[Federal Register Volume 75, Number 224 (Monday, November 22, 2010)]
[Notices]
[Pages 71171-71177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29350]



[[Page 71171]]

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SOCIAL SECURITY ADMINISTRATION

[Docket No. SSA-2010-0050]


Social Security Disability Program Demonstration Project: Benefit 
Offset National Demonstration (BOND)

AGENCY: Social Security Administration.

ACTION: Notice.

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SUMMARY: We are announcing the following demonstration project relating 
to the Social Security disability program under title II of the Social 
Security Act (Act). Under this project, we will test modifications to 
current title II program rules that we apply to beneficiaries who work 
and receive title II benefits based on disability. We will also modify 
current rules for paying outcome payments to providers of services 
under the Ticket to Work and Self-Sufficiency program (Ticket to Work 
program). We are conducting this project, called the Benefit Offset 
National Demonstration (BOND), under the demonstration authority 
provided in section 234 of the Act.
    In this project, we are testing the use of a benefit offset based 
on earnings as an alternative to certain rules that we currently apply 
to title II disability beneficiaries who work. Under the benefit 
offset, we will reduce title II disability benefits by $1 for every $2 
that a beneficiary earns above a substantial gainful activity threshold 
amount. This alternative rule will allow a beneficiary to receive 
reduced benefit payments when we would ordinarily stop payments under 
our usual rules because of the beneficiary's work and earnings.
    In selecting beneficiaries to participate in the project, we will 
include some beneficiaries who receive only title II disability 
benefits. We also will include some beneficiaries who receive both 
title II disability benefits and Supplemental Security Income (SSI) 
based on disability or blindness under title XVI of the Act. However, 
we are only modifying title II program rules for beneficiaries who 
participate in the project. We will continue to apply the usual SSI 
program rules for participants who receive SSI payments in addition to 
title II disability benefits.

DATES: The demonstration project will begin January 2011 and will end 
September 2022.

FOR FURTHER INFORMATION CONTACT: Jamie Kendall by email at 
<a href="/cdn-cgi/l/email-protection#402a212d29256e2b252e24212c2c003333216e272f36"><span class="__cf_email__" data-cfemail="1379727e7a763d78767d77727f7f536060723d747c65">[email protected]</span></a>, by telephone at (202) 358-6448, or by mail at 
Social Security Administration, Office of Program Development and 
Research, ITC Building, 500 E Street, SW., Washington, DC 20254.

SUPPLEMENTARY INFORMATION:

Background

Who may receive disability benefits?

    Under title II of the Act, we provide for the payment of the 
following benefits to persons who meet the definition of disability 
under the Act:
    <bullet> Disability insurance benefits for a worker insured under 
the Act;
    <bullet> Widow's and widower's insurance benefits based on 
disability for a widow, widower, or surviving divorced spouse of an 
insured worker; and
    <bullet> Childhood disability benefits for a child of an insured 
worker who is entitled to retirement or disability benefits or has 
died.
    In the rest of this notice, we refer to these benefits collectively 
as Social Security Disability Insurance (SSDI) benefits and refer to 
the beneficiaries who receive them as SSDI beneficiaries.
    Under title XVI of the Act, we pay SSI to persons who are aged, 
blind, or disabled and have limited income and resources. An SSDI 
beneficiary with limited income and resources may qualify for SSI 
payments.
    A person must meet the definition of disability under title II of 
the Act in order to be eligible for SSDI benefits. A person is disabled 
under title II if he or she has a physical or mental impairment or 
combination of impairments that is expected to last for at least 12 
months or to result in death and prevents the person from doing any 
substantial gainful work.\1\ This definition of disability also applies 
under title XVI of the Act for persons age 18 or older.\2\
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    \1\ Section 223(d)(1)(A) of the Act; 20 CFR 404.1505(a).
    \2\ Section 1614(a)(3)(A) of the Act; 20 CFR 416.905(a).
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How do we help disability beneficiaries to return to work?

    Under the Act, we offer certain work incentives to encourage 
disability beneficiaries to attempt to work. We also administer the 
Ticket to Work program and other employment support programs to assist 
disability beneficiaries to become as self-sufficient as possible 
through work and to promote their economic independence. Under certain 
provisions of the Act, such as the title II provision for a trial work 
period, beneficiaries are allowed to test their ability to work and 
continue to keep their cash and medical benefits.

The Trial Work Period

    We provide a trial work period (TWP) that allows SSDI beneficiaries 
to test their ability to work for at least nine months and not have 
that work considered for disability purposes.\3\ During this period, 
beneficiaries continue to receive full SSDI benefits regardless of how 
much money they earn as long as they report the work activity and 
continue to have a disabling impairment. The TWP ends when a 
beneficiary has completed nine trial work months, not necessarily 
consecutive, within a 60-month period. (The TWP may end earlier if we 
determine that the beneficiary's disability ended based on medical 
factors.) \4\ We count as a trial work month any month in which a 
beneficiary's gross earnings are above a certain amount ($720 a month 
in 2010) or in which the beneficiary works more than 80 hours in self-
employment.\5\
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    \3\ Sections 222(c) and 223(d)(4) of the Act; 20 CFR 404.1592.
    \4\ Id.
    \5\ 20 CFR 404.1592(b).
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What happens if a beneficiary works after the TWP?

    If a beneficiary works after the TWP ends, we review the 
beneficiary's work and earnings to decide if the work is substantial 
gainful activity (SGA). Work is ``substantial'' if it involves doing 
significant physical or mental activities. Work activity may be 
``substantial'' even if it is performed on a part-time basis. Work 
activity is ``gainful'' if it is performed for pay or profit or is the 
kind of work usually performed for pay or profit, whether or not a 
profit is realized.\6\
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    \6\ 20 CFR 404.1572.
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    In deciding whether work is SGA, we consider the nature of the 
person's job duties, the skills and experience the person needs to do 
the job, and how much the person actually earned. Usually, we consider 
a person's work to be substantial and gainful if monthly earnings, 
after allowable deductions, average more than the monthly SGA amount 
(in 2010, $1,000 a month for a person who is not blind, or $1,640 a 
month for a person who is blind). If the person is self-employed, we 
may give more consideration to the kind and value of the work, 
including the person's part in the management of the business, than to 
the person's income alone.\7\
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    \7\ 20 CFR 404.1571-404.1576.
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    We will decide that an SSDI beneficiary's disability has ended in 
the first month he or she does SGA after completion of the TWP.\8\ We 
pay benefits for the month disability ended and the following two 
months, no matter how much the beneficiary earns.\9\

[[Page 71172]]

This three-month period is the ``grace period.''
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    \8\ 20 CFR 404.1592a(a)(1) and 404.1594(d)(5).
    \9\ 20 CFR 404.401a and 404.1592a(a)(2).
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    What happens next depends on whether disability ended due to SGA 
during or after the reentitlement period.\10\
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    \10\ The SSI program under title XVI of the Act does not provide 
a TWP. The performance of SGA by a recipient of SSI payments based 
on disability or blindness does not affect the recipient's 
disability or blindness status under the SSI program. Section 1619 
of the Act; 20 CFR 416.260-416.269.
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The Reentitlement Period

    We provide a 36-month reentitlement period that begins immediately 
after an SSDI beneficiary completes the TWP. The reentitlement period 
allows an SSDI beneficiary with a disabling impairment an additional 
period to test his or her ability to work.\11\ The reentitlement period 
ends after 36 months or when the beneficiary ceases to have a disabling 
impairment, whichever is earlier.\12\
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    \11\ Sections 202(d)(1), (d)(6), (e)(1), and (f)(1) and 
223(a)(1) of the Act; 20 CFR 404.316(d), 404.337(d), 404.352(e), and 
404.1592a(a).
    \12\ 20 CFR 404.1592a(b).
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    If we determine that a beneficiary's disability ended during the 
reentitlement period because he or she performed SGA, we will pay 
benefits for the months in the three-month grace period. After the 
grace period, we will not pay benefits to the disability beneficiary or 
anyone receiving benefits on his or her earnings record for any month 
during the reentitlement period in which the disability beneficiary 
does SGA. However, we will pay benefits for any month during the 
reentitlement period in which the disability beneficiary does not do 
SGA.\13\ If the beneficiary performs SGA after the reentitlement 
period, we will find that entitlement to disability benefits terminates 
in the first month after the reentitlement period in which he or she 
performs SGA.\14\
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    \13\ Section 223(e) of the Act; 20 CFR 404.401a and 
404.1592a(a)(2).
    \14\ 20 CFR 404.325 and 404.1592a(a)(3)(i).
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    When we determine whether a beneficiary performed SGA in a month 
after the grace period, we only consider his or her work in or earnings 
for that month. We do not apply the rules regarding averaging of 
earnings or unsuccessful work attempts.\15\
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    \15\ 20 CFR 404.1592a(a)(2)(i) and (3)(i).
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    We apply different rules if the month a beneficiary's disability 
ended due to the performance of SGA occurred after the 36-month 
reentitlement period. In this situation, we will find that entitlement 
to and payment of benefits terminate in the first month after the grace 
period.\16\
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    \16\ 20 CFR 404.325 and 404.1592a(a)(3)(ii).
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Period of Disability for an Insured Worker

    Under title II of the Act, a worker who becomes disabled may apply 
to have us establish a period of disability to protect his or her 
earnings record as well as apply for disability insurance benefits. A 
period of disability protects the benefit rights of a worker and his or 
her dependents or survivors by allowing us to exclude the time the 
worker is disabled from consideration in determining his or her insured 
status and the amount of monthly benefits payable on his or her record.
    In general, to be entitled to a period of disability, a worker 
must:
    <bullet> File an application;
    <bullet> Be insured for disability under the Act; and
    <bullet> Be disabled throughout a period of at least five full 
calendar months.\17\
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    \17\ Section 216(i) of the Act; 20 CFR 404.320.
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    A period of disability may begin on the day the worker's disability 
begins if he or she is insured for disability on that day. The period 
of disability ends with the earliest of the following months:
    <bullet> The month before the month he or she attains full 
retirement age;
    <bullet> The month before his or her termination month; or
    <bullet> If he or she performs SGA during the reentitlement period, 
the last month for which he or she received cash benefits.\18\
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    \18\ Section 216(i)(2)(D) of the Act; 20 CFR 404.321 and 
404.325.
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Description of the BOND Project

    Under the BOND project, we will modify certain title II disability 
program rules that we currently apply to SSDI beneficiaries who work. 
We will test alternate rules to determine their effectiveness in 
encouraging SSDI beneficiaries to return to work or increase their 
earnings. We are testing the use of a benefit offset based on earnings 
and the provision of enhanced benefits counseling services. Under the 
benefit offset, we will reduce SSDI benefits by $1 for every $2 of a 
beneficiary's earnings that are above a certain dollar amount. This 
dollar amount is equal to the applicable monthly SGA amount for the 
calendar year multiplied by the number of months for which the 
beneficiary is eligible for the offset in that year. The benefit offset 
will allow a beneficiary to receive reduced SSDI benefit payments when 
we would ordinarily stop or terminate benefit payments under our usual 
rules because of the beneficiary's performance of SGA. We will evaluate 
the impact of the benefit offset and the enhanced counseling services 
on work activity, earnings, and continued receipt of cash benefits.
    We have contracted with Abt Associates to assist in implementing 
the BOND project and to conduct the evaluation activities. Under a 
prior contract with us, Abt Associates helped us develop the 
demonstration project design and evaluation plans. The design 
identified the program changes, target populations, treatment groups, 
sample sizes, and project sites. The evaluation plan identified 
pertinent outcomes, the data necessary for the analysis, and 
appropriate measurements of the effects of the alternate rules that we 
will test. The evaluation will focus on issues such as the rate of 
return to work by project participants, their earnings and ability to 
sustain work, and the rate at which they leave cash benefits due to 
work. We will also examine for whom these interventions appear to be 
the most effective.

Where will we conduct the BOND project?

    We will conduct this project in 10 sites across the country. Abt 
Associates is setting up local demonstration site offices in each of 
these locations to work directly with the beneficiaries in this 
project. We randomly selected the following 10 locations to be project 
sites. (These locations are general descriptions of the project sites 
as some small areas within certain locations may not be part of the 
demonstration site.)
    <bullet> Alabama;
    <bullet> Arizona and Southeastern California;
    <bullet> Colorado and Wyoming;
    <bullet> Southeastern Michigan;
    <bullet> Southeastern Texas;
    <bullet> Southern Florida;
    <bullet> Vermont, Maine, New Hampshire, and Northern Massachusetts;
    <bullet> Washington DC area including Northern Virginia, suburban 
Maryland, and Northeastern West Virginia;
    <bullet> Western New York State; and
    <bullet> Wisconsin.

Who is eligible to participate in the BOND project?

    To be eligible to participate in the project, a beneficiary must:
    <bullet> Be at least age 20 and under age 60;
    <bullet> Be entitled to title II benefits based on disability;
    <bullet> Receive title II disability cash benefits, unless we are 
not paying cash benefits because the beneficiary is engaging in SGA 
after the grace period and during the reentitlement period;
    <bullet> Reside in one of the 10 sites for the project, according 
to our administrative records; and

[[Page 71173]]

    <bullet> Not be a current or prior treatment or control group 
participant in any of our other demonstration projects.

How will we select participants and assign them to control or treatment 
groups?

    We will select potential participants for the BOND project from a 
pool of beneficiaries who are entitled to SSDI benefits, reside in one 
of the 10 sites according to our records, and meet the other 
requirements for eligibility for participation described above. This 
pool will include some concurrent SSDI/SSI beneficiaries, that is, 
beneficiaries who receive both title II benefits based on disability 
and title XVI payments based on disability or blindness. We estimate 
that the pool will consist of approximately one million beneficiaries, 
with SSDI-only beneficiaries comprising about 80% of the pool and 
concurrent SSDI/SSI beneficiaries comprising about 20% of the pool. We 
will identify the beneficiaries in the pool who are SSDI-only 
beneficiaries and will randomly assign these beneficiaries to one of 
the three groups described below. We will identify the beneficiaries in 
the pool who are concurrent SSDI/SSI beneficiaries and will randomly 
assign these beneficiaries to one of the first two groups described 
below.
    <bullet> Stage 1 Control Group--We will assign approximately 
580,000 SSDI-only and concurrent SSDI/SSI beneficiaries to this group, 
which will continue to be subject to our usual program rules. We will 
not test any alternative rules with this group.
    <bullet> Stage 1 Treatment Group--We will assign approximately 
80,000 SSDI-only and concurrent SSDI/SSI beneficiaries to this group, 
which will be offered the opportunity for the benefit offset under 
Stage 1 of the project.
    <bullet> Stage 2 Eligible Group--We will assign approximately 
340,000 SSDI-only beneficiaries to this group, from which we expect to 
recruit about 12,600 beneficiaries to volunteer to participate in Stage 
2 of the BOND project. We will randomly assign SSDI-only beneficiaries 
who have agreed to participate in Stage 2 of the project to a Control 
Group or one of two Treatment Groups, as described below. Concurrent 
SSDI/SSI beneficiaries are not eligible to participate in Stage 2 of 
the project.

How will we conduct Stage 1 and Stage 2 of the BOND project?

    The BOND project design includes two separate stages. Stage 1 will 
consist of a control group that receives no alternative program rules 
and a treatment group that is offered the opportunity for the benefit 
offset. Beneficiaries randomly assigned to the Stage 1 treatment group 
will receive a notice informing them of their eligibility for the 
project and the alternate program rules that will apply for the 
treatment of earnings. The notice will provide contact information for 
beneficiaries to establish Abt Associates as their central point of 
contact for the BOND project.
    Stage 2 will consist of a control group and two treatment groups. 
We will recruit volunteers for Stage 2 from the pool of approximately 
340,000 SSDI-only beneficiaries in the Stage 2 Eligible Group described 
above. We will recruit about 12,600 SSDI-only beneficiaries to 
volunteer to participate in Stage 2 of the project. While we are not 
required to obtain a beneficiary's consent to participate in a 
demonstration project under section 234 of the Act, we will require 
beneficiaries whom we recruit for Stage 2 of the project and who wish 
to participate in the project to sign a consent form to indicate their 
agreement to participate. We will randomly assign the SSDI-only 
beneficiaries who consent to participate to one of the following three 
groups:
    <bullet> Stage 2 Control Group--We will assign approximately 4,800 
beneficiaries to this group, which will continue to be subject to our 
usual program rules. We will not test any alternative rules with this 
group.
    <bullet> Stage 2 Offset Treatment Group--We will assign 
approximately 4,800 beneficiaries to this group. We will offer this 
group the opportunity for the benefit offset under Stage 2 of the 
project.
    <bullet> Stage 2 Offset and Enhanced Benefits Counseling Treatment 
Group--We will assign approximately 3,000 beneficiaries to this group. 
We will offer this group the opportunity for the benefit offset and 
enhanced benefits counseling services. We will send the volunteers 
randomly assigned to the two treatment groups in Stage 2 a notice 
informing them of the alternate program rules that will apply for the 
treatment of earnings and the enhanced benefits counseling, depending 
on their treatment group.

Alternate Title II Program Rules for Participants in the Benefit Offset 
Treatment Groups

    We will apply the following alternate program rules to 
beneficiaries assigned to the treatment groups. The alternate rules 
will provide a beneficiary whose disability ended because of the 
performance of SGA the opportunity to continue working or start working 
again and receive SSDI benefit payments, subject to a benefit offset. 
The benefit offset will allow a beneficiary who performs SGA after the 
grace period to receive reduced SSDI benefit payments when we would 
ordinarily stop payments or terminate entitlement under our usual 
rules. We will continue to apply our usual rules for the TWP, for 
deciding whether disability ended due to the performance of SGA, and 
for paying benefits for months in the grace period to participants in 
the treatment groups.

When will a participant in a treatment group be eligible for the 
benefit offset?

    A beneficiary who is in a Stage 1 or Stage 2 treatment group and 
whose disability ends or has ended under our usual rules due to the 
performance of SGA will be eligible for the benefit offset during his 
or her ``BOND participation period.'' The BOND participation period is 
a period of up to 60 months that begins and ends as described below. A 
beneficiary must complete the TWP by September 30, 2017 to qualify for 
the BOND participation period. A beneficiary whose disability ended 
because of the performance of SGA will be eligible for the benefit 
offset during his or her BOND participation period beginning with the 
later of the following months:
    <bullet> The month after the beneficiary's three-month grace 
period; or
    <bullet> The first month of the beneficiary's BOND participation 
period.

When does the BOND participation period begin?

    The BOND participation period of a beneficiary who is assigned to a 
treatment group begins as follows:
    <bullet> For a beneficiary who did not complete the TWP in or 
before the month of assignment to a treatment group, the BOND 
participation period begins with the month after the month the TWP is 
completed, provided the beneficiary completes the TWP by September 30, 
2017.
    <bullet> For a beneficiary who completed the TWP in or before the 
month of assignment to a treatment group, the BOND participation period 
begins with the month after the month of assignment to a treatment 
group.
    We explain in the following table when the BOND participation 
period and eligibility for the benefit offset begin depending on a 
beneficiary's status as of the close of the month of his or her 
assignment to a treatment group.

[[Page 71174]]



------------------------------------------------------------------------
 Beneficiary status at close of                         Eligibility for
 month of random assignment to a  BOND Participation  the benefit offset
         treatment group             period begins          begins
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TWP not completed...............  Month after TWP     Month after grace
                                   completed,          period if
                                   provided TWP        disability ends
                                   completed by        due to SGA.
                                   September 30,
                                   2017.
TWP completed and disability did  Month after month   Month after grace
 not end due to SGA.               of assignment to    period if
                                   treatment group.    disability ends
                                                       due to SGA.
TWP completed, disability ended   Month after month   Month after grace
 due to SGA, and grace period      of assignment to    period.
 has not ended.                    treatment group.
TWP completed, disability ended   Month after month   First month of
 due to SGA, grace period has      of assignment to    BOND
 ended, and entitlement has not    treatment group.    participation
 terminated.                                           period.
------------------------------------------------------------------------

When does the BOND participation period end?

    The BOND participation period ends with the earliest of the 
following months:
    <bullet> The 60th month after it begins;
    <bullet> The month before the month the beneficiary ceases to have 
a disabling impairment;\19\
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    \19\ If a beneficiary whose disability has ended due to SGA 
appeals an impairment severity cessation determination and receives 
statutory benefit continuation pending the appeal, the BOND 
participation period may continue during the appeal.
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    <bullet> For a beneficiary in a Stage 2 treatment group, the month 
before the month the beneficiary's withdrawal of consent to participate 
becomes effective;
    <bullet> For a beneficiary entitled to disability insurance 
benefits, the month before the month the beneficiary attains full 
retirement age; or
    <bullet> The month before the month of death.

When will a participant in the Stage 2 Offset and Enhanced Benefits 
Counseling Treatment Group be eligible for counseling services?

    A beneficiary assigned to this Stage 2 treatment group will be 
eligible for enhanced benefits counseling services beginning with the 
month after the month he or she is assigned to this treatment group. 
The beneficiary will continue to be eligible for these services until 
his or her BOND participation period ends. A beneficiary who does not 
complete the TWP by September 30, 2017 and does not qualify for the 
BOND participation period will no longer be eligible for these 
counseling services beginning October 1, 2017.

What happens if a participant in a treatment group does not complete 
the TWP by September 30, 2017?

    A beneficiary in a Stage 1 or Stage 2 treatment group who does not 
complete the TWP by September 30, 2017 will not qualify for the BOND 
participation period and will not be eligible for the benefit offset. 
We will apply our usual title II disability program rules beginning 
October 1, 2017.
    In addition, a beneficiary in the Stage 2 Offset and Enhanced 
Benefits Counseling Treatment Group who does not complete the TWP by 
September 30, 2017 will no longer be eligible for the enhanced benefits 
counseling beginning October 1, 2017.

How will we apply the benefit offset?

    We may apply the benefit offset to reduce monthly SSDI benefits 
beginning with the first month a beneficiary in a treatment group is 
eligible for the offset. A beneficiary who qualifies for the BOND 
participation period and whose disability has ended due to the 
performance of SGA is eligible for the offset beginning with the first 
month after his or her grace period or the first month of his or her 
BOND participation period, whichever is later. A beneficiary is 
eligible for the offset only during his or her BOND participation 
period.
    If a beneficiary is eligible for the offset throughout a calendar 
year, we will determine whether his or her earnings for the year, after 
allowable deductions, exceed the BOND yearly amount to decide whether 
to reduce SSDI benefits payable for months in that year under the 
benefit offset. We will reduce a beneficiary's monthly SSDI benefit 
payments by $1 for every $2 of the beneficiary's yearly earnings that 
are above the applicable BOND yearly amount. If the beneficiary's 
earnings for the year do not exceed the BOND yearly amount, we will not 
reduce his or her SSDI benefits for months in that year under the 
offset.
    The BOND yearly amount for a calendar year is equal to twelve times 
the applicable monthly SGA amount for that year. For example, in 2010, 
the monthly SGA amount is $1,000 for a beneficiary who is not blind and 
$1,640 for a beneficiary who is blind. The BOND yearly amount for 2010 
would be $12,000 for a beneficiary who is not blind and $19,680 for a 
beneficiary who is blind.
    A beneficiary may be eligible for the benefit offset for less than 
an entire calendar year. This situation may occur, for example, in a 
beneficiary's first and last years of eligibility for the offset. In 
this situation, we will prorate the applicable BOND yearly amount for 
the calendar year based on the number of months for which the 
beneficiary is eligible for the offset in that year. We will use the 
prorated BOND yearly amount to decide whether to offset the 
beneficiary's SSDI benefits based on his or her earnings. We will only 
consider the beneficiary's earnings for the period of months for which 
he or she is eligible for the offset in the calendar year and will only 
apply the offset to the benefits payable for months in that period. The 
period of months for which a beneficiary is eligible for the offset in 
a calendar year is his or her ``offset period'' in that year.
    When a beneficiary's offset period is less than the calendar year, 
we will determine whether the beneficiary's earnings for the offset 
period, after allowable deductions, exceed the prorated BOND yearly 
amount to decide whether to reduce SSDI benefits payable for months in 
the offset period. We will reduce a beneficiary's monthly SSDI benefit 
payments for months in his or her offset period by $1 for every $2 of 
the beneficiary's earnings for that period that are above the prorated 
BOND yearly amount. If the beneficiary's earnings for the offset period 
do not exceed the prorated BOND yearly amount, we will not reduce his 
or her SSDI benefits for months in that period under the offset.
    We will decide whether to reduce a beneficiary's monthly SSDI 
benefit payments under the offset and determine the amount by which 
monthly benefits will be reduced (i.e., the monthly offset amount) 
based on a beneficiary's estimate of earnings for the calendar year or 
for the months for which he or she is eligible for the offset in the 
calendar year. A beneficiary who is eligible for the benefit offset 
will provide us with an estimate of earnings after deducting the 
estimated amount of any impairment-related work expenses and any 
earnings that are not counted under our usual SGA rules.\20\
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    \20\ 20 CFR 404.1574-404.1576.

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[[Page 71175]]

    In the example below, we show how we will calculate the amount by 
which monthly SSDI benefit payments will be reduced under the offset 
for a beneficiary who is eligible for the offset throughout a calendar 
year and whose estimated yearly earnings exceed the BOND yearly amount. 
In the example, we use the BOND yearly amount that would apply in 2010 
to a beneficiary who is not blind. However, since the BOND yearly 
amount is equal to twelve times the applicable monthly SGA amount, the 
BOND yearly amount may increase from year to year as a result of 
increases in the applicable SGA amount.\21\ Therefore, the BOND yearly 
amount for 2011, or for a later year, may be higher than the amount 
that would apply in 2010.
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    \21\ 20 CFR 404.1574(b)(2) and 404.1584(d)(3).
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Example

    A beneficiary who is eligible for the offset throughout a calendar 
year provides us with an estimate of his earnings for the year. The 
beneficiary estimates that his yearly earnings, after allowable 
deductions, will be $15,000. The BOND yearly amount is $12,000. The 
beneficiary's estimated yearly earnings exceed the BOND yearly amount 
by $3,000. We will reduce each of the beneficiary's SSDI benefit 
payments for months in the year by $125. The calculations for this 
example are as follows:
    First, we calculate the amount of estimated annual earnings that 
exceed the BOND yearly amount.
[GRAPHIC] [TIFF OMITTED] TN22NO10.023

    Second, we calculate the annual $1 for $2 benefit offset amount by 
dividing the amount of estimated earnings that exceeds the BOND yearly 
amount by 2.

$3,000 / 2 = $1,500 (annual $1 for $2 benefit offset amount)

Finally, we calculate the monthly offset amount by dividing the annual 
offset amount by 12 months.

$1,500 / 12 = $125 (monthly $1 for $2 benefit offset amount)

    For the purposes of the BOND project, we will round the monthly 
benefit offset amount resulting from the calculations above up to the 
nearest dime.
    In determining when wages will be counted as earnings for purposes 
of applying the benefit offset, we will count a beneficiary's wages as 
earnings at the earliest of the following times:
    <bullet> When the beneficiary receives the wages;
    <bullet> When they are credited to the beneficiary's account; or
    <bullet> When they are set aside for the beneficiary's use.
    If the beneficiary is self-employed, we count net earnings from 
self-employment on a taxable year basis. However, we divide the total 
of these earnings equally among the months in the taxable year to get 
the beneficiary's earnings for each month. For example, if the 
beneficiary's net earnings from self-employment for a taxable year are 
$2,400, we consider that the beneficiary received $200 in each month. 
If the beneficiary has net losses from self-employment, we divide them 
over the taxable year in the same way, and we deduct them only from the 
beneficiary's other earned income.
    We will perform an end-of-year reconciliation after the close of 
each calendar year in which a beneficiary was eligible for the benefit 
offset. We will determine the actual amount of the beneficiary's 
earnings, after allowable deductions, for the calendar year (or for 
those months for which the beneficiary was eligible for the offset in 
the year) to decide if he or she was paid more or less in benefits than 
was due under the offset. We will make appropriate adjustments to 
future benefit payments if we determine that we paid the beneficiary 
too much or too little in benefits under the offset. We will send the 
beneficiary a written notice of our determination that will provide 
appeal rights.

What happens to the payment of benefits to other persons entitled on 
the earnings record of a beneficiary whose SSDI benefits are subject to 
the offset?

    If any other person(s) is entitled to benefits on the earnings 
record of a beneficiary whose SSDI benefits are subject to the offset, 
we will pay the other person(s) the full amount of monthly cash 
benefits that he or she is otherwise due for any month for which the 
beneficiary is eligible for payment of a reduced SSDI benefit under the 
offset. However, we will not pay benefits to the other person(s) for 
any month for which the beneficiary's SSDI benefit is reduced to zero 
under the offset.

What happens to the reentitlement period of a beneficiary who qualifies 
for the BOND participation period?

    The BOND participation period replaces a beneficiary's 
reentitlement period or supplements it if the reentitlement period 
ended in or before the month of the beneficiary's assignment to a 
treatment group. The BOND participation period will:
    <bullet> Replace the reentitlement period if a beneficiary 
completes the TWP in or after the month of assignment to a treatment 
group and on or before September 30, 2017 (subject to the exception 
below);
    <bullet> Replace any remaining months of the reentitlement period 
if a beneficiary completed the TWP and his or her reentitlement period 
did not end in or before the month of assignment to a treatment group 
(subject to the exception below); or
    <bullet> Provide an additional period for a beneficiary to test his 
or her ability to work if the beneficiary completed the TWP and his or 
her reentitlement period ended in or before the month of assignment to 
a treatment group.
    Exception: If a beneficiary's BOND participation period ends before 
his or her reentitlement period would have ended under the usual rules, 
the beneficiary will be eligible under the usual rules for whatever 
months of his or her reentitlement period remain after the BOND 
participation period ends.

What happens when a beneficiary's BOND participation period ends?

    We will apply our usual title II disability program rules beginning 
with the first month after his or her BOND participation period ends. 
If a beneficiary works after the BOND participation period ends, we 
will review the beneficiary's work and earnings under our usual rules 
to decide

[[Page 71176]]

if the work is SGA. We will apply the same rules that we would apply to 
a beneficiary who works after his or her reentitlement period ends, 
including the rules for terminating entitlement to SSDI benefits if the 
work is SGA.\22\ However, under the exception described in the previous 
section, a beneficiary may be eligible for one or more months of the 
reentitlement period after his or her BOND participation period ends. 
In this situation, we will consider any work the beneficiary performs 
in any remaining months of his or her reentitlement period under the 
usual rules that we apply to a beneficiary who works during the 
reentitlement period.\23\ In either situation, we will use the 
following rules to decide whether the work performed by a beneficiary 
after the BOND participation period ends is SGA:
---------------------------------------------------------------------------

    \22\ 20 CFR 404.1592a(a)(3).
    \23\ 20 CFR 404.1592a(a)(1) and (2).
---------------------------------------------------------------------------

    <bullet> If the beneficiary's disability ended due to SGA before or 
during the BOND participation period, we will decide whether this work 
is SGA under our usual rules for evaluating whether work performed 
after the grace period is SGA.\24\ We will not apply the rules on 
averaging of earnings or unsuccessful work attempts.\25\
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    \24\ 20 CFR 404.1592a(a)(2)(i) and (3)(i).
    \25\ Id.
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    <bullet> If the beneficiary's disability has not ended due to SGA, 
we will decide whether the work is SGA under our usual rules for 
evaluating whether work is SGA for purposes of determining if 
disability has ended, including the rules on averaging of earnings and 
unsuccessful work attempts.\26\
---------------------------------------------------------------------------

    \26\ 20 CFR 404.1592a(a)(1) and (3)(ii).
---------------------------------------------------------------------------

When will the period of disability end for a BOND participant entitled 
to disability insurance benefits?

    We will apply our usual title II disability program rules to 
determine when the period of disability ends for a participant in a 
treatment group who does not complete the TWP by September 30, 2017 or 
whose disability does not end due to the performance of SGA before the 
end of his or her BOND participation period. See the section ``Period 
of disability for an insured worker'' for our usual rules on when a 
period of disability ends.
    We will apply the following alternate rules to determine when the 
period of disability ends for a disability insurance beneficiary in a 
treatment group whose disability ended due to SGA before or during his 
or her BOND participation period.
    1. The beneficiary's period of disability will end with the close 
of the earliest of the following months:
    <bullet> The month before the month he or she attains full 
retirement age;
    <bullet> The month before his or her termination month; or
    <bullet> The last month for which he or she received a benefit 
payment if his or her monthly benefits were reduced to zero under the 
benefit offset for each month thereafter up to his or her termination 
month.
    2. For purposes of determining when his or her period of disability 
ends, the beneficiary's termination month will be the earlier of the 
following months:
    <bullet> The third month following the month in which he or she no 
longer has a disabling impairment; or
    <bullet> The first month in which he or she performs SGA following 
his or her BOND participation period or, if later, the month after the 
grace period.

Will the alternate rules under the BOND project affect a beneficiary's 
Medicare coverage?

    The alternate program rules that we will apply to a beneficiary in 
a treatment group will not affect his or her Medicare eligibility. A 
beneficiary who is under age 65 and who has been entitled to SSDI 
benefits for 24 months is entitled to Hospital Insurance under the 
Medicare program (Medicare Part A).\27\ Entitlement to Medicare 
coverage generally continues as long as a beneficiary's entitlement to 
SSDI benefits continues. However, a beneficiary whose entitlement to 
SSDI benefits terminates due to the performance of SGA and who 
continues to have a disabling impairment may be entitled to extended 
Medicare coverage for a period of at least 93 months following the end 
of his or her TWP. Under the Act, the period of extended Medicare 
coverage is determined as if the beneficiary had a 15-month 
reentitlement period following the end of his or her TWP.\28\ This rule 
for determining the period of extended Medicare coverage will continue 
to apply to an SSDI beneficiary who is in a BOND treatment group and 
entitled to Medicare.
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    \27\ Section 226(b) of the Act; 42 CFR 406.12.
    \28\ Id.
---------------------------------------------------------------------------

May a beneficiary in a Stage 2 treatment group withdraw from the BOND 
project?

    A beneficiary in a Stage 2 treatment group may withdraw his or her 
consent to participate in the BOND project at any time in writing. A 
beneficiary who wishes to withdraw his or her consent to participate 
will work with Abt Associates to facilitate his or her withdrawal from 
the project. A beneficiary in a Stage 2 treatment group who withdraws 
his or consent to participate will no longer be eligible for the 
alternate program rules or any project services available under the 
BOND project. We will continue to track the beneficiary for project 
evaluation using administrative data. We will apply our usual program 
rules to the beneficiary beginning with the month his or her withdrawal 
from the project becomes effective.

Ticket to Work Program

    We issue tickets to disability beneficiaries, which they may use to 
obtain services from service providers under the Ticket to Work 
program. A beneficiary may assign his or her ticket to a qualified 
service provider to obtain employment services to find, enter, and 
retain employment.\29\ A qualified service provider is an Employment 
Network (EN) or a State vocational rehabilitation agency that qualifies 
to receive EN payments from us.\30\ We pay a qualified service 
provider, to which a beneficiary has assigned a ticket, for certain 
outcomes achieved by the beneficiary.\31\ We may pay an outcome payment 
to a qualified service provider for each month for which SSDI benefits 
and Federal SSI are not payable to the beneficiary because of the 
performance of SGA or by reason of earnings from work activity.\32\ If 
the beneficiary is an SSDI-only or concurrent SSDI/SSI beneficiary, we 
may pay outcome payments for a maximum of 36 months, not necessarily 
consecutive.\33\
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    \29\ Section 1148 of the Act; 20 CFR part 411.
    \30\ 20 CFR 411.135.
    \31\ 20 CFR part 411, subpart H.
    \32\ Section 1148(h) of the Act; 20 CFR 411.500, 411.525, and 
411.575.
    \33\ 20 CFR 411.500 and 411.525.
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Alternate Rule for Paying Outcome Payments Under the Ticket to Work 
Program

    We will apply an alternate rule for paying outcome payments to a 
qualified service provider that has been assigned a ticket by an SSDI-
only or concurrent SSDI/SSI beneficiary in a BOND treatment group. We 
will pay an outcome payment to the provider for each month for which 
the beneficiary's SSDI benefits are reduced under the benefit offset 
and Federal SSI is not payable by reason of earnings from work 
activity. We will apply this alternate rule for paying outcome payments 
only during a beneficiary's BOND participation period. We will apply 
our usual rule for paying outcome payments

[[Page 71177]]

beginning with the first month after a beneficiary's BOND participation 
period ends. We will continue to limit the number of months for which 
outcome payments may be made based on the same ticket to a maximum of 
36 months. We will count any month for which we pay an outcome payment 
under the alternate rule or our usual rule toward this 36-month limit.

What is our authority for conducting the BOND project?

    We are conducting the BOND project under the demonstration 
authority in section 234 of the Act. This section of the Act directs us 
to carry out experiments and demonstration projects to determine the 
relative advantages and disadvantages of, among other approaches, 
various alternative methods of treating the work activity of 
individuals entitled to title II benefits based on disability, 
including such methods as a reduction in benefits based on earnings. 
Section 234 of the Act authorizes us to waive compliance with the 
benefit requirements of title II of the Act and the requirements of 
section 1148 of the Act (concerning the Ticket to Work program) as they 
relate to the title II program, insofar as is necessary for a thorough 
evaluation of the alternative methods under consideration.

What provisions of the Act and regulations are we waiving to provide 
alternate rules under the BOND project?

Alternate Title II Program Rules

    Under the Act and our regulations, we provide an SSDI beneficiary 
with a disabling impairment a 36-month reentitlement period following 
the completion of the TWP during which the beneficiary's entitlement to 
benefits continues even if the beneficiary is performing SGA. However, 
we do not pay benefits to the disability beneficiary or any other 
person entitled to benefits on his or her earnings record for any month 
after the grace period and during the reentitlement period in which the 
disability beneficiary performs SGA. In determining whether a 
beneficiary performs SGA in a month after the grace period, we consider 
only his or her work in or earnings for that month. We terminate 
entitlement to benefits if the disability beneficiary performs SGA 
after the reentitlement period. In addition, we provide a disability 
insurance beneficiary a period of disability to protect his or her 
earnings record. We terminate the beneficiary's period of disability 
when his or her entitlement to cash benefits terminates or, if earlier, 
with the last month for which he or she received cash benefits during 
the reentitlement period. Sections 202(d)(1), (d)(6), (e)(1), and 
(f)(1), 216(i)(2)(D), and 223(a)(1) and (e) of the Act; 20 CFR 
404.316(d), 404.321(c), 404.325, 404.337(d), 404.352(e), 404.401a, and 
404.1592a.
    We are waiving these provisions of the Act and regulations to the 
extent necessary to provide the alternate title II program rules 
described in this notice to beneficiaries in the BOND treatment groups. 
(See the section ``Alternate Title II Program Rules for Participants in 
the Benefit Offset Treatment Groups'' for the rules we will apply.) In 
general, under the alternate program rules, we will provide the 
following to an SSDI beneficiary assigned to a treatment group who 
completes the TWP by September 30, 2017:
    <bullet> A BOND participation period of up to 60 months beginning 
with the month after completion of the TWP or the month after 
assignment to a treatment group, whichever is later;
    <bullet> Eligibility for the benefit offset during a beneficiary's 
BOND participation period beginning with the month after the grace 
period or the first month of the BOND participation period, whichever 
is later;
    <bullet> Payment of SSDI benefits, subject to reduction under the 
benefit offset, for months for which the SSDI beneficiary is eligible 
for the benefit offset (see the section ``How will we apply the benefit 
offset?'' for the rules we will apply);
    <bullet> Payment of benefits to any other person entitled to 
benefits on the earnings record of the SSDI beneficiary for any month 
for which the beneficiary's SSDI benefits are reduced under the benefit 
offset, unless SSDI benefits are reduced to zero under the offset;
    <bullet> Termination of a disability insurance beneficiary's period 
of disability with the close of the last month for which he or she 
received a benefit payment if his or her monthly benefits were reduced 
to zero under the benefit offset for each month thereafter up to the 
month his or her entitlement to cash benefits terminated; and
    <bullet> Application of our usual program rules beginning with the 
month after the BOND participation period ends.

Alternate Rule for Paying Outcome Payments Under the Ticket to Work 
Program

    Under the Ticket to Work program, we pay a qualified service 
provider, to which a disability beneficiary has assigned a ticket, for 
certain outcomes achieved by the beneficiary. We may pay an outcome 
payment to a qualified service provider for each month for which SSDI 
benefits and Federal SSI are not payable to the beneficiary because of 
the performance of SGA or by reason of earnings from work activity. If 
the beneficiary is an SSDI-only or concurrent SSDI/SSI beneficiary, we 
may pay outcome payments for a maximum of 36 months, not necessarily 
consecutive. Section 1148(h) of the Act; 20 CFR 411.500(b)-(e), 
411.525(a)(1)(i), and 411.575(b)(1)(i)(A).
    We are waiving this section of the Act and these provisions of our 
regulations to the extent necessary to provide the alternate rule 
described in this notice for paying outcome payments to a qualified 
service provider to which a beneficiary in a treatment group has 
assigned a ticket. In general, under the alternate rule, a qualified 
service provider will be eligible for an outcome payment for each month 
(up to a maximum of 36) for which the beneficiary's SSDI benefits are 
reduced under the benefit offset and Federal SSI are not payable by 
reason of earnings from work activity.

    Authority: Section 234 of the Act.

    Dated: November 12, 2010.
Michael J. Astrue,
Commissioner of Social Security.
[FR Doc. 2010-29350 Filed 11-19-10; 8:45 am]
BILLING CODE 4191-02-P


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