bureau, U.S. Department of Commerce Economics and Statistics 

Administration. (2005, July), p. 5. 

297 Ibid. 

298 Shackleton & Foertsch. (2005). 

299 U.S. Census Bureau, U.S. Department of Commerce Economics and Statistics 

Administration. (2005, July). 

300 Oliver, M. L., & Shapiro, T. M. (1995). Black wealth, white wealth. New York: 

Routledge. 

301 Shapiro, T. M. (2004). The hidden cost of being African American: How wealth 

perpetuates inequality. New York: Oxford University Press. 

302 Sherraden, M., McBride, A., Johnson, E., Hanson, S., Ssewamala, F., & Shanks, T. 

R. (2005). Savings in low-income households: Evidence from interviews with 

participants in the American Dream Demonstration. St. Louis, MO: Center for Social 

Development, George Warren Brown School of Social Work, Washington University in 

St. Louis. 

303 Mendelsohn. (2006). Role of the tax code. 

304 Hartnett, J. (2006, October). Educating democracy: Tax and financial service needs 

of Americans with disabilities. A Report to the Ford Foundation Based on the 2006 

Taxfacts+ Campaign Four City Pilot. Washington, DC: National Disability Institute and 

the Law, Health Policy & Disability Center, University of Iowa College of Law. 

www.reitour.org.[Contractor] 

305 Mendelsohn, S. (2005). Disability as an emerging market segment. A meeting of the 

Federal Deposit Insurance Corporation and the National Disability Institute. Washington, 

DC: National Cooperative Bank Development Corporation (October 31, 2005, 

Presentation). 

306 The FCDCU is part of the Asset Accumulation and Tax Policy Project at the Law, 

Health Policy & Disability Center, University of Iowa, College of Law, under a grant from 

the National Institute of Disability Research and Rehabilitation. 

307 Schmeling, J., Schartz, H., Morris, M., & Blanck, P. (2006, January). Tax credits and 

asset accumulation: Findings from the 2004 N.O.D./Harris survey of Americans with 

disabilities. Disability Studies Quarterly 26(1),1041–5718. 

308 Sard, B., & Fischer, W. (revised 2004, March 24). Administration seeks deep cuts in 

housing vouchers and conversion of program to a block grant. Center on Budget and 

Policy Priorities. www.cbpp.org/2-12-04hous.htm. 

309 Disability Policy Seminar—Housing for people with disabilities: The crisis. (2005). 

Participants: The Arc, AAMR, AUCD, United Cerebral Palsy, NACDD. 

www.nacdd.org/images2/pdfs/FS%20Housing%202005.pdf. 

310 Ibid. 

234 
311 Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581, 119 S.Ct. 2176, 67 USLW 3683, 9 

A.D. Cases 705, 99 Cal. Daily Op. Serv. 4859, 144 L.Ed.2d 540, 1999 CJ C.A.R. 3627, 

67 USLW 4567, 1999 Daily Journal D.A.R. 6263, 15 NDLR P 130. 

312 NCB Development Corporation. (2002). Home access network. Washington, DC: 

NCB. Retrieved from www.home-access.org/natlpic.asp. 

313 The Urban Institute. (2005, May). Discrimination against persons with disabilities: 

Barriers at every step. Prepared for Office of Policy Development and Research, U.S. 

Department of Housing and Urban Development by Margery Austin Turner et al. 

Washington, DC: The Urban Institute. The study was designed to advance the testing 

method of using paired testing to measure discrimination against people with 

disabilities, for research and enforcement purposes. 

314 Ibid., p. 35. 

315 Ibid., p. 42. 

316 Ibid., p. 45. 

317 NCB Development Corporation. (2002). 

318 U.S. Department of Health and Human Services (HHS). (2006). Substance Abuse 

and Mental Health Services Administration (SAMHSA), Center for Mental Health 

Services (CMS). Transforming Housing for People With Psychiatric Disabilities Report. 

Prepared by Bazelon Center. HHS publication No. 4173. Rockville, MD: HHS. 

319 Ibid., p. 3. 

320 National Low Income Housing Coalition (NLIHC). (Spring 2002). The NIMBY Report: 

The Olmstead factor, integrating housing for people with disabilities. Published by 

NLIHC with funding from Washington Mutual Foundation. 

321 Ibid., p. 4. 

322 Technical Assistance Collaborative (TAC). (2005, August). Priced out in 2004. 

Washington, DC. The TAC biennial study verifies that low-income people with 

disabilities are experiencing a national housing affordability crisis. Published in 

collaboration with the CCD Housing Task Force with funding from the Melville 

Charitable Trust. 

323 Ibid. 

324 Law, Health Policy & Disability Center. (2004, April 15). 2004 Disability Program 

Navigator Training: Affordable and accessible housing. Iowa City, IA: University of Iowa. 

http://disability.law.uiowa.edu/dpn/audio/2003-04_audioconf/04152004.html. 

325 NCB Development Corporation. (2002). 

326 Ibid. 

327 Ibid. 

328 Ibid. 

329 Ibid. 

235 
330 Ibid. 

331 Ibid. 

332 News Release: Statement by Henry Cisneros on worst case needs in housing. 

(1996, March 14). U.S. Department of Housing and Urban Development (HUD). 

333 Edgar, E, O’Hara, A., Smith, B., & Zovistoski, A. (1999). Priced Out in 1998. From 

http://www.tacinc.org/Pubs/PricedOut.htm. 

334 HUD. (1999, March). Waiting in vain: An update on America’s rental housing crisis.
 

Washington, DC: Author. 

335 HUD. (1998, March). Recent research results: A newsletter from HUD Office of 

Policy Development and Research. Washington, DC: Author. 

336 24 CFR §982.503. 

337 Sard & Fischer. (revised 2004, March 24). 

338 Ibid. 

339 Ibid 

340 P.L. 90-248, 81 Stat. 821 (1968). 

341 Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35). 

342 Home and Community-Based Services: Medicaid research and demonstration 

waivers, chart of state participation. (2004, November). 

www.pascenter.org/demo_waivers. 

343 Saegert, S., & Benitez, L. (June 2004). Limited equity housing cooperatives. New 

York: City University of New York Graduate Center for the Taconic Foundation. 

344 Ibid., p. 22. 

345 Cotton, M., Saegert, S., & Reiss, D. (1996). No more “housing of last resort”: The 

importance of affordability and resident participation in in-rem housing. New York: The 

Task Force on City Owned Property. 

346 NCD. (2002, July 26). Achieving independence: The challenge for the 21st century; 

National disability policy: A progress report, December 2000–December 2001. 

Washington, DC: Author. 

www.ncd.gov/newsroom/publications/2002/progressreport_07-26-02.htm. 

347 Wright, B. (1997, Spring/Summer). There’s no place like home: National program 

provides mortgage funds to people with disabilities. Point of Departure, Publication of 

the Technical Assistance about Transition and the Rehabilitation Act Project, 3(1). 

PACER Center. www.pacer.org/tatra/pod_summer97.htm#home. 

348 Ibid. 

349 Ibid. 

350 Ibid. 

351 Ibid. 

236 
352 Disability Policy Seminar. (2005). 

353 Ibid. 

354 O’Hara, A., & Miller, E. (2000). Going it alone: The struggle to expand housing 

opportunities for people with disabilities. Washington, DC: Technical Assistance 

Collaborative and Consortium for Citizens with Disabilities Housing Task Force. From 

www.c-c-d.org/task_forces/housing/going_alone.htm. 

355 According to CCD members’ and affiliates’ responses in a TAC survey dated July 

1999. 

356 According to HUD data regarding Section 8 Mainstream applicants, years 1997, 

1998, and 1999. 

357 Ibid. 

358 STARTing line, first quarter newsletter topics. 

www.startsaving.la.gov/savings/news.jsp. 

359 Ibid. 

360 Clancy, M., et al. (2005, February). Section 529 savings plans, access to postsecondary education, and universal asset building. 

www.newamerica.net/publications/policy/section_529_savings_plans_access_to_post_ 

secondary_education_and_universal_asset_building. 

361 Ibid. 

362 Kendrick, D. (2002). One state’s solution to getting more people on line. AFB Access 

World. www.afb.org/afbpress/pub.asp?DocID=aw020203. 

363 Jenson, A., & Folkemer, D. (revised draft 2002, July 26). Developing fiscal estimates 

for a Medicaid Buy-in Program: Using data from early implementer states. 

www.uiowa.edu/~lhpdc/work/II_Policies/Estimating_Fiscal_Impact.doc. 

364 University of Nebraska Public Policy Center. (2002, December). The impact of 

earnings of Nebraskans with disabilities on their eligibility for selected services and 

programs. Prepared for Medicaid Infrastructure Grant Program, Nebraska Department 

of Health and Human Services. 

http://ppc.unl.edu/reports_publications/price_program_integration.pdf. 

365 Community Transportation Association. (2001) Maryland passes legislation 

establishing job access transportation program. 

www.ctaa.org/adaview.asp?pageid=776. 

366 Ibid. 

367 Cooper, A. (2005, May). Rethinking rehab: Using vocational rehabilitation funds to 

start Individual Development Accounts. EQUITY e-Newsletter. 

www.wid.org/publications/?page=equity&sub=200505&topic=pm. 

368 www.ndi-inc.org/docs/familycafe-June_4_06.ppt. 

237 
369 Social Security Administration. (1999). Number of SSI recipients by category and 

age, December 1975 to September 1999. Retrieved January 8, 2008, from 

http://www.ncd.gov/newsroom/publications/2005/ssa-promoteemployment.htm 

370 Case 1 and Case 3 only. 

371 OMB. (October 29, 1992). Guidelines and Discount Rates for Benefit-Cost Analysis 

of Federal Programs. (Circular No. A-94 Revised, Transmittal Memo No. 64). 

Washington, DC. 

372 HHS, CMS. (March 23, 2005). 2005 Annual Report of the Boards of Trustees of the 

Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. 

Rockville, MD. http://www.cms.hhs.gov/ReportsTrustFunds/ 

373 SSA, Office of the Chief Actuary. (2004, September). Unisex life expectations at birth 

and age 65. Baltimore, MD. (Actuarial Note No. 2004.2). 

374 SSA , Office of the Chief Actuary. (2005) Actuarial Study No. 119: Short-range 

actuarial projections of the old-age, survivors, and disability insurance program. SSA. 

Baltimore, MD. 

375 Their only other source of income, SSI, is not taxable. 

376 However, we note that a tax credit on income taxes paid by businesses offsets much 

of this contribution. 

377 Their only other source of income, SSI, is not taxable. 

378 As is the case with other payroll taxes, there is likely some federal and state tax 

revenue offset associated with these high payroll expenses. 

379 These same time frames will apply in Case Study 3. 

380 See Executive Order 12291, Federal Regulation (1981, February 17); and Executive 

Order 12866, Regulatory Planning and Review (1993, September 30). 

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