U.S. GOVERNMENT PRINTING OFFICE

66–686 CC WASHINGTON : 2000

WORK INCENTIVES FOR BLIND AND DISABLED

SOCIAL SECURITY BENEFICIARIES

HEARING

BEFORE THE

SUBCOMMITTEE ON SOCIAL SECURITY

OF THE

COMMITTEE ON WAYS AND MEANS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MARCH 23, 2000

Serial 106–56

Printed for the use of the Committee on Ways and Means

(

ii

COMMITTEE ON WAYS AND MEANS

BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois

BILL THOMAS, California

E. CLAY SHAW, JR., Florida

NANCY L. JOHNSON, Connecticut

AMO HOUGHTON, New York

WALLY HERGER, California

JIM MCCRERY, Louisiana

DAVE CAMP, Michigan

JIM RAMSTAD, Minnesota

JIM NUSSLE, Iowa

SAM JOHNSON, Texas

JENNIFER DUNN, Washington

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

PHILIP S. ENGLISH, Pennsylvania

WES WATKINS, Oklahoma

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

SCOTT MCINNIS, Colorado

RON LEWIS, Kentucky

MARK FOLEY, Florida

CHARLES B. RANGEL, New York

FORTNEY PETE STARK, California

ROBERT T. MATSUI, California

WILLIAM J. COYNE, Pennsylvania

SANDER M. LEVIN, Michigan

BENJAMIN L. CARDIN, Maryland

JIM MCDERMOTT, Washington

GERALD D. KLECZKA, Wisconsin

JOHN LEWIS, Georgia

RICHARD E. NEAL, Massachusetts

MICHAEL R. MCNULTY, New York

WILLIAM J. JEFFERSON, Louisiana

JOHN S. TANNER, Tennessee

XAVIER BECERRA, California

KAREN L. THURMAN, Florida

LLOYD DOGGETT, Texas

A.L. SINGLETON, Chief of Staff

JANICE MAYS, Minority Chief Counsel

SUBCOMMITTEE ON SOCIAL SECURITY

E. CLAY SHAW, JR., Florida, Chairman

SAM JOHNSON, Texas

MAC COLLINS, Georgia

ROB PORTMAN, Ohio

J.D. HAYWORTH, Arizona

JERRY WELLER, Illinois

KENNY HULSHOF, Missouri

JIM MCCRERY, Louisiana

ROBERT T. MATSUI, California

SANDER M. LEVIN, Michigan

JOHN S. TANNER, Tennessee

LLOYD DOGGETT, Texas

BENJAMIN L. CARDIN, Maryland

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records

of the Committee on Ways and Means are also published in electronic form. The printed

hearing record remains the official version. Because electronic submissions are used to

prepare both printed and electronic versions of the hearing record, the process of converting

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process

is further refined.

iii

C O N T E N T S

Page

Advisories announcing the hearing ........................................................................ 2

WITNESSES

Social Security Administration, Susan Daniels, Ph.D., Deputy Commissioner,

Disability and Income Security Programs ......................................................... 8

U.S. General Accounting Office, Barbara D. Bovbjerg, Associate Director,

Education, Workforce and Income Security Issues, Health, Education and

Human Services Division; accompanied by Carol Petersen, Assistant Director, Education, Workforce and Income Security Issues; Health, Education

and Human Services Division ............................................................................. 24

Arc of the United States:

William R. VanOoteghem, Essexville, MI ...................................................... 77

Wendy VanOoteghem, Essexville, MI ............................................................. 78

Consortium for Citizens with Disabilities, and NISH, Tony Young .................... 87

Ehrlich, Hon. Robert L., Jr., a Representative in Congress from the State

of Maryland .......................................................................................................... 6

Gillis, Brenda-Ann, Stuart, FL ............................................................................... 38

Hanes, Pamela, Oregon Health Policy Institute, Oregon Health Sciences University ................................................................................................................... 80

Life In Time Consultation Services, Inc., David E. Gallagher ............................. 72

Louisiana Center for the Blind, Joanne Wilson .................................................... 42

National Federation of the Blind, James Gashel .................................................. 51

Cavenaugh, Brenda, Rehabilitation Research and Training Center on Blindness and Low Vision, Mississippi State University .......................................... 45

SUBMISSIONS FOR THE RECORD

American Council of the Blind:

Charles H. Crawford, letter ............................................................................. 116

Jenine Stanley, letter ....................................................................................... 117

American Network of Community Options and Resources, Annandale, VA.

statement .............................................................................................................. 118

Davis, Richard L., Bay City, MI, letter .................................................................. 119

English, Hon. Philip, a Representative in Congress from the State of Pennsylvania, letter .......................................................................................................... 120

National Alliance for the Mentally Ill, Arlington, VA, Michael Freedman,

statement .............................................................................................................. 120

Nussle, Hon. Jim, a Representative in Congress from the State of Iowa,

statement .............................................................................................................. 123

Paralyzed Veterans of America, statement ........................................................... 124

Protection & Advocacy, Inc., Los Angeles, CA ...................................................... 126

(1)

WORK INCENTIVES FOR BLIND AND

DISABLED SOCIAL SECURITY BENEFICIARIES

THURSDAY, MARCH 23, 2000

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

SUBCOMMITTEE ON SOCIAL SECURITY,

Washington, DC.

The Subcommittee met, pursuant to notice, at 10:00 a.m., in

room 1100 Longworth House Office Building, Hon. E. Clay Shaw,

Jr. (Chairman of the Subcommittee) presiding.

[Advisories announcing the hearing follow:]

2

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE

March 15, 2000

No. SS–12

Shaw Announces Hearing on

Work Incentives for Blind and Disabled

Social Security Beneficiaries

Congressman E. Clay Shaw, Jr., (R–FL), Chairman, Subcommittee on Social Security of the Committee on Ways and Means, today announced that the Subcommittee

will hold a hearing examining work incentives in the Social Security disability program for those who are blind and those with other disabilities. The hearing will

take place on Thursday, March 23, 2000, in room B–318 Rayburn House Office Building, beginning at 10:00 a.m.

In view of the limited time available to hear witnesses, oral testimony at this

hearing will be from invited witnesses only. Witnesses will include policy experts

and advocates for blind and disabled individuals as well as beneficiaries who have

been affected by these policies. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by

the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

Social Security provides benefits for individuals who are blind or disabled and unable to work because of their medical conditions. To qualify for benefits, an individual must be unable to perform work for pay due to any medically determinable

physical or mental impairment. A person is considered able to work or engage in

substantial gainful activity (SGA) if earning at or above a certain dollar level

(known as the SGA level). The SGA test applies to both determining initial and continuing eligibility for benefits.

Prior to 1977, all disability beneficiaries, as well as blind beneficiaries, were subject to the same SGA limit, established in regulation by the Social Security Administration. The Social Security Amendments of 1977 (P.L. 95–216) increased the

amount of the SGA limit for blind beneficiaries to the same amount as the age 65

earnings limit, but did not change the SGA limit for all other disabled beneficiaries.

The Contract with America Advancement Act of 1996 (P.L. 104–121) increased the

age 65 earnings limit, but did not change current law with respect to the blind.

In 2000, the SGA limit for blind beneficiaries is $1,170 per month and this

amount is indexed annually for wage growth. The limit for non-blind disability beneficiaries was increased from $500 to $700 per month in July 1999, after remaining

at the same level for the past 10 years.

In announcing the hearing, Chairman Shaw stated: ‘‘We should do all we can so

every disabled worker has opportunities and incentives to stay in the workforce. Everyone wants that. That is what the Ticket to Work legislation passed last year was

all about. But we need to do more. This hearing will help to show us the way.’’

3

FOCUS OF THE HEARING:

The hearing will focus on the role of earnings in determining initial and continuing eligibility for disability benefits, a review of the differences in current law for

blind individuals and those who have other disabilities, and an assessment of costs

and employment experiences of individuals who are blind and individuals with other

disabilities.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Any person or organization wishing to submit a written statement for the printed

record of the hearing should submit six (6) single-spaced copies of their statement,

along with an IBM compatible 3.5-inch diskette in WordPerfect or MS Word format,

with their name, address, and hearing date noted on a label, by the close of business,

Thursday, April 6, 2000, to A.L. Singleton, Chief of Staff, Committee on Ways and

Means, U.S. House of Representatives, 1102 Longworth House Office Building,

Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Social Security

office, room B–316 Rayburn House Office Building, by close of business the day before the hearing.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement

or exhibit submitted for the printed record or any written comments in response to a request

for written comments must conform to the guidelines listed below. Any statement or exhibit not

in compliance with these guidelines will not be printed, but will be maintained in the Committee

files for review and use by the Committee.

1. All statements and any accompanying exhibits for printing must be submitted on an IBM

compatible 3.5-inch diskette in WordPerfect or MS Word format, typed in single space and may

not exceed a total of 10 pages including attachments. Witnesses are advised that the Committee

will rely on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing.

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material

not meeting these specifications will be maintained in the Committee files for review and use

by the Committee.

3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments

by the Committee, must include on his statement or submission a list of all clients, persons,

or organizations on whose behalf the witness appears.

4. A supplemental sheet must accompany each statement listing the name, company, address,

telephone and fax numbers where the witness or the designated representative may be reached.

This supplemental sheet will not be included in the printed record.

The above restrictions and limitations apply only to material being submitted for printing.

Statements and exhibits or supplementary material submitted solely for distribution to the

Members, the press, and the public during the course of a public hearing may be submitted in

other forms.

Note: All Committe advisories and news releases are avaailable on the World

Wide Web at ‘‘HTTP://WAYSANDMEANS.HOUSE.GOV’’.

The Committee seeks to make its facilities accessible to persons with disabilities.

If you are in need of special accommodations, please call 202–225–1721 or 202–226–

3411 TTD/TTY in advance of the event (four business days notice is requested).

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

4

NOTICE—CHANGE IN LOCATION

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON SOCIAL SECURITY

FOR IMMEDIATE RELEASE CONTACT: (202) 225–9263

March 16, 2000

No. SS–12-Revised

Change in Location for Subcommittee Hearing on

Work Incentives for Blind and Disabled

Social Security Beneficiaries

Thursday, March 23, 2000

Congressman Clay Shaw, Jr., (R–FL), Chairman of the Ways and Means Subcommittee on Social Security, today announced that the Subcommittee hearing on

examining work incentives in the Social Security disability program for those who

are blind and those with other disabilities, previously scheduled for Thursday,

March 23, 2000, at 10:00 a.m., in room B–318 of the Rayburn House Office Building,

will now be held in the main Committee hearing room, 1100 Longworth

House Office Building.

All other details for the hearing remain the same. (See Subcommittee press release No. SS–12, dated March 15, 2000.)

Chairman SHAW. Today, the Subcommittee is considering how

best to encourage work and earnings for a special group, and that

is people with disabilities. We have already taken some major steps

to encourage work through last year’s Ticket to Work law. This law

will better help beneficiaries prepare for work and keep jobs. It extends health care coverage, encourages service providers to focus on

results, and maintains the safety net for those who need it. But we

can’t stop there. Fortunately, as we consider ways to further improve the disability program, there is much we already agree on.

Let us focus on that.

We all agree that federal programs should promote work and

self-sufficiency. We all agree everyone should be offered a ‘‘hand

up’’ rather than a ‘‘handout’’. And we all agree disability programs

must protect those who are simply too disabled to work.

Our commitment to the Ticket law establishes exactly that, but

each of us must also consider some tough questions as we listen to

today’s witnesses. For example, are proposed changes consistent

with the purposes of the disability program? Are they fair to all

disabled beneficiaries as well as to current workers whose hardVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
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earned wages support the program? And will they threaten the disability program’s safety net, which already will start running in

the red by 2006?

Despite these challenges, I am convinced that we can do more to

encourage work. Ronald Reagan once said, ‘‘The very key to our

success has been our ability, foremost among nations, to preserve

our lasting values by making change work for us rather than

against us’’. Especially with complicated government disability programs, such change never occurs easily. But that is all the more

reason for us to dig in and get to the bottom of the issues that have

kept others from doing more to help every disabled person who

wants to work.

And I will now yield such time as he may consume to the gentleman from California, Mr. Matsui.

Mr. MATSUI. Thank you very much, Mr. Chairman, I appreciate

your yielding to me, and appreciate the fact that you are holding

this hearing.

Over the past year, the Congress has made significant bipartisan

progress in ensuring that the Social Security program encourages

people to participate fully in the nation’s economy and provides

them with incentives to join, return to or remain in the workforce.

At the end of last year, the Congress passed on a bipartisan basis

and the President signed into law the Ticket to Work and Work Incentives Act. The Ticket to Work Act assists disability beneficiaries

attempting to return to work or who are struggling to remain in

the workforce by expanding their access to public and private vocation rehabilitation providers, extending the period for which they

are eligible for Medicare coverage, and creating new options for

states to allow individuals with disabilities to purchase Medicaid.

Just three weeks ago, the House unanimously passed a bipartisan legislation to repeal the Earnings Test for Social Security beneficiaries who have attained the normal age of retirement. H.R. 5 allows the most experienced members of our workforce, our nation’s

senior citizens, to continue work without experiencing a reduction

in their Social Security benefits. Despite this progress, we can still

do more to look at Social Security programs to see where we can

improve the ability of beneficiaries to take part in the workforce.

As we all know, we are in an environment of budget constraints.

On the one hand, we have a limit on budget surplus and budget

resolutions that we are going to discuss today that will challenge

our ability to fund health, education and social programs while allowing for tax cuts. And on the other hand, we have a Social Security surplus that we will set aside for debt reduction and help us

pay for the benefits in the future.

We are determined to do our best for Social Security recipients

and to explore ways to improve their ability to participate in the

labor force while working within our budget limits. One such avenue is a requirement in the Ticket to Work and the Work Incentives Act that the Social Security Administration conduct demonstration projects on possible modification on earnings limitation

for the disabled.

In addition, the bill mandates a GAO study on the topic as well.

The information that we will receive on these two initiatives will

6

be very useful and helpful to our investigation into the costs and

effectiveness of various incentive policies.

Today, I look forward to the testimony of the representatives

from the Social Security Administration and the GAO, and I am

eager to hear from disability beneficiaries about the impact that

possible work incentive policies may have on them.

In the end, enhanced work incentives in the Social Security program benefit more than the disability community themselves, they

benefit the country as a whole.

I look forward to working with Chairman Shaw and the other

members of the Subcommittee to make the most of this very, very

important opportunity. Thank you.

Chairman SHAW. Thank you, Bob.

Because of the length of our agenda today, I am going to try to

hold all the witnesses within the five-minute limit. Each person to

testify this morning, we have your full statement that will be made

a part of the record, and we would hope that you can summarize

within the time allotted, and I would hope we can have everyone’s

cooperation on that.

Our first witness is Member from the State of Maryland. Mr.

Ehrlich.

STATEMENT OF THE HON. ROBERT L. EHRLICH, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MARYLAND

Mr. EHRLICH. Thank you, Mr. Chairman. I will certainly hold to

the daily rule with respect to the five-minute limitation. I really

appreciate the opportunity to briefly highlight my written testimony which I submitted for the record, and I am not going to read

it.

Members of this Committee, particularly the Chairman, know

this issue very well. And, again, I thank you for this opportunity

today.

Very briefly, Mr. Chairman, a couple of points I would like to hit

with respect to history and the facts and the sponsorship, and then

a final plea with regard to this particular issue.

The Chairman and Members of the Subcommittee are well aware

of the history of the Social Security limitation and the linkage between seniors and the blind. It occurred in the 1970s, the original

linkage came out of this Committee.

As part of the Contract With America, in fact, the senior citizens’

earnings limitation was phased in over five years from $11,000 to

$30,000. At that time, however, not because of any compelling policy reasons, but because of the need to balance the budget, there

was a de-linkage. Seniors and the blind were de-linked.

It has been that case now for the past four years. This year,

given the great work of this Committee, the Subcommittee and the

full Committee, and now the House, with respect to the seniors’

limitation, I thought the time would be good with respect to doing

something for the blind.

The Chairman is well aware that at least past leadership has

made representations to the blind community with regard to ‘‘fixing’’ this linkage problem, and I am truly hopeful that the ChairVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
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man, the Subcommittee and the full Committee will follow through

on that promise made a number of years ago.

The Chairman is well familiar with the facts. During a time of

technological innovation, a steaming economy, very low unemployment, the blind suffer from a 70-percent unemployment rate. The

primary reason, in my view and in the view of the folks you are

going to hear today, is the ‘‘disincentives’’ built into the code with

respect to this earnings limitation.

H.R 1601 has over 280 bipartisan co-sponsors in this House.

Nineteen Members of the Ways and Means Committee co-sponsor

this bill.

Mr. Chairman, we can talk about policy. We can talk about equity. I believe that to at least re-link the blind with the seniors regardless of what happens with regard to the senior bill, whether

that is a clean bill or whether it comes back from the Senate with

a phase-in, or whatever, is the right thing to do. These are people

who want to work. Given the technology we have in this country

today, they can work. I think this Congress should all be about empowering people who simply want to work, and whether it is the

Social Security Act, whether it is our Code that provides the disincentive, I believe it is incumbent upon this Congress to remove

those disincentives from the law.

I truly thank you for your interest. I know your personal interest

in this issue. I thank you for the time today, and I am going to let

the folks who are impacted by this inequity in our law testify before the Committee. And, again, I thank you, and yield back.

[The prepared statement follows:]

Statement of the Hon. Robert L. Ehrlich, Jr., a Representative in Congress

from the State of Maryland

Good morning, Mr. Chairman and Members of the Subcommittee. I appreciate the

opportunity to talk to you about eliminating a work disincentive for blind Americans. As many of you know, I have repeatedly introduced and pushed for passage

of legislation to restore work incentives for the blind. Last year I introduced H.R.

1601, the Blind Empowerment Act (BEA). This bipartisan bill has more than 280

co-sponsors. This legislation could positively impact as many as a quarter million

blind Americans.

For nearly twenty years, the blind and senior citizens were linked for the purposes of the Social Security Earnings Test. In 1996, this historic link was broken,

not to make a significant policy change, but to balance the budget. Under that legislation, Congress provided seniors with an opportunity to increase their earnings to

$30,000 by 2002 without losing their Social Security benefits; however, blind individuals were limited to earnings of approximately $14,000 in calendar year 2000.

Blind individuals who earn more than this earnings limit threshold lose all of their

benefits. In contrast, a senior citizen in the same situation has their benefits reduced at a rate of $1 for every $3 earned over the limit.

To be sure, this lower threshold and complete loss of benefits for the blind creates

major disincentives to work. Presently, the unemployment rate for the blind is approximately 70%. In effect, Congress penalizes blind workers for trying to improve

their quality of life for themselves and their families. This is unacceptable. Congress

should encourage, not discourage, blind individuals to work.

My legislation (H.R. 1601) accomplishes this. Specifically, my bill removes the existing disincentives by re-linking the blind with the seniors. Most importantly, H.R.

1601 restores fairness for the blind by honoring the co-sponsors’ pledge for parity

with senior workers.

The Ways and Means Committee recently voted to repeal the earnings limitation

for seniors. Shortly thereafter, the House overwhelmingly affirmed this repeal and

the Senate has likewise done the same. I strongly support the repeal of the seniors

earnings limitation. I do believe, however, that Congress has a responsibility to restore fairness and work incentives for the blind. By adopting H.R. 1601 this ComVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
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mittee can accomplish this goal. I urge you to take this opportunity and help blind

Americans to reach their full working potential. I pledge to continue my efforts on

behalf of all blind Americans.

Again, Mr. Chairman, thank you for affording me the opportunity to testify before

the Social Security Subcommittee.

Chairman SHAW. Thank you, Bob. Mr. Matsui?

Mr. MATSUI. I have no questions. I would like to thank Mr. Ehrlich.

Chairman SHAW. Mr. Doggett?

Mr. DOGGETT. No questions.

Chairman SHAW. Well, I do know you have talked to me on numerous occasions. I know your interest in this issue, and we appreciate your being here this morning.

Mr. EHRLICH. Thank you, Mr. Chairman. I am going to get to my

Commerce markup before the Chairman gets angry at me. Thank

you.

Chairman SHAW. We next have a panel of witnesses from the Social Security Administration. We have Dr. Susan Daniels, Deputy

Commissioner, Disability and Income Security Programs; and from

the U.S. General Accounting Office, Barbara Bovbjerg, Associate

Director, Education, Workforce and Income Security Issues, Health,

Education and Human Services Division; and she is accompanied

by Carol Petersen, who is the Assistant Director of the Education,

Workforce and Income Security Issues, Health, Education and

Human Services Division.

Dr. Daniels, I beg your pardon. I put everybody together, and

that is not the way it is supposed to be this morning. So, everyone

can remain at the table, but we will start out with Dr. Daniels and

go to questioning, and then get to the other witnesses from the

United States General Accounting Office. Dr. Daniels.

STATEMENT OF SUSAN DANIELS, PH.D., DEPUTY COMMISSIONER, DISABILITY AND INCOME SECURITY PROGRAMS,

SOCIAL SECURITY ADMINISTRATION

Dr. DANIELS. Mr. Chairman, there certainly are enough chairs up

here, so anyone could join if they would like to.

Mr. Chairman, Members of the Subcommittee, thank you so

much for inviting me here today to talk about the work incentives

for blind individuals and other people with disabilities.

The Social Security Act defines disability as the inability to engage in any substantial gainful activity (SGA) due to a medically

determinable physical or mental impairment. We use how much a

person earns as a guideline for evaluating whether work is substantial and gainful, and whether we may consider them eligible

for benefits.

Blindness, sometimes referred to as statutory blindness, is the

only impairment defined in the Act itself; all other impairments are

defined by regulation.

The Social Security Administration has approximately 120,000

statutorily blind individuals on our rolls, about 100,000 of them on

Disability Insurance.

9

How do we determine if a person is actually working? For most

individuals, that is done through regulation, and since July 1999

the SGA amount has been $700. For individuals who are blind, the

Act itself specifies the computation of the SGA amount, and since

January 2000 that has been $1,170 a month. Prior to 1978, the

SGA amount for the blind and nonblind were identical. The Social

Security amendments of 1977 linked the SGA amount for individuals who are blind and the retirement earnings test. The SGA

amount for individuals who are blind and the retirement earnings

test rose from $334 a month in 1978 to $980 a month in 1995. For

the nonblind, the SGA amount rose from $260 a month in 1978 to

$500 a month in 1995.

The Contract With America Advancement Act in 1996 significantly increased the retirement earnings test and de-linked the

SGA amount for individuals who are blind from that test, and it

indexed the then-SGA amount for individuals who are blind to average wage growth. Meanwhile, SSA increased the SGA for

nonblind individuals to $700 a month last summer.

The Social Security disability programs that we administer may

not be the exclusive and permanent source of income for all beneficiaries, but they can be a stepping stone to improve the economic

conditions of people with disabilities through Return to Work initiatives.

There are several work incentives in both the SSI program and

in the Disability Insurance program, which were further enhanced

by the Ticket to Work and Work Incentives Improvement Act of

1999.

We also refer individuals with disabilities to private and public

vocational rehabilitation programs. Last year, Social Security reimbursed State Vocational Rehabilitation agencies $120 million for

the rehabilitation of over 11,000 beneficiaries.

As you well know, you have worked two hard years on producing

legislation to improve the work incentives. Your success culminated

in the President signing the Ticket to Work and Work Incentives

Improvement Act into law last December. I want to express my

thanks to you, Mr. Chairman, and to all members of this Committee for getting that important piece of work done. It is really a

magnificent bill.

A quick review. We now have tools in place under the Ticket to

Work program in Social Security to extend Part A Medicare premium-free for individuals who return to work for eight and a half

years; a quick reinstatement of benefits if working and the workplace doesn’t work out for beneficiaries; and, finally, the Medicaid

buy-in for states to increase economic and health security in the

states.

H.R. 1601 and S. 285 would reset the SGA amount for blind people back to the retirement earnings test amount. Currently, the

earnings retirement test is $1,417 a month. If these bills are enacted in the year 2000, the five-year cost would be about a billion

dollars and the long-term cost .01 percent of payroll, an impact on

the long-term solvency of the trust fund.

H.R. 5 as passed by the House and the Senate would eliminate

the retirement earnings test completely. The President has promised to sign a clean bill to eliminate the retirement earnings test.

10

Obviously, such enactment, combined with the previously discussed

legislation, would completely eliminate the SGA for blind individuals, thus making all statutorily blind people eligible for our programs.

Who would benefit? Such a significant policy change would benefit primarily those individuals who are currently blind and working

because they would become immediately eligible for Social Security

Disability.

In the year 2000, if this bill was enacted, the five-year cost would

be $2.6 billion and the long-term costs .03 percent of payroll, an

even greater impact on the trust fund.

As we think about changes, a few questions should be kept in

mind. Have we given the time and the resources and support we

need to achieve and measure the new work incentives you passed

last year? Are additional ones needed now? If we eliminate work

as a criteria for benefits, we create a new program that pays people

based on a significant limitation. Which limitation should that be?

Which impairments would be covered? Should this supplement extend to nonworking age people, say, children or the elderly who are

in great need? And what is the long-term effect on the solvency of

Social Security, and how will it be financed?

A policy change of great significance is possible but is likely to

require a long period of conversation and significant financial analysis.

Mr. Chairman, we want to build the momentum provided by the

enactment of the Ticket to Work bill to increase incentives for people with disabilities to work. Commissioner Apfel has reaffirmed

our commitment to make every effort to bring as many Americans

with disabilities into the workforce as possible.

I would be delighted to take your questions. Thank you.

[The prepared statement follows:]

Statement of Susan Daniels, Ph.D., Deputy Commissioner, Disability and

Income Security Programs, Social Security Administration

Thank you for inviting me to discuss current work incentives for blind individuals

and other people with disabilities. This is an important issue, and the Social Security Administration looks forward to working with you on finding ways to help more

Americans with disabilities successfully return to work.

Today I would like to discuss the definition of disability and how work activity

for both blind and non-blind individuals relates to it; our current work incentives

and the recent changes in the law; and some pending proposals in that area.

Definition of Disability

The Social Security Act (the Act) defines disability as the inability to engage in

any substantial gainful activity (SGA) because of a medically determinable physical

or mental impairment(s):

• That can be expected to result in death, or

• That has lasted or, that we can expect to last for a continuous period of not

less than 12 months.

We use earnings guidelines to evaluate whether the work activity is SGA and

whether we may consider someone disabled under the law. While this is only one

of the tests used to decide if a person is disabled, it is a critical threshold in disability evaluation.

Blindness (sometimes referred to as statutory blindness) is the only impairment

defined in the Act; all other impairments are defined in regulations. Blindness is

defined as central visual acuity of 20/200 or less in the better eye with best correction, or a limitation in the field of vision in the better eye so that the widest diameter of the visual field subtends an angle of 20 degrees or less (tunnel vision).

11

Blind individuals do not have to meet the ‘‘regency of work’’ test (generally, work

in 20 out of the last 40 quarters) to be eligible for disability benefits. Approximately

120,000 of our beneficiaries meet the statutory definition of blindness. (About 50,000

are Supplemental Security Income beneficiaries aged 18 to 64; approximately

100,000 are Social Security beneficiaries; about 30,000 are concurrently receiving

benefits under both programs.)

Substantial Gainful Activity (SGA)

The Act requires the Commissioner to prescribe in regulations the criteria for determining when earnings demonstrate an individual’s ability to engage in SGA. The

Act also specifies that a different definition of SGA applies to blind individuals.

With an impairment other than blindness, effective July 1999 earnings over $700

a month generally demonstrate SGA. For someone who is blind, effective January

2000, earnings over $1,170 a month generally demonstrate SGA.

Prior to 1978, the SGA amount was the same for both blind and non-blind individuals. The Social Security Amendments of 1977 made the SGA threshold for blind

individuals the same as the monthly exempt amount under the retirement earnings

test (RET) for individuals at or above the normal retirement age (NRA), an amount

which has generally been indexed that amount to average wage growth. At the time,

Senator Birch Bayh indicated that blindness was a ‘‘distinct and unique condition’’

and that ‘‘The blind, as a group, suffer largely artificial impediments when they

seek to enter and compete in the labor market.’’ The two thresholds (the exempt

amount and SGA) rose together from $334 a month in 1978 to $940 a month in

1995, while the non-blind SGA amount rose from $260 a month in 1978 to $500 a

month in 1990.

The Contract with America Advancement Act of 1996, enacted March 29, 1996,

significantly increased the RET exempt amount (rising to $2,500 a month in 2002

for individuals at NRA). It de-coupled the SGA amount for blind individuals from

the RET, and instead continued to index the then-existing SGA amount for average

wage growth. Meanwhile, SSA increased the regular SGA amount in regulations to

$700 a month effective July 1999.

For individuals who are blind and age 55 or older, if their work requires a lower

level of skill and ability than the work that they did before age 55, benefits are suspended, not terminated, when earnings demonstrate SGA. Benefits are then payable

for any subsequent month that earnings fall below SGA.

Work Incentive Provisions

Congress enacted work incentive provisions that were strongly supported by the

Administration to provide beneficiaries with the support they need to move from

benefit dependency to independence. Work incentives assist beneficiaries with disabilities to enter or reenter the workforce by protecting entitlement to cash payments and/or health care until this goal is achieved.

Some work incentives are common to both the Social Security Disability Insurance

(SSDI) and Supplemental Security Income Program (SSI), while some are unique to

one program or the other. Because even the common work incentives may be treated

differently by either program, I would like to briefly discuss work incentives as each

program treats them. I would also like to point out the special work incentives that

apply only to blind beneficiaries of either program. SSDI Work Incentives

There are several work incentives for SSDI beneficiaries built into the Act, most

notably impairment-related work expenses (IRWE), the trial work period (TWP), the

extended period of eligibility for reinstatement of benefits (EPE), and continuation

of Medicare. These are dependent upon the disabled beneficiary continuing to have

a disabling impairment.

When determining SGA, we deduct from gross earnings the cost of certain impairment-related work expenses. We deduct beneficiaries’ IRWE paid during a period of

work when:

• The item or service enables them to work;

• They need the item or service because of their disabling impairment;

• They pay the cost and are not reimbursed by another source (e.g., Medicare,

Medicaid, private insurance);

• The expense is ‘‘reasonable’’—that is, it represents the standard charge for the

item or service in their community.

The TWP allows disabled beneficiaries to test their ability to work for at least 9

months. During the TWP, beneficiaries receive full benefits regardless of how high

earnings might be. The TWP continues until the accumulation of 9 months (not necessarily consecutive) of ‘‘services’’ performed within a rolling 60-consecutive-month

period. We use this ‘‘services’’ rule only to control when the TWP stops. ‘‘Services’’

means any activity in employment or self-employment for pay or profit or of the

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kind normally done for pay or profit (whether or not it is SGA). We currently consider work to be services if earning are more than $200 a month (or more than 40

self-employed hours in a month).

Once benefits have been ceased due to SGA, the EPE allows automatic reinstatement of benefit payments for any month in which earnings fall below SGA. Benefits

can be reinstated anytime during the 36-month period following the end of the TWP,

and will continue as long as requirements are met. Currently, Medicare coverage

continues during this period and for three additional months. At that point, disabled

individuals can buy Medicare coverage. Effective October 1, 2000, based on the new

Ticket to Work Incentives Improvement Act, premium-free Medicare is extended an

additional 4 years.

In addition to providing incentives to work, we also refer disabled beneficiaries

to their local State Vocational Rehabilitation VR agency, or to other service providers in the public and private sector who try to help beneficiaries return to work.

In fiscal year 1999, SSA paid State VR agencies about $120 million for their services

provided to

over 11,000 beneficiaries with disabilities who worked at least 9 months at the

substantial gainful activity level. Although this was a record year for reimbursements, we look forward to much more progress in this area.

SSI Work Incentives

Some general information about the SSI program is useful to explain the work

incentive provisions as they apply to that program. The SSI program differs from

Social Security in that the monthly Federal benefit standard (currently, $512 for an

individual and $769 for an individual with an eligible spouse) is reduced dollar-fordollar by the amount of the individual’s ‘‘countable’’ income—i.e., income less all applicable exclusions. The result of this computation determines whether the individual (or couple) is eligible and the amount of the benefit payable.

SSI law defines two kinds of income: earned and unearned. Earned income is

wages, net income from self-employment, remuneration for work in a sheltered

workshop, royalties on published work, and honoraria for services. All other income

(including income received in kind) is unearned.

When determining an individual’s countable income, exclusions are taken for various types of income. There is a general $20 exclusion, generally applied to an individual’s for unearned income. In the case of earned income, we exclude a portion

of the $20 general exclusion that has not been used, and then exclude the first $65

and one-half of the remainder of the earnings. This greater exclusion for earned income acts as a work incentive for all SSI recipients.

In determining the benefits of disabled individuals, we exclude IRWEs. For the

disabled, we exclude work expenses directly related to the individual’s disability,

such as attendant care services, assistance in travelling to and from work and personal assistance related to work. I will discuss allowable deductions for blind SSI

beneficiaries in greater detail later.

Under SSI we also exclude income set aside or being used to pursue a plan for

achieving self-support (PASS) that has been established by a disabled or blind person. These plans are established to help blind and disabled individuals become selfsupporting by excluding income that is set aside to help the individual reach a specific occupational goal. In December 1999, there were 1,045 SSI recipients with a

PASS established, although not all of those individuals reported earnings for that

month.

Finally, the laws governing SSI contain provisions that enable blind and disabled

individuals to continue working and receiving income beyond the limit that would

normally result in ineligibility.

Under section 1619(a), a disabled beneficiary who would cease to be eligible because of earnings over the SGA limit (currently $700 a month) can continue to receive cash benefits until the amount of earnings would cause him or her to be ineligible for benefits under SSI income counting rules. Being a recipient of this special

benefit equals being an ‘‘SSI recipient’’ for Medicaid eligibility purposes.

Section 1619(b) provides ‘‘SSI recipient’’ status for Medicaid eligibility purposes

for certain SSI recipients. These individuals have earnings which preclude the payment of an SSI benefit but are not sufficient to provide a reasonable equivalent of

the SSI, social services, and Medicaid benefits that the individuals would have in

the absence of earnings. For these individuals, the loss of the social service and

Medicaid benefits would seriously inhibit their ability to continue working. However, these individuals have to be otherwise eligible except for their earnings.

According to SSAs Office of Research, Evaluation and Statistics, there were approximately 340,000 SSI disability beneficiaries (or 6.4 percent) who were working

13

In December 1999. About 70,000 of these individuals were receiving benefits under

section 1619(b). These beneficiaries do not receive an SSI payment but retain their

Medicaid coverage. Almost three-fourths of those who received this type of SSI benefit had amounts of earned income below the substantial gainful activity level.

Blind Work Incentives

I have already discussed how the SGA level differs for blind beneficiaries and how

it applies to SSDI beneficiaries who are blind and age 55 or older. SSA also does

not count any earned income a blind SSI beneficiary receives that is used to meet

any expenses needed to earn that income in determining SSI eligibility and payment

amount. Unlike IRWE, blind work expenses (BWE) do not have to be related to

blindness. As a result, any expense reasonably attributable to work is to be excluded, dollar for dollar, not simply those related to the impairment.

Some examples include guide dog expenses; transportation to and from work; Federal, state, and local income taxes; Social Security taxes, attendant care services,

professional association fees; and union dues.

Ticket to Work and Work Incentives Improvement Act of 1999

As you know, the President signed the Ticket to Work and Work Incentives Improvement Act of 1999 (the ‘‘Ticket’’) into law last December. I want to express my

thanks, Mr. Chairman, to you, and the members of the Subcommittee, for your support in getting the ‘‘Ticket’’ passed. This legislation will help disabled individuals

who want to work by lessening their fears about losing health care coverage and

income during attempts to work.It improves and expands their VR choices, providing enhanced work incentives, outreach activities and new service structures.

The provisions most pertinent to today’s discussion include:

• The Ticket to Work and Self-Sufficiency Program—which provides beneficiaries

with opportunities to get vocational rehabilitation services, employment services or

other support services from approved providers that they can choose, and which will

be phased in beginning 2001.

• Part A premium-free Medicare coverage for disability beneficiaries who return

to work is extended for four and one-half years beyond the current limit effective

Oct. 1, 2000.

• Quick reinstatement within five years without filing a new application for beneficiaries with a disabling condition whose benefits have ended because of earnings

from work.

• Prohibition against initiation of a continuing disability review (CDR) while a

beneficiary is—using a ticket—or based on the work activity of an individual receiving benefits for at least 24 months.

Ever since the ‘‘Ticket’’ was enacted, we have been actively engaged in the hard

work of implementing its various provisions. We again look forward to working with

you as the different provisions take shape and begin to show the results we anticipate—more people with disabilities entering or reentering the workforce.

Pending Legislation

Legislation has been introduced in both the House (H.R. 1601) and the Senate (S.

285) that would equate the SGA amount for blind individuals with the RET exempt

amount at NRA. Currently that amount is $1,417 a month, which is scheduled to

rise to $2,500 a month in 2002 (30,000 per year), and to be indexed to average wage

growth thereafter. I would like to point out that approximately 60 percent of workers today earn $30,000 per year or less. If these bills were enacted effective 2000,

we estimate 5-year costs of $0.9 billion and long-term costs to the Social Security

trust funds at ¥0.01 percent of taxable payroll; in other words, passage of such a

provision would have a detrimental impact on long-term solvency. Any consideration

of these proposals should be done in the context of Social Security solvency legislation.

H.R. 5 as passed by the House would eliminate the RET at NRA effective this

year. As you know, the President has promised to sign a clean bill to eliminate the

RET at NRA. Obviously, such enactment would affect the preceding SGA proposal;

that proposal, if combined with H.R. 5, would completely eliminate the SGA amount

for blind individuals, thus permitting a blind individual to earn any amount and

still be eligible for benefits. Under this scenario, effective 2000, we estimate 5-year

costs of $2.6 billion and long-term costs at ¥0.03 percent of taxable payroll, an even

greater negative impact on long-term solvency. Note that the elimination of the RET

at NRA has no impact on long-term solvency, but there are additional Medicare and

Medicaid costs as well.

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Conclusion

Mr. Chairman, we want to build on the momentum provided by the enactment

of the ‘‘Ticket’’ and to increase incentives to work for all people with disabilities. Our

commitment is to make every effort to enrich the lives of people with disabilities

and to help those who want to work do so.

As Commissioner Apfel testified before this Subcommittee last year, as a nation,

we are best served when all our citizens have the opportunity to contribute their

talents, ideas, and energy to the workforce. We look forward to working together

with the Subcommittee and Congress to achieve the proper equilibrium of equity

and actuarial balance in the area of disability work incentives. I will be happy to

answer any questions the Members may have.

Chairman SHAW. Thank you. Mr. Matsui?

Mr. MATSUI. Thank you, Mr. Chairman. Dr. Daniels, thank you

for your testimony, it is very helpful, obviously. You indicated that

if we raise the earnings limit for the disabled to $17,000 a year—

from $700 to whatever the current level would be, the level before

the new bill becomes law, it would be .03 in terms of the negative

impact on solvency of the Social Security system?

Dr. DANIELS. That is the estimate if we eliminate the SGA

amount just for our blind beneficiaries.

Mr. MATSUI. It is my understanding that the actuaries, however,

do take into consideration that there would be indexing of that

earnings limit in terms of doing a calculation over a 75-year period,

is that correct?

Dr. DANIELS. Well, yes. The notion of substantial gainful activity,

just that notion itself, has to continue in actuarial terms to change

and grow over time, or else it would lose all meaning because

wages grow over time.

Mr. MATSUI. So they do expect—the actuaries, in their calculations over the 75-year period, do expect it to grow or increase over

time?

Dr. DANIELS. That is correct.

Mr. MATSUI. So, if we begin today—and the only reason—because

it is such a small amount, given the fact that the CPI is so small,

obviously it is good for our economy—probably not good for, obviously, people that are receiving fixed benefits—but if you begin indexing, then this would have no impact on the solvency of the Social Security trust fund in terms of where we are today, over a 75-

year period?

Dr. DANIELS. Well, what the actuaries actually do is assume the

current law. And so they look at what the growth would be in SGA

given current law which is right now indexing the SGA for blind

individuals as currently indexed to average wage growth, but if we

eliminated it, then there would be an even larger number of people

eligible for the program.

Mr. MATSUI. You are talking about eliminating the earnings

limit?

Dr. DANIELS. Eliminating the substantial gainful activity test,

right.

Mr. MATSUI. Oh, but I wasn’t suggesting—I was suggesting in

my question that if you indexed it—

Dr. DANIELS. It is indexed today.

Mr. MATSUI. It is indexed today?

15

Dr. DANIELS. Yes, it is. The blind SGA is currently indexed to average wage growth.

Mr. MATSUI. Well, I thought it stated at $700.

Dr. DANIELS. No, $700 is for those individuals who are not blind.

Mr. MATSUI. For individuals who are—

Dr. DANIELS. Not blind. The SGA is $700 a month.

Mr. MATSUI. Okay. But if you indexed it for both the blind and

the nonblind, would it then have an impact on the trust fund?

Dr. DANIELS. It would have an immediate and small impact because there is an assumption that SGA will grow as wages grow.

So the long-term impact is very negligible to index the SGA.

Mr. MATSUI. That is because—again, I want to go back and repeat myself—because the actuaries take into consideration the indexation on the basis of wages.

Dr. DANIELS. Absolutely.

Mr. MATSUI. So it shouldn’t have any impact. It shouldn’t even

be a negligible impact.

Dr. DANIELS. I can’t believe it took us this long to get to agreeing

with your statement. Yes.

Mr. MATSUI. Now, I guess if we would have been indexing when

we decoupled the blind from those 65 and older—I don’t know what

the inflation rate would have been over that last few years, but it

probably would have been somewhat substantial, and I would

imagine this would make some sense to do—it obviously may not

make a lot of folks happy—but at least it would be a start. Is that

something that you—and I know you can’t make a policy decision—

obviously, this is a new discussion—but at least would that be

something that you would consider recommending as a solution to

this?

Dr. DANIELS. Well, we are not taking a position today—

Mr. MATSUI. I understand that.

Dr. DANIELS.—but what I can say to you is just to keep in mind

that the blind SGA is currently indexed by statute—

Mr. MATSUI. Right, but not the balance of the disabled.

Dr. DANIELS.—but the balance of our beneficiaries have an SGA

amount fixed at $700 a month, which can be changed by regulation.

Mr. MATSUI. Right. Okay. Well, I don’t have anymore questions

in this area. I sense that the real way we probably will have to address these issues when we deal with Social Security comprehensively, that is my belief given the fact that we have a lockbox, and

then given the fact that the surplus is not as large at this time,

and we obviously don’t want to use on-budget surpluses. Is that a

correct analysis of the position today?

Dr. DANIELS. The President is very eager to sign a clean bill on

the retirement earnings test, and a decision to change substantially

the role and function of the disability program, which the SGA is

a very significant part of, is possible, but requires a great deal of

conversation and financial analysis.

Mr. MATSUI. Thank you. Thank you very much.

Dr. DANIELS. You are welcome, Mr. Matsui. Thank you.

Chairman SHAW. Dr. Daniels, I have a number of questions here

that have been supplied by staff that I would like to read to you,

and if you could answer, we would appreciate it.

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What is substantial gainful activity? You mentioned that SGA is

a ‘‘critical threshold’’ in disability evaluation. Would you explain

what we mean when we talk about substantial gainful activity?

What would it mean to have a ‘‘disability’’ program that does not

consider ability to work and the earnings as a test of whether

someone is disabled?

Dr. DANIELS. Well, I think it is really—the words ‘‘substantial

gainful activity’’ are a lot of big legal words for the notion of work

and ensuring work.

When individuals pay Social Security payroll taxes, what they

are getting is not only an opportunity to have income when they

retire, but if they are unable to work because of a disability, an opportunity to have their income replaced. So the notion is that people of working age should work if they can, but if they can’t they

are insured against the loss of income due to disability.

So, our first question when we evaluate whether or not a person

is eligible for Disability Insurance benefits, is to ask it they are

working. And SGA is just a way of determining if a person is really

earning a real income, not just a token income from some hobby

or some small activity, but substantial activity that produces a real

income.

That amount is set for blind individuals by statute, by the Act

itself. For all other people with disabilities who apply, we set that

amount by regulation. We assume that if a person today is earning

less than $700 a month, they are not doing substantial gainful activity, or that is they are not really working enough to support

themselves. And if they have a mental or physical impairment,

they become eligible for the program. For individuals who are blind, however, the amount is $1,170 a

month because that is what the statute has established. We do not

set that by regulation.

So, basically, the question is, do we want to have a test for work?

Do we want to say that we provide income security for individuals

because they are unable to work in their working years? And that

pretty much is the question about SGA.

Now, it is possible to have a program where people simply get

a benefit based on a limitation that they might have and whether

or not they work, but that has never been the role of the Social Security Disability Insurance program. That would be a supplement—or sometimes in other countries called the ‘‘disability allowance.’’ That is a different kind of program, and the effect of removing SGA is basically to say that an individual with a significant impairment would simply be eligible based on that impairment,

whether or not he or she is they are able to work.

Chairman SHAW. Thank you. Mr. Collins?

Mr. COLLINS. Dr. Daniels, how does the SGA differ from the

earnings limit for seniors?

Dr. DANIELS. Well, today, it is not linked. In 1996, with the Contract with America Advancement Act, the SGA for blind individuals

and the retirement earnings test were de-linked. They were no

longer tracking together in the legislation. But the SGA for blind

individuals was indexed to average wage growth. And the growth

of the retirement earnings test from 1996 to the year 2002 was

greater than it would have been had it been indexed.

17

So, in other words, the individuals who are blind, their SGA is

not growing as fast as the retirement earnings test under current

law.

Mr. COLLINS. What is the difference in the principle behind it—

not the dollar amount? Why is one set at one rate, or fee, or check,

or benefit, than another one? Why do you do these things?

Dr. DANIELS. Well, I think that would be a good question for me

to ask you because I didn’t do those.

Mr. COLLINS. Why did I do that?

Dr. DANIELS. I don’t know why you did, but let me see—let me

take a good guess, Mr. Collins. When we think about social insurance, we are thinking about individuals paying in together so that

they can insure themselves against loss of income either due to

aging because they are elderly, or due to disability, the inability to

work during their working years. And I think that is a very wonderful idea, that we all pull together to take care of those who need

income when they are elderly and should expect to get some of that

back, or who in their working years are unable to work.

Now, when we say that we would eliminate a retirement earnings test for the elderly, what we are saying is that even if you

don’t have to work or you are retired, you can work if you can. But

we know that a lot of people, as they get older, find it very difficult

to work full-time or to work consistently, and we are not expecting

people who are retirement age to actually be able to continue to

work full-time; whereas, with the younger population, we expect all

those who can work, to work.

And so the SGA amount for people in their working ages can be

different because its purpose is to say that we only give our benefits to individuals who are not able to work with their impairment.

Now, some people are able, regardless of their impairment, to

work, but some are not. And so SGA—the substantial gainful activity test—becomes a way of saying, ‘‘Well, if you can work, you

should work; but, if you can’t, this program is here to help you’’.

Mr. COLLINS. I have talked to constituents who are blind, and

they have expressed they don’t feel like there should be a total repeal, that there should be some limit, do you agree with that?

Dr. DANIELS. Well, I certainly think that some people believe

that if you go to work, the way the program has a ‘‘financial cliff’’—

after a year your benefits completely end—is quite problematic.

And in the Ticket to Work and Work Incentives Improvement Act

that you passed last year, you directed the Social Security Administration to do some demonstrations, to test out different ways of

making that ‘‘cliff’’ a ‘‘ramp’’ so that people could ease off, and we

are preparing—very, very actively preparing to begin those demonstrations. I hope in the next few years we will have a good answer for you on that question.

Mr. COLLINS. Well, that seems to be the answer because I see

where, with the cliff, it totally can disrupt an individual’s life.

Okay. Thank you, ma’am.

Chairman SHAW. Mr. McCrery?

Mr. MCCRERY. Thank you, Mr. Chairman. I know we have a

vote, and I apologize for being late.

Chairman SHAW. Do you wait until after the vote, or do you want

to go ahead now?

18

Mr. MCCRERY. Well, I am mainly interested—and I understand

Mr. Matsui pursued this, I am sorry I wasn’t here—but I would

like for you to explain, if you can, why there is a difference in the

amount of income allowed blind disabled and the amount of income

allowed nonblind disabled, if you can. Could you touch on that? The

rationale, the policy rationale for that.

Dr. DANIELS. Well, the rationale and the why might not be exactly the same. The why is that the SGA for blind individuals is

set in the statute itself, by law. The SGA, substantial gainful activity, amount for nonblind beneficiaries is set in regulation. Now,

that is the way the current provisions are structured.

So the reason that the SGA for the blind is what it is and indexed to average wage growth is because the Act says it should be,

and the Act is silent on the SGA amount for nonblind, or how it

is handled in terms of growth. So, that is the technical answer. If

that satisfies you, that is fine.

Mr. MCCRERY. No, it doesn’t.

Dr. DANIELS. There is a philosophical answer as well, and that

has to do with the function of the retirement earnings test and the

function of SGA. SGA assumes, or the Disability Insurance program assumes that people of working age who can work, should

work. But we know that some people can’t work. Some people can’t

work because of impairments—that is, they have a health condition

or a functional limitation that makes it impossible for them to

work. Those people receive Disability Insurance. They receive that

when they are unable to work, and that is a great safety net because that happens to many workers, that they are unable to work.

However, it is not the same thing as being retired. It is not the

same policy.

We provide retirement income to people when they reach a certain age, based on the average—

Mr. MCCRERY. Maybe I didn’t make myself clear. I am

interested—

Chairman SHAW. Let me interrupt, if I may. If you could mull

over that question, we will come right back. We are going to have

to recess—

Mr. MCCRERY. Let me restate the question so she can mull over

the question that I want her to answer. The thing I am interested

in is the difference between the earnings limit, if you will, or the

SGA limit for blind disabled as opposed to nonblind disabled. Never

mind the Social Security retirement, I understand why there is a

difference there. I want to know the policy rationale for the difference between blind disabled and nonblind disabled, and what

each of those categories can earn without losing their benefits.

Dr. DANIELS. I will focus on that when you come back.

Chairman SHAW. And with that, stay tuned for that answer. We

will return in approximately 15 minutes.[Recess.]

Chairman SHAW. We had a real cliffhanger, and we were waiting

for Dr. Daniels to reply to Mr. McCrery.

Dr. DANIELS. I guess the question is, is this my final answer,

right? [Laughter.]

Dr. DANIELS. Mr. McCrery, I gave some thought to the question

that you asked, and I actually consulted here with my colleagues

19

and some members of the advocacy community, and I think here

the answer goes something like this.

The SGA for blind and nonblind were the same from the beginning of this program to 1978. And that is when the split began.

I would imagine when the time of the split was made—and I

wasn’t there, and I wasn’t in Congress at the time—but I would

imagine that what that split represented to the Congressmen who

made that split was a recognition that individuals with blindness

have very significant and very serious impediments in getting in

the workforce, and great need.

Now, it would be hard today, looking at the changes in technology and the advancements in education for people with disabilities to actually—and I think you will hear testimony today about

whether or not research supports that assumption—but I would

imagine that this was done in good will—that is, to recognize and

support some people who have a very, very significant impairment,

and it was probably done on the basis of that good will and that

notion that they are unique and uniquely disabled and uniquely

disadvantaged by their impairment.

Mr. MCCRERY. Well, thank you for that answer. Have you

thought about the fact that blindness is easily—the disability of

blindness is easily ascertained, it is easily discovered, it is easily

provable, as opposed to some other forms of disability that are

more subjective in terms of medical analysis? Is that possibly part

of—

Dr. DANIELS. There are some impairments that are very easy to

discern, even to the layman. For instance, I use a scooter and that

is fairly easy to discern. And people who have very significant hearing impairments are very easy to discern. And there are other impairments that are more difficult to discern—heart condition, diabetes, et cetera.

I don’t know if that would explain the difference in the amount

itself, or linking one to the retirement earnings test and not another. But I imagine it was done on the basis of some notion of

good will and assistance to people who are obviously in need.

Mr. MCCRERY. Do you support the difference? Do you think that

there is—would you recommend to us policymakers that we maintain a difference in the earnings limit, so to speak, for blind disabled and nonblind disabled?

Dr. DANIELS. I think that the road you are going down now is

the most judicious, to listen to the constituencies and to hear from

people about this difference, and to have the GAO look at the research.

I will not be in the same position to have gathered all that information that you have. We have not taken, in the Administration,

a position on this, but you are certainly going to hear from your

customers, from people with disabilities of various kinds, and from

the GAO, and I think that is the way to go. Take a look at it from

all sides, and make up your own mind.

Mr. MCCRERY. Thank you, Ms. Daniels.

Chairman SHAW. Mr. Portman.

Mr. PORTMAN. Thank you, Mr. Chairman, and commend you for

what you did last year on the Ticket to Work, which was very helpVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
20

ful, but I know you would like to do more to ensure that all disincentives are removed to work.

Dr. Daniels, I was just listening to your response to Mr.

McCrery. I am not sure that I understand the Administration’s position, and looking at your testimony I wanted to ask a question,

if I could. I don’t think you will need a lifeline for this one.

Dr. DANIELS. Thank you. My mother is standing by.

Mr. PORTMAN. Okay. You can call or you can poll the audience,

but—[Laughter.]

Mr. PORTMAN. This is sick, isn’t it? We are all spending our time

watching these shows instead of watching C–SPAN and these interesting hearings.

Does the Administration take a position with regard to differential treatment? I know you say you haven’t done some of the research and so on, but in looking at your testimony, it says ‘‘Our

commitment is to make ever effort to enrich the lives of all people

with disabilities and to help all those who want to work to do so’’.

And I just wonder, are you implying there that all people with

disability should be treated equally when it comes to incentives to

work and, if so, do you have any specific suggestions for this Subcommittee as we grapple with this issue? What is the Administration’s position?

Dr. DANIELS. Well, the Administration has no position on this

particular piece of legislation, but there is some guidance, I think,

that I can offer you in terms of thinking about it.

You have asked the right questions, I think, of the GAO, and I

think your question of me, is this disparate treatment fair? It is not

necessarily fair to treat everyone alike. Some people have greater

need. And we recognize that in the SSI program when people are

able to work some, their check is reduced $1.00 for every $2.00 that

they earn, and that is a recognition that some people can do more

for themselves.

We don’t think that ‘‘identical’’ is the same thing as ‘‘fair’’. You

are about to evaluate whether or not this disparate treatment is

based on some rational facts about the special circumstances of individuals who are blind. That makes sense to me. And you will

draw your own conclusions about that. I think that the worst thing

to do is to think that ‘‘identical’’ is the same thing as ‘‘fair,’’ and

I don’t think it is.

Mr. PORTMAN. Well, I appreciate that guidance. I think it would

be helpful if we could get a specific answer to this legislation from

the Administration because you all do have a lot of research and

resources, and have obviously the responsibility of administering

these programs.

I would just make the general comment that just as we have run

into the earnings limit issue with Social Security, ages 65 to 70,

so we have run into it on this issue. And back home we have a

wonderful organization called the Clovernook Center for the Blind,

and they do a lot of work. They produce for the Federal Government and for the private sector lots of material including Braille

editions of general readership magazines that go around the country. And they have had a hard time keeping and attracting blind

and disabled employees because people worry about how it will affect their Social Security Disability benefits, which is very similar

21

to what we all hear back home on the earnings limit on Social Security.

And just last week, in fact, two constituents came to see me, both

of whom are active members of the American Council of the Blind

and are blind themselves, and talked about that in very personal

terms. They want to work, but they feel they can’t afford to.

So, I do think this is an issue that the Ticket to Work helps a

lot, but our work is not yet done. And, again, I think it would be

very helpful if the Administration could give us some more specific

guidance as we work through this. Thank you, Mr. Chairman.

Chairman SHAW. Mr. Hulshof.

Mr. HULSHOF. Thank you, Mr. Chairman. Dr. Daniels, welcome.

I want to make a point, and I think it is worth noting, that individuals with disabilities can actually earn more than the limits but

then stay eligible, and the reason is that they can subtract work

expenses that are related to their disability in determining their

earnings subject to the limit, although this sounds to me like an

administrative nightmare.

I guess my question is, first of all, how many individuals who are

blind take advantage of these deductions to earn more than the

$1170 a month limit, do you know offhand?

Dr. DANIELS. Actually, I do know, and I have it on a sheet of

paper here and I am going to take a look at it and answer that

question for you. But the blind work incentive deduction is a little

bit more liberal than the other, for the impairment-related work

expenses. The impairment-related work expenses for nonblind have

to be impairment-related whereas the work expenses for individuals who are blind can be any work expense. So, it can be a reader,

or the care of a guide dog, or special transportation, but it also can

be union dues, or uniforms, or any of the expenses of work can also

be deducted. So that is a more liberal standard than for the

nonblind.

Hold on a second, I am going to look that up for you. It is hard

to compare apples and oranges here because we have work incentives in the SSI program, work incentives in the Disability Insurance program, and we have concurrent beneficiaries, so you are

right, it is a pretty complicated picture.

But we have about 75 percent of blind DI individuals are not

posting any kinds of earnings and are probably not using any of

the work incentives, and about 13 percent of them are posting

earnings under $6,000 a year. Nine percent are posting earnings at

about between $6–12,000 a year, and 3 percent are posting earnings over $12,000 a year. So, 75 percent of our blind beneficiaries

are not using the work incentives at all.

Mr. HULSHOF. Does SSA ever determine that expenses are ‘‘not

reasonable’’ and, if so, what happens then?

Dr. DANIELS. Well, certainly, when they are not reasonable, but

we would then give an explanation to the beneficiary of why an expense is not considered reasonable.

But we really do want to encourage people to tell us what their

expenses are so that we can assist them in getting the maximum

from the work incentives, and as good a start on that employment

track as we can help them do.

22

Mr. HULSHOF. Do you have, maybe in the numbers in front of

you, how many people actually file for these work incentives? I

mean, you have told us how many qualify. Do you happen to have

those numbers, or can you get them to us later?

Dr. DANIELS. Yes, we can get them to you for the record, as best

we can.

[The information follows:]

For work expenses for either DI or SSI beneficiaries, no formal claim is filed that

SSA would keep track of. These issues come up in the ordinary course of claims development and work reviews. We can deduct all, some, or none of the claimed expenses, but we do not track these categories. Often, the amount of expenses would

be immaterial to the case, such as when earnings are below SGA without considering expenses. In any event, processing instructions indicate that the work expense

provisions should be liberally construed.

In December 1999, about 4,000 SSI recipients reduced their countable earnings

through the Blind Work Expense provision. The average amount of the blind work

expense was approximately $250.

Mr. HULSHOF. The other issue as we have been talking about, in

1977 the separate substantial gainful activity limit was established, and the new limit was increased annually for the blind to

reflect average wage growth, and because average wages grow faster than prices, this SGA limit also has grown faster than inflation.

In contrast, the SGA limit for individuals with other disabilities is

not automatically adjusted either for prices or wages, and as a result the SGA limit for those who are not blind has fallen behind.

Now, I recognize that the Administration just increased that

limit from $500 to $700 a month last year. When was the last increase prior to 1999, if you know, Dr. Daniels?

Dr. DANIELS. Yes, I do know, it was in 1990. It was raised from—

the two most recent changes was from 1980 to 1990, it went from

$300 to $500. It was $300 in the entire decade of 1980. In 1990,

it went to $500, and in 1999 to $700.

Mr. HULSHOF. And do you anticipate any further increases for

those who are not blind?

Dr. DANIELS. When we put out the regulation, the Notice of Proposed Rulemaking for raising the SGA to $700, we asked individuals for comments on all other aspects of SGA for nonblind, and

we received many, many comments. Those are under consideration

and analysis, at this time.

Mr. HULSHOF. Thank you, Dr. Daniels. Thank you, Mr. Chairman.

Mr. MCCRERY. Mr. Chairman, may I follow up just very quickly?

Chairman SHAW. Yes, go ahead.

Mr. MCCRERY. Did the Administration make a cost estimate

when you increased it from $500 a month to $700 a month?

Dr. DANIELS. Yes, we did.

Mr. MCCRERY. And what was that?

Dr. DANIELS. I am going to have to look over here to my colleagues because I have a number in mind, but I want to check it.

We did make a cost estimate it was included in the baseline, in

OMB.

Mr. MCCRERY. Can you get for us maybe the analysis and show

us how much that cost was estimated to cost over, say, five years

or ten years?

23

Dr. DANIELS. Okay. We certainly will, we will submit it for the

record.

[This information follows:]

Mr. MCCRERY. Thank you.

Chairman SHAW. Thank you, Dr. Daniels. We appreciate your

being here with us. As usual, you gave us a very open and very

clear view of your responsibility.

[The following questions submitted by Chairman Shaw, and Dr.

Daniels’ responses, are as follows:]

1. About 100,000 individuals who are blind receive DI benefits. About 12%

earn more than $500 per month; only 1% return to work each year. So if

SGA was repealed for those who are blind, no more than 12,000 and probably more like 1,000 people on the rolls would be helped. Is that a fair asVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00027 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
24

sessment? How many individuals who are blind are currently working and

NOT receiving disability benefits? If SGA, were repealed, how many individuals would be eligible for DI benefits? Is it fair to say that repealing

SGA would primarily help those who are NOT now receiving disability benefits? Does that make sense, given the DI program’s financial prospects?

It is fair to say that removing the SGA limit for blind individuals would have only

a small program effect with respect to current DI beneficiaries.The much more substantial program effect is the entry onto the rolls of new beneficiaries.

It is difficult to estimate the number of blind individuals who are currently working and not receiving DI benefits. According to the testimony of the General Accounting Office, about 30 percent of working-age blind individuals are employed.

We estimate that removing the SGA limit for blind individuals would cause an

additional 55,000 people to become eligible for DI benefits, with 5-year costs of $2.6

billion and long-term costs of 0.03 percent of taxable payroll, which would have a

distinct negative impact on long-term solvency. Almost all of this would go to individuals not currently receiving DI benefits. As to whether such a change should be

considered, any consideration of this and other program changes should be done in

the context of Social Security solvency legislation.

2. One of the work incentive provisions in current law is the ability to

subtract the value of impairment-related work expenses from earnings before determining whether these earnings are substantial gainful activity.

How many SSDI beneficiaries receive the benefit of this work incentive

provision? Of this number, how many are statutorily blind?

We do not track that data. We know from reports from our field office employees

that only a relatively small number of DI beneficiaries use impairment-related work

expenses to reduce their earnings below SGA, too small a number to justify building

a special system to capture this information.

Chairman SHAW. We now have the next panel which I inappropriately called up a few moments ago. Barbara Bovbjerg is the Associate Director, Education, Workforce and Income Security Issues,

and we have her accompanied by Carol Petersen, if the witnesses

would take their seats. And I apologize again for trying to put everybody on the same panel. That was not my intention, it was my

not looking at a few asterisks on the schedule which separated the

two panels. You may proceed.

STATEMENT OF BARBARA D. BOVBJERG, ASSOCIATE DIRECTOR, EDUCATION, WORKFORCE AND INCOME SECURITY

ISSUES, HEALTH, EDUCATION AND HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING OFFICE; ACCOMPANIED

BY CAROL PETERSEN, ASSISTANT DIRECTOR, EDUCATION,

WORKFORCE AND INCOME SECURITY ISSUES; HEALTH, EDUCATION AND HUMAN SERVICES DIVISION

Ms. BOVBJERG. Good morning, Mr. Chairman, Members of the

Subcommittee. I am Barbara Bovbjerg, from the GAO, and I am

happy to be here today with my colleague, Carol Petersen, to discuss the Disability Insurance program’s substantial gainful activity

level for the blind.

The DI program requires disabled applicants to demonstrate they

cannot earn more than the SGA both to enter DI and to remain in

the program. Since 1977, the SGA for the blind has been higher

than for those with other disabilities, and consideration is being

given to raising the SGA level further.

I would like today to focus on two aspects of this question. First,

to what extent the blind face different employment circumstances

than those with other disabilities; and, second, the potential impact

25

of raising or eliminating the SGA for the blind on work effort, trust

fund costs, and the DI program overall. My testimony is based on

prior work that we have done on circumstances of blind beneficiaries and on our overall body of work in the disability program.

First, the blind and barriers to employment. Proponents for higher SGA levels for the blind have suggested three ways in which the

blind are at a greater disadvantage than other disabled individuals—lower employment rates, lower wages when they are employed, and higher work-related costs. They believe that these relative disadvantages are so great that the SGA for the blind should

be higher to make the difficult search for employment more attractive to blind beneficiaries.

There are few empirical studies that consider whether the blind

are indeed more disadvantaged than those with other disabilities.

And among those few studies, there is little to suggest that the

blind are unique among the disabled population. My written statement presents the data we found, and it suggests that many disabled individuals, blind and nonblind, face barriers to obtaining

well-paying jobs, and many experience significant work-related

costs.

I would like to turn now to the potential effects of raising the

SGA for the blind on work effort, cost to the program and the trust

fund, and on the nature of the program itself.

Increasing the SGA may indeed motivate current blind beneficiaries to seek and obtain work, and this should represent a positive step toward increased integration with society and the enhanced self-esteem associated with the work experience. But raising the SGA would also make the DI program more generous and

thus more costly. This is because the number of beneficiaries could

be expected to rise. Some disabled individuals already working

would join or rejoin the rolls, and those already on the rolls would

retain eligibility longer than would otherwise be the case.

As beneficiary rolls grow, DI costs would rise, and that is worse

than the projected financial outlook for the Social Security trust

funds. For example, if the SGA for the blind is reset to today’s retirement earnings limit of $17,000 a year—and I say today knowing that we are about to change that—Social Security actuaries estimate that it would cost the trust funds $2.7 billion over the next

ten years.

Although this worsens 75-year solvency projections for the trust

funds only relatively slightly, it still would worsen the financial

outlook in a system already facing a $3 trillion actuarial deficit.

Eliminating rather than raising the SGA would, of course, have

even greater financial impact. Actuaries estimate that these costs

would rise $6.8 billion over a ten-year period.

Eliminating the SGA also has the potential to change the DI program in fundamental ways. Historically, the program has insured

workers against reduced earnings due to impairment. Without an

SGA standard, DI benefits would be offered to blind individuals regardless of their earnings. Although this measure may encourage

current beneficiaries who can work to work and earn more, it

would pay the same benefits to people who earn a lot as to those

who earn a little or nothing.

26

1To meet the statutory definition of blindness for Social Security purposes, a person must

have either central visual acuity of 20/200 or less in the better eye with the use of a correcting

lens or a limitation in the fields of vision so that the widest diameter of the visual field subtends

an angle of 20 degrees or less. 2 Individuals with disabilities other than blindness must also demonstrate an inability to engage in substantial gainful activity. 3See DI Substantial Gainful Activity Levels (GAO/HEHS–96–109R, Mar. 20, 1996). Other related GAO products are listed at the end of this testimony.

Breaking the connection between ability to work and eligibility

to receive DI benefits would represent a fundamental change in the

nation’s Disability Insurance policy and should be recognized as

such.

In conclusion, raising the SGA for the blind could increase work

participation among blind beneficiaries, but would raise program

costs and could widen differences in the program’s treatment of the

blind and the nonblind, even though both groups face barriers to

obtaining well paying jobs. Eliminating the SGA for the blind

would have these same effects, but more broadly, and would fundamentally change the program.

There are a number of ways to approach incentives to work,

some of which are being tested as part of the Ticket to Work and

Work Incentives Improvement Act. Such other incentive approaches also have the potential to increase work among disabled

individuals without altering the fundamental purpose of the DI

program structure and deserve consideration as well.

That concludes my statement, Mr. Chairman. Dr. Petersen and

I are available to answer any questions.

[The prepared statement follows:]

Statement of Barbara D. Bovbjerg, Associate Director, Education, Workforce and Income Security Issues, Health, Education and Human Services

Division, U.S. General Accounting Office

Thank you for inviting me here today to discuss the substantial gainful activity

(SGA) level established for blind beneficiaries of Social Security Disability Insurance

(DI). The DI program provides monthly cash benefits to workers who have become

severely disabled and to their dependents and survivors. In addition, Medicare coverage is provided to DI beneficiaries after they have received cash benefits for 24

months. In fiscal year 1999, about 6.5 million beneficiaries received DI benefits

amounting to $50.4 billion. Of these, about 100,000 qualified because of statutory

blindness. 1 The average benefit paid to disabled workers was $734 a month in December 1999. In addition to providing evidence establishing their medical impairment, individuals must demonstrate that they are not earning above a certain

amount—known as the SGA level—in order to qualify for and maintain eligibility

for DI benefits.2 Since 1977, the SGA levels have been higher for blind than for

nonblind DI beneficiaries, and until recently the level for the blind was set equal

to the earnings limit for Social Security retirees.

Today I would like to focus my remarks on (1) the differences in employment circumstances affecting people with blindness compared with those affecting people

with other disabilities and (2) the potential impact of changes in SGA levels on the

DI program and on the Social Security trust funds. My testimony updates and expands on our prior work on the circumstances of blind beneficiaries and on our body

of work examining the DI program and SGA levels.3

In summary, higher SGA levels have been established for blind beneficiaries primarily on the basis of the assumption that certain adverse economic consequences

associated with blindness are unique. Few empirical studies have compared the

work-related experiences of blind individuals with those of people who have other

disabilities. However, the studies that we reviewed showed many disabled individuals—blind and nonblind—face adverse employment circumstances. Although raising SGA levels for the blind—or even eliminating them—could encourage more blind

beneficiaries to work, such changes would perpetuate differences in the treatment

of blind and nonblind beneficiaries and could slightly worsen the Social Security

trust funds’ financial outlook. Moreover, eliminating the SGA level, by removing the

27

4The DI program was established under title II of the Social Security Act

5To qualify for benefits, individuals with blindness need only show that they are not earning

at the SGA level. Individuals with disabilities other than blindness must also demonstrate an

inability to engage in substantial gainful activity. 6Deductions can be made only if (1) the cost of the item or service is paid by the person with

the disability and (2) the person has not been, and will not be, reimbursed for the expense. 7SGA levels were first published in regulations in 1961 and at that time were set at $100

a month of countable earnings. 8The 1977 law did not affect SGA levels for nonblind DI beneficiaries.

9There is a different earnings limit, as well as a different benefit reduction rate, for retirees

aged 62 to 64. 10The earnings limit does not apply to those over age 69, and it is increased each year on

the basis of indexing to average wages in the economy.

connection between benefit eligibility determination and the inability to work, would

fundamentally alter the purpose of the DI program.

BACKGROUND

From its origin in 1956, the purpose of the DI program has been to provide compensation for the reduced earnings of individuals who, having worked long enough

and recently enough to become insured, have lost their ability to work. 4 The program is administered by the Social Security Administration (SSA) and is funded

through payroll deductions paid into a trust fund by employers and workers (currently 1.8 percent of payroll for DI).

To qualify for benefits, an individual must have a medically determinable physical

or mental impairment that (1) has lasted or is expected to last at least 1 year or

result in death and (2) prevents the individual from engaging in substantial gainful

activity.5 Individuals are considered to be engaged in substantial gainful activity if

they have countable earnings at or above a certain dollar level. To calculate countable earnings, SSA deducts from gross earnings the cost of items that, because of

the impairment, a person needs to work (for example, attendant care services performed in the work setting, wheelchairs, or Braille devices).6 In addition to determining initial eligibility, the SGA test also applies to determining continuing eligibility for benefits. Beyond a trial work period during which DI beneficiaries are allowed to keep any level of earnings, benefit payments are terminated once SSA determines that a beneficiary’s countable earnings exceed the SGA level.

The Social Security Act did not initially distinguish between the SGA levels for

blind and nonblind DI beneficiaries.7 This was changed in 1977 when the Social Security Financing Amendments (P.L. 95–216) set the SGA level for individuals who

are blind equal to the monthly earnings limit set for Social Security retirees aged

65 to 69.8 This link also meant that the SGA level for the blind would be indexed

to the average wage index (AWI), a measure of average wages of all employees in

the country. Linking the SGA level for the blind to the retirement earnings limit

meant that whenever the limit was changed, the SGA level for the blind would

change to an equal amount.

The provision for linking the blind SGA level to the retirement earnings limit remained in effect until the Senior Citizens’ Right to Work Act of 1996 (P.L. 104–121)

was enacted. This act mandated a substantial increase in the monthly earnings limits for Social Security retirees over a 5-year period and removed the link between

the retirement earnings limit and the SGA level for the blind but retained the SGA

level that was in place at that time as well as the annual indexing to the AWI. Currently, the SGA level for the blind is $1,170 a month of countable earnings.

On March 1, 2000, the House passed H.R. 5, the Senior Citizens’ Freedom to

Work Act of 2000, which, if enacted into law, would eliminate the earnings limit

for retirees between the normal retirement age (currently age 65) and age 70.9 The

Senate passed its version of the bill on March 22, 2000. Currently, recipients aged

65 to 69 can earn up to $17,000 a year without having their benefits affected.10 For

earnings above this limit, Social Security benefits are reduced $1 for every $3 in

earnings. The application of this earnings test is generally a deferral of benefit payments to a later time when earnings cease or are lessened. Thus, future benefit levels may be increased as a result of having benefits withheld under the earnings

limit. According to SSA’s actuarial estimates, eliminating the earnings limit for

those reaching the normal retirement age would increase Social Security costs over

approximately 20 years but would be negligible over a 75-year period. H.R. 5 explicitly exempts blind DI beneficiaries from the provision that would eliminate the earnings limit.

For individuals who have disabilities other than blindness, the Social Security Act

gives the Commissioner of Social Security the authority to prescribe the SGA level

by regulation. Over the years, SSA has increased the SGA level a number of times,

28

11See SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/

HEHS–96–62, Apr. 24, 1996). 12L. Trupin and others, Trends in Labor Force Participation Among Persons with Disabilities,

1983–1994, Disability Statistics Report (Washington, D.C.: U.S. Department of Education, National Institute on Disability and Rehabilitation Research, 1997). This report is based on the

most recent available data from the National Health Interview Survey (NHIS). The NHIS, conducted annually by the Census Bureau for the National Center for Health Statistics, is a crosssectional survey of the civilian noninstitutionalized population of the United States. The labor

force participation rate is the primary measure in labor market analysis. It is a measure of everyone in the labor force, including people who have a job, are on temporary layoff, or are looking for work.

the latest increase occurring in July 1999 when the level for nonblind individuals

was raised from $500 to $700 a month of countable earnings. The SGA level for

nonblind beneficiaries is not indexed. The current SGA level for the blind of $1,170

a month is about 67 percent greater than the $700 level for people with disabilities

other than blindness.

Under the current program, a DI beneficiary may earn any amount for 9 months

within a 60-month period and still receive full cash and health benefits. At the end

of this trial work period, if a beneficiary’s countable earnings exceed the SGA level,

cash benefits continue for an additional 3-month grace period and then stop, causing

a precipitous drop in monthly income from full cash benefits to none. Such a drop

in income is a considerable disincentive to work. Indeed, less than 1 percent of DI

beneficiaries return to work each year.

In addition to identifying this ‘‘income cliff,’’ our prior work has identified other

program design and implementation weaknesses—such as limited referral to vocational rehabilitation services and the eventual loss of medical coverage after cash

benefits end—that have been disincentives to work. 11 To help reduce such disincentives, the Congress has, over the years, established various work incentive provisions to safeguard cash and medical benefits while a beneficiary tries to return to

work, and recently, SSA has begun to place greater emphasis on assisting beneficiaries in returning to work.

In addition, the Ticket to Work and Work Incentives Improvement Act of 1999

(P.L. 106–170) is expected to enhance certain work incentives for people with disabilities through such measures as expanding eligibility for Medicare, creating a

Ticket to Work voucher program that will allow people with disabilities a greater

choice of vocational rehabilitation and employment service providers, and establishing new demonstration projects for the working disabled. This increased focus on

work reflects a shift in societal attitudes, as embodied in the Americans With Disabilities Act, toward goals of economic self-sufficiency and the right of people with

disabilities to full participation in society. In addition, medical advances, new technologies, and changes in the nature of work now provide people with disabilities

more opportunities to work than ever before.

MANY DISABLED WORKERS FACE ADVERSE EMPLOYMENT CIRCUMSTANCES

Proponents of a higher SGA level for the blind believe that blind individuals are

at a greater disadvantage, particularly from an economic standpoint, than individuals with other disabilities. According to these proponents, the disadvantages facing

blind people include (1) greater employment discrimination resulting in low employment rates; (2) greater likelihood that when able to find work, it will be in a lowwage job; and (3) extra costs for supportive services or equipment that are necessary

for the blind to find and maintain employment and conduct other daily activities.

Few empirical studies rigorously compare the experience of blind individuals in

terms of employment, earnings, and work-related expenses with the experience of

those who have other disabilities. The readily available studies that we reviewed relied on data from the mid–1990s. These studies indicate that many disabled workers—blind and nonblind—face adverse employment circumstances and high job-related expenses.

Estimates from the 1997 Disability Statistics Report, published by the National

Institute on Disability and Rehabilitation Research, show that although the 1994

labor force participation rates for adults with visual impairments aged 18 to 64 were

low in comparison with the rates for some impairments, these rates were higher

than the labor force participation rates for those with other impairments, such as

mental illness or emphysema (see table 1).12

29

13 John M. McNeil, Americans With Disabilities: 1994–95, Current Population Reports, Household Economic Studies, P70–61 (Washington, D.C.: U.S. Department of Commerce, Economics

and Statistics Administration, Bureau of the Census, 1997). The SIPP, an ongoing study by the

Bureau of the Census of the economic well-being of the civilian noninstitutionalized population,

is a nationally representative sample of approximately 30,000 households. Information about

disability was collected during the period October 1994–January 1995, which represents the

most current available SIPP data regarding employment and earnings of people with disabilities.

Table 1: Labor Force Participation Rates Across Various Impairment Types

Impairment type

Participation rate (percentage)

No disability ..................................................................................................................... 83.0

Deafness or hearing impairment in one ear only ........................................................... 80.0

Orthopedic impairments of lower extremity ..................................................................... 69.4

Blindness or visual impairment in one eye .................................................................... 69.0

Orthopedic impairments of shoulder and/or upper extremities ...................................... 68.6

Orthopedic impairments of back or neck ........................................................................ 62.5

Intervertebral disc disorders ............................................................................................ 59.8

Visual impairment in both eyes ...................................................................................... 59.8

Orthopedic impairment of hip or pelvis .......................................................................... 59.3

Hearing impairment in both ears .................................................................................... 58.7

Amyothrophic lateral sclerosis ......................................................................................... 50.1

Malignant neoplasm of female breast ............................................................................ 46.4

Toxic poisoning and other adverse effects ...................................................................... 46.2

Osteoarthrosis and allied disorders ................................................................................. 45.2

Malignant neoplasm of respiratory and intrathoracic organs ........................................ 45.0

Rheumatoid arthritis and other inflammatory polyarthropathies ................................... 44.0

Heart disease, excluding hypertension ............................................................................ 41.5

Hypertensive disease ........................................................................................................ 38.2

Multiple sclerosis ............................................................................................................. 36.9

Absence or loss, lower extremity ..................................................................................... 35.0

Mental retardation/Down syndrome ................................................................................. 33.5

Affective psychoses .......................................................................................................... 30.9

Chronic liver disease and cirrhosis ................................................................................. 30.7

Cerebral palsy .................................................................................................................. 30.7

Blindness in both eyes .................................................................................................... 28.9

Mental illness ................................................................................................................... 27.2

Emphysema ...................................................................................................................... 27.1

Depressive disorders ........................................................................................................ 25.4

Cerebrovascular disease .................................................................................................. 23.3

Nephritis, nephrotic syndrome, and nephrosis ................................................................ 20.1

Schizophrenic psychoses .................................................................................................. 11.9

Source: 1994 NHIS data, reported by National Institute on Disability and Rehabilitation Research.

Data patterns from the 1994–95 Survey of Income and Program Participation

(SIPP) are consistent with this finding.13 The SIPP provides estimates of employment rates and earnings levels of individuals disaggregated by various functional

limitations. As shown in table 2, employment rates and earnings of adults (aged 21

to 64) with severe functional limitations were significantly lower than those for

adults with no disability. Adults with limitations involving sight had a somewhat

higher employment rate than those with limitations involving lifting, walking, or

climbing stairs but had a significantly lower employment rate than for those unable

to hear normal conversations. Monthly earnings levels of individuals with severe

sight limitations were about the same or slightly lower than the monthly earnings

for individuals with severe limitations in walking, lifting, and hearing.

Table 2: Employment Rates and Earnings Across Various Functional Limitations

Functional limitation Percentage

employed Earnings

No disability .................................................... 82.1 $2,153

Unable to hear normal conversation .............. 59.7 2,047

Unable to see words and letters .................... 30.8 1,252

Unable to lift and carry 10 pounds ............... 27.0 1,536

Unable to climb stairs without resting .......... 25.5 1,257

30

14 C. Kirchner and others, Lifestyles of Employed Legally Blind People: A Study of Expenditures and Time Use, Technical Report (Mississippi State, Miss.: Mississippi State University, Rehabilitation Research and Training Center on Blindness and Low Vision, 1992). 15G. Bond and others, ‘‘Toward a Framework for Evaluating Cost and Benefits of Psychiatric

Rehabilitation: Three Case Examples,’’ Journal of Vocational Rehabilitation, Vol. 5 (1995). 16W.A. Welsh, ‘‘The Economic Impact of Deafness,’’ Journal of the American Deafness and Rehabilitation Association, Vol. 24, No. 3 and 4 (Jan./Apr., 1991). 17S. 285 and H.R. 1601, introduced on January 21, 1999, and April 28, 1999, respectively,

both propose to ‘‘restore the link between the maximum amount of earnings by blind individuals

permitted without demonstrating ability to engage in substantial gainful activity and the exempt amount permitted in determining excess earnings under the earnings test.’’

Table 2: Employment Rates and Earnings Across Various Functional Limitations—Continued

Functional limitation Percentage

employed Earnings

Unable to walk three city blocks .................... 22.5 1,346

Source: 1994–95 SIPP data, Census Bureau

Other studies conducted by researchers in academic institutions and by organizations representing the disabled have provided some information on the work-related

costs faced by those with disabilities. While comparisons of results across these

studies is difficult given the varying focus, methodology, and measures used in each

study, the results, in general, indicate that individuals with disabilities other than

blindness also incur high work-related costs.

For example, the American Foundation for the Blind and Mississippi State Uni- versity found that legally blind individuals spent an average of $884 per year on

readers, $57 per year on tapes related to reading, $50 per year on recruiting new

readers, $469 per year on work-based adaptive devices, and $150 per year on mobility aids. Also, over 50 percent of the legally blind spent less than $500 for devices

used at work.14 In comparison, the literature we reviewed and researchers we contacted indicate that people with severe mental illness may also require many workrelated services, including on-the-job coaching, money management assistance, and

mental health services. Cost estimates ranged from $1,400 to $3,600 annually for

supportive employment services and $3,200 to $7,000 annually for mental health

services.15 In addition, researchers have noted that people with hearing impairments incur costs for interpreter services, telecommunications devices for the deaf,

answering machines and ancillary services, retrofitting of items that use sound to

operate, and the care of hearing dogs. Researchers have pointed out that most of

these items require significant initial and continuing investment.16

INCREASING OR ELIMINATING SGA LEVELS COULD INCREASE WORK BUT

WOULD HAVE COSTS

Recently, proposals have been put forth that would either raise or eliminate the

SGA level for the blind. In particular, proposals raising the SGA level for blind individuals have been focused on restoring the link between this level and the retirement earnings limit that existed from 1977 to 1996.17 Restoring this link would

allow working beneficiaries to keep more of their benefits, thereby reducing a significant disincentive to work. However, SSA estimates of the impact of these possible changes indicate that they all would have some negative effect on DI costs and

the actuarial balance of the Old-Age, Survivors, and Disability Insurance (OASDI)

trust funds. Moreover, if enacted, the proposals to eliminate the SGA requirement,

by removing the connection between benefit eligibility determination and the inability to work, would fundamentally alter the purpose of the DI program.

Increasing or Eliminating the Blind SGA Level Could Increase Work Effort but

Would Raise Program Costs

Under the current DI program, earning even one dollar above the SGA level for

a sustained period results in loss of DI cash income and Medicare benefits. The

prospect of losing cash and health benefits can reduce motivation to work, especially

when low-wage jobs are the likely outcome. Increasing or eliminating the SGA level

for the blind would reduce this disincentive to work and thus could result in more

work effort by blind beneficiaries. However, by making the program more generous,

this change would also increase the number of beneficiaries through the effects of

both increased entry to and decreased exit from the program. Some working individuals not currently on the DI rolls would be newly eligible to enter the program, and

those already on the rolls would be able to increase their work and earnings without

losing their eligibility and thus would not exit the program.

31

18The short-range estimates cover the period 2000–09. 19 Although the DI trust fund is affected by changes in SGA levels, SSA only estimated the

effects on the combined OASDI trust funds. 20The combined OASDI trust funds will be in cash surplus until 2014. At that point, the trust

funds will start redeeming some of their assets to obtain the funds necessary to pay benefits,

and expenditures will begin to exceed revenues. By 2034, the trust funds will be exhausted; that

is, OASDI will meet only 71 percent of its benefit obligations. 21This earnings limit refers to that set for Social Security retirees aged 65 to 69. 22Taxable payroll is the amount of wages or self-employment income that is subject to the

Social Security tax. For long-range forecasting, Social Security’s income and costs are expressed

as a percentage of taxable payroll. Measuring the program’s income and outgo over long periods

(75 years) by describing what portion of taxable earnings they represent is more meaningful

than using dollar amounts, because the value of the dollar changes over time.

The extent to which these increased entry and decreased exit effects occur will

affect DI benefit costs and OASDI trust fund balances. SSA’s Office of the Actuary

has estimated the financial impact of several options for increasing or eliminating

the SGA level for the blind. Ten-year estimates of increased DI benefit payments

range from $2.7 billion, if the SGA level for the blind is set equal to the currentlaw earnings limit for retirees, to $6.8 billion, if the SGA level for the blind is completely eliminated.18

Table 3 shows that increasing the SGA level for the blind also would have varying

effects on the OASDI actuarial balance, depending upon the proposed option.19 In

discussing these proposed increases, it is important to view their effect on trust fund

costs within the context of an already large Social Security shortfall. Under current

SSA actuarial projections, the OASDI trust funds will be exhausted in 2034, with

the Old-Age and Survivors Insurance trust fund being depleted in 2036 and the DI

trust fund being depleted in 2020.20 Over a 75-year period, the OASDI deficit is currently estimated to be 2.07 percent of taxable payroll—approximately $3 trillion.

Setting the blind SGA level equal to the current-law earnings limit for retirees

($1,416.67 per month) 21 would have a negligible effect, less than 0.005 percent of

taxable payroll,22 on the OASDI actuarial balance. However, other options for increasing or eliminating the SGA level for the blind could reduce the actuarial balance, up to .01 and .03 percent of taxable payroll. Although these proposed increases

would have a relatively small impact on the actuarial balance, the trust fund shortfall would be exacerbated under any increase to the SGA level.

Table 3: Estimated Change in the OASDI Actuarial Balance as a Result of Changes in the Blind SGA Level

SGA option SGA level Impact on OASDI actuarial balance (as a

percentage of taxable payroll)

Set the SGA level for blind individuals equal

to the 2000 earnings limit for retirees,a

and index thereafter ................................... Beginning in 2000, increase the SGA

level from $1,170 to $1,416.67, and

index thereafter

Less than ¥0.005

Set the SGA level for blind individuals equal

to the 2000 earnings limit for retirees,a

allowing it to rise to the 2002 limit, and

index thereafter .......................................... Beginning in 2000, increase the SGA

level from $1,170 to $1,416.67, then

raise the SGA level through 2002 to

$2,500, and index thereafter

–0.01

Eliminate the SGA level .................................. Permit blind individuals to earn any

amount and still retain full DI

benefits

–0.03

Note: Although the DI actuarial balance is affected by changes in SGA levels, SSA estimated the effect on only the OASDI actuarial balance. a This earnings limit refers to that set for Social Security retirees aged 65 to 69.

Source: SSA Office of the Chief Actuary.

Some advocacy and interest groups representing people with disabilities other

than blindness have proposed establishing a uniform SGA level for both blind and

nonblind individuals. Because relatively few DI beneficiaries are blind, the DI benefit cost of raising or eliminating the SGA level for the nonblind would be even higher than it would be for the blind, although DI benefit cost estimates for either of

these changes were not available from SSA at the time of our review.

However, SSA has estimated the financial impact on the OASDI actuarial balance

of various options affecting the nonblind SGA level. Changes in the nonblind SGA

32

level would have greater adverse effects on the OASDI trust funds than would

changes in the blind SGA level. For example, table 4 shows that raising the current

nonblind SGA level of $700 a month to that of the blind SGA level of $1,170 a

month would significantly affect the OASDI actuarial balance. These effects would

be even greater if the SGA level for the nonblind were set equal to the current-law

earnings limit for retirees or were completely eliminated. Such changes would represent a significant worsening of an already dire situation.

Table 4: Estimated Change in the OASDI Actuarial Balance as a Result of Changes in the Nonblind SGA

Level

SGA option SGA level

Impact on OASDI actuarial

balance (as a percentage of

taxable payroll)

Set the SGA level for nonblind individuals

equal to the current SGA level for blind

individuals .................................................. Beginning in 2000, increase the SGA

level from $700 to $1,170, and

index thereafter

–0.09

Set the SGA level for nonblind individuals

equal to the 2000 earnings limit for retirees,a and index thereafter ......................... Beginning in 2000, increase the SGA

level from $700 to $1,416.67, and

index thereafter

–0.15

Set the SGA level for nonblind individuals

equal to the 2000 earnings limit for retirees,a allowing it to rise to the 2002 limit,

and index thereafter. Beginning in 2000,

increase the SGA level from $700 to

$1,416.67, then raise the SGA level

through 2002 to $2,500, and index thereafter ............................................................ –0.44

Eliminate the SGA level .................................. Permit nonblind individuals to earn

any amount and still retain full DI

benefits

Not estimated b

Note: Although the DI actuarial balance is affected by changes in SGA levels, SSA estimated the effect on only the OASDI actuarial balance. a This earnings limit refers to that set for Social Security retirees aged 65 to 69.

b Although not estimated, eliminating the nonblind SGA level would have the greatest adverse effect on the OASDI actuarial balance.

Source: SSA Office of the Chief Actuary.

Proposals to Eliminate the SGA Level Would Alter the Fundamental Role of the DI

Program

Elimination of SGA levels for blind or other disabled individuals would fundamentally alter the purpose of the DI program. The DI program’s historic role of providing compensation for reduced earnings due to a disability and the program’s emerging role of facilitating severely disabled individuals in their return-to-work efforts

are both based on the concept of assisting individuals whose impairments have adversely affected their work capabilities. The very definition of disability includes the

requirement that a person be unable to perform substantial work, and the purpose

of the SGA level is to determine if, regardless of one’s medical condition, a person

demonstrates by working that he or she is not in fact work-disabled. Without an

SGA standard, cash benefits would be offered to individuals incurring a physical or

mental disability regardless of their earnings. Removing the connection between

benefit eligibility determination and the inability to work would fundamentally alter

the program’s emphasis.

CONCLUSIONS

Current proposals ranging from increasing the SGA level for the blind to eliminating it completely would have the likely effect of increasing beneficiaries’ work effort

but would raise program costs and could widen the differences in the program’s

treatment of blind and nonblind beneficiaries, even though both groups face adverse

employment circumstances. Moreover, raising the SGA level for the blind could result in further calls to increase the SGA level for nonblind beneficiaries, leading to

significantly higher program costs and adverse effects on trust fund solvency. In addition, eliminating the SGA level would fundamentally alter the purpose of the DI

program. Other changes to the work incentives—some of which are being impleVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
33

mented or will be tested by SSA as a result of the Ticket to Work and Work Incentives Improvement Act of 1999—are likely to increase work without fundamentally

changing the nature of the DI program.

Mr. Chairman, this concludes my prepared statement. At this time, I will be

happy to answer any questions you or other Members of the Subcommittee may

have.

CONTACT AND ACKNOWLEDGMENT

For information regarding this testimony, please contact Barbara Bovbjerg at

(202) 512–7215 or bovbjergb.hehs@gao.gov. Individuals making key contributions to

this testimony include Carol Dawn Petersen, Mark Trapani, Gretta L. Goodwin, and

Michael J. Collins.

RELATED GAO PRODUCTS

Social Security Disability: Multiple Factors Affect Return to Work (GAO/T–HEHS–

99–82, Mar. 11, 1999).

Social Security Disability Insurance: Factors Affecting Beneficiaries’ Return to Work

(GAO/T–HEHS–98–230, July 29, 1998).

Social Security Disability Insurance: Multiple Factors Affect Beneficiaries’ Ability to

Return to Work (GAO/HEHS–98–39, Jan. 12, 1998).

Social Security Disability: Improving Return-to-Work Outcomes Important, but

Trade-Offs and Challenges Exist (GAO/T–HEHS–97–186, July 23, 1997).

Social Security: Disability Programs Lag in Promoting Return to Work (GAO/HEHS–

97–46, Mar. 17, 1997).

SSA Disability: Return-to-Work Strategies From Other Systems May Improve Federal

Programs (GAO/HEHS–96–133, July 11, 1996).

Social Security: Disability Programs Lag in Promoting Return to Work (GAO/HEHS–

96–62, June 5, 1996).

SSA Disability: Program Redesign Necessary to Encourage Return to Work (GAO/

HEHS–96–62, Apr. 24, 1996).

Chairman SHAW. Ms. Petersen, do you have a statement?

Dr. PETERSEN. No, I don’t.

Chairman SHAW. Mr. Matsui.

Mr. MATSUI. Thank you, Mr. Chairman. I want to thank you for

your testimony, Ms. Bovbjerg, for it is very clear and precise and

I think pretty much lays it out.

And I know that you probably don’t want to make any conclusions here, but are you kind of concluding that for us to really do

something, we have to really deal with the fact that maybe we need

a comprehensive solution to the Social Security problem; otherwise,

we make the Social Security problem worse before we make it better?

Ms. BOVBJERG. Well, I acknowledge that the cost would be small,

but it is going in the wrong direction if you are trying to deal with

this $3 trillion problem.

Mr. MATSUI. I am not suggesting the cost is so small we should

just do it, but I am just saying that, frankly, the way—I think the

way we structured our debate—both parties have structured our

debate in terms of not tampering with the Social Security surplus,

and obviously the on-budget surplus can be used, but we certainly

don’t intend to move SSI disability and take from that at this moment, anyway. We are left in the position of having to deal with

this comprehensively. Is that kind of where we are?

Ms. BOVBJERG. I think that is a good summary, yes.

34

Mr. MATSUI. In terms of the actual increase in employment for

many of the disabled if we do raise the earnings limit, do we get

credit for that at all in terms of the budgetary impacts and others?

Ms. BOVBJERG. I am not sure that it would score, and I can’t

speak to that, you would have to ask my colleagues at the Congressional Budget Office.

Mr. MATSUI. I doubt it would score, that is—

Ms. BOVBJERG. You know that there would be a net effect that

some people would work more if the SGA were higher or eliminated, who are currently on the rolls, but there are other people

who are not currently on the rolls because they work, who would

work less because they would then get benefits plus whatever they

were earning.

Mr. MATSUI. Well, I want to thank you for your testimony. As I

said, I think you have laid it out very well. It is a decision that

we have to make and, obviously, we are kind of caught in a dilemma right now, all of us are.

Ms. BOVBJERG. If we can provide any help, we will.

Mr. MATSUI. I appreciate that. Thank you.

Chairman SHAW. Mr. Collins?

Mr. COLLINS. No questions.

Chairman SHAW. Mr. McCrery.

Mr. MCCRERY. Would you pronounce your name for me?

Ms. BOVBJERG. It is a hard one, it is ‘‘Boberg’’, like ‘‘iceberg’’.

Mr. MCCRERY. Thank you. I have other questions.

Ms. BOVBJERG. I am glad you asked one I could answer.

Mr. MCCRERY. You said in your testimony that if we were to do

away with the SGA limit for the blind, that by removing the connection between eligibility and the inability to work would fundamentally alter the purpose of the disability program. I agree

with you. But I would like for you to expound on that. How would

it fundamentally alter the purpose of the disability program?

Ms. BOVBJERG. Well, first, it would sever the linkage between eligibility and inability to work—that is, to engage in substantial

gainful activity. This is a linkage that is intrinsic to the current

program. Eligibility for benefits at that point would be determined

solely on a medical or functional basis. Everyone meeting those criteria would receive benefits, regardless of how much they work and

how much they earn. That removes the concept of disability insurance from the disability program by doing that, and makes it more

of a payment for physical impairment. That is something the Congress could decide to do, but as Dr. Daniels stated, I think that is

such a significant policy change that certainly we would want to

know more about the implications of that on finance and disability

policy.

Mr. MCCRERY. In other words, if we were to do away with any

kind of earnings limitation, it would undermine the original purpose of the disability program.

Ms. BOVBJERG. Yes, sir.

Mr. MCCRERY. Can you state for us your impression of what the

original purpose of the disability program was?

Ms. BOVBJERG. Well, I can, and I hope that Carol will chime in

if I don’t get everything here, but the Disability program is to insure people who become disabled—who have been in the workforce,

35

who become disabled-against an inability to—and I hate to keep

using these words—to engage in substantial gainful activity or an

inability to support themselves in some way that we have defined.

Mr. MCCRERY. So, in other words, it was not the Disability program under Social Security—was not intended to simply provide a

payment to somebody who becomes disabled, it was to provide a

safety net, if you will, for income that if a person is so disabled that

he can’t work or that his work is very limited, then we want to provide some income so that person can provide food and shelter and

so forth, is that correct?

Ms. BOVBJERG. That is right, and I think that there are statements made by members of Congress at the time that the Disability law was passed that say that very explicitly, that we understand that this means that only people with impairments who cannot work will get benefits. That was made very clear.

Mr. MCCRERY. Well, Mr. Chairman, I agree with the analysis—

Ms. Bovbjerg—and I think it would fundamentally alter the definition and the purpose of the Disability program if we were to simply

do away with any earnings limitation at all, and to do that for the

blind disabled may not cost that much to the Federal fisc, but

again we get to this question of what would be the rationale, the

policy rationale, for not doing the same thing for other categories

of disabled, and if we do it for all then it is going to be a huge cost

and it would not serve the same purpose that was originally intended by the Congress when this program was created.

So, I think that is a fundamental question that the GAO at least

has answered correctly, and I think this Subcommittee and full

Committee and full Congress ought to answer the same way.

Thank you.

Chairman SHAW. Ms. Bovbjerg, did you touch on the effect that

his question would have on the trust fund?

Ms. BOVBJERG. Well, I can tell you that we have received from

the actuary information that eliminating the SGA for the blind

would reduce—would have an impact, an actuarial impact, the 75-

year impact of .03 percent of taxable payroll, which is about $40

billion over 75 years. $40 billion even in the context of $3 trillion

is still significant.

Chairman SHAW. If you could address that same question as to

what effect it would have on the date that the trust fund runs negative. Now I think it is 2006 on the disability side.

Ms. BOVBJERG. We can get that.

Chairman. SHAW. If you could supply that for the Committee,

that is something that I think is a concern of everyone on the Committee. Mr. Hulshof.

Mr. HULSHOF. Thanks, Mr. Chairman. Ms. Bovbjerg, on page 4

of your written testimony and in your oral statement, you talk

about the disadvantages that blind people face according to the

proponents, and you mentioned that there are really few empirical

studies that rigorously compare the experiences of blind individuals

as compared with the experience of others. And I have read your

synopsis of the 1997 Disability Statistics Report. I know Mississippi State also has a published report.

Are there empirical studies currently being conducted that could

rigorously take a look at this to determine, that you are aware of?

36

Dr. PETERSEN. In the short period of time we had to prepare for

this testimony, these were the studies that we could identify, and

we could not find any systematic studies looking at costs that exist

to date.

Mr. HULSHOF. Could you just briefly—I know your time was limited in your five minutes, but could you maybe expound on what

the studies—I mean, I have read this—but could you just summarize for me what at least these studies indicate regarding the blind

versus nonblind?

Ms. BOVBJERG. Well, we have three pieces that we have brought

into the testimony, and some of this is from work that we did in

1996 on some of these same issues—one involved labor participation rates, another is employment rates and wages, and another

piece is on work-related costs. And what you see there is there are

differences among impairments, but that really it seemed to us

that the point was that different impairments have tremendously

adverse employment circumstances. This is not something that is

unique to the blind.

And we want to emphasize that we are not saying it is easy to

be disabled and get a job, that is not what we are saying, but we

are saying that we have not found evidence that the blind are

unique in this regard.

Mr. HULSHOF. Regarding those work-related costs, whether for

the blind or for those individuals with other disabilities, are they

most often borne by the worker? Are they borne by the employer?

I mean, how are those costs actually—who bears the brunt of those

costs?

Dr. PETERSEN. It varies. Some can be borne by the employer,

other costs are borne by the individuals themselves.

Mr. HULSHOF. I think that is all I have. Thank you, Mr. Chairman.

Chairman SHAW. Thank you very much. We appreciate your

being with us. If you could supply us with the information I asked

you about the trust fund, I would greatly appreciate it. It would

add a lot to the discussion. Thank you.

[Questions submitted by Chairman Shaw, and Ms. Bovbjerg’s answers, follow:]

Barbara Bovbjerg, General Accounting Office, Response to Questions for

the Record

1. Could you elaborate on the types of adverse circumstances faced in today’s society by individuals with disabilities?

Research has shown that many disabled individuals-blind and nonblind-face a

number of adverse employment circumstances when attempting to return to work.

First, employers may be reluctant to hire individuals with disabilities. Although the

Americans with Disabilities Act prohibits employment discrimination against the

disabled, there is still a stigma associated with disability that may influence employers. This stigma may be related to the misconception that a disabling impairment always adversely affects the individual’s productivity. Another cause of employment discrimination may arise from the fact that a disabled employee may require workplace accommodations, which the employer may be unwilling to provide.

Second, for those individuals who do seek employment, the number and type of

jobs available may be limited due to the disabling condition. Sometimes a disabling

condition will lower a worker’s productivity when he or she is unable to perform the

same essential tasks of the job as before the disability. This decreased productivity

may limit the pool of available jobs to those that require less skill and thus provide

lower wages.

37

Finally, disabled workers incur costs that a non-disabled worker does not incur

for supportive devices, equipment, and other work-related services necessary for employment. Examples of these costs include readers and mobility aids for the blind,

mental health services for people with severe mental illness, and interpreter services and hearing dogs for the deaf. Most of this assistance requires significant initial

and continuing investment.

2. What proportion of beneficiaries work and, among those, what proportion approach substantial gainful activity (SGA) limits?

The Social Security Administration (SSA) has estimated that one half of one percent of all beneficiaries leave the program each year because of work, but this figure

does not include beneficiaries who work but do not earn enough to be terminated

from the program. According to agency officials we interviewed, SSA is unable to

accurately determine the total number of disabled beneficiaries who work. Furthermore, SSA does not have the capability to generate a reliable and valid estimate

of the number of disabled beneficiaries who work because the agency data systems

cannot distinguish a beneficiary terminated due to a medical improvement from one

who is terminated because of work. In addition, an agency official told us that SSA’s

data systems cannot distinguish work-related earnings from other disability-related

payments.

In addition to being unable to accurately determine the number of disabled beneficiaries who work, SSA is unable to accurately determine how many working beneficiaries have earnings that approach the SGA limit. Because an individual can earn

any amount in a month without losing benefits when he or she is in a trial work

period, SSA does not track the individual’s earnings during this period. Once the

individual finishes the trial work period, SSA verifies earnings and if the individual

is earning above SGA then benefits continue for a three-month grace period and

then cease. If an individual has monthly earnings below SGA at the end of the trial

work period, then SSA assumes his or her earnings remain below SGA until the individual reports this information or if the agency’s data systems identify earnings

above the SGA limit.

Although the agency’s data systems can identify earnings above the SGA level,

there are some limitations associated with this process. Some income classified as

earnings may not be from work. In addition, earnings are only reported on a yearly

basis, so SSA’s data systems will only catch those individuals who earn 12 times

the SGA level, which is stated in monthly terms. Therefore, beyond the trial work

period, it is possible for an individual to earn above the SGA level for some months,

but still retain benefits as long as yearly earnings are less than 12 times the SGA

level. An agency official told us that there is no computerized method to identify

earnings on a monthly basis.

3. Is raising the SGA limits the right public policy?

Raising the SGA limits for disabled beneficiaries would reduce disincentives to

work and could result in greater work effort by beneficiaries. However, as we mentioned in our testimony of March 23, 2000, by making the program more generous,

this change would also increase the number of beneficiaries through the effects of

both increased entry to and decreased exit from the program. Some working individuals not currently on the Disability Insurance (DI) rolls would be newly eligible to

enter the program, and those already on the rolls would be able to increase their

work and earnings without losing their eligibility and thus would not exit the program.

The extent to which these increased entry and decreased exit effects occur will

affect DI benefit costs and Social Security trust fund balances. SSA’s Office of the

Actuary has estimated that raising the SGA limit for the blind to the current-law

earnings limit for retirees is estimated to increase DI benefit payments by $2.7 billion over a ten-year period. Since relatively few DI beneficiaries are blind, the DI

benefit cost of raising the SGA limit for nonblind beneficiaries would be even higher.

Raising the SGA limit for all DI beneficiaries would lead to significantly higher program costs and adverse effects on trust fund solvency.

Whether raising the SGA limit represents good policy goes beyond the financial

considerations. Fundamental policy weaknesses in the DI program continue to persist. As we have reported in the past, these weaknesses include an eligibility determination process that concentrates on applicants’ incapacities, an ‘‘all-or-nothing’’

benefits structure, and return-to-work services offered only after a lengthy determination process. To address these policy weaknesses, we continue to believe—as

we recommended in 1996—that SSA should place greater priority on helping disabled beneficiaries return to work. We also recommended that the agency develop

a comprehensive strategy to achieve this goal. While SSA has taken actions that

38

place a greater emphasis on return to work, it has yet to adopt an overall strategy

for implementing a new approach.

In developing a return-to-work strategy, SSA can draw upon the experiences of

other systems to identify elements of a new federal disability system that could help

each individual realize his or her productive potential without jeopardizing the

availability of benefits for people who cannot work. Having identified these elements, SSA would then be in a position to determine the legislative and regulatory

changes needed to test and evaluate the effectiveness of these practices in the federal disability system. After obtaining this information, policymakers will be in a

position to determine whether raising the SGA is good public policy.

Chairman SHAW. The next panel we have, includes Ms. Brenda

Gillis, a Social Security Beneficiary, and she is from Stuart, Florida, which is just a few miles north of my district; Joanne Wilson,

who is the Director of the Louisiana Center for the Blind; Dr. Brenda Cavanaugh, Research Director for the Rehabilitation Research

and Training Center on Blindness and Low Vision, of Mississippi

State University; James Gashel, Director of Governmental Affairs,

National Federation of the Blind, from Baltimore, Maryland.

Mr. MCCRERY. Mr. Chairman, while our panelists are begin seated, if I might take just a minute to introduce Joanne Wilson, from

Louisiana. Ms. Wilson has been very active with the Association for

the Blind in Louisiana for a number of years, and has constantly

worked on behalf of the blind in our state. She has met with me

on a number of occasions since I have been in Congress, and has

always been extremely helpful in providing good information and,

I will say, as much as any other advocate that I have come in contact with over the last 12 years, she has been honest, straightforward, and tried to do her best to not only represent those that

she is advocating for, but to be forthright and up-front with the

facts and policy rationale, and for that I appreciate it very much.

And we are, I think, honored to have somebody of her stature in

the blind community here to testify today, and I hope the Subcommittee will pay attention to what Ms. Wilson has to say.

Chairman SHAW. Indeed, we will, and thank you very much.

Again, I will repeat, we have everyone’s full statement to be made

part of the record, and we invite the witnesses to summarize as

they see fit, and we will start with Ms. Gillis.

STATEMENT OF BRENDA-ANN GILLIS, SOCIAL SECURITY

BENEFICIARY, STUART, FLORIDA

Ms. GILLIS. Good morning. I would like to thank the Committee

for inviting me here to testify today. This is a very nerve-wracking

experience, but I am honored to be here.

My father always told me that when you need to consider things

in life, especially difficult decisions, you should first try to walk in

that person’s moccasins. So, I suppose my role here today is to try

to express to you what my moccasins feel like and encourage you

to try to walk in them with me for a few moments.

I am relatively new to blindness. I was declared legally blind in

1994 when my son was two years old. It was a very difficult transition for me, and to this day I still need some blindness skills that

I haven’t quite mastered yet. Braille is one of them. Otherwise, I

would have note cards and be much more organized.

39

I worked my whole life. I was encouraged to do so from the time

I was 15. I picked corn and tomatoes in south Jersey, and I knew

that by doing that I was contributing to my government, to my

community, and to my future retirement benefits.

When I was declared legally blind, I had held a job that I had

enjoyed for 11 years, as the Parish Administrator for the Episcopal

Church. In that job, I earned a $30,000-a-year wage and was provided with $5700 a year in medical benefits, and I had $4900 a

year contributed into a retirement pension by my parish.

As my sight diminished through the retinitis pigmentosa, which

is a degenerative disease of my retina which has slowly robbed my

vision and tunneled it down to the point where one day I will have

no vision left, I began to realize that it was unfair to my parish

for me to continue in my employment as I did not have all the

skills I needed, the equipment I needed, and I was rapidly approaching a point in my life where I would no longer be able to

drive. After almost having an accident with my three-month-old

son in the car, I decided to give up my driving privilege.

As time wore on, my job became more and more difficult for me

to do effectively, so I resigned that position. At that point, I applied

for Social Security Disability benefits. While I awaited a determination from Social Security as to my eligibility, my family faced

the foreclosure of our home. It was a very scary time, having such

a young child in the home, and I really didn’t know where to turn.

It was shortly thereafter that I became associated with the National Federation of the Blind, and I have since touted this relationship as the best career move I have ever made. I finally found

a group of professionals who treated me as an equal and didn’t

judge me on the basis of my inability to see.

I struggled quite often with my family and friends, not knowing

how to handle me under my new set of circumstances. And, finally,

the disability benefits arrived. I began my own business. I own Letter Perfect in Stuart, Florida, and do secretarial duties on the side.

However, because of the earnings limit imposed upon me as a recipient of SSDI, I have to be very careful as to the types of jobs

that I accept and the duration of those jobs and how they affect

that income at the end of the month.

The reason for this is, if I earn $14,000 a year, I lose $20,000

of benefits. The loss of that income would then once again place me

in the position of facing foreclosure on my home. It is very difficult

to juggle in one’s mind how to manage a business under these circumstances.

I very much want to work. I do not view my vision loss and my

blindness as a reason not to be employed. So, with my benefits at

$1715 a month, I encourage you to raise the earnings limit so that

I could go back to work and augment my retirement and be made

whole with the middle class. I guess that’s all. I just heard my tone

back here.

My retirement benefit is important to me, and at the current

rate I cannot augment that in any way. So, I implore you to consider raising the earnings limit for the blind so that I can compete

with the other members of the middle class. I thank you for the

time to speak.

[The prepared statement follows:]

40

Statement of Brenda-Ann Gillis, Stuart, Florida (Social Security

Beneficiary)

My name is Brenda-Ann Gillis. I am a 35 year-old wife, mother, business owner

and advocate for the blind community of Martin County, Florida. I have lived in my

single family home since June of 1986.

First, I would like to thank the committee members for allowing me to share my

story. The earnings limit has a direct negative impact on my life and that of my

family. I hope that my testimony will illustrate the difficult economic choices blind

individuals must face when contemplating work.

Background

I was born with retinitus pigmantosa (RP). My condition was not diagnosed until

I entered college in the fall of 1982. Because of the degenerative nature of the disease, my vision was not noticeably affected for some time after the initial diagnosis.

As a result, I was able to graduate from college and begin my working career without using any of the adaptive techniques that a blind individual uses. After college

a local print shop employed me as their office manager. Eventually I accepted a position as a parish administrator for the Episcopal Church and worked there from

1985 to 1996. As time went on, I found my vision getting worse and worse. Finally

I was declared to be ‘‘legally blind.’’ It was difficult to do my job without knowing

how to ‘‘function’’ as a blind person. As a result, I had to leave my job.

After leaving my job I applied for Social Security Disability Insurance (SSDI) benefits to which I was entitled. Unfortunately an eligibility determination did not come

soon enough. My loss of income resulted in a possible foreclosure on our home.

While awaiting a determination by the Social Security Administration, I sought

service from the Division of Blind Services in West Palm Beach. I was able to locate

an employer who was willing to employ me as a ‘‘work at home’’ sub-contractor and

began to operate my own business. Eventually I was awarded disability benefits. My

disability benefit coupled with my part-time job, however, does not compensate for

the loss of the previous income.

I was frustrated with my new circumstances. I had never noted as a sighted member of society, that the stereotypes associated with blind persons were a large and

seemingly unfair invisible barrier that could not be moved or altered with any measure of ease. For me, I had been a visible and active member of my community, but

on that day when I was presented with a white cane all my accomplishments of my

past seemed to disappear and even my closest friends were struggling with how to

handle the person I had become. It was at that point that the decision was made

to either give up or start fighting and this is when I came to learn of the National

Federation of the Blind. The relationship I have developed with this organization

since that time is in my opinion the best career move I ever made. I had finally

found a group of professionals who acknowledged the skills and intelligence that I

had always possessed but were no longer recognized by my sighted colleagues. So,

I set to work at the business of ‘‘Changing What it Means to be Blind’’ everywhere

I turned. In the furniture store when the sales woman inquired as to why my friend

would bring a blind person to shop for furniture, my friend replied, ‘‘. . I bring her

along to evaluate comfort and texture.’’ In a restaurant when the hostess literally

grabbed my head and proceeded to demonstrate the proximity of the sconce on the

wall to ensure that I would not injure myself. I made a point of contacting the management and requesting the opportunity to come back and place his staff under occlusion and allow them to experience a meal without sight. My resume to employers

does not begin with the line ‘‘I am a blind applicant,’’ but when I arrive for interviews the position has undoubtedly been filled in the time it took me to travel to

their office. Why then do we always seem to seek new and innovative ways to oppress blind individuals? Is there not enough in the way of daily challenges for our

lawmakers to feel it necessary to exclude the blind when they discuss our ability

to work and earn a decent living? Please do not take these comments to infer that

you are not sensitive, as I am sure you are, but quite frankly, even I did not contemplate the impact being blind has on one’s life until I myself became blind.

Earnings Limit Work Disincentive

The reality for me is that I simply do not view myself as less employable now

than I was in 1985 when I was considered to be a ‘‘sighted’’ member of society. The

loss of my eyesight did not affect my ability to reason, manage, perform or communicate. My brain did not die. I truly wish to work. I truly am concerned about the

need for me to provide for my retirement, my son’s education and actively participate in my community. Unfortunately, because I happen to be blind, some of these

goals are not prudent given the current restrictions posed upon my family and myVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
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self. The reality is that given the present earnings limits for blind individuals, it

is not practical for me to seek employment. Presently I receive monthly checks in

the amount of $933.00 for myself, $498.00 for my dependent son and a disability

pension from church insurance in the amount of $292.00. This totals $1,715 in

monthly benefits of which I pay federal taxes on only one half of the $933.00 and

100% on the $292.00 of 1099–R income. By not working I additionally save the expense of childcare, transportation and insurance, together with all the other routine

incidentals associated with leaving my home to work in an office environment.

Under this present set of circumstances, I would have to secure a job that paid

$35,500 per year to simply break even. At that rate of pay, which would require

employment that a blind individual would have to maneuver to secure, I would have

no extra money to save for retirement. By not working, the prospect of retirement

becomes even dimmer since I am not continuing to contribute to the system which

will eventually be charged with providing my only source of income. It has come to

my attention that upon reaching the age of 65 my disability pension will be reduced

from $292 to $63 per month. When my son turns sixteen I will lose $498 per month.

While I am bright enough to comprehend the economic impact of my present circumstances on my eventual retirement, there is simply no way in my mind to prevent the inevitable. If I were to take a job for the average wage of approximately

$23,000 per year in our area, I would not only lose my monthly benefits, but I would

further be asked to pay taxes of 100% on this earned income. The bottom line is

at that rate I would once again face the foreclosure of the mortgage on my home

and still have no free dollars to invest in the augmentation of my retirement income. Work at this point would force me to significantly decrease my monthly cash

flow.

In closing, I wish to share a bit of reality with those of you who enjoy the privilege

of being sighted and all that goes with it. In addition to the inconceivable notion

that you would no longer be able to ‘‘see’’ the beauty of all that God has created

for our enjoyment, you would also lose the respect you have earned from your peers

despite your accomplishments. You would lose the self-esteem that comes with the

pride of being employed and rewarded for a job well done. You would lose the privilege of driving and subsequently the loss of your personal freedom to travel when

and where you wish to go. And you would face on a daily basis the uninformed and

sorely uneducated general public who would view you as a person who deserves

their pity and constant assistance. If you were blind, I am certain that you would

evaluate your situation and do as I have done, pick yourself up and start fighting

for the truth to be revealed. You would realize without a doubt that the only way

to effect change under such circumstances is to teach by your example, to earn respect through your accomplishments; and you would be forever transformed into the

mind set that the democratic process requires your personal involvement.

Conclusion

Therefore, I ask that you thoughtfully consider what your life would be like if you

woke one day to find yourself in my moccasins. Would you view your circumstances

as a really good reason to continue in the status quo and never consider the possibility of obtaining a job? Would you view the work disincentives imposed upon you by

your government as fair and just? Would you be content to live in this manner when

you know the best way to change public perceptions is by doing precisely what others may think is simply not possible for you to do?

If it is your intention to provide an environment that fosters the pursuit of life,

liberty, and happiness, then you have no choice than to find a way for blind persons

to earn a comfortable way of life. Solutions must be found to make it feasible for

us to contribute to our communities and our self-esteem. As the population of the

blind and visually impaired grows across our nation we must find ways to ensure

that they are accepted as functional members of society and not simply brushed

aside or ignored as a dirty little secret. It is inconceivable to me to imagine that

here in the land of freedom, the home of the brave, we find ourselves too fearful

of the consequences to do what we know in our hearts to be the right thing. If we

are to tout the virtues of independence then we need to ensure that every citizen

is afforded the independence necessary to succeed and prosper here and now in the

United States. This is precisely why I traveled here today. I truly appreciate the

opportunity to express to each of you why it is imperative that you increase the

earnings limits of the blind to the extent that the blind of our nation can be made

whole. If provided a limit of earnings that will afford me the opportunity to actually

seek employment that would place me in a position of equality with the middle-class

citizens who are considered to be ‘‘able-bodied,’’ then I promise to each of you I

would happily welcome the chance to avail myself to being the responsible citizen

who works hard to earn all the benefits and privileges associated with living in our

42

free country. It has truly been an honor to address you today, and I will leave our

Capitol now with the knowledge that you have carefully listened to my personal

story and will seriously consider the impact the choices you make today will have

on at least one blind person from the state of Florida who stood before you praying

that you will listen to your hearts and do that which is only right and just. Thank

you.

Chairman SHAW. Thank you, Ms. Gillis. Ms. Wilson.

STATEMENT OF JOANNE WILSON, DIRECTOR, LOUISIANA

CENTER FOR THE BLIND, RUSTON, LOUISIANA

Ms. WILSON. Thank you, Congressman McCrery, for your kind

words. I want to talk to you today about fleas and about blind people. Scientists have taken fleas and they have put them in a jar

and put a lid on that jar, and the fleas would try and jump out of

the jar. And after hitting their heads on the lid several times, they

would realize they could only jump just so high, right under where

that lid would be.

Now, if the scientists take the lid off the jar, the fleas will continue to jump just so high, just right below where that lid was, and

never realize that if they made one more jump they would be set

free.

This is very much like what happens to blind people. I run the

Louisiana Center for the Blind. I have been doing that for 15 years

now. We bring in students from all over Louisiana and all over the

country, who say they want to go back to work, that they are coming there for training so they can go back to work. We have had

521 students now enrolled at our Center.

I recently did statistics that said that 41 percent of those students came in on Social Security Disability, and out of that 41 percent, unfortunately, only 15 percent ultimately left the Social Security rolls and went back to full-time competitive employment. Some

of the others went to work, but just under the earnings limit.

Now, I thought, 15 percent, we are doing something wrong, until

I found figures that in the general disability population it is less

than 5 percent that ultimately leave the Social Security disability

rolls and go back to work.

We are thought of as one of the best agencies in this country for

rehabilitation, but yet we are not getting to some of these folks.

The Ticket to Work program has some good things in it, but it is

not hitting the real problem that is faced by blind people. In most

polls and anybody that you ask, cancer, AIDS and blindness are

the three most dreaded things that could happen to you.

The real problem with getting blind people off of Social Security

disability is a psychological one. It is a fear of risk. The real problem of blindness is not the loss of eyesight, it is the misconceptions

and stereotype notions that exist about blindness, and these stereotype notions exist with the sighted public, but they also exist with

the blind. Blind people themselves really don’t believe in what they

can do. When they leave our center, they know what they should

do, but they don’t really know in their hearts what they could do.

Just last Tuesday, I met with our students and I told them I was

coming for this testimony, and I said to them, ‘‘I want to speak to

43

you, you that are getting Social Security Disability. Tell me how

you are thinking’’.

Jack immediately piped up and said, ‘‘Well, you know, I am kind

of old, and I don’t want to go back to work, and it is time for the

younger folks to take my place, and I don’t need all that pressure’’.

And another student said, ‘‘Wait a minute, Jack, how old are you?‘‘

And he said, ‘‘Well, I am 40’’. And they all started laughing, and

they said, ‘‘Jack, what is the real problem?’’ The real problem, after

we prodded a little bit, was Jack didn’t really believe that he could

go back to work, that he could take the risk and become competitive again.

Brenda, one of our students, said, ‘‘Well, it is really hard for me

to give up the certainty of a check when I have two children, and

rent to pay, and food to put on the table. I just can’t take the risk

when I know I am going to get probably a minimum wage job’’.

Janice spoke up and said, ‘‘I can’t afford to go back to work. By

the time the taxes are taken off and the huge cost of transportation

and accessible means of working as a blind person, I can’t afford

to go back to work. It doesn’t pay for me to work’’.

The stories went on and on, but what is happening is that we

are denying people that have paid into the system, that have paid

into the system and that have talents and experiences and things

to give back. We are denying society the opportunity for those talents to be utilized and for them to become taxpaying citizens.

I ask for all of you—I know we have the votes, if we could just

get it up for a vote—to help us take off the lid, take off the lid for

blind people so we really don’t have these psychological and emotional barriers caused by Social Security work incentives, and we

could really get back to work. Thank you.

[The prepared statement follows:]

Statement of Joanne Wilson, Director, Louisiana Center for the Blind,

Ruston, Louisiana

My name is Joanne Wilson. I am director of the Louisiana Center for the Blind

in Ruston, Louisiana. My address at the Louisiana Center is 101 South Trenton,

Ruston, Louisiana 71270. The telephone number at the Center is (318) 251–2891.

I want to thank the distinguished members of this Committee for an opportunity

to testify regarding the issue of Social Security earnings limitations for the blind.

Approximately 15 years ago we opened the Louisiana Center for the Blind as a

private, non-profit rehabilitation training facility for blind and visually impaired

adults. With support from the membership of the National Federation of the Blind

of Louisiana, we willingly undertook the imposing task of opening a facility that

would provide training for blind and visually impaired individuals. Foremost in our

thought was that if we were to ever gain the acceptance of a society which for centuries had regarded blind people as severely limited and unable to lead full lives

which include productive work and full participation in the affairs of their communities, then we needed to establish ourselves within those communities as respectable citizens, with the same hopes and expectations as our sighted peers. We knew

that with proper training and opportunity a blind person could become a contributing member of our complex society, but such achievement had to begin with instilling a positive philosophy about blindness in blind people themselves.

What is of paramount importance for your deliberations today is understanding

that for a blind person, the real problem of blindness is not the loss of sight, although this is significant. Rather, it is the attitudes which exist, both among the

sighted public and among the blind themselves concerning blindness and the ability

of the blind to compete with their sighted counterparts.

Certainly, it is well documented that historically blind individuals have always

been last in line when they must compete with the general public for services, and

more often than not they are denied access to employment and full societal access.

While training facilities like the Louisiana Center for the Blind and others across

44

the country can address societal attitudes, employment is a persistent problem.

Many members of the public have long assumed that blind people could not engage

in productive work, at least not at a level that would allow them to be economically

self-sufficient. To many in our society, a legally blind person is presumed to be unemployed, if not unemployable. Imagine, if you will, being a blind person growing

up in a society that has embraced this notion wholeheartedly, with its formidable

misconceptions about who you are and what you are able to do. Every fiber of your

being would long for the opportunity to compete for a job and succeed or fail on your

abilities—not on preconceived notions about your blindness.

Emerging from a long history of dependence and lack of opportunity to escape

from it, with its stifling of the human spirit and its degrading effect on self-esteem,

has presented a tremendous challenge to individuals who are blind. They know that

most employers can see and cannot imagine even being able to get to the job (let

alone doing the job) without their sight. In this respect, blindness is unlike most

other disabilities in that the effects of not seeing are believed to be all-pervasive.

We as blind people have struggled mightily for the small advances we have made,

yet clearly individuals who are blind are not yet realizing the ‘‘American Dream’’

even in the best of economic times.

The nation’s policy is to promote opportunity. In the Rehabilitation Act of 1973,

for example, Congress defined the purpose and mission of the rehabilitation program as follows:

‘‘Sec. 2. (B)(1) to empower individuals with disabilities to maximize employment, economic self-sufficiency, independence, and inclusion and integration into society. . .

‘‘(2) to ensure that the Federal Government plays a leadership role in promoting the

employment of individuals with disabilities, especially individuals with significant

disabilities. . .’’

Inclusion of the Rehabilitation program in the Workforce Investment Act of 1998

reinforces the intent of Congress that persons with disabilities can and should participate fully in the American labor force. However, according to a study published

in Americans with Disabilities: 1991–1992 U.S. Bureau of the Census, Current population Reports (870–33), Washington, DC: U.S. Government Printing Office, the employment rate among those with visual disabilities is approximately 26%, with the

remaining 74% either ‘‘out of the labor force’’ or ‘‘unemployed.’’ Since clearly Congress has provided a system to promote inclusion of persons with disabilities in

meaningful employment, why then does such an alarming rate of unemployment

among the blind persist?

It is well documented that a major disincentive to the blind considering work is

the loss of cash benefits under Social Security Disability Insurance. This program

provides support to meet subsistence-level needs, and eligibility for this assistance

is virtually automatic for a blind person. Although the benefit payments are modest

compared to earnings from most (even entry-level) employment, the security it provides is highly valued. The fear of losing those benefits is great, due primarily to

uncertainty about the impact of working on benefits and the belief that future assistance may not be available if work stops. Blind people are aware that, under the

current limitations, one dollar over the earnings limit for the blind will result in

complete loss of cash benefits. Think, if you will, about your own work here. Clearly

if work defines us, as many contend, blind and visually impaired persons do not find

it easy under the current limitations to resist becoming ‘‘underachievers’’ or ‘‘secondclass’’ participants in America’s workforce.

In my position as director of a training facility, I have personally counseled with

hundreds of individuals who are convinced that they must remain dependents of,

rather than contributors to, the system. Examples which immediately come to mind

are two individuals who became blind in mid-career. In both instances, their blindness was sudden because of medical conditions which did not affect them in any

other way-only their vision was affected. Both were professionals with established

careers, who realized that in order to regain their confidence and possess the ability

to travel and care for themselves independently, they needed to learn alternative

techniques of doing so as blind persons. Incidentally, not only did they need to learn

skills, but they also needed desperately to re-gain their self-esteem. After completing training, they fully expected to return to their respective fields, James as a construction engineer with 25 years’ experience building major highways across the

country and Robert as an claims adjuster with a national insurance corporation.

However, when job placement efforts began near the end of their training, it became

apparent that their respective companies were not interested in their knowledge

and experience but rather were consumed with imagined barriers and false misconceptions about the abilities of these two formerly valued employees who were

now blind.

45

At that point they faced a dilemma: Should they return to work for mediocre

wages which wouldn’t cover their mortgages, or should they become dependent upon

Social Security benefits, which would at least provide some reliable income for their

families? Senior citizens in similar situations do not have to make this choice. Why

then, should a blind person? Had these individuals been given an opportunity to

work, even at modest wages, and to keep their earnings without loss of Social Security benefits, I could tell you today that they are contributing to and not drawing

support from the system. Sadly, I cannot do that. They returned home with their

hopes and careers dashed, facing uncertainty about their ability to care for their

families.

When I think of James and Robert, I am reminded on the other hand of two elderly individuals I know-both of them quite financially secure, who decided because of

boredom to return to work when they were well into their 70’s. An attorney and

a rancher, respectively, they have generously endowed universities and institutions

with their gifts, yet they still earn Social Security benefits, earn wages which are

never questioned, and complain when Medicare doesn’t cover the cost of a medical

procedure. No earnings limitations are imposed on the elderly. The system did not

encourage these two to stay dependent and to remain idle from fear of losing everything. Nor did it strip them of their dignity as it did James and Robert. My question

then, is why earnings limitations are imposed on the blind. Is it because our aspirations and our sense of personal responsibility are those of such a relatively small

number that they go unnoticed? If that is the case, I ask you to consider these two

facts: Blind individuals do compose only a very small segment of our society. If 74%

of that small number are either ‘‘out of the labor force’’ or ‘‘unemployed,’’ then the

current system with its disincentives to work has failed.

Removing attitudinal barriers, raising expectations on the part of employers and

individuals who are blind, and instilling the work ethic in those who have experienced little opportunity for meaningful work-these are the needs and challenges

which we address today. Eliminating the earnings limit for blind individuals will

ensure that more blind Americans have the opportunity to participate in the workforce, express their strong work ethic, and exercise personal responsibility as they

long to do. We ask that you help us achieve our goal to be recognized as contributing

members of society and to gain respect for our abilities by giving them free rein to

help build a more productive nation. Thank you.

Chairman SHAW. Thank you, Ms. Wilson. Dr. Cavenaugh.

STATEMENT OF BRENDA S. CAVENAUGH, PH.D., RESEARCH DIRECTOR, REHABILITATION RESEARCH AND TRAINING CENTER ON BLINDNESS AND LOW VISION, MISSISSIPPI STATE

UNIVERSITY

Ms. CAVENAUGH. Good morning, Mr. Chairman, Members of the

Subcommittee. Thank you for the opportunity to testify. I have

worked in blindness rehabilitation since 1972. Today, my testimony

is based upon findings from research conducted at the Rehabilitation Research and Training Center on Blindness and Low Vision at

Mississippi State University. The RRTC, was established in 1981,

through the support of the National Institute on Disability and Rehabilitation Research. We are the only NIDRR-funded center studying blindness and low vision. Our mission is to conduct research activities focused on improving the employment and independent living outcomes of consumers who are blind.

I would like to present findings on the costs and employment experiences of blind individuals. First, findings from an analysis of

data on consumers served in the State-Federal Vocational Rehabilitation Program, will be presented, followed by findings a national

survey of blind consumers.

The Rehabilitation Act of 1973, as amended, authorizes the allocation of federal funds on a formula basis to the states and terriVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
46

tories for the administration of a vocational rehabilitation VR program to assist individuals with disabilities in preparing for and engaging in gainful employment. State VR agencies provide a wide

variety of services. The following findings are based on data from

the 1998 Rehabilitation Services Administration, RSA, 911 National database of all clients/consumers exiting the VR program

from the 50 states and from the District of Columbia.

The number of persons who had been accepted for and received

services who exited the program in 1998 was around 360,000. Four

percent of those 360,000 consumers were legally blind, and about

96% or 345,000 had other disabilities.

When comparing competitive closure rates of consumers—and I

am using RSA’s definition of competitive employment which includes those consumers with competitive employment closures, selfemployment closures, or business enterprise program closures—35

percent of blind people were closed in competitive employment, 60

percent of other people with other disabilities were closed in competitive employment.

In comparing costs, the mean cost of services of blind persons with competitive employment outcomes was approximately $8,200.

The mean cost of services for consumers with other disabilities was

approximately around $3500. The average mean number of services

for blind persons was approximately 6; the mean number of services for other persons with disabilities was around 4.5. The mean

length of services of legally blind consumers was about 4 years; for

people with other disabilities, the length of services was approximately 3 years.

Included in my written testimony is a list of 17 services that people can receive through the State-Federal VR program. I have included the percentage of legally blind people receiving each service,

and the percentage of people with other disabilities receiving each

service.

This information indicates that blind people are five times more

likely to receive rehabilitation engineering services. They are three

to four times more likely to receive assistive technology devices and

assistive technology services—services that are critical to maintaining employment.

To further investigate differences in cost of services, I categorized

people with disabilities into 16 sub-groups. Again, the cost for legally blind people was $8200. Cost of services was highest for people who are deaf-blind—approximately, $8600. Cost of services was

least expensive for people with nervous system disorders—approximately $2700.

To summarize, the mean cost for serving blind people is double

the cost for serving other persons with disabilities. In addition to

services noted above, blind people are twice as likely to need adjustment training, twice as likely to need personal assistance, and

unlike other impairment-related services such as occupational or

physical therapy, blindness-specific services and equipment—critical to acquiring and maintaining employment—are rarely, if ever,

reimbursable through Medicare or other health plans. Additionally,

these are generally not one-time expenses. For example, blind persons must purchase new—or upgrade, if it is an option—speech,

Braille, and large-print computer access technology when new verVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
47

sions of mainstream computer operating systems and software are

released. Orientation and mobility services may be required when

employment settings change.

Finally, with respect to findings from the national telephone survey. Legally blind persons were asked if specialized technology assistive technology was needed to perform their job effectively,

eightly nine percent of the participants said yes. When asked if

they would like a regular job, 92 percent of those participants who

were unemployed said yes, they wanted a job.

In conclusion, blind people want to work. Blind people require

specialized skills, services, technology, and equipment not covered

by insurance. Many blind people can pay for these expenses because this higher SGA level. Thank you.

[The prepared statement follows:]

Statement of Brenda S. Cavenaugh, Ph.D., Research Director, Rehabilitation Research and Training Center on Blindness and Low Vision, Mississippi State University

Good morning, Mr. Chairman and Members of the Subcommittee. Thank you for

inviting me to testify on issues related to work incentives for blind and disabled Social Security beneficiaries. I have worked in vocational rehabilitation since 1972 and

am currently the Research Director at the Rehabilitation Research and Training

Center (RRTC) on Blindness and Low Vision at Mississippi State University. The

RRTC was established in October, 1981, through support from the National Institute on Disability and Rehabilitation Research (NIDRR) of the U. S. Department of

Education. As the only NIDRR-funded RRTC studying blindness and low vision, our

primary mission is to conduct research, training, and dissemination activities focused on improving the employment and independent living outcomes of consumers

who are blind or severely visually impaired. Dr. J. Elton Moore serves as our Executive Director.

Today, I will be reporting findings on the costs and employment experiences of

individuals who are blind or severely visually impaired (hereafter referred to as

blind persons). First, results of analysis of national data on consumers served in the

state-federal vocational rehabilitation (VR) program will be presented. These findings indicate that although the substantial gainful activity (SGA) level for blind

beneficiaries is higher than the SGA level of other disabled persons ($1170 vs. $700

per month), blind persons must purchase specialized blindness-related services and

equipment which are not reimbursable through Medicare or other health plans. Further, these are critical to their achieving and sustaining employment. Second, preliminary results from a national survey on the employment status of working-age

persons who are blind will be presented. These findings provide more detailed information on the relationship of work disincentives and employment.

Analysis of State-Federal Vocational Rehabilitation Data

The Rehabilitation Act of 1973, as amended, authorizes the allocation of federal

funds on a formula basis to the states and territories for the administration and operation of a vocational rehabilitation (VR) program to assist individuals with disabilities in preparing for and engaging in gainful employment. State VR agencies provide a wide range of services (e.g., physical restoration, counseling and guidance, vocational training, maintenance, job referral, job placement, rehabilitation engineering, assistive technology) to assist people with disabilities in becoming employed. VR

program data were derived from the 1998 Rehabilitation Services Administration

(RSA) 911 National data base. All cases exiting from the VR program from the 50

states and the District of Columbia were used in the analysis.

Consumers Exiting VR program after ‘‘Individualized Plan for Employment’’ Initiated (Includes both ‘‘rehabilitated’’ and ‘‘not rehabilitated’’ closures)

Total Served ............................................................................ n = 359,913

Legally blind consumers ......................................................... n = 14,732 (4%)

48

Consumers with other disabilities ......................................... n = 345,181 (96%)

Consumers Exiting VR program ‘‘Rehabilitated’’ with Competitive Employment Outcomes includes competitive, self-employment, or state-agency-managed business enterprise work statuses

Competitive Outcomes ............................................................ n = 212,082

Legally blind consumers ......................................................... n = 5,201 (35% of 14,732)

Consumers with other disabilities ......................................... n = 206,881 (60% of 345,181)

Service Intensity Variables (computed only for consumers with competitive employment outcomes)

Mean Cost of Services.

Legally blind consumers ......................................................... $8,184

Consumers with other disabilities ......................................... $3,488

Mean Number of Services.

Legally blind consumers ......................................................... 6.0 services

Consumers with other disabilities ......................................... 4.5 services

Mean Duration of Services.

Legally blind consumers ......................................................... 4.0 years

Consumers with other disabilities ......................................... 3.0 years

The Rehabilitation Services Administration defines cost of services as the total

amount of money spent by the State VR agency in providing or arranging for services on behalf of the consumer. Expenditures are ‘‘life-of-the-case’’ costs and do not

refer to any particular year. In addition, the RSA requires the VR agency to include

information on whether the client did, or did not, receive a specific service sometime

during the VR process. To further explore possible reasons for differences in costs

and numbers of services between blind consumers and those with other disabilities,

percentages from cross-tabulations were computed. Results from this analysis are

reported in Table 1.

Table 1: Percent Receiving Services by Disability

Types of Services Legally Blind Other Disability

Assessment .............. 84% 82%

Physical Restoration 39% 29%

University Training 10% 16%

Business or Vocational Training .... 7% 14%

Adjustment Training ........................ 50% 20%

On-the-job Training 5% 7%

Miscellaneous

Training ............... 24% 16%

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Table 1: Percent Receiving Services by Disability—Continued

Types of Services Legally Blind Other Disability

Counseling and

Guidance .............. 79% 76%

Job Referral ............. 18% 38%

Job Placement ......... 15% 29%

Transportation ........ 30% 30%

Maintenance ............ 14% 16%

Personal Assistance

(includes reader) 12% 2%

Rehabilitation Engineering ................. 12% 2%

Assistive Technology Devices ..... 42% 8%

Assistive Technology Services .... 45% 12%

Other Services ........ 42% 23%

Comparisons among ‘‘other disability’’ group. To explore differences within the

‘‘other disability’’ group, those consumers with competitive sector outcomes ((n =

206,881) were further categorized into disability sub-groups. Sample size, cost of

services and percent competitively closed (i.e. competitive, self-employed, and BE

closures) are reported in Table 2.

Table 2: Disability by Cost of Services and Percent Competitive Employment

Disabling Condition Mean Cost of Services Competitive Closure

Deaf-blind (n=166) .. $8,602 45%

Legally blind (n =

5,201) ................... 8,230 35%

Orthopedic conditions (n = 44,229) 4,608 62%

Genitourinary system (n = 2,249) .... 4,557 70%

Visual impairments,

but not legally

blind (n = 5,242) .. 4,418 57%

Neoplasms (n = 846) 4,404 65%

Traumatic brain injuries (n = 3,990) 4,393 55%

Allergic endocrine,

nutritional diseases (n = 3,557) 4,112 62%

Hearing impairments (n =

15,458) ................. 3,761 72%

Speech impairments

(n = 591) .............. 3,682 68%

Respiratory conditions (n = 787) ..... 3,492 56%

Diseases of the

blood (n = 4,524) 3,204 67%

Mental and emotional conditions

(n = 85,265) ......... 3,155 56%

Digestive system

conditions (n =

3,345) ................... 3,111 83%

Cardiac and circulatory conditions (n = 3,537) .. 2,920 64%

Nervous system disorders (n =

23,961) ................. 2,688 63%

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Conclusions

• Mean cost of VR services for legally blind consumers reaching competitive employment outcomes is more than twice the cost of services for consumers with other

disabilities ($8,184 vs. $3,488). • When consumers with other disabilities are grouped into smaller categories of

disability-specific conditions, only deaf-blind consumers (n = 166) have a higher

mean cost of VR services when compared with legally blind consumers $8,602 vs.

$8,230). Consumers with orthopedic conditions have the third highest cost of services ($4,608). • Legally blind consumers are more than twice as likely than consumers with

other disabilities to receive adjustment training and approximately four times more

likely to receive personal assistance (includes reader services), rehabilitation engineering, assistive technology devices, and assistive technology services. (Adjustment

training includes training in blindness-specific skills, such as Braille, orientation

and mobility, and activities of daily living. Rehabilitation technology devices and

training includes purchase of and training to use blindness-specific technology, such

as computer speech, Braille, and large print plus low vision optical and non-optical

devices.) • Unlike other impairment-related services such as occupational or physical therapy, blindness-specialized services and equipment—critical to acquiring and maintaining employment—are rarely, if ever, reimbursable through Medicare or other

health plans. Additionally, they are generally not ‘‘one-time’’ expenses. For example,

blind persons must purchase new (or upgrade if an option) speech, Braille, and large

print computer access technology when new versions of mainstream computer operating systems and software are released; orientation and mobility services may be

required when employment settings change.

Factors Affecting Employment Status of Persons who are Blind:

Preliminary Analysis of National Telephone Survey

Research Question:

What employment-related factors have the most impact on employment status

and occupations of working age adults with blindness or visual impairment?

Participants:

Working-age adults who are legally blind (N = 279)

Sampling Frame

National Library Service (NLS) subscribers designated as blind or visually impaired

Sampling Design:

Systematic sampling with random start -every kth element in the total list chosen

(first chosen at random). Sample size chosen to ensure findings are accurate within

plus or minus five percentage points of the population parameters (95 percent confidence level). Sampling tolerances (intervals) range from 3–5 points, depending

upon percentage result (worst case scenario 50% would be 5 points; best case 10%

or 90% would be 3 points.

Selected Findings related to SSDI ‘‘Income Cliff’’:

When asked if ‘‘risk of losing benefits or insurance payments’’ was a employment

barrier that they had personally encountered in trying to find a job, 27% of participants answered affirmatively.

When asked if ‘‘risk of losing benefits or insurance payments’’ was an important

reason they were not working full-time, 34% of participants working part-time or

unemployed answered affirmatively.

When asked if ‘‘risk of losing benefits or insurance payments’’ was an important

reason they were not working full-time, 39% of participants working part-time answered affirmatively.

When asked if specialized assistive technology was needed to perform job effectively, 89% of participants answered affirmatively.

When asked if they would like a regular job, 92% of those participants who were

unemployed, but not currently looking for employment, answered affirmatively.

References

Cavenaugh, B. S. (2000). [Analysis of Rehabilitation Services Administration R–

911 National Data, Fiscal Year 1998]. Unpublished raw data.

51

Cavenaugh, B. S. (2000). [Analysis of National Telephone Survey on the Employment Status of Blind Persons]. Unpublished raw data.

The Rehabilitation Research and Training Center (RRTC) on Blindness and Low

Vision at Mississippi State University was established in October, 1981, through

support from the National Institute on Disability and Rehabilitation Research

(NIDRR) of the U. S. Department of Education. As the nation’s only RRTC studying

blindness and low vision, our purpose is to enhance employment and independent

living outcomes of consumers who are blind or severely visually impaired through

the conduct of research, training, and dissemination activities.

Chairman SHAW. Thank you. Mr. Gashel.

STATEMENT OF JAMES GASHEL, DIRECTOR, GOVERNMENTAL

AFFAIRS, NATIONAL FEDERATION OF THE BLIND, BALTIMORE, MARYLAND

Mr. GASHEL. Thank you, Mr. Chairman. I am appearing today on

behalf of the National Federation of the Blind, and I appreciate the

opportunity to testify.

It is no secret that the NFB has sought removal of the earnings

limit just like seniors. We hold this view because the work and

beneficiary status of the vast majority of blind people is just like

seniors.

We had a policy in this country until yesterday, telling seniors

not to work and paying them not to. Congress was right to end that

policy. The earnings limit stifles initiative and kills the spirit.

It is one thing when this happens to someone at age 65, who has

worked a lifetime and had opportunities throughout that lifetime.

It is a different thing all together, and it is very sad, when this

happens to a person who is blind at age 25, told not to expect very

much of themselves for the future, and then to have that confirmed

by the earnings limit.

I have witnessed this throughout my 30-year career in counseling

blind people about going to work and helping them struggle with

the earnings limit.

You should see the letters they receive from Social Security, from

Susan Daniels over here. They don’t thank you for going back to

work. What do you think it says to a person when you get a letter

from Social Security that goes like this: ‘‘We are writing to give you

new information about the benefits you receive on this record, and

the rest of this letter will tell you how we overpaid you $45,000’’—

or pick some other number, it is usually real high—‘‘too much in

benefits, and how you can pay us back.’’

People are devastated by this. They are trapped in a system that

doesn’t help them go to work and doesn’t really seem to want them

to. It penalizes them if they do. Our country can do better. We are

going to do better for seniors, and I think that reflects a great deal

of credit on you.

I have been around this issue for many, many years, and I think

that it is right—no person at age 65 will ever get an overpayment

notice like that anymore, regardless of how much they earn.

I was present when Mr. Archer created the concept of the equivalent status through the identical earnings limit for seniors and the

blind. He told me that he wanted to remove the limit all together,

but he knew it wouldn’t pass right then. His alternative was five

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mandated adjustments followed by automatic indexing applied to

seniors and the blind. This did pass.

With removal of the earnings limit for seniors, a choice was made

to exclude the blind, so what should the policy be? We have been

fighting for years just like seniors, to have meaningful work incentives just like seniors, so blind people could go to work and not

have any reason not to do so just like seniors. Is that wrong? Was

Mr. Archer wrong when he thought that linkage up in 1977? Why

isn’t it right now if it was right then?

Frankly, I don’t know what to say to blind people who are caught

in the earnings limit trap. If Congress has really adopted a ‘‘just

say no’’ stance, then I don’t know how to answer that issue. I don’t

think people can accept the fact that it is right to pay benefits for

someone who earns, let’s say, as much as a member of Congress,

over $140,000 a year, and then just say ‘‘no’’ to members of a group

who are otherwise eligible, if they earn $14,000.

On the matter of disability and blindness, I am troubled by the

fact that disability still means the inability to work. I honestly

don’t know another definition, but I worry that no progress will

really be made on the earnings limit as long as there isn’t a different definition.

With blindness, SGA is applied as a pure earnings limit, which

could be changed without changing or redefining disability. I think

Congress should look at doing it that way.

Mr. Chairman, the economics of the circumstances of the blind—

low income, intermittent employment, and lots of unemployment—

clearly justify removing limits and providing resources to members

of this population. Our country would be richly rewarded if you

would use your leadership to do this.

There will be no reward if the blind are simply held back and

told that we have to wait again. This is not to say that something

else should not be done apart from blindness relating to disability

because that, too, should be done.

On behalf of the National Federation of the Blind, I thank you.

[The prepared statement follows:]

Statement of James Gashel, Director, Government Affairs, National

Federation of the Blind, Baltimore, Maryland

Good morning, Mr. Chairman. My name is James Gashel. I am the Director of

Governmental Affairs for the National Federation of the Blind.

The National Federation of the Blind (NFB) has a membership in excess of

50,000, representing all states, the District of Columbia, and Puerto Rico. All of our

officers and the vast majority of our members are blind. Local chapters of the Federation can be found in most sizable population areas in the United States. In the

words of our monthly publication, the Braille Monitor, ‘‘We are not an organization

speaking for the blind; we are the blind speaking for themselves.’’

This hearing is being held in the wake of legislation passed to remove the earnings limit altogether for people who reach age 65. The NFB has sought identical

treatment for blind people. In this statement I will explain how the blind person’s

earnings limit presently works and why we think it should be changed.

How the Blind Person’s Earnings Limit Works:

At least two provisions of the Social Security Act work together to form what I

have called ‘‘the blind person’s earnings limit.’’ These are section 216(i) (in which

blindness is defined) and the second sentence of section 223(d)(4) (which specifies

that earnings not exceeding the exempt amount for age–65 retirees are not considered to be substantial gainful activity (SGA) for someone who is blind). This latter

53

provision has been amended to exclude the changes in the exempt amount made in

1996 and the removal of the earnings limit altogether.

This means that the blind person’s earnings limit (or exempt amount—whichever term you like) is now set at $1,170.00 per month. This is $14,040.00 annually, indexed to coincide with average wage growth determined from year to year. As with

seniors, only Congress can change this limit.

I have used the term ‘‘earnings limit,’’ because this is the best way to describe

the situation for the blind. The technical term formerly used for seniors was the ‘‘retirement test,’’ but members of Congress and the public called it the earnings limit.

With blindness, the technical term is the ‘‘substantial gainful activity test,’’ but this

too is just an earnings limit.

SGA is an earnings limit for the blind but an entirely different concept when used

in determining disability. An SGA determination in disability cases is intertwined

with the decision as to whether or not the person is disabled. The person found able

to perform SGA is not disabled according to the law.

This is not how it works with blindness. I say this because of the plain language

of section 216(i) of the Act:

‘‘. . .the term ’disability’ means (A) inability to engage in any substantial gainful

activity by reason of any medically determinable physical or mental impairment

which can be expected to result in death or has lasted or can be expected to last

for a continuous period of not less than 12 months, or (B) blindness; and the term

‘‘blindness’’ means.....’’

This language is certainly not new. It has been in the law this way for at least

35 years. If blindness is established, the only remaining question is, do earnings (if

any) exceed (or not exceed) SGA? If earnings exceed SGA, no benefit can be paid.

Conversely, benefits are payable when earnings are below SGA. So—technical term

or not—SGA is really an earnings limit imposed on the blind.

How the Earnings Limit Works as a Disincentive:

I have already said that only Congress can change the blind person’s earnings

limit, but why do so? In my mind, the foremost reason is that only 26 percent of

blind adults age 18 to 65 are working to any extent at all. According to a November,

1999, report of the American Association of Retired Persons, 12 percent of persons

age 65 and older work. So the vast majority of blind adults, 74 percent, are just

like seniors in regard to work and beneficiary status.

There are many reasons why so few blind people work. Lack of self-confidence and

lack of employers willing to hire them are two reasons. The imposition of the earnings limit is by far the reason most often given, however. I say this from 30 years’

experience in counseling blind people to go to work.

Consider the economics in a fairly simple but typical case. Assume annual cash benefits of $9,000.00 or $750.00 per month. At this rate for a single person with

no other income, the benefits are tax-free. Taking this into account, plus the expenses that also go with working (such as commuting and buying clothing appropriate to the workplace) $15,000.00 in gross pay would be needed to replace $9,000

in benefits.

Annual pay of $15,000.00 is $7.20 an hour. At $16,000.00 or $7.70 an hour, the

average net gain for working full-time for an entire year would be about $1,000.00.

Earnings below $15,000.00 will mean a loss. Some will do this, but most won’t because they can’t afford to lose income. If the beneficiary has dependents, the situation is even more troublesome.

With two dependents, the total benefits are likely to average $18,000.00 annually.

Therefore, earnings of $15,000.00 or $16,000.00 (just above the limit) will not replace benefits. Using conservative assumptions, such as taxes figured at 25 percent

of gross pay and child care for two children at $300.00 per month, I conclude that

replacement of $18,000.00 in benefits would require about $33,000.00 in gross pay.

When dependents are involved, the choice to work or not to work is far more constrained, and the amount needed to replace everyone’s benefit far exceeds the blind

person’s earnings limit.

From this it is clear that a typical blind person is apt to face a severe income

penalty with earnings at the entry level. Most people will not lose with gross pay

above $33,000.00, but most blind people are not being offered that much money to

start or return to work. So most blind people accept their benefits and often do

intermittent work to supplement them. This way, with benefits of $9,000.00 and

earnings of $13,000.00 (just under the earnings limit), the beneficiary can have

$22,000.00 and often do better financially than accepting a full-time entry-level job.

This is the sad reality that most blind people face day after day: not getting

ahead, just getting by. It would be one thing if employers were opening their arms

to accept us, but that is not happening. For most blind people, just getting a chance

54

to have a job is a job itself. This condition, combined with the earnings limit, leads

to lost opportunities and lost potential for far too many blind people.

Creating Incentives:

Congress is very good at using laws—especially tax laws and Social Security—to

create incentives. There are many examples of subsidies paid to certain groups or

industries to achieve desirable national goals. The removal of the earnings limit to

subsidize working seniors’ wages is a relevant example. In this instance, one goal

is to help employers maintain an experienced workforce. This responds to current

needs, but many years ago when economic and employment conditions were different, the earnings limit was a means of encouraging seniors to vacate their jobs

for younger workers.

This brings me to the earnings limit policy for the blind. What should the policy

be? Frankly, the removal of the earnings limit at age 65 looks like a choice has been

made to pay benefits to seniors who work and pay blind people on the condition that

they don’t work. Since both ‘‘retirement age’’ and ‘‘blindness’’ are defined—so establishing basic eligibility is really not the question—the policy of no limit for seniors

compared to $14,040.00 for the blind is unjust. That point is not lost on blind people.

People have asked, ‘‘Would you really pay benefits to blind people who earn as

much as a member of Congress?’’ My answer would be ‘‘yes.’’ If benefits are paid

to members of Congress (or others who earn as much as a member of Congress),

then I would not exclude the blind. With the removal of the earnings limit, benefits

will now be paid to thousands of seniors who will continue to work and earn as

much as $141,300.00 and more. The goal achieved by this policy is valid, but continuing an earnings limit of $14,040.00 on work performed by the blind is not.

CONCLUSION:

Mr. Chairman, the economic circumstances of blindness—low incomes, intermittent work, and lots of unemployment—clearly justify removing limits and providing

resources to members of this population. This is not to say that issues relating to

disability apart from blindness don’t deserve attention—they do. So, on behalf of the

National Federation of the Blind, I urge you to examine the impact of the earnings

limit with the wisdom, caring, and foresight shown in removing the limit for seniors.

If you do that, I am confident that new opportunities will result from new incentives. I thank you.

Chairman SHAW. Thank you. Mr. Matsui.

Mr. MATSUI. Thank you, Mr. Chairman. I would like to thank all

four of the panelists for their testimony, it was very precise and

very moving.

Dr. Cavenaugh, you indicated that there was a difference in

terms of expenses for those that are blind and other disabled, and

you related a number of numbers. Could you perhaps—and not go

into a lot of detail because it would probably take a long time—explain where the difference is and why the blind have a larger expense than the other disabled?

Dr. CAVENAUGH. The Rehabilitation Services Administration requires the state agencies to report ‘‘yes’’ or ‘‘no’’ if a person received

a specific service during the VR process. RSA also requires data on

total cost of services. So, we know the total cost of services and

which services a consumer received. There are about 17 different

types of services.

Using cross-tabulations, percentages, frequencies, I looked at the

types of services different disability sub-groups actually received.

First, I compared legally blind consumers with all other consumers.

Then I grouped consumers with other disabilities into 16 subgroups. I again looked at the services received by consumers in

these subgroups.

55

I found that blind people were receiving many more of those

services which we would expect to be more expensive. Why is it two

times more expensive for a legally blind person to go through the

VR system? Well, I think it is to some extent because of the huge

cost for rehabilitation engineering. For example, among legally

blind people, 12 percent receive rehabilitation engineering; in the

other disability group, about 2 percent receive rehabilitation engineering. Forty-two percent of legally blind people receive assistive

technology devices; 8 percent of other disability groups receive technology devices. Forty-five percent of blind people receive assistive

technology services; 12 percent of other people do.

So, from this data, that blind people are receiving those services

that are more expensive and, unfortunately, these are services, as

I earlier indicated that are necessary for finding employment and

are also necessary for maintaining employment.

Legally blind consumers are twice as likely to receive adjustment

services. Adjustment services include training in blindness-specific

alternative techniques critial to living independently. So, I think

cost of services is higher because blind clients receive these services

more frequently than other VR consumers.

With respect to job placement services, other disability groups

are twice as likely to receive job placement services. When I was

a VR counselor, job placement services were provided by the rehabilitation counselor and were not included in cost of services. So,

I think differences in costs can be explained by the types of services

received.

Mr. MATSUI. Thank you, I appreciate that response. Mr. Gashel,

how is your building coming along?

Mr. GASHEL. We are making good progress. We have raised about $3.5 million, but we have got to raise $18 before we—

Mr. MATSUI. You are moving along, anyway. It is coming along.

Mr. GASHEL. Yes, we are.

Mr. MATSUI. Congratulations.

Mr. GASHEL. Thanks for asking.

Mr. MATSUI. The unemployment rate among the blind is, what,

75 percent?

Mr. GASHEL. Seventy-four percent.

Mr. MATSUI. I want to ask a two-part question. If you raise the

earnings limit and eliminate it completely, do you have any estimates what the unemployment rate would be for the blind? And,

secondly, if you raised it to $17,000, do you have an estimate or

studies that would indicate what the unemployment rate for the

blind would be? Maybe you don’t.

Mr. GASHEL. I think it would be a guess, but we are talking

about 100,000 beneficiaries who would be the target group, and all

of them are receiving benefits now, very few of them are working,

as we have heard today. So, what you are trying to do is attract

as many of them as possible into the workforce.

There are probably only about 30,000 blind people who are earning above the earnings limit, according to the information that we

have assembled, so you are not going to add that many beneficiaries to the rolls, and it would be a great trade-off to attract,

you know, 50,000 of these people, or even 30-40,000 of these people

into the workforce who are not now paying in.

56

Now, if you figure—we could do the math sometime—but if you

figure that those people are going to earn, say, average incomes of

$25,000, they are going to pay taxes when they earn that money.

Right now, they are just drawing benefits.

So, I think this is a great way for the program—just like seniors—to pay for itself.

Mr. MATSUI. Thank you, all of you.

Chairman SHAW. Mr. Collins.

Mr. COLLINS. You heard Dr. Daniels talk about a demonstration

project. My question is going to be aimed at her comment, and the

question is, what change would be better, a higher SGA or no

‘‘cliff‘‘, and that is open to all.

Mr. GASHEL. I would like to try first. I will go for it, Mr. Collins.

Well, probably both. I think this is really an analogous situation

to seniors, I hope that comes through. With seniors, you know,

there was no cliff for a long time, and even a 2-for-1 offset wasn’t

considered enough of a work incentive, and so then they went to

a 3-for-1 offset and that wasn’t considered enough of a work incentive, and so now it is no limit.

I don’t know why it would be any different for blind people, but

some people have talked about a 2-for-1 offset. Well, that would be

one way to look at it, or maybe a 3-for-1 as was done for seniors. I certainly think that the threshold has to be higher. $11,000 wasn’t a good enough threshold for seniors, and so now it is $17,

and it will be nothing. So the threshold clearly has to be a lot higher than it is to help people get into the workforce. Average incomes

are about $25,000, entry level incomes. Now, different jobs, of

course, have different entry level incomes, but I think you have got

to get above $25,000 for an entry level job to encourage people to

enter the workforce.

Mr. COLLINS. Anyone else want to tackle that one?

Ms. WILSON. I wanted to make a comment on that, if I could. In

my roomful of students last Tuesday, they all unanimously agreed

that they were afraid to go off of Social Security Disability because

they basically do not trust the system.

Don said, ‘‘I would be afraid to go off of it even though there are

some of these incentives because I don’t want to face Mrs. King, my

Social Security worker again, she was just awful, and I don’t want

to get entrenched—have to deal with that system anymore than I

do’’.

Fifteen years ago when we started the Louisiana Center for the

Blind, we got a Social Security demonstration grant to prove some

of the things that I think are, again, going to be coming around to

be proven, and some of those demonstration grants have been going

around for 15 years that I know of straight up from Social Security.

Nothing much is changing, I think, because we are missing the

point. We are going all around it, but we are not hitting the real

basics, and that is the emotional thing.

I would love to see what blind people could really do and really

work if they really had the real incentives to do it. I think we could

change the whole way people view blindness.

Mr. COLLINS. If I understood you right then, you are kind of from

the old school—a bird in the hand is worth two in the bush—stay

on Social Security to keep from wrestling with the system itself,

57

and the fear of losing income totally. Is that the way I interpret

it? Ms. Gillis?

Ms. GILLIS. For me, in order to replace my benefit, I would have to secure a job for $35,500 a year. Those jobs are few and far between in Martin County. The entry level jobs there start at $23,000

a year, and I would need to work at a $35,500 a year level just to

break even with where I am presently at. So that, to me, is scary.

At that level, even if I broke even, I am still in the position I am

in now where there are no extra dollars to augment my eventual

retirement. And the scariest part of this, in my mind, is when I

turn the magic age of 65 and my benefits all convert over, my benefits will be so reduced, my pension with the church which is $292

now will be reduced to $63. I don’t know what Social Security will

do with the $933 a month benefit, but I bet you it will be at least

half of that, and that is a scary thing. And then what is my employment outlook when I am 65 and blind, when I get to that age,

even though there is no limit, I will have been out of the workforce

for almost 30 years. So that concerns me.

Mr. COLLINS. Thank you very much.

Chairman SHAW. Mr. McCrery.

Mr. MCCRERY. Ms. Gillis, would you explain to us why it would take a $35,000 a year job to replace what you are getting from Social Security?

Ms. GILLIS. With the additional expenses that I incur to go back

to work—well, first of all, the taxability of the income. Presently,

I pay tax on one-half of the $933 a month I receive for myself, and

pay no income tax on the $498 I receive for my dependent son, and

I pay tax on 100 percent of the $292 of 1099-R income on my tax

return. When you factor in the difference of the taxability of the

income, in itself, when I go back to work and my income is all

earned income, that is all subject to taxes. So that is part of the

problem.

I would have additional expenses that I would need to incur to

secure the adaptive technology, the equipment, the maintenance

thereof, the transportation, child care, the list goes on and on, all

the incidentals associated with leaving my home and going back

into the workforce.

Mr. MCCRERY. Anything else? You are not counting loss of medical benefits, are you?

Ms. GILLIS. Yes, the medical benefits, as well, Medicare. I am

sorry.

Mr. MCCRERY. But you know you would continue to receive

Medicare for nine years after you broach the earnings limit.

Ms. GILLIS. Right, and I would have to get additional medical insurance as well, yes.

Mr. MCCRERY. Within that nine-year period, yes, you would have

to obtain other medical insurance, but your medical benefits would

continue even after you lost your cash benefits under current law,

do you know that?

Ms. GILLIS. I do now, sir. I am not an expert.

Mr. MCCRERY. I thought you might have been counting that in

your estimate, and it doesn’t exactly fit as neatly as that.

Ms. Wilson came to my office about a month ago and brought

with her a group of about 15 blind individuals, and we talked for

58

about an hour about this subject, and Ms. Wilson knows that I disagree with Mr. Gashel and Ms. Wilson on severing—I mean, on

doing away with any earnings limitation for the disability program

under Social Security. So, I am over that hurdle with Ms. Wilson.

I haven’t talked with Mr. Gashel about it.

I really believe, in brief, that the disability program under Social

Security is completely different from the earned retirement benefits

under Social Security, and I really think it is apples and oranges.

The incentives are the same, yes, I agree with that, and certainly, as Ms. Gillis has pointed out, if we keep this very low limit

as a cliff, it serves definitely as a disincentive for people to work,

no doubt about that. And I, and I think other members of this Subcommittee, would like to do something about that. I don’t think the

right thing to do, though, is just to say there is no earnings limit.

That, as GAO testified, just fundamentally changes the purpose of

a disability program under Social Security. For example, if you have a blind individual who makes $100,000

a year, it doesn’t make sense for him to receive disability benefits

from the government, from the taxpayers. And you say, okay,

$100,000—well, $80,000—$50,000—you know, where do you stop?

I don’t know. But I do think there is a need for an earnings limit

when somebody has demonstrated an ability to earn enough clearly

to take care of his needs, his family’s needs, then the taxpayers

don’t need to supplement that.

But I think this issue of a cliff is something that we need to look

at. I think that is the most detrimental part of this whole system.

Ms. Gillis already testified, gosh, she has got to be very careful to

not make just over that limit because, if she does, boom, she loses

everything except her medical benefits.

So, I think one of the most important things we could do, Mr.

Chairman, is to smooth out that cliff, to provide a slope so that Ms.

Gillis doesn’t have to watch everything so closely for fear of losing

everything. She can smoothly transition into that slope and not

have to be so precise about counting every penny, and I think that

would be a big help.

I would like to raise the earnings limit and I think Dr.

Cavenaugh has done this Subcommittee some service in pointing

out some of the underlying rationale for the difference in treatment

between blind disabled and nonblind disabled and, Dr. Cavenaugh,

I appreciate your giving us those statistics which I think bolster

the argument for separation of the two.

So, with that, Mr. Chairman, I see my time has expired. I appreciate your giving me the time, and thank all the witnesses for your

testimony.

Chairman SHAW. Mr. Hulshof.

Mr. HULSHOF. Thank you, Mr. Chairman. Dr. Cavenaugh, in the

interest of full disclosure, I have a degree from the University of

Mississippi and, as you know, there is the intense rivalry between

Ole Miss and Mississippi State. So, if you promise not to hold it

against me, I promise not to hold it against you.

Dr. CAVENAUGH. You know what we do when we say the prayer

at Mississippi State, do you know how we respond?

Mr. HULSHOF. How is that?

Dr. CAVENAUGH. Go to hell Ole Miss. We really don’t mean it.

59

Mr. HULSHOF. I will resist the urge to respond in kind.

Dr. CAVENAUGH. Well, actually, we have stopped saying the prayer, so it doesn’t happen anymore.

Mr. MCCRERY. We do the same thing at LSU, for that matter,

so, Hulshof, you are in bad company here.

Mr. HULSHOF. I feel outnumbered by other SEC teams, but I do

want to ask you just quickly, because we are also being called for

a vote, in looking over your study, you mention that, or your conclusions that the cost of VR services for those legally blind are

more than twice that of VR services for people with other disabilities, and I want to ask, does that category of other disabilities include people that are not on the Disability rolls?

Dr. CAVENAUGH. Yes, it does. There are people who are served

in the State-Federal program who are not on the Disability rolls.

Mr. HULSHOF. Is that a fair comparison, because wouldn’t you

expect VR costs—and you have worked in VR, as you mentioned—

wouldn’t you expect VR costs to be lower for people who are not

disabled enough to qualify for Disability benefits?

Dr. CAVENAUGH. Absolutely.

Mr. HULSHOF. We talked about, with the previous panel, that the

SGA limit for those who are blind is about 67 percent higher for

those with other disabilities. I assume your research findings justify that disparity?

Dr. CAVENAUGH. The disparity that—I am sorry, I didn’t hear.

Mr. HULSHOF. Does your research—do you agree that is an

appropriate—

Dr. CAVENAUGH. What is an appropriate?

Mr. HULSHOF.—that there is a 67 percent higher SGA limit for

the blind as opposed to those that are other individuals with disabilities?

Dr. CAVENAUGH. Do I agree with the higher SGA level for blind

people?

Mr. HULSHOF. Yes, ma’am.

Dr. CAVENAUGH. The data seem to indicate yes.

Mr. HULSHOF. What about, as Dr. Daniels mentioned for us, that

any individual who is disabled can actually earn more than the

SGA limits and still stay eligible because they can subtract work

expenses that are related to their disability in determining the

earnings subject to the limit. I mean, the fact that we are trying

to help provide a deduction or subtraction of work-related expenses.

Including that, does that also continue then to justify this disparity

between individuals who are blind and those disabled who are not

blind?

Dr. CAVENAUGH. Yes, I would think so. And I think my reasoning

is, are we talking about those work-related expenses through

Schedule A? You are talking about the IRS deductions?

Mr. HULSHOF. Yes.

Dr. CAVENAUGH. You have to make it first, and using Schedule

A precludes people from taking the Standard Deduction, so I think

there continues to be real problems. In response to your question

regarding non-recipients, I could select out those VR clients receiving SSI or SSDI and I compare cost of services for blind persons

versus consumers with other disabilities. I would expect similiar

results to those I have reported.

60

Mr. HULSHOF. Mr. Chairman, I know we have got this vote on,

so I yield back my time.

Chairman SHAW. Mr. Gashel, are you aware of a proposal that

was in the President’s budget to exempt the disabled employees

and the sheltered workshops from receiving Social Security credits

to withholding of FICA? I would like you to comment on that because I think it is important that everybody who is working continue to build up Social Security credits that will help them when

they reach retirement.

Mr. GASHEL. Well, I agree with that, Mr. Chairman, and I think

it is an outrageous proposal. I honestly don’t know where it came

from, but I can see some of the workshops that employ the disabled

might want to exempt themselves from coverage under the—with

FICA, paying into Social Security, because a lot of the people might

be getting Supplemental Security Income anyway, but it is outrageous to end up denying people Social Security coverage.

It is kind of like, in our case, we get paid the sub-minimum wage

in these workshops, too, which again is outrageous. So, I think that

what we have got to do is look at blind and disabled people more

along the lines of the way we look at other workers in this country,

including seniors. We want people to work and we want them to

earn as much as they possibly can, and we want them to earn Social Security credits. I think this proposal might end up having to

come to this Subcommittee—I am glad you brought it up because

I hope you don’t approve anything like this.

Chairman SHAW. I am also concerned about the fact that so

many of these sheltered workshops do not pay minimum wage. It

is something that has come up in my office in talking with some

of the blind representatives. Chris Cox brought it up to me. I see

she is in the audience today. She brought it up to me in the office

sometime ago. And it is something I would like to look into.

Do we have any data—and I address this to any of the witnesses

at the table here—do we have any data as to what effect that

would have on the employment of the blind within the workshops,

if we were to do away with that exemption and provide that the

workshops pay minimum wage just like everybody else?

Mr. GASHEL. You are going to have trouble believing this, but according to the people that pay the sub-minimum wages, there are

only 150 blind people, nationwide, that are paid less than the minimum wage. So, really, we are talking almost academics here. It is

close enough for government work to pay everybody at least the

minimum wage.

Chairman SHAW. Yes, but I think it is insulting. I think it is insulting.

Mr. GASHEL. It is absolutely insulting. And so the impact would

be 150 people. The guy who runs the workshop umbrella called National Industries for the Blind, is paid $200,000 a year, which is

as much as the President. And I have said, you know, at a salary

like that, he ought to be able to figure out a way to bring 150 blind

people up to at least the minimum wage.

Chairman SHAW. I think you just figured out a way to do it.

Mr. GASHEL. I hope so.

Chairman SHAW. Well, we do have two votes on the Floor, which

is going to take us away, so I am going to recess until 1:00 o’clock.

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It is now a quarter after 12:00. We will come back at 1:00 o’clock.

That will give everyone a chance to take a little break and have

lunch and be back here. This panel is excused, we have completed,

and we are down now to the final panel. Thank you. And I want

to thank all you witnesses. Ms. Gillis, I was particularly impressed

with your comment that to walk in your shoes. I think that we

should pay heed to that and do that.

Ms. GILLIS. Thank you.

Chairman SHAW. Thank you for being here.

[Recess.]

[Questions submitted by Chairman Shaw to Ms. Cavenaugh, Mr.

Gashel, Ms. Gillis, and Ms Wilson, and their respective answers,

follow:]

Brenda Cavenaugh, Ph.D.

Rehabilitation Research and Training Center on Blindness and Low Vision

P.O. Box 6189

Mississippi State University, MS 39762

Dear Dr. Cavenaugh:

Thank you for testifying before our Subcommittee regarding work incentives for

blind and disabled Social Security beneficiaries. In order to complete our hearing

record, I would appreciate your answering the following questions:

1. Individuals who are disabled, including those who are blind, can actually earn

more than the SGA limits and stay eligible for benefits. The reason is they can subtract work expenses related to their disability in determining earnings subject to the

limit. (For example, if a person who is blind earns $1,500 per month but has $500

in work expenses, their SGA is $1,000—below the $1,170 limit.) Are you familiar

with the provision? Is it being used? How many individuals who are blind take advantage of these deductions? Is it effective? Should it be changed?

2. Your analysis of the costs of vocational rehabilitation services compares the

costs of blind individuals with the costs of individuals with other disabilities. Do all

of these blind individuals meet the definition of statutory blindness used by Social

Security? Do all of the individuals with other disabilities have impairments that are

severe enough to qualify for Social Security disability benefits? If you compared the

costs of only those blind individuals who qualify for Social Security with those individuals with other disabilities who qualify for Social Security disability benefits,

what would be the difference in these costs?

I thank you for taking the time to answer these questions for the record and

would appreciate your response by no later than May 19, 2000. In addition to a hard

copy of your response, please submit your response on an IBM compatible 3.5-inch

diskette in WordPerfect or Microsoft Word format. If you have any questions concerning this request, please feel free to contact Kim Hildred, Staff Director, Subcommittee on Social Security at (202) 225–9263.

Sincerely,

E. CLAY SHAW, JR.

Chairman

Honorable E. Clay Shaw, Jr.

Chairman, Subcommittee on Social Security

House of Representatives

Washington, DC 20515

Dear Congressman Shaw:

Thank you for the opportunity to further respond to your questions regarding

work incentives for Social Security Disability Insurance (SSDI) beneficiaries who are

blind.

In response to questions regarding my analysis of the costs of vocational rehabilitation (VR) services:

• Legally Blind consumers are those with ‘‘center visual acuity 20/200 or less in

the better eye with best correction or widest diameter of visual field subtending an

62

angle of no greater than 20 degrees.’’ All blind individuals used in this analysis as

reported in my March 23, 2000 testimony meet the definition of statutory blindness

used by Social Security.

• Although the Rehabilitation Services Administration database used in this analysis does not include direct data indicating if VR consumers have impairments severe enough to qualify for SSDI, it does include information indicating if individuals

received SSDI at application, at closure, or at any time during the VR process. With

the expectation that an analysis of this specific population of SSDI beneficiaries

would be helpful in answering your questions, I am attaching findings from this

analysis.

• Based on an extensive search, I have not found any research that has shown

that costs of VR services for those who qualify for SSDI are significantly different

from those reported in my testimony of March 23, 2000 or in the enclosed attachment.

With respect to your other questions regarding work-related expenses:

• Although SSDI and Supplemental Security Income (SSI) beneficiaries can deduct Impairment Related Work Expenses (IRWEs) in determining earnings subject

to SGA limits, an extensive review of the literature revealed no empirical data on

the use of IRWE’s by blind recipients. My personal experience has been that blind

individuals are generally unaware of work-incentive provisions, such as IRWE, the

Trial Work Period (TWP), and the Extended Period of Eligibility (EPE).

• Dr. John Hennessey, Office of Research and Statistics, Social Security Administration, has authored several publications focusing on factors (e.g., work incentives,

job accommodations, VR, age, sex, race, and marital status) that Honorable E. Clay

Shaw, Jr. affect the ability of SSDI recipients to sustain their work effort. In addition, researchers at the Rehabilitation Research and Training Center (RRTC) for

Economic Policy for People with Disabilities, Cornell University, have investigated

earnings and program participation rates of SSI recipients. You may want to contact

Dr. Suzanne Bruyère, RRTC Director, at (607)255–7727 for information on

related ongoing studies. My review indicated that neither of these sources reported

findings on utilization of IRWE’s across disability groups.

Please, do not hesitate to contact me it you have further questions. My telephone

number is 662–325–2001. I can also be contacted by e-mail at

bcavenaugh@colled.msstate.edu.

Sincerely,

BRENDA S. CAVENAUGH, PH.D., CRC

Research Director

Analysis of State-Federal Vocational Rehabilitation Data

The Rehabilitation Act of 1973, as amended, authorizes the allocation of federal

funds on a formula basis to the states and territories for the administration and operation of a vocational rehabilitation (VR) program to assist individuals with disabilities in preparing for and engaging in gainful employment. State VR agencies provide a wide range of services (e.g., physical restoration, counseling and guidance, vocational training, maintenance, job referral, job placement, rehabilitation engineering, assistive technology) to assist people with disabilities in becoming employed. VR

program data were derived from the 1998 Rehabilitation Services Administration

(RSA) 911 National data base. All cases exiting from the VR program from the 50

states and the District of Columbia were used in the analysis.

Consumers Accepted for Service and Exiting VR program after Individualized Plan for Employment Initiated (Includes both ‘‘rehabilitated’’ and ‘‘not rehabilitated’’ closures)

All Consumers SSDI Recipients*

Total Served ......... 359,913 53,416

Legally blind consumers ................. 14,732 4,229

Consumers with

other disabilities 345,181 49,187

63

Consumers Exiting VR program ‘‘Rehabilitated’’ with Competitive Employment Outcomes—includes competitive, self-employment, or state-agency-managed

business enterprise (BE) work statuses

All Consumers SSDI Recipients

Competitive Employment Outcomes .................. 212,082 25,123

Legally blind consumers ................. 5,201 1,774

Consumers with

other disabilities 206,881 23,349

Service Intensity Variables (computed for consumers with competitive employment outcomes)

All Consumers SSDI Recipients

Mean Cost of

Services.

Legally blind consumers ................. $8,184 $9,052

Consumers with

other disabilities $3,486 $4,767

Mean Number of

Services.

Legally blind consumers ................. 6.0 6.7

Consumers with

other disabilities 4.5 4.7

Mean Duration of

Services (Yrs.).

Legally blind consumers ................ 4.0 3.8

Consumers with

other disabilities 3.0 3.1

Disability by Mean Cost of Services

All Consumers SSDI Recipients

Deaf-blind (n = 166) $8,602 $10,179

Legally blind (n =

5,201) ................... 8,230 9,076

Orthopedic conditions (n = 44,229) 4,608 7,212

Genitourinary system (n = 2,249) .... 4,557 4,300

Visual impairments,

not legally blind

(n = 5,242) ........... 4,418 6,970

Neoplasms (n = 846) 4,404 4,278

Traumatic brain injuries (n = 3,990) 4,393 5,877

Allergic endocrine,

nutritional diseases (n = 3,557) 4,112 4,315

Hearing impairments (n =

15,458) ................. 3,761 5,216

64

All Consumers SSDI Recipients

Speech impairments

(n = 591) .............. 3,682 5,999

Respiratory conditions (n = 787) ..... 3,492 3,264

Diseases of the

blood (n = 4,524) 3,204 3,252

Mental and emotional conditions

(n = 85,265) ......... 3,155 3,833

Digestive system

conditions (n =

3,345) ................... 3,111 3,483

Cardiac and circulatory conditions (n = 3,537) .. 2,920 4,043

Nervous system disorders (n =

23,961) ................. 2,688 3,933

References

Cavenaugh, B. S. (2000). [Analysis of Rehabilitation Services Administration R–

911 National Data, Fiscal Year 1998]. Unpublished raw data.

Cavenaugh, B. S. (2000). [Analysis of National Telephone Survey on the Employment Status of Blind Persons]. Unpublished raw data.

Mr. James Gashel

Director of Government Affairs

National Federation of the Blind

1800 Johnson Street

Baltimore, MD 21230

Dear Mr. Gashel:

Thank you for testifying before our Subcommittee regarding work incentives for

blind and disabled Social Security beneficiaries. In order to complete our hearing

record, I would appreciate your answering the following question:

Individuals who are disabled, including those who are blind, can actually earn

more than the SGA limits and stay eligible for benefits. The reason is they can subtract work expenses related to their disability in determining earnings subject to the

limit. (For example, if a person who is blind earns $1,500 per month but has $500

in work expenses, their SGA is $1,000—below the $1,170 limit.) Are you familiar

with the provision? Is it being used? How many individuals who are blind take advantage of these deductions? Is it effective? Should it be changed?

In your testimony, you indicate that one reason to increase the SGA limit is because of work-related expenses which make it less profitable to work. However,

aren’t work-related expenses excluded from the SGA limit?

I thank you for taking the time to answer this question for the record and would

appreciate your response by no later than May 19, 2000. In addition to a hard copy

of your response, please submit your response on an IBM compatible 3.5-inch diskette in WordPerfect or Microsoft Word format. If you have any questions concerning

this request, please feel free to contact Kim Hildred, Staff Director, Subcommittee

on Social Security at (202) 225–9263.

Sincerely,

E. CLAY SHAW, JR.

Chairman

65

May 18, 2000

The Honorable E. Clay Shaw, Jr., Chairman

Subcommittee on Social Security

Committee on Ways and Means

United States House of Representatives

Washington, D.C. 20515

Dear Mr. Chairman:

Thank you for your letter of April 26, 2000, including questions resulting from our

recent hearing. I certainly appreciate you continuing interest in this matter as well

as the opportunity to respond to the additional questions.

You ask if I am aware of allowed deductions for disability-related work expenses,

how many blind people take advantage of these deductions, and whether the law

should be changed. To answer the last question first, I certainly think the law

should be changed. In the rest of this letter I will explain why.

According to the Social Security Administration, 120,000 blind persons receive disability insurance benefits. I saw an official estimate several years ago that about

eleven percent of beneficiaries who are blind have earnings. This means that approximately 13,200 blind people work while continuing to receive benefits. Based on

my experience, I would estimate that about 40 percent, or 5,300, claim impairmentrelated work expenses.

This means that 89 percent of blind beneficiaries don’t work. Of those who do,

the majority still don’t claim impairment-related work expenses. Therefore, this is

not a significant work incentive. At best, it only serves to compensate a few people

for some of their work-related costs.

For the blind, I think there are several reasons why this deduction is not effective

as a work incentive. Most work expenses cannot be counted. For example, the cost

of transportation to and work does not count, since the Social Security Administration does not consider taking the public bust to be blindness-related. Costs that may

relate to impairments, other than blindness, don’t count if eligibility is based on

blindness. Costs that are paid by an employer don’t count either. So, the result is

that most work-related expenses really don’t count.

Also, the application of this deduction is very discretionary with the Social Security Administration. Therefore, beneficiaries are left with considerable uncertainly

as to whether a particular deduction will be allowed or disallowed. No process for

reliable and consistent advance determination exists.

Work incentives are only effective if they as seen as clearly addressing and favorably resolving perceived penalties. It is a fundamental principle that beneficiaries

will not use what they cannot understand or do not trust. This-in addition to the

narrow scope of the allowed deduction itself-is the primary reason why only a small

minority of blind beneficiaries claim deduction for impairment-related work expenses.

I believe these comments provide answers to you questions about impairment-related work expenses, although no necessarily in the order of the questions themselves. The following comments will address you final question, which is: ‘‘Aren’t

work-related expenses excluded from the SGA limit?’’ The answer is ‘‘no.’’ Only impairment-related work work expenses are excluded.

In one of her responses to a question during the hearing, Deputy Commissioner

Susan Daniels said that all ordinary work expenses can be deducted from gross

earnings for blind people. However, Dr. Daniels either misspoke or was confused.

In either case her information was factually incorrect. This demonstrates the problem. If officials of the Social Security Administration cannot accurately explain the

deductions that all allowed and not allowed, how can claimants be expected to know

where they stand?

This is really the underlying problem which why work incentives are not used.

They are just too complex for beneficiaries or their advocates to understand and for

Social Security personnel to administer. As long as there are penalties to working

and there is no certainty as to whether they will or will not be applied, beneficiaries

will choose security over work.

I hope this information will be useful to you in your further deliberations on this

issue. Please not that a letter (copy attached) which I sent to you after the hearing

provides further information to consider. Essentially this letter explains that extra

expenses were not used to justify the higher SGA level for the blind. In view of your

66

questions, I though it might be helpful to include this explanation with this response.

Very truly yours,

JAMES GASHEL

Director of Governmental Affairs

NATIONAL FEDERATION OF THE BLIND

JG/mrb

Attachments

March 27, 2000

The Honorable E. Clay Shaw, Chairman

Subcommittee on Social Security

Committee on Ways and Means

House of Representative

Washington, D.C. 20515

Dear Mr. Chairman:

I am writing to provide additional information for the Subcommittee in light of

testimony given at the March 23, 2000, hearing on work incentives for blind and

disabled persons.

(1) There appears to be an assumption that the blind SGA law enacted in 1977,

was based anticipated higher costs resulting from blindness. This is an important

issue. Extra costs were not the basis for the higher SGA. I know this. I was present

when Mr. Archer first expressed the idea that the earnings exemption threshold

should be the same for the blind as it was for seniors, and I heard every word he

said to explain this position.

The blind SGA law was an Archer amendment offered in conference in lieu of a

Senate amendment which called for a complete removal of the earnings limit for the

blind. The legislative history on this amendment consists solely of the discussion

which occurred among the conferees who were meeting to reconcile the differences

in the Senate- and House-passed versions of the 1977 Social Security financing bill.

Mr Archer propounded the provision which became law when the House confesses

refused to go along with the Senate position. He was asked directly for the rationale

of treating blind people differently from persons with other disabilities. His explanation did not include extra costs as the basis. He relied instead on the fact that

blindness has its own definition apart from disability.

Mr. Archer said that determining the inability to work was not at issue in applying the definition of blindness. As he explained it, he viewed the legal status of the

blind as similar to reaching age-65 in that both conditions are clearly defined. He

contrasted this with disability and explained that the inability to perform SGA was

at the heart of the definition, unlike blindness.

I was presented in Mr. Archer’s office in January, 1995, when the subject of blindness, disability, and the earnings limit again arose. Valerie Nixon of the Subcommittee staff was also present. When Ms Nixon presented the view that blindness and

disability are essentially equivalent, Mr. Archer returned to the same explanation

he gave in 1977—that blindness is defined apart form disability, and the ability to

work is not at issue.

I am not suggesting that Mr. Archer currently believes in removing the earnings

limit for the blind. Apparently he does not, even though he expressed the desire to

do so in 1977. My point is that Mr. Archer’s reasoning for the blind SGA law had

nothing to do with an excess cost justification. It was solely based on the view

that—with blindness being defined—the payment or denial of benefits is really a

pure earnings limit question.

The GAO questions the extra cost justification, but extra costs were not the justification. The assumption that they were seems to come from statements made by

Senators on the floor when the amendment to remove the earnings limit for the

blind was passed. I acknowledged that Senators may have attempted to cite extra

costs, but their position did not prevail in the end. Mr. Archer’s position that blindness and retirement age are defined, and an identical exemption of earnings would

be appropriate, did prevail. This is an important distinction to make in giving further consideration to the blind person’s earnings limit.

(2) The GAO has failed to acknowledge that major costs relating to disability,

such as supported employment and extra medical expenses, are often covered by

67

federal or state programs. The record should be clear on this in the interest of accuracy, even though ‘‘whose costs are higher’’ was really not Mr. Archer’s rationale in

the first place.

(3) Dr. Daniels testified that expense deductions used to reduce gross earnings

and determine SGA are different for the blind as compared to the disabled. She said

that all reasonable work expenses can be deducted for the blind and only impairment-related work expenses can be deducted for the disabled.

This statement is incorrect. The work expense deducted for the blind and disabled

is identical in the Disability Insurance program. Only impairment-related work expenses (more common for disability than for blindness) can be deducted. There is

a difference in the deduction of expenses in the SSI, title XVI program, but that

would not be relevant to SGA evaluation under title II.

(4) Concern was expressed that raising or eliminating the earnings limit altogether would change the nature of the Disability Insurance program. There is no

question that the program would be changed, but the change would be essentially

the same as removing the earnings limit at retirement age. With the removal of the

earnings limit at age 65, the original purpose of the retirement program has now

been changed. Before this change (and particularly before other changes made more

gradually over the years), benefits were paid if a person actually retired-that is,

stopped working.

The earnings limit was called the ‘‘retirement test.’’ Anyone who continued to

work beyond certain limits applied to earnings and amount of services performed

was not ‘‘retired’’ and not eligible for benefits. The purpose of Social Security was

partially to replace earnings lost due to retirement.

The concept has been changed altogether in the current program with no earnings

limit. Benefits are not paid to anyone who reaches retirement age, regardless of

whether or not the person retires. The same thing could be done in the case of blindness, since blindness is already defined as an eligibility condition. It is only the

earnings limit that prevents actual payment of cash benefits and results in a severe

work disincentive.

Thank you for the opportunity to present this additional information. The NFB

is anxious to assist you on legislation to reduce the disincentive of the earnings

limit.

Very truly yours,

JAMES GASHEL

Director of Governmental Affairs

NATIONAL FEDERATION OF THE BLIND

April 26, 2000

Ms. Brenda Gillis

c/o Kristen Cox

National Federation of the Blind

1800 Johnson Street

Baltimore, MD 21230

Dear Ms. Gillis:

Thank you for testifying before our Subcommittee regarding work incentives for

blind and disabled Social Security beneficiaries. In order to complete our hearing

record, I would appreciate your answering the following questions:

1. In your opinion, what is the role and purpose of the Disability Insurance program? Do you believe it is successful in achieving its purpose? What changes would

you make?

2.Individuals who are disabled, including those who are blind, can actually earn

more than the SGA limits and stay eligible for benefits. The reason is they can subtract work expenses related to their disability in determining earnings subject to the

limit. (For example, if a person who is blind earns $1,500 per month but has $500

in work expenses, their SGA is $1,000—below the $1,170 limit.) Are you familiar

with the provision? Is it being used? How many individuals who are blind take advantage of these deductions? Is it effective? Should it be changed?

I thank you for taking the time to answer these questions for the record and

would appreciate your response by no later than May 19, 2000. In addition to a hard

copy of your response, please submit your response on an IBM compatible 3.5-inch

diskette in WordPerfect or Microsoft Word format. If you have any questions conVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00071 Fmt 6633 Sfmt 6621 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
68

cerning this request, please feel free to contact Kim Hildred, Staff Director, Subcommittee on Social Security at (202) 225–9263.

Sincerely,

E. CLAY SHAW, JR.

Chairman

May 17, 2000

The Honorable E. Clay Shaw

Committee on ways and Means

United States House of Representatives

Washington, DC 20515

RE: Re: SSDI Program Inquiry

Dear Congressman Shaw:

In the words of Social Security’s own publication, ‘‘Understanding the Benefits,’’

the agency states, ‘‘. . .the disability is one of the most complicated of all Social Security programs.’’ We can certainly agree on this point. Throughout this publication

an SSDI recipient is instructed to request publication after publication from their

local office for additional information. However, the ‘‘bible’’ for disabled persons who

wish to work is publication 05–10095, ‘‘Working While Disabled . . . How We Can

Help.’’ The best part is that it only takes several months, countless phone calls and

four to six weeks for mailing to obtain this ‘‘additional information,’’ only to discover

that if you are disabled due to blindness you require an additional booklet. These

are the moccasins I told you about on March 23, 2000.

You have asked in your letter for me to tell you if I understand the purpose of

the SSDI program and if I believe it is presently meeting its intended purpose. It

is my opinion that the ultimate purpose is to provide financial security for individuals faced with life changing circumstances who are looking for a hand up, not a

hand out. However, because of the reasons I have outlined below I do not believe

the program is meeting it’s intended purpose. Allow me to ask you to once again

place yourself in my moccasins. Unlike the SSI program, SSDI is an insurance program for which I am eligible because I had worked in the past, paid into the system,

and have qualified to have my contributions repaid to me in an amount determined

by the credits earned. SSDI is not a gift of the Federal Government bestowed upon

a disabled person because you want to help out; it is something I have earned.

Social Security representatives at a local level have demonstrated, in my opinion,

that they know less about this program and how it pertains to blind workers than

do I, the lay person. As a matter of fact, when I first applied for benefits they were

denied because SSA failed to read the entire definition of ‘‘legal blindness’’ and this

oversight delayed the start of my benefits by more than three months. Furthermore,

I feel that our panel efficiently demonstrated to the sub-committee that blindness

in and of itself is a unique condition that is easily defined.

When I was declared legally blind and began to receive my benefits, I was finally

in a position where I could learn the new skills required to re-enter the workplace

without fear of financial hardship. The first step was to obtain these new skills and

the adaptive equipment and software that would make my ‘‘rehabilitation’’ possible.

The Division of Blind Services (DBS), the Florida state agency in place to assist

blind persons to this end, was my sole source of information and assistance. Because

I desired to operate my own business, DBS was able to provide me with the adaptive technologies I would require to achieve this goal. Once I demonstrated that I

was earning money, my case was closed and I was left to my own devices to become

self-sufficient. After doing a little homework, I learned about earnings limits, reporting requirements and how they would affect my benefits. One of the requirements

is to report to SSA my earnings during the ‘‘trial work period.’’ At the end of the

first month I called the local Social Security office and no one seemed to know what

it was I was attempting to do nor did they seem to have a clue as to what form

should be utilized. I was told they would make a note of my comments and there

was no need for me to contact them again citing that the forms I needed would be

sent to me in the mail. When my first year of operation had concluded and still no

forms had arrived, I contacted Social Security again to report my work activity.

Again I was simply told they would make a note in my file and they refused my

offer to fax over my balance sheet and profit & loss statement for the year. This

did not agree with what I had read in the SSA publication. Not knowing where to

turn (if the supervisor was instructing me in this manner) I determined to follow

69

the local office’s instructions. This situation has not changed at any point during

the past five years my business has been in operation. At this point I have assumed

that when SSA finally gets around to reviewing my status in seven years, I will at

that time be expected to produce my shoebox full of receipts and paperwork. Therefore, I look at the whole program and its requirements as being far too burdensome

for the beneficiary. There is no systematic and easy method to report qualifying deductions, changes in income, and impairment related work expenses.

The reality for most blind individuals is that they will be worse off financially by

working as compared to receiving SSDI benefits. The financial loss creates a persuasive work disincentive. Let’s say for the purpose of discussion that instead of operating my own business, I had opted to go to work for ABC Distributors making

$24,000 per year. The Division of Blind Services would provide to me the adaptive

technology I required, supply a personal employment consultant to integrate the

adaptive technology into my work situation and coach me on how to improve my

productivity. The agency then closes my case and deems me rehabilitated. However,

the time and energy that has gone into securing my employment, (paid for by the

tax payers) it is likely that I would be worse off financially. This is true because

the minute I earn over $1,170 per month gross I will lose all of my SSDI benefits.

Not only do I lose my benefits, but also I now will incur additional expenses such

as childcare and transportation specifically related to my employment.

Furthermore, by working at ABC Distributors 100% of my income would be taxable. Using a conservative tax rate of 25%, my net monthly income would be approximately $1,500 per month. My SSDI benefits totaled $1,715 per month. As you

can see, I would net nearly 200 dollars less by working than staying at home and

collecting benefits. This is true without considering the negative impact that work

related expenses would have on my net earnings (not to be confused with impairment related work expenses). Let me also add here that it was pointed out to me

that the costs associated with medical insurance should not be part of this equation

as Medicare would still be available for nine years after benefits are discontinued.

What the Congressman failed to point out is that an employed individual in this

situation would have to pay a premium for those benefits. So while they may be

an option, there is a definite cost associated to it. To complicate things further a

blind worker still endures lack of ‘‘job security’’ in the workplace. But still we are

grateful to have our jobs.

Now three years down the road the ABC Distributors Company decided to change

accounting software. I come to work one day to discover that the screen reading software will not work with the new accounting package and a major incompatibility

has cropped up overnight. This is not an uncommon scenario. I call the screen reader software manufacturer and they send someone out to see if their product can be

adapted to function properly. In the best case I find myself unemployed for two or

three weeks while the problem is resolved and I have a receipt of a hefty bill for

their ‘‘on site’’ services. In the worst case, a solution cannot be found and I am now

on the unemployment line again with that hefty bill still in hand. Under this latter

situation, I am by myself reapplying for SSDI benefits and the process would start

over again. A vicious cycle, wouldn’t you agree?

As to your second question about ‘‘impairment related work expenses’’ and whether I believe that blind persons take advantage of them. Well, in my opinion based

on my interpretation of the ‘‘rules’’ in this game, I truly believe that Ms. Daniels

should read some of her Administration’s publications and clear things up in her

own mind before making blanket statements like those she made on March 23,

2000. It is my opinion that Ms. Daniels, like many of the SSA employees, do not

fully understand the differences between the SSI and SSDI programs offered to disabled persons. While many of the expenses she referred to are ‘‘deductible’’ from the

SGA under the SSI program, those same deductions do not always pass the test for

SSDI. As I understand it, one can only deduct impairment related work expenses.

If Mrs. Daniels does not fully understand work incentive under the SSDI program,

you can imagine the confusion that exists among beneficiaries, like myself. For blind

individuals, there are so few impairment related work expenses that one can legitimately deduct that they do not significantly impact one’s income. This may be a different scenario for people who need full time attendant care or have other substantial costs related to work and impairment. As I mentioned above there doesn’t seem

to be an adequate way for the SSDI recipient to report them even if they do exist.

Do blind persons take advantage of the ‘‘work incentive,’’ as you like to call it? Well,

the best answer I can give you is we sure try like hell.

The confusing and abundant policies surrounding SSDI often result in beneficiaries fearing the system itself. Blind people know that it is not a matter of ‘‘if’’

SSA will send a letter outlining how we can repay what they believe to be an ‘‘overpayment’’ of benefits—it’s a matter of ‘‘when’’ we will receive it. And, let me assure

70

you that if you opened your mailbox to find that you owe the federal government

tens of thousands of dollars, you would carefully consider if the personal rewards

and satisfaction you get from being employed is worth the financial risk. In fact,

I have heard from many of my blind friends that even though they write and call

SSA over and over to discontinue benefits, should they land a really good job, the

checks keep coming month after month until that one day when the strong arm of

SSA marches in to collect it all back.

In closing, think about your many blessings. You are sighted, able bodied and

have a good job. Your life is not filled daily with the challenges of living with blindness and the stereotypes associated with your ‘‘condition’’ that you would experience

each day you ventured out into the general public. You enjoy the privilege of driving

where and when you want. You open your mailbox and go inside to read it, tossing

the junk out without even opening the envelope. There is no need for you to invest

thousands of dollars and countless hours learning new skills simply to find the important items or wait until Saturday when your neighbor has time to come over and

read it all to you. What needs to be done with SSDI and what it will cost, I leave

to you the expert. But I would make these two suggestions. First, create a system

in which blind beneficiaries are not worse off financially for working. This primarily

could be done by increasing the earnings limit to such an extent that you demonstrate a genuine effort to afford the blind community with a hand up not a hand

out. Second, the SSDI system must be simple and easy for the lay person to understand. I ask that you stop the vicious circle of revolving through an endless stream

of employed, unemployed, in this agency and then out to another. The blind community needs to have the opportunity to show the world blindness is not something

to be feared and that it ultimately, in this day and age, has little impact on our

ability to be productive and responsible citizens. There is far too much to do in this

country to ‘‘Change What it Means to be Blind’’ and worrying about our financial

security should not be one of the battles we must fight. I sincerely hope we can

count on you to seek an appropriate solution and provide the blind citizens of our

Nation a real incentive to work.

Faithfully,

BRENDA-ANN GILLIS

Stuart, FL 34997

April 26, 2000

Ms. Joanne Wilson

Director

Louisiana Center for the Blind

101 South Trenton St.

Ruston, LA 71270

Dear Ms. Wilson:

Thank you for testifying before our Subcommittee regarding work incentives for

blind and disabled Social Security beneficiaries. In order to complete our hearing

record, I would appreciate your answering the following questions:

1. Individuals who are disabled, including those who are blind, can actually earn

more than the SGA limits and stay eligible for benefits. The reason is they can subtract work expenses related to their disability in determining earnings subject to the

limit. (For example, if a person who is blind earns $1,500 per month but has $500

in work expenses, their SGA is $1,000—below the $1,170 limit.) Are you familiar

with the provision? Is it being used? How many individuals who are blind take advantage of these deductions? Is it effective? Should it be changed?

2. In your testimony, you ask why should a person who is blind have to make

the choice between work or becoming dependent on Social Security benefits. You add

that had these individuals been given an opportunity to work, even at modest

wages, and to keep their earnings without loss of benefits, they would be contributing to and not drawing support from the system. Are you saying that individuals

should be allowed to work and earn as much as they want, and still draw full benefits for a certain time limit? Or are you saying there should be no time limit, but

individuals will choose to leave the rolls at some point?

I thank you for taking the time to answer these questions for the record and

would appreciate your response by no later than May 19, 2000. In addition to a hard

copy of your response, please submit your response on an IBM compatible 3.5-inch

diskette in WordPerfect or Microsoft Word format. If you have any questions conVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00074 Fmt 6633 Sfmt 6621 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
71

cerning this request, please feel free to contact Kim Hildred, Staff Director, Subcommittee on Social Security at (202) 225–9263.

Sincerely,

E. CLAY SHAW, JR.

Chairman

May 18, 2000

The Honorable E. Clay Shaw, Jr.

Chairman

Subcommittee on Social Security

Committee on Ways and Means

United States House of Representatives

Washington, D.C. 20515

Dear Chairman Shaw:

Thank you for your letter of April 26, 2000, concerning work efforts of blind persons in the Social Security Disability Insurance program. The information below is

provided in response to your specific questions:

1. You describe the policy of deducting disability-related work expenses and ask

several questions. I am, of course, familiar with this policy. While the example you

provide is plausible, it is far from typical for blind persons. This is because the deduction is limited to ‘‘impairment-related work expenses,’’ excluding most costs that

blind people will pay when they work. For example, transportation to and from work

is often not deductible for blind persons because a specialized, disability-related

service is not needed.

I don’t have access to statistics. However, I doubt that this deduction is used very

much. I say this because the ‘‘if’s,’’ ‘‘and’s,’’ and ‘‘but’s,’’ of the deduction are far too

complex for most people to understand or apply. When a person could be working

with gross earnings marginally above the SGA limit, there is usually a fear of taking a chance. Beneficiaries have good reasons for not relying upon what someone

in the Social Security office might tell them. Therefore, they have no way of knowing whether or not a particular work-related expense deduction will be allowed or

counted against them. For this reason the law should be changed. If deductions are

part of the law, they should be straightforward, easy to understand, and not discretionary with the Social Security Administration.

2. You ask if blind persons should be able to work and retain benefits under a

time limit, or whether they will leave the rolls on their own without a time limit.

My answer is that work should not be penalized at any point. In other words, a policy that encourages work should not be withdrawn or time-limited. If a beneficiary

works, the contributions made to the system are savings to the trust funds. The continued payment of benefits for people who work has been adopted as a policy for

seniors. Frankly, I don’t think the policy should really be any different for the blind.

If Congress does adopt a different policy, however, it should clearly include a guarantee of not losing by working.

I hope this information helps. Please contact me if I can respond to any other

questions.

Sincerely,

JOANNE WILSON, DIRECTOR

Louisiana Center for the Blind, Inc.

Chairman SHAW. This will be our final panel of the day. We have

David Gallagher, Social Security Beneficiary, from Eastpointe,

Michigan; William VanOoteghem, Father of Social Security Beneficiary, from Essexville, Michigan, on behalf of The Arc of the

United States, and he is accompanied by Wendy VanOoteghem,

who is a Social Security Beneficiary. We have Dr. Pamela Hanes,

Associate Professor, Public Health and Preventive Medicine, Oregon Health Sciences University, and Tony Young, who is CoVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00075 Fmt 6633 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
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Chair, Social Security Task Force, Consortium for Citizens with

Disabilities.

As with the other witnesses, we have your full statements which

will be placed in the record, and we would invite you to proceed

and summarize as you see fit. Mr. Gallagher.

STATEMENT OF DAVID E. GALLAGHER, SOCIAL SECURITY

BENEFICIARY, AND CONSULTANT, LIFE IN TIME CONSULTATION SERVICES, INC., EASTPOINTE, MICHIGAN

Mr. GALLAGHER. Thank you. Mr. Chairman and Members of the

Subcommittee, thank you for the opportunity to share my testimony. This testimony is not just about me, but it is about many

people who are consumers of mental health services.

I was diagnosed as having manic depressive disorder in February

1978. I have been hospitalized over 20 times since that time. I have

a Master’s Degree in social work from Wayne State University in

Michigan, and I am currently working as a peer counselor at

Northeast Drop-In Center, a place for mental health consumers to

meet and receive services.

I am currently on Social Security Disability Insurance and Medicare, but I also pay for Blue Cross/Blue Shield Supplemental to pay

for the things that Medicare does not pay for. The cost of mental

illness is staggering. My medications alone cost over $1,000 a month for the psycho- tropic medications, and another $49 a month for high blood pressure medication. These costs are pretty typical for a person with

severe mental illness. I could not work without these medications.

In addition, I have chronic renal failure, chronic bronchitis, I have

had lymph nodes removed from my larynx twice, I have had a history of seizure disorder, I have had two mini-strokes, I am in need

of extensive dental work, I have glaucoma which affects my night

vision.

Although I have worked from the time I was 15, because of my

mental illness I have not been able to work continuously at fulltime employment. In spite of my illness, I have had periods where

I have worked years at a time, but not always at the same job. In

between, I have been hospitalized because of my illness. My current job as peer counselor is my longest history of employment, but

currently it is only part-time. However, I could work more if I knew

my benefits would not end right away, and I could work at an income level above poverty with full health benefits.

To be able to work full-time, I need full Blue Cross/Blue Shield

insurance. Managed care coverage is not adequate due to the cost

of medications and the need for mental health services both of

which are costly and extremely limited by almost all health plans.

Most importantly, medications are not covered by Medicare or my

Blue Cross/Blue Shield Supplemental insurance. Another factor is

because of our pre-existing conditions, most health insurance providers will not extend us coverage.

Consequently, due to the lack of parity, we are forced into continual dependency on Disability rolls. A key point I need to stress is

that I was taken off Social Security Disability benefits after being

on Disability for three years because Social Security said I was

gainfully employed. I was making just $560 a month as a direct

73

care staff person. This is not gainful employment for a person who

has a thousand dollar prescription drug cost that no health plan

pays for. Worse, because I am currently paying back Social Security Disability benefits because of the cost of my medication and because of the cost of my medication I have to continue to be on Social Security Disability. I am currently paying $100 a month to Social Security Administration because they said I was overpaid back

when I was making $560 a month. I reported my earnings to Social

Security Administration, so I don’t know why I have an overpayment, but Social Security says I do.

These two issues, the restrictions on my earnings that keep a

person from earning above what they need to make in order to live

and the fact that consumers always feel that Social Security is out

to get them when we try to do work is enough to keep people from

doing the best they can do.

I do want to work, and so do many mental health consumers, but

we are unable to work above the poverty level without losing our

insurance benefits, then we have little choice but to stay on the

rolls. I hope, and all consumers hope, that Congress fixes this program.

Honorable Chairperson, thank you for allowing me to speak.

Have a wonderful day.

[The prepared statement and attachment follow:]

Statement of David E. Gallagher, Social Security Beneficiary, and Consultant Life in Time Consultation Services, Inc., Eastpointe, Michigan (Social

Security Beneficiary)

Thank you for the opportunity to allow me to share my story. This testimony is

not just about me, but it’s about many people who are consumers of mental health

services. I started out my journey with mental health when I was diagnosed as having manic-depression in February 1978. I have been hospitalized over twenty times

since that time. My last hospitalization was in 1995. I spent over 13 months in Clinton Valley Center, a state hospital in Michigan. I was put in Clinton Valley when

my Blue Cross/Blue Shield ran out. My last hospitalization was due to the fact that

I had a blood clot in my leg and I had to have a DVT. Also, I had neuroleptic malignant syndrome, which caused my liver functions to fail and my kidneys to go toxic.

I was pronounced dead twice. I am fortunate to be alive.

I have a family history of mental illness. My parents dealt with the suicide of my

maternal grandfather when I was an infant. They were raised with a strong work

ethic, they were a byproduct of an agrarian agricultural life style and then thrust

into an industrial revolution. My father raised us as practicing Roman Catholics.

My parents’ struggle to give their three boys the best material things in life robbed

them of their serenity and ultimately produced a family of overachievers. Throughout their heartache and pain they have tried to understand and cope to the best

of their ability. And I love them for that.

By the time I graduated from high school, I was searching and seeking hope. My

life had no plan. I wanted to marry my first love, but I was being prompted to ‘‘go

to college and make something of myself.’’ So off I went to Michigan State University with absolutely no idea what the college experience was all about. I had a

three-hour orientation, and I was left to figure out the rest. Being alone with complete freedom, sometimes one makes bad choices. At the end of the year I was on

social probation, academic probation, and was asked to leave the University. I left

Michigan State University with a 1.9 grade point average.

That summer I worked for Ford Motor Company, a lifestyle I did not enjoy, so

I enrolled in Eastern Michigan University. Again, I had a three-hour orientation

and was off to school. I knew that I liked money so I thought I’d take business administration. I joined a social fraternity and soon I was active in everything. I was

hypermanic, enjoying the attention, the prestige. I was out of balance. By the end

of 1977 I was like a runaway locomotive. My grade point average at Eastern

dropped to a 2.39. My need to be important and accepted by others drove a wedge

between my girlfriend. Other people close to me were fearful of me.

74

There were many precipitating psychosocial stressors leading to my first hospitalization, in February 1978. I lost my part-time job, my funding sources dried up,

my finals went poorly, and my parents decided that this would be an opportune

time to practice tough love, which is a good concept when alternate supports are

in place. I went to unemployment, I was turned down. I went to social services, I

was turned down. I was physically, emotionally, socially, and spiritually bankrupt.

And, in psychosis, I collapsed emotionally

From 1978 to 1980, I worked part-time at Kroger’s and then I worked in the field

of collections at a bank. I struggled to get back to school. I was fortunate that in

1980, Vocational Rehabilitations offered to sponsor me to go back to school if I could

complete two semesters at Schoolcraft Community College, then they would reevaluate the possibility of me finishing up my Bachelor’s in Business Administration

Degree. I was doing well; I had a good support system. I felt so good that I decided,

against medical advice, that I did not need my Lithium or other neuroleptics. Within three months of discontinuation of my medication, I was hospitalized in a state

institution for one of my longest periods ever. The years 1980 through 1985 involved

a rapid succession of hospitalizations. I was put on Social Security Disability for approximately three years. I worked part-time at a Clark Gas station. When I felt

strong enough, I worked in a flower delivery business full-time. Then Social Security

Disability was discontinued.

In 1985 I started to play guitar at a mission in Detroit. Working with individuals

who were homeless, I decided to be an advocate by becoming a social worker. The

people I met that year had touched my heart. I formulated a plan, and started the

process of getting admitted to Wayne State University School of Social Work. I filed

for financial aid and applied for guaranteed student loans. In my personal statement to Wayne State’s University School of Social Work, I stated the reason for my

desire to become a social worker was that I am a consumer and I wanted to help

other consumers. I had two entrance interviews for admission to the Bachelor of Social Work program. I felt discriminated against in the verbal questions asked of me.

I really wanted to be a social worker, so I accepted the situation and the decision

made. I was to go through the College of Life Long Learning process of admission,

and take the Introduction to Social Work class as well as getting a recommendation

from the professor. I took the class and received a 4.0 grade point average and the

instructor sponsored my entrance into the program.

The university experience can be frustrating to the average person, let alone to

a person who is perceived as different. I found in my personal situation that when

I was open about my emotional recovery, many persons in academia were guarded,

apprehensive, and at times obtrusive when it came to evaluating my ability to function as a student. It may be noted that during 1985 to 1990, when I attended Wayne

State University, I was completely medically stabilized; I was not hospitalized during that period. I did find some supportive faculty at Wayne. One professor taught

me the prevention model of social work. His teachings were in part responsible for

the substance abuse prevention program I later designed and implemented at William Dickerson Detention Facility through People’s Community Services of Metropolitan Detroit.

I graduated from Wayne State University in 1989 with a Bachelor’s Degree in Social Work, and a grade point average of 3.18. The next year in the advanced standing program was like being in boot camp. I did not work, I lived off guaranteed student loans. I was totally immersed in social work, day in and day out. I knew that

a failure at this level would devastate me.

Graduating from the Master’s Program in 1990 was one of the highlights of my

life. I graduated with a 3.54 grade point average. I had a new girlfriend. My family

showed complete acceptance for the first time in my life. I was interviewing all

around the state for jobs. I was doing consultant work. Once again, I tried being

captain of my own ship, but I lacked humility. I concealed my feelings from my psychiatrist, because I truly enjoyed having / I the illusion of complete control.

I was hired as coordinator of an assertive community treatment team at a community mental health agency. They were looking for someone who had control capabilities. In the interview process, I told the director I was I being treated for manicdepressive disorder when he asked me, ‘‘ Is there anything you want to share about

your personal life?’’ He hired me anyway. Life was great; I had a good job, a company car, good benefits. Boom, I started not sleeping! I did not tell my doctor. Eight

business days after starting to work, I totaled out the company car. I broke my collarbone and was in full-blown mania.

While I was in the psychiatric hospital, I received notice that I was fired. After

recovering from the broken collarbone and thirty days in the hospital, I was hired

by another community mental health agency. The clinical supervisor was truly

75

happy to have me on staff because of my background at Sinai, which was also her

orientation towards therapy.

Soon after being hired, I confided in one of my coworkers that I was being treated

for a bi-polar condition. It got back to my clinical supervisor. She called me into her

office and told me that she had heard that I was a consumer of mental health and

asked me if it was true. I said yes. She told me that due to the nature of my illness,

it would be important that all the staff in our department know. She asked me to

announce this at the next staff meeting. I told her no problem. So at the next staff

meting, I explained the nature of my illness to approximately ten people, all professionals. Soon there were rumors that I was not doing my job. I was called into the

clinical supervisor’s office and told that someone had been listening in and documenting my sessions. I was never late for work, I never took time off from work,

all my paperwork was up to date. Six weeks after being hired, I was fired without

cause. I was hospitalized for depression. When I got out of the hospital, I was broke, depressed and socially isolated. No one wanted to hire me, so I went to the Clark gas

station, handed the manager my resume, told him that I could learn his computer

cash register system and he hired me that day. It was a very humbling experience,

but it paid some of the bills, brought up my self-esteem and got me out of the apartment. I sent out over 200 resumes. Finally, I was hired part-time contractually at

a private practice doing individual and family counseling. I continued to work at the

Clark gas station. With both jobs, I was able to pay the rent, but I was having a

difficult time paying my health insurance and medical bills. This continued for 8

months.

I was hired at People’s Community Services of metropolitan Detroit in 1991, to

be a social group worker. Soon after, I became the supervisor for the Hamtramck

programs. I was able to develop a social adjustment group at the consumer-run

Northeast Drop-In Organization Center (NEDO). It was my pride and joy. Using the

concepts of self-help, affirmation and empowerment from NEDO, I then developed

the program and directed it at the detention facility.

When I was taken off social security benefits after being on disability for three

years it was because they said it was because I gainfully employed. At the time I

making just $560 a month as a direct care staff person. My main need was insurance benefits. I was a melarill and lithium patient for 20 years. Fortunately, the

community mental health system was able to help me with my benefits.

Due to the fact that I am currently paying back social security benefits and the

cost of medication, I have to continue to be on social security disability. I am currently paying back social security benefits of $100 a month to SSA because they said

I was overpaid back when I was making $560 a month. I reported my earnings so

I don’t understand why I have an overpayment, but Social Security says I do.

The costs faced by consumers who want to work are enormous. Medications make

it possible for me to work, but Medicare doesn’t pay for them. So I have to pay for

them. The cost of my current medication is as follows: Closeral is $800.00 a month,

Depokote is $150.00 a month, Cogentine is $49.00 a month. My hypertension medication is $49.00 a month. My blood is drawn twice a month, I see a Psychiatrist

twice a month, a case manager every three months and a Medical Doctor every

three months.

I have chronic renal failure, chronic bronchitis, and I have had lymph nodes removed from my larynx twice. I have a history of a seizure disorder. I have had two

mini-strokes. I am in need of extensive dental work. I have glaucoma that affects

my night vision.

I currently have Medicare and Blue Cross/Blue Shield supplemental insurances.

Without which I could not function. I do want to work but like many consumers who

also want to work, we are unable to secure gainful employment above the poverty

level with insurance benefits. Another factor is because of our pre-existing conditions most insurance providers will not extend us coverage. Consequentially, due to

the lack of parity, we are forced into continual dependency on Medicare rolls.

My goal one day is to be an advocate for all consumers of mental health services.

I no longer look at my illness as a debilitating situation, but rather a medical condition. It has become the motivation and catalyst for my desire to help others to understand themselves. I have found that by helping others, I help myself.

Many understanding and compassionate people have helped and inspired me

along the way. Many medical doctors and the mental health professionals have contributed to the stabilization of my condition. These professionals went beyond the

call of duty and I am truly grateful to them for their compassion to myself and others. My brother, Greg, has dedicated the last twenty years to being a mental health

professional. He has reached countless thousands, directly and indirectly. His insight into the human psyche as well as his understanding of the need for advocacy

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has influenced the availability of least restrictive environments for consumers of

mental health services. His faith in me gave me hope when I lacked all faith in myself I love him for that; I love him for his strength and his courage. My younger

brother, Leonard has also been an encouragement to me. His past role as a consumer advocate combined with his doctoral training in neuropsychology has given

him a unique perspective on recovery issues. I love him and I am encouraged to see

him work through the trials and tribulations of his own life. Above everyone else,

I would like to thank God, who has allowed me choices in life; He does not make

junk. I have learned that He loves us all.

Additional Testimony of David Gallagher

Community Mental Health Organizations, and Client Centered planning, are at

risk due to the current policies of our HMO’s, PPO’s, and EAP’s. As an at risk agency, CMH’s will be forced to reduce, restrict, and in some cases deny services to many

who can not afford traditional treatment. Managed care will be devastating to many

of the neediest clientele. Client centered planning is supposed to put the consumer

in control of his/her treatment plan. Unfortunately client centered planning is not

being followed in most cases. What is needed is more Consumer Advocates, especially, professionals who are themselves mentally ill.

As both a Consumer and a professional certified social worker I can afford the

luxury of being an advocate no matter where I go or to whom I speak. I have

learned to walk in other people’s moccasins and have empathy for those who suffer

the disease called mental illness. What will be needed is psychosocial rehabilitation

combined with self-help initiatives. We need to aid and assist consumers of mental

health through self help alternatives, consumer initiatives counseling and education.

Our goal is to promote a better understanding of the potential of all persons who

suffer from the condition called mental illness. Organizations are in place such as

Manic Depressive Depressive Association (MDDA), International Association of Psychosocial Rehabilitation Services (IAPSRS), Schizophrenics Anonymous (S.A.), and

Michigan Supported Education Program, (MSEP). They are just a few of the many

support groups available.

The objective for the year 2002 will be to lower recidivism rates and optimize resources. The stigmatization that causes the Not In My Backyard (NIMBY) syndrome

is going to have to be overcome. Revolving door hospitalization is going have to end.

What we are finding is that our jails and prisons are being filled due to homelessness and valid medical needs. Misdemeanors are being committed just to get three

squares and a cot. By the year 2002 each CMH should be required to have a Consumer run drop-in center. Utilizing the Fountain House Model, these outreaches fill

in the gap where the CMH’s currently are lacking. It may be noted that I am affiliated with North East Drop In Center (NEDO), and I also circulate with the Odyssey

House Drop IN, and the Liberty Drop IN Center.

While education and counseling play a major role for the struggling consumer, it

is imperative that pharmacology not be disregarded. The newer medications like

Closeral, Depokote and Respitol work wonders with little side effects. With proper

medication mental illness can be arrested and treated as any other physical disability. With the new millennium we must empower our consumers; they are a valuable

resource. The American work ethic is very important to all. It gives a person a sense

of accountability. In order for Workfare to work though, a living wage and a national insurance program will be needed. The programs will have to be innovative.

Unlike Social Security Insurance, which is over three trillion dollars in debt, these

programs will have to be self-sustained. Social Security was never set up to be lived

on but to supplement ones income.

Our greatest resource is our intelligence and ability to learn. You can give a person fish for a day and he will eat for a day but if you teach a person how to fish

he can eat for a life. All colleges must be cost affordable to be utilized by consumers.

The need for tutors will be in demand for this special population. Drop In Centers

should be on campus just as they are at Wayne County Community College and

Henry Ford Community Colleges. Peer support groups should be available at all colleges.

By the year 2002 we will need more Occupational Therapists, Recreational Therapists, and Music Therapists. Lay people and para-professionals with shared life experiences will be in high demand. Due to the fact that many Consumers are dual

diagnosed with substance abuse as a secondary diagnosis, self-help groups such as

Narcotics Anonymous (N.A.) and Alcoholics Anonymous (A.A.) will be in high demand. Group therapy as well as behavior modification techniques combined with

cognitive short-term therapy will be the standard. Because many of our consumers

are addicted to tobacco, and the cost of 1 pack of cigarettes will probably be well

over $5.00 a pack, the emphasis will be on prevention as well as the importance

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of not smoking in public places due to the hazards of secondary smoke. As a former

smoker myself I recognize how difficult it is to quit smoking, it was the hardest addiction to overcome. However, for many clients caffeine and nicotine are the only

pleasure they have in life.

We will be watching and waiting for continued client recipient rights as well as

policies related to the Americans with Disabilities Act. We must become our own

lobbyists and take responsibility for informing legislatures of our needs. It is a myth

that consumers are not capable of being lobbyists. We have been doing this at

NEDO and have actually been written back by President Clinton and Governor

Engler, as well as several other elected officials. There is however an element of

stigmatization that prevents many clients from ‘‘coming out of the closet.’’ We will

need more mentors, such as MSEP provides, to be peer counselors.

The family stresses related to being a caregiver, guardian and/or payee have to

be addressed. Mental illness can destroy a family. Usually there is a trust broken

in the relationship and anger inhibits the relationship. Groups like MDDA and

IAPSRS will be imperative to support the family. With the onset of HMO’s, PPO’s,

and EAP’s traditional treatment will not be available for family counseling.

Finally spirituality should be addressed. With the dawn of the new century ones

faith is important. Scriptures state that we need faith, hope, and love. We must

never discount a client’s faith, no matter how delusional it may sound, it may be

the only hope they have. This combined with genuine love will heal.

Chairman SHAW. Thank you, Mr. Gallagher. Mr. VanOoteghem.

STATEMENT OF WILLIAM R. VANOOTEGHEM, FATHER OF SOCIAL SECURITY BENEFICIARY, AND WENDY VANOOTEGHEM,

SOCIAL SECURITY BENEFICIARY, ESSEXVILLE, MICHIGAN,

ON BEHALF OF ARC OF THE UNITED STATES

Mr. VANOOTEGHEM. Good afternoon, Chairman Shaw and members of the Subcommittee. My name is William R. VanOoteghem

and this is my daughter, Wendy. Before I get started, I would like

to thank the Arc, and your Committee for the work that you did

on the work incentives bill last year.

Wendy and I are here to talk to you about what will happen to Wendy if her work increases her wages over the SGA level of $700

per month—which, by the way, is just about the poverty level for

an individual. We are here to talk to you about SGA and what it

means to all people with disabilities across the country.

I have been able to observe people with disabilities for over 25

years. I have seen them grow over the years with the desire to

have a better life, especially in this growing economy. Last summer, allowable monthly earnings went from the $500 level to $700

a month. People with disabilities have more opportunities now to

get better paying jobs as the business community now recognizes

that they can do the same jobs as persons without disabilities.

I have seen my daughter Wendy’s life begin to take a real positive outlook as she did more productive work that paid her more

money and made her look forward to every payday. The more work

skills people with disabilities acquire, the more money they make,

the more part of the community they become. They have more buying power and also pay taxes, therefore, they become an asset to

their community.

Wendy has mental retardation, and limitations in physical movement. She functions at the third-grade level in reading, spelling

and arithmetic. She enjoys work and is a dedicated worker on a

production line.

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I believe that working is important for Wendy and other people

with disabilities, just as it is for people without disabilities. But we

actually cause a hardship to many people with disabilities if they

are penalized and have to lose basic supports as a result of work.

Now Wendy and her co-workers have to worry about going over the

$700 a month that the Social Security Administration sets for the

SGA level per month. That means that if they make more than

$700 per month, they will eventually give up all their cash benefits

and will eventually lose Medicare health insurance and have to pay

out of their own pocket to get insurance. If a person with a disability works 40 hours per week, at a minimum wage of $5.15 per

hour, they will earn $824 per month. That is $124 above the current SGA level of $700 per month. This will cause the loss of benefits that they need to survive.

Under the work incentives available in the SSI program, Wendy

would have been able to earn more, but because she receives Title

II benefits as a disabled adult child since I retired, she is limited

by the $700 a month amount.

For many like my daughter, their disabilities are lifelong and severe and they cannot afford to lose the basic safety net supports

of Social Security and Medicare. That is why we are asking for the

same financial advantage that a person who is blind gets at $1,170

per month, with annual indexing or COLAs. In doing this, we will

never again hold people back from being productive in the years to

come.

STATEMENT OF WENDY VANOOTEGHEM, SOCIAL SECURITY

BENEFICIARY, ESSEXVILLE, MICHIGAN

Ms. VANOOTEGHEM. My name is Wendy VanOoteghem, I am 39

years old. I have been working at Do-All in Bay City, Michigan, for

13 years. Right now I am working 30 hours a week on a packaging

line, packaging zip-loc bags and doing other specialty packaging. I

believe I could make more than $700 a month, but I cannot afford

to lose Social Security and Medicare. I have to make sure that I

do not make more than $700 each month. It makes me angry. I

want to be able to work more.

Mr. VANOOTEGHEM. My wife and I are in our 60s, like a lot of

other families, and if something would happen to us, we want

Wendy to be able to make it on her own. Yet she must depend on

her Social Security and Medicare as a safety net, especially when

we can no longer assist her.

What the SGA level amounts to is a wage ceiling for people with

severe, lifelong disabilities, a ceiling that is created in federal policy. We need your help to bring the SGA level up to a reasonable

amount and index it for inflation.

Thank you for giving us this opportunity to testify here today.

[The prepared statement follows:]

Statement of William VanOoteghem, Father of Social Security Beneficiary,

and Wendy VanOoteghm, Social Security Beneficiary, on behalf of Arc of

the United States

A Parent’s Perspective on SGA

My name is William R. VanOoteghem and this is my daughter Wendy. We are

here to talk to you about what will happen to Wendy if her work increases her

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wages over the SGA level of $700.00 per month (which, by the way, is just about

the poverty level for an individual). We are here to talk to you about SGA and what

it means to all people with disabilities across the country.

I have been able to observe people with disabilities like my daughter for over

twenty-five years. I have seen them grow over the years with the desire to have a

better life, especially in this growing economy. Last summer, allowable monthly

earnings went from $500.00 to $700.00. People with disabilities have more opportunities now to get better paying jobs, as the business community now recognizes that

they can do many of the same jobs as a person without disabilities. I have seen my

daughter Wendy’s life begin to take a real positive outlook, as she did more productive work that paid her more money and made her look forward to every payday.

The more work skills people with disabilities acquire, the more money they make,

the more part of the community they become. They have more buying power and

also pay taxes, therefore, they become an asset to their community.

Wendy has Down syndrome, mental retardation, and limitations in physical movement. Her reading, spelling, and arithmetic are at the third grade level. She enjoys

work and is a dedicated worker on a production line.

I believe that working is important for Wendy and other people with disabilities,

just as it is for people without disabilities. But we actually cause a hardship to

many people with disabilities if they are penalized and have to lose basic supports

as a result of work. Now Wendy and her co-workers have to worry about going over

the $700.00 a month that the Social Security Administration sets for the SGA level

per month. That means that if they make more than $700.00 per month, they will

eventually give up all their cash benefits and will eventually lose Medicare health

insurance and have to pay out of their own pocket to get insurance. If a person with

a disability works forty hours per week, at a minimum wage of $5.15 per hour, they

will earn $824.00 per month. That is $124.00 above the current SGA level of

$700.00 per month. This will cause the loss of benefits that they need to survive.

Under the work incentives available in the SSI program, Wendy would have been

able to earn more; but because she receives Title II benefits as a ‘‘disabled adult

child’’ since I retired, she is limited by the $700.00/month amount.

For many, like my daughter, their disabilities are lifelong and severe and they

cannot afford to lose the basic safety net supports of Social Security and Medicare.

That is why we are asking for the same financial advantage that a person who is

blind gets at $1170.00 per month, with annual indexing or COLAs (cost of living

adjustments) for all people with disabilities. In doing this, we will never again hold

people back from being productive in the years to come.

Wendy’s Perspective on SGA

My name is Wendy VanOoteghem; I am thirty-nine years old. I have been working at Do-All in Bay City, Michigan, for thirteen years. Right now, I am working

about thirty hours a week on a packaging line, packaging zip-loc bags and doing

other specialty packaging. I believe I could make more that $700.00 a month, but

I cannot afford to lose Social Security and Medicare. I have to make sure that I do

not make more than $700.00 each month. It makes me angry. I want to be able to

work more.

Preparing for the Future

My wife and I are in our sixties, like a lot of other families, and if something

would happen to us, we want Wendy to be able to make it on her own. Yet she must

depend on her Social Security and Medicare as a safety net, especially when we can

no longer assist her.

What the SGA level amounts to is a wage ceiling for people with severe, lifelong

disabilities -a ceiling that is created in federal policy. We need your help to bring

the SGA level up to a reasonable amount and index it for inflation.

Thank you for giving us this opportunity to testify here today.

The Arc of the United States is a membership organization made up of people

with mental retardation, their families, friends, interested citizens, and professionals in the disability field. Together they form approximately 1,000 state and

local chapters of The Arc and the largest voluntary organization in the United

States devoted solely to working on behalf of people with mental retardation and

their families. The Arc works through education, research, and advocacy to improve

the quality of life for children and adults with mental retardation and their families

and works to prevent both the causes and effects of mental retardation.

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Chairman. SHAW. Thank you, sir. Dr. Hanes.

STATEMENT OF PAMELA HANES, PH.D., ASSOCIATE DIRECTOR

FOR RESEARCH, OREGON HEALTH POLICY INSTITUTE, DEPARTMENT OF PUBLIC HEALTH AND PREVENTIVE MEDICINE, OREGON HEALTH SCIENCES UNIVERSITY

Ms. HANES. Mr. Chairman and Members of the Subcommittee, I

want to thank you for the invitation to present testimony at your

hearing today. I am Research Director at the Oregon Health Policy

Institute, and in this capacity I am currently directing an evaluation, a three-year evaluation, of a three-state work incentive initiative demonstration project that is being conducted in Oregon, Vermont and Wisconsin, and is being funded by the Robert Wood

Johnson Foundation. This research is attempting to better understand the perceived and real barriers to employment as experienced by Social Security beneficiaries who live with a severe disability, and to understand how these perceptions influence their return to work efforts.

We are confident that this research effort will illuminate the individual structural factors that contribute to the high rates of unemployment and under-employment among Social Security beneficiaries.

I am presenting to you today preliminary findings from our Employment Barriers Survey. This survey was first developed in 1993

and conducted with a group of severely physically disabled beneficiaries in Wisconsin, and has more recently been administered to

Social Security beneficiaries not only in Oregon, Wisconsin and

Vermont, but also the State of Alaska.

The survey data reports the collective experiences, beliefs, attitudes and fears about returning to work, pursuing gainful employment, and the potential impact of this pursuit on the preservation

of their essential income and health insurance benefits. We have

learned from our participants that SGA is a major basis for the

fears that are experienced by beneficiaries.

To focus our attention on today’s hearing, I would like to quickly

summarize some of the findings from the Alaska survey, which has

been more extensively analyzed than the three-state evaluation,

and then I would like to summarize what the findings of these surveys are pointing to.

In Alaska, of 354 individuals who returned the survey, 59 percent reported that they would like to return to work if employment

didn’t jeopardize their eligibility for needed benefits.

What we are hoping to learn in the three-state work incentive

evaluation is what happens to thwart these expectations about employment.

This is the primary finding that we hope to learn from the participants of the three-state study over the next two and a half

years. When this study is complete, the Institute will have not only

self-reported data from individuals that has been collected at three

points in time, but we will be linking this information to earnings,

public program participation, cost of disability-related benefits and

services, and health care utilization. These data will be reported on

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approximately 600 program participants and a comparable group of

nonparticipants.

I mention this to tell you that it is a very unique study in the

country in terms of our ability to understand the impact of employment barriers on the personal lives of a cross-section of individuals

who have severe disabilities.

Fifty-eight percent of the survey respondents in Alaska reported

that they had been employed prior to receiving Disability benefits.

Only 96 of these individuals were employed at any time after collecting Disability benefits. At the time the survey was administered, only 39 individuals of the full 354 people were working. Of

these 96 individuals who reported working, we had some very interesting findings about what the supports were that allowed them

to continue to work. Support from family and friends, as we just

heard from the presenters right before me, was a very important

factor in individuals with severe disabilities to get and keep a job.

In addition to that support from family and friends, having convenient and accessible transportation, and most especially and somewhat surprising, is employer and co-workers’ attitudes toward people with disability was reported to be a major support in the reason

that people were able to remain at their job.

Finally, 70 percent of these few people who told us they had

worked since their disability, told us that continuing to be able to

get their SSI checks while working was a very important factor for

getting and keeping a job.

Now, among the majority of people who didn’t work, we had findings about what were the barriers to pursuing gainful employment,

and I am sure this committee has heard these factors many times

as we were hearing testimony for the Ticket to Work and Work Incentives Improvement Act.

Disability and health problems was the most important factor to

keep people out of the labor market but, after the disability itself,

not having affordable health insurance, not being able to earn

enough money to make up for lost benefits, not being eligible for

Medicare and Medicaid were top vote-getters in the reasons that

people perceive it is not in their best interest to go back to work.

I would just like to say that it is very instructive when we looked

at the information that came from people who had worked since

collecting Disability benefits and those who had not, the differences

in their perceptions of these barriers. Twice as many people were

likely to report they couldn’t work because of their disability, if

they had never worked. Three times were more likely to say that

their inability to get time off for disability-related benefits was a

major reason for not working, and six times more people were more

likely to report that not having control over the pace and scheduling of work was a major barrier to working.

I mention these barriers because we are learning from the research that we are doing that many of these are perceptual barriers that don’t hold up once people have successes in the workplace. And this is a very powerful message, I think, to those of us

who are interested in looking at policy and system level modifications that help get folks with severe disabilities back into the labor

market.

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And almost every employment barrier measure presented, individuals who were currently working did not express major concern

about the effect of working public benefits. It is a powerful and instructive finding.

I would like to complete my comments by just suggesting one

thing that is particularly relevant to the hearing here today, and

that has to do with the challenge facing—the changing face of disability and the challenge of reshaping and modifying policy that is

disability sensitive.

Individuals with differing types of disabilities have very differing

needs in terms of getting back to work. Individuals with physical

and sensory disabilities depend heavily on adaptive equipment and

devices, durable medical equipment and personal support. There is

no ‘‘one size fits all’’ accommodation to overcome the misfit between

individuals’ functional limitations and their work environment.

It is incumbent on all of us to acknowledge that employment barriers are equally disempowering for all individuals who live with a

severe disability, whether it be physical, psychiatric, sensory, or developmental in nature.

Structural barriers to employment, therefore, must be resolved

based on the unique needs and differences of the different types of

disabilities that present in the Social Security beneficiary rolls.

Thank you, and I would be happy to answer any questions about

the data that are contained in my written testimony.

[The prepared statement follows:]

Statement of Pamela Hanes, Ph.D., Associate Director for Research, Oregon

Health Policy Institute, Department of Public Health and Preventive

Medicine, Oregon Health Sciences University

Chairman E. Clay Shaw, Honorable Robert Matsui, and distinguished subcommittee members, thank you for the invitation to present testimony at today’s hearing.

My name is Dr. Pamela Hanes. I am the Associate Director for Research at the Oregon Health Policy Institute (OHPI) in the Department of Public Health and Preventive Medicine at the Oregon Health Sciences University. I am here today to discuss early findings from an important research project currently underway at the

Institute. This research is attempting to better understand the barriers to employment experienced by a population of SSA beneficiaries who live with severe disabilities. Further, the research will help us learn the extent to which mitigation of these

barriers will lead to increased rates of gainful employment among severely disabled

workers.

I come today with findings from an Employment Barriers Survey that has been

administered to SSA beneficiaries in four states. These findings are unique in several ways. The data are derived directly from individuals who live with a severe disabling condition and represent their collective experiences, beliefs, attitudes and

fears about returning to work, pursuing gainful employment, and the potential impact of this pursuit on the preservation of their essential income and health insurance safety net. This survey was conducted with SSA beneficiaries who live in Oregon, Vermont and Wisconsin and are participating in the 3-State Work Incentive

Initiative currently underway in these three states. In addition to the self-reported

experiences of individuals participating in the 3-State Initiative, comparable data

are presented from a representative sample of 1000 low-income SSDI and SSI beneficiaries on Medicaid in Alaska who were mailed in an earlier version of the Employment Barriers Survey in 1998.

These data are unique because they represent a true cross section of a severely

disabled population in terms of geography and the types of disabilities experienced.

The data include a representative sample of SSDI and SSI beneficiaries living with

psychiatric, physical, sensory, and developmental disabilities. This information gives

voice to over 1000 SSA beneficiaries in these four states.

When this 3-state study is completed in 2002, we will have individually reported

attitudinal data that is linked to the earnings, public program participation, and

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health care utilization data of approximately 600 program participants and a comparable group of non-participants. This uniquely linked data set will provide a comprehensive picture of the relationship between living with a severe physical, psychiatric or developmental impairment and the structural factors in the policy and

physical environment that both thwart and facilitate gainful employment. I look forward to a future date when I can report these very important research findings to

the Social Security Subcommittee of Ways and Means.

The field of disability policy research has been slowly and steadily building a body

of evidence to support policy and systems change at the state and federal levels.

These changes can be seen in both the re-structuring of SSA benefits and work incentives as well as in the new options and protections available in the Medicare and

Medicaid programs. AK, OR, VT, and WI, along with several other states, have

taken a strong leadership role in these reform efforts. The Robert Wood Johnson

Foundation has provided generous support to the 3-State Work Incentive Initiative

(OR, VT, and WI) currently being evaluated by OHPI. Additionally, Vermont and

Wisconsin are among ten other states that have cooperative agreements with the

Social Security Administration to further support the individual states’ work incentive efforts.

The Ticket to Work and Work Incentives Improvement (TWWIIA) Act of 1999 is

another vitally important foundation to facilitate these knowledge-building and policy reform processes. My research team at OHPI will be closely monitoring the early

impact of TWWIIA on the 3-State Work Incentive Demonstration programs in Oregon, Vermont, and Wisconsin.

The initial ‘‘pictures’’ we have taken of individuals participating in the 3-State

Work Incentive Initiative and those taken in Alaska have produced somewhat differing images of living with a severe disability. A primary reason for these differences

can be explained by certain characteristics of the underlying populations sampled.

In Alaska, a randomly selected sample of SSA beneficiaries who receive Medicaid

was drawn from the state Medicaid files. Therefore, this sampled population represented a particularly low-income group of individuals. Although likewise SSA

beneficiaries in OR, VT, and WI, the survey respondents also are current or past

clients of their states’ vocational rehabilitation agencies. Thus, this group represents

a population of beneficiaries that has demonstrated some vocational readiness to

enter or re-enter the labor market.

To set the context for the reported attitudes, beliefs and fears associated with

being gainfully employed, I have provided a brief description of educational and employment history characteristics of the population surveyed in AK and also those

found among participants in the 3-State Work Incentive Initiative.

Alaska Profile

• Almost 30% of Alaskan respondents had less than a high school education;

• 96% reported an annual income of less than $15,000;

• In spite of full Medicaid coverage among survey respondents, 46% reported having out-of-pocket medical expenses; of these, 2⁄3 reported spending between $50–100/

month on medical and health-related expenses;

• 35% of all respondents had been on disability benefits for over 10 years;

• 63% of all respondents reported having more than one diagnosed disability; the

group least likely to have a second disability was those with a primary sensory disability;

• 58% of all survey respondents reported being employed prior to receiving disability benefits. Of those with an employment history, the majority held non-professional positions and had substantial work histories (53% worked over 5 years and

32% of these over 10 years);

• Wages from prior employment were low, in most cases near the poverty level;

• Of the 29% of respondents who reported being employed at any time since collecting disability benefits (n=96), 41% were working at the time of the survey.

To summarize this respondent profile, survey responders in Alaska were an extremely disadvantaged group as noted in their pre-disability as well as post-disability demographic profiles. Because the sample was stratified to capture the voices of

rural as well as urban dwellers, a disproportionately high response from the frontier

areas of the state (49%) is reflected in the prior occupation of beneficiaries, with almost one-third of formers workers in the manual laborer category prior to becoming

a SSA beneficiary.

Of the individuals who reported having worked since becoming eligible for SSA

benefits:

• 69% said that having support from family and friends was an important factor

in getting or keeping a job;

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• 71% reported having convenient and accessible transportation was important; • 76% reported that positive employer attitudes about people with disabilities was

important; likewise 74% said co-workers attitudes were important; and

• 70% said that continuing to get SSI checks while working was important to getting or keeping a job.

When the group of respondents who never worked since collecting SSA benefits

was asked about the major barriers that keep them from working:

• 77% said their disability was a major barrier to work;

• 51% reported not having affordable health insurance was a major barrier;

• 57% reported not being able to earn enough money to make up for lost benefits

as a major barrier to work;

• 65% reported not being eligible for Medicare or Medicaid as a major barrier to

work;

• 61% said losing eligibility for Medicare or Medicaid as a major barrier to work;

• 56% reported that employment would affect their ability to keep disability-related benefits as a major barrier to work; and

• 52% reported employment making it harder to get disability-related benefits in

the future as a major barrier to work.

To summarize the major barriers to work reported by a representative sample

SSA beneficiaries on Medicaid in Alaska, it is instructive to note the differences in

perception of what constitutes a barrier to work between respondents who had

worked at some time since collecting benefits and the majority of respondents who

had not returned to work. Respondents who hadn’t worked since collecting disability

benefits were:

• Twice as likely to report they couldn’t work because of their disability;

• Three times more likely to say that their inability to get time off disability-related reasons was a major barrier to work;

• Three times more likely to say that lack of convenient transportation was a

major barrier to work; and

• Almost six times more likely to report that not having control over the pace and

scheduling of work was a major barrier to working.

Even more dramatic are the differences in perceptions of barriers between those

who were currently working at the time of the survey and those who had not

worked since collecting SSA benefits. Current workers were:

• Six times LESS likely to report that employment affecting their benefits in the

future was a major barrier to working;

• Six times LESS likely to report that employment affecting their ability to keep

disability-related benefits was a major barrier to working;

• Six times LESS likely to report that not having the ability to receive Medicare

and Medicaid was a major barrier to working; and

• Three times LESS likely to report that not being able to earn enough money

to make up for lost benefits was a major barrier to working.

• Current workers reported no major concern about negative employer or co-worker attitudes as a major barrier to working.

On almost every employment barrier measure presented, individuals who were

currently working did not express a significant level of fear about the effect of working on public benefits compared to those who had not worked since collecting benefits. This is a powerful and instructive finding about the support that is needed and

the positive impact of successful employment on dispelling the fear of loss of benefits. This support will come, in part, through education about the informed use of

existing and the new work incentive programs that are embodied in TWWIIA. It

also will come when beneficiaries have reason to believe and trust in a solid safety

net that exists should their disability or health worsen while attempting or engaging in gainful employment.

Oregon, Vermont, Wisconsin Profiles

The data reported today from the 3-State Work Incentive Initiative is preliminary.

We are currently in the process of tabulating information from the baseline Employment Barriers Survey that was administered to all individuals who are participating

in the three states’ programs and a cohort of non-participants who are being tracked

in the same way as program participants. The full population of program participants has not been enrolled in the three states’ programs. Enrollment will continue

through the end of April 2000.

A modified version of this survey will be re-administered two more times during

a three-year study period. I am reporting preliminary baseline data today. The data

have been presented by type of disability to reinforce the fact that type of disability

DOES make a difference in how individuals relate to their physical environment,

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therefore impacting their ability to work, and subsequently affecting their belief in

their ability to work.

Individuals with sensory disabilities have been included the ‘‘physical disability’’

category. We estimate that approximately 10% of the individuals in this group have

a self-reported primary or secondary sensory disability. In terms of the preliminary

data: 44% of participants reported a physical disability, 28% a psychiatric disability,

11% a developmental disability, and 13% reported more than one primary disability.

% Of participants reporting ever being employed before collecting SSA benefits:

• 84% Physical • 89% Psychiatric • 42% Developmental • 76% More Than One Primary Disability

% Of participants reporting working full-time prior to collecting SSA benefits:

• 81% Physical • 67% Psychiatric • 41% Developmental • 74% More Than One Primary Disability

% Of participants reporting working more than 10 years prior to collecting SSA

benefits: • 59% Physical • 40% Psychiatric • 17% Developmental • 53% More Than One Primary Disability

% Of participants reporting being currently employed at the time of the survey:

• 58% Physical • 50% Psychiatric • 35% Developmental • 57% More Than One Primary Disability

% Of participants reporting working full-time at the most recent job lasting 30

days or more: • 36% Physical • 23% Psychiatric • 8% Developmental • 27% More Than One Primary Disability

% Of participants reporting their ability to work is limited because of their disability: • 59% Physical • 46%% Psychiatric • 41% Developmental • 63% More Than One Primary Disability

% Of participants reporting strong concern that working will affect their ability

to keep their SSA cash benefits:

• 52% Physical

• 54% Psychiatric

• 41% Developmental

• 46% More Than One Primary Disability

% Of participants reporting that unless a job offers prescription drug coverage

they can’t afford to work:

• 34% Physical

• 45% Psychiatric

• 13% Developmental

• 42% More Than One Primary Disability

% Of participants reporting that it would be hard to earn enough money to make

up for lost SSA benefits:

• 45% Physical

• 51% Psychiatric

• 34% Developmental

• 40% More Than One Primary Disability

% Of participants reporting a major concern about not being eligible for Medicare

and Medicaid if they return to work:

• 19% Physical

• 29% Psychiatric

• 16% Developmental

• 30% More Than One Primary Disability

From these preliminary data we can see that earnings from return to work does

pose a significant threat to beneficiaries in terms of their fear of loss of essential

safety net benefits. Tracking these beliefs and fears over time, and being able to link

them to participants’ back to work efforts will provide a critical body of information

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that is currently missing from our knowledge base. We do know that in Vermont

when policy analysts looked at the successful closures of their SSA beneficiary clients in 1995 there was a strong tendency to ‘‘park’’ earnings right under $500/month

which, at the time, was the level of Substantial Gainful Activity (SGA). This parking

behavior was in stark contrast to their successful closures of non-SSA beneficiaries—the non-SSA clients demonstrated a steady upward trend in earnings out

to 18 months after closure.

The take away messages I would like to leave with subcommittee members today

are based on ten years of policy research in this area.

First, the problem of un-and underemployment among SSA beneficiaries living

with a severe disability represents a complex web of personal, policy, and environmental factors, and as such, any potential policy or systems reform solutions must

both recognize and appropriately deal with this complexity.

Second, the severity of an individual’s disability, that is, the degree of functional

limitation one experiences in pursuing normal activities of daily living is ultimately

a function of an individual’s fit with his or her physical environment. Disability describes a misfit between an individual and his physical environment. As such, much

of what we call disability can be ameliorated through accommodation, modification

of the built and policy environment, and changing societal attitudes from those that

use the label of disability to those that put the focus on individuals with differing

abilities.

Third, the face of work disability has changed dramatically since the disability

insurance (DI) amendments were added to the Social Security Act in 1958. In the

late 1950s, a DI beneficiary characteristically would be described as a 50-something

‘‘worn out worker’’ -a male with a life expectancy of 60 (+/¥a few years), laboring

in a production-oriented, heavy industrial position who exits the labor force with a

physical disability. In the 1990s a younger worker in his 30s or 40s who is increasingly exiting from an information-based, high technology or service-based labor market with a severe mental disorder is more characteristic of a DI beneficiary. The

profile of the 1990s beneficiary is supplementing, if not replacing, the earlier

profiled disabled worker, this is especially true in the northern tier states of the

U.S. The largest single category of disability in the DI and SSI population is mental

disorders followed by muscular-skeletal disorders. In the past 10 years alone, the

number of disabled beneficiaries under age 30 has more than doubled from 116,000

to 275,000. With this growth in the younger disabled population is a projected lifetime stay on SSI disability benefits of 25 years for recipients between the ages of

0–17 and 16 years for those between the ages of 18–34. The primary reasons individuals leave the SSDI rolls are death (55%), followed by reaching retirement age

(34%), disability cessation (8%) and Other (2%). The ‘‘other’’ category includes return

to work. These sobering statistics require a re-thinking and subsequent re-engineering of the disability safety net.

Fourth, with the changing face of disability comes the challenge of re-shaping

and modifying policy that is disability-sensitive. Work patterns, earnings, and employment barriers differ on the basis of the underlying disabling condition. Individuals with psychiatric disabilities are the most vulnerable to starts and stops in employment because disability management is so heavily dependent on professional involvement and strict adherence to drug regimens that often outlive their usefulness.

On the other hand, individuals with physical and sensory disabilities depend heavily

on adaptive equipment and devices, durable medical equipment, and personal support services. There is no one-size-fits-all accommodation to overcome the misfit between an individual’s functional limitations and his or her work environment. Each

individual’s experience of functional impairment is unique and yet we know that

what facilitates employment for individuals with spinal cord injuries or blindness

will not necessarily lead to gainful work activity for individuals with bipolar disorder or schizophrenia.

It is incumbent on all of us to acknowledge that employment barriers are equally

disempowering for all individuals who live with a severe disability, whether it be

physical, psychiatric, sensory, or developmental in nature. Structural barriers to employment for individuals with severe disabilities are no respecter of person based

on their particular type of disability. Policy solutions that promote access to the

world of work therefore must be equally and equitably available to all SSA beneficiaries regardless of their underlying disability. Only when this happens will the

full legislative intent of the ADA become realized and the potential for fuller employment of individuals with severe disabilities embodied in the TWWIA be fully

utilized.

87

Chairman SHAW. Thank you, Dr. Hanes. Mr. Young.

STATEMENT OF TONY YOUNG, DIRECTOR OF GOVERNMENT

ACTIVITIES, NISH, VIENNA, VIRGINIA, AND CO-CHAIR, SOCIAL SECURITY TASK FORCE, AND VICE CHAIR, CONSORTIUM FOR CITIZENS WITH DISABILITIES

Mr. YOUNG. Thank you. Good afternoon. I would like to start this

afternoon by thanking the Subcommittee and the staff for the time

and energy that went into passing the Ticket to Work and Work

Incentives Improvement Act. The leadership of this Subcommittee

was crucial to ensuring this legislation became law.

As you well know, the Social Security Disability Insurance was

established to protect workers against the loss of income due to a

disability that prevented them from working. When SSDI was established 50 years ago, it was reasonable to expect that people with

the most severe disabilities would almost certainly never work. The

technologies, services, supports, and medications that exist today

would seem like science fiction to those who wrote the original

SSDI law.

Let me put this in some perspective. A popular comic of the

1950s portrayed a character whose car had a telephone in it. Another had a car that could display maps on a television in the dashboard. Today, this is no longer science fiction, this is reality.

The reality for people with disabilities has changed also. Work,

a job, a career, things that were not possible 50 years ago today

can be an expectation for people with even the most severe disabilities. These expectations can be a reality when we have access to

new technologies, new services, supports, and medications, yet we

struggle to work under SSA rules that were created when things

were quite different. The automobile industry has kept up with the

times, and so, too, should disability policy.

On many occasions CCD has testified about the difficulties posed

by the SSDI earnings limit. The earnings limit, also know as the

‘‘cash cliff’’, creates an all-or-nothing situation that forces beneficiaries to forego all cash benefits after only a meager level of

earnings. This earnings limit is now $700 per month, $8400 per

years. Earning just one dollar over this limit can cause an SSDA

beneficiary to be determined no longer eligible for cash benefits. Oftentimes, the benefit amount lost is nearly equal to the earnings

limit, subjecting the beneficiary to a whopping 50 percent drop in

net income.

Further, all individuals with severe disabilities incur substantial

costs in attempting to work. In my case, I pay over $10,000 a year

just for personal assistance services. The wheelchair that I use to

get around and go everyplace and go to work, cost $20,000. I spent

another $20,000 buying a van to transport me and my wheelchair,

and then had to spend another $15,000 to make it accessible. Assistive technology, hearing aids, animal companions, medical equipment and supplies, deductibles and co-payments, communications

devices and the maintenance of all this equipment all increase

costs faced by individuals with severe disabilities who work.

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As a result, far fewer beneficiaries attempt work than would

under a more rational policy. Many never work above the earnings

limit, even if they can. This policy creates financial costs for the

government because beneficiaries who could work and pay taxes

aren’t. It costs the government because people fear they can’t jump

the cash cliff to achieve a level of earnings that allow them to live

above poverty, so they remain on full benefits.

It took ten years for SSA to raise the earnings limit to $700 from

$500. It took just as long to go to $500 from $300. And those increases weren’t even enough to keep up with the low rate of inflation our economy experienced during that time.

For more than 20 years, the disability community has advocated

for changes in the SSDI program, particularly about the SSDI cash

cliff. Legislative addressing the earnings limit could take many

forms. However, certain key principles should form the foundation

for any congressional action addressing the earnings limit. These

principles are: (1) Do No Harm. Changes made by Congress to

earning limit, or to the Social Security Disability programs as a

whole, should ensure that no disability group is negatively affected.

Whatever Congress does, it must not enact policy detrimental to

any category of DI beneficiaries; (2) Equity. Should Congress take

favorable action on legislation that addresses earnings limits, Congress must ensure equity among all DI beneficiaries.

There are a variety of options available to Congress that would

eliminate the cash cliff. We would welcome the opportunity to work

with you and your Subcommittee staff in developing a proposal

that eliminates the cash cliff.

We urge Congress to finish the work begun with the enactment

of the Ticket to Work and Work Incentives Improvement Act by removing the cash cliff barrier to work.

Again, I thank the Subcommittee for this opportunity. I will be

glad to answer any questions you might have.

[The prepared statement follows:]

Statement of Tony Young, Director of Government Activities, NISH, Vienna,

Virginia, and Co-Chair, Social Security Task Force, and Vice Chair, Consortium for Citizens with Disabilities

Thank you Chairman Shaw, Mr. Matsui and members of the subcommittee, for

the opportunity to testify today on the SSDI earnings limit. I am Tony Young, the

Director of Government Activities for NISH and Vice Chair of the Consortium for

Citizens with Disabilities. CCD is a coalition of nearly 100 national organizations

advocating on behalf of people with all types of physical and mental disabilities. I

am testifying today in my role as a Co-Chair of the CCD Task Force on Social Security.

Mr. Chairman, I want to begin this morning by thanking you and Mr. Matsui,

the subcommittee, and your staff, for the hard work and commitment that went into

passing the Ticket-to-Work and Work Incentives Improvement Act. Your leadership

and that of the subcommittee were crucial to ensuring that legislation became law.

We especially appreciate your decision to hold this hearing so quickly after the recent approval of H.R. 5, legislation that completely eliminates the earnings test for

people over age 65.

As you know, the Social Security Disability Insurance Program was established

to protect workers against the loss of income due to a disability that prevented them

from working. When SSDI was established some fifty years ago, it was reasonable

to expect that people with the most severe disabilities would almost certainly never

work. The technologies, services, and medications that exist today would seem like

science fiction to those who wrote the SSDI law in the 1950s. Let me explain by

putting this in some perspective. A popular comic of the 1950’s portrayed a main

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character whose car had a phone in it, and a wristband that had a television screen.

Another had a car that could produce maps on a television in the dashboard.

Today, this is not science fiction, it’s reality. We have cell phones that can call

anywhere in the world, and cars can be equipped with a map system that uses satellites to find your location and give you directions. You can even watch your favorite 1950’s cartoon show via satellite broadcast to the on-board television.

The reality for people with disabilities has changed too. Work, a job, a career,

things that were not possible fifty years ago are today an expectation for people

with even the most severe disabilities. New technologies, new services, evolving employment supports, and better medications have made those expectations a reality.

Yet we struggle to work under rules created when things were quite different. The

automobile industry has kept up with the times, and so too, should disability policy.

On many occasions in the past CCD has testified about the difficulties posed by

the SSDI earnings limit on the ability of people with disabilities to achieve meaningful employment before losing all cash benefits. The earnings limit, known as the

‘‘cash cliff’’ creates an all-or-nothing situation that causes people with disabilities to

forgo all cash benefits after only a meager amount of earnings are achieved. Currently, the earnings limit is at $700 per month, or $8,400 per year. This amount

is at just about the federal poverty level for a single individual. Earning just

one dollar over this amount, can cause an SSDI beneficiary to be determined no

longer eligible for cash benefits. Often times, the benefit amount lost is nearly equal

to the earnings limit, thus subjecting the beneficiary to a whopping 50% marginal

tax.

Further, workers with disabilities incur substantial expenses in attempting to

work. The cost of personal assistance, of a wheelchair, an accessible van or hand

controlled car; assistive technology, hearing aids, animal companions, computers,

communications devices and the repair and maintenance costs of the equipment all

increase the costs faced by individuals with severe disabilities who want to work.

As a result, far fewer beneficiaries attempt work than would under a more reasonable, rationale policy. Many never work above the earnings limit, even if they could.

This policy is just plain wrong. Worse, this policy creates financial costs for the government, and the SSDI program. It costs the government because people who could

be working and paying taxes aren’t, and people who are working might be working

more, but aren’t. It costs the SSDI program because people fear they can’t jump the

cash cliff to achieve a level of earnings that allow them to live above poverty, so

they remain on full benefits.

Further, although the earnings limit was recently raised to seven hundred dollars

from five hundred dollars, it took ten years for the Social Security Administration

to act on that increase. And it took just as long to raise the earnings limit to five

hundred dollars from three hundred dollars in the mid–1980’s. These increases

weren’t even enough to keep up with the low rate of inflation our economy has experienced these past 15 years.

For more than twenty years, the disability community has advocated for changes

in the SSDI program, and particularly about the SSDI earnings cliff. Legislative advocacy concerning the earnings limit has often taken many forms. However, certain

key principles should form the foundation for any congressional action addressing

the earnings limit. Those principles are:

1) Do No Harm—Changes made by Congress to earning limit, or to the Social Security disability programs as a whole, should ensure that no disability group is negatively affected. Whatever Congress does, it must not enact policy detrimental to

any particular category of DI beneficiaries.

2) Equity—Should Congress take favorable action on legislation that addresses

earnings limits, Congress must ensure equity among all DI beneficiaries.

There are a variety of options available to Congress that would deal with the

‘‘earnings cliff’’ that beneficiaries face if they try to work. We would welcome the

opportunity work with you, and subcommittee staff in developing a proposal that

eliminates the earnings cliff.

In this time of profound fiscal growth and economic prosperity, Congress should

‘‘fix’’ the SSDI earnings limit to allow all people with disabilities the opportunity

to contribute to this unprecedented economic expansion. We urge Congress to finish

the work substantially started with the enactment of the Ticket-to-Work and Work

Incentives Improvement Act by removing the ‘‘earnings cliff’’ barrier to work.

Finally, while not directly on point regarding SGA, several issues have come to

the attention of the CCD Social Security Task Force that we believe merit further

attention. It is our understanding that, for a ‘‘disabled adult child,’’ leaving the Title

II program as a result of earning above SGA after the EPE has expired means the

loss of ‘‘disabled adult child’’ status for life. Many people do not understand that the

benefits that the parent has earned for the disabled adult child (severely disabled

90

since childhood) are permanently lost, and there is no re-entry under SSA’s current

interpretation. We believe that this must be fixed; otherwise, the purpose of the

Ticket-to-Work & Work Incentives Improvement Act will be thwarted for those who

qualify as disabled adult children. We believe that the TTWWIIA clearly contemplated the ability of disabled adult children to move on and off the program to

the same extent that other people with disabilities will be allowed to do so. The statutory language establishing the eligibility category for disabled adult children was

clearly cited in every case that eligibility for the SSDI program was cited.

In addition, we understand that SSA’s interpretation regarding the value to be

placed on a worker’s work effort (regarding whether it exceeds SGA or not) is different for people in supported employment depending upon whether the individual

is supported directly by an employer or whether the individual is supported by services from an outside source, such as a state-funded supported employment agency.

Due to this distinction, an individual’s work effort could be found to exceed SGA

when the support is from a third party while that same work effort could be found

not to exceed SGA when the support is from the employer. From the perspective

of the individual, this is an arbitrary distinction. Further, there may be additional

complications in that the nature and scope of the support provided to the individual

may be misunderstood when making the valuation of work effort. For instance,

while the individual may be performing the actual task (bagging groceries, assembling a package, etc.), it may be that the individual would be unable to perform the

task without the help of the job coach in ensuring that the individual arrives at

work on time properly attired, that he/she interacts appropriately with customers

and co-workers, and that he/she remains focused on the assigned job tasks, among

other things. We believe that this is an area that also needs further examination

if work incentives are to work as intended by TTWWIIA.

Again, I thank the subcommittee for this opportunity to testify. I will be glad to

answer any questions you may have.

TONY YOUNG

NISH

Director of Governmental Activities

Chairman SHAW. Thank you. Mr. Matsui

Mr. MATSUI. Thank you, Mr. Chairman. I want to thank all five

of the panelists for their testimony today. I just have one series of

questions of Dr. Hanes.

Dr. Hanes, it is my understanding that in your written testimony

you talk about the profile of a disabled individual when the program was first established, and then you have a profile today of

that same disabled individual. The original profile was somebody

who was in the workforce for years and became disabled perhaps

at the age of 50 or thereabouts, and then received some benefits.

Today’s disabled individual is somebody that perhaps has mental

problems, emotional problems, is much younger. Is that a correct

representation of your findings?

Dr. HANES. Yes. I would like to just clarify that. If you look at

the prevalence of disability across the country, there is a very interesting difference between the prevalence of mental disorders as

the primary disabling condition in both the SSI and the DI beneficiary population. It appears to be much more linked to the kind

of industrial base that workers are coming from.

We still see a lot of the musculoskeletal, the bodies that are

breaking down under manual labor in the southern areas of the

country, and it is very interesting, and it is an area that I think

merits further research. But I do think it is correct to say that the

face of disability has changed since the Disability Insurance program was first enacted, and the most single prevalent category of

disability is mental impairment, mental condition.

91

Mr. MATSUI. And I guess the conclusion I am reaching from your

findings there is that the earnings limit years ago is probably in

need of significant adjustment for the nonblind disabled today because they are younger and they still have a lot of work years left,

perhaps unlike those that were defined as disabled 30 years ago,

is that correct?

Dr. HANES. I think that is an appropriate conclusion to make,

and some of the data that have actually been analyzed by Social

Security Office of Statistics and Evaluation have projected the lifetime of benefits for this younger disabled population, and it is very

true that the younger—obviously, the younger someone goes on the

Disability rolls, the longer the projection is that individual will be

on the rolls.

The other piece of my testimony that is written, that I would like

to reinforce with you, is the primary reason for leaving Disability

Insurance is death. Fifty-five percent of the people exit the program because of death. The next largest category, I believe around

35 percent, is retiring or moving from Disability Insurance to retirement benefits. And I think there is fairly persuasive evidence

that less than 1 percent of people leave the Disability rolls permanently because of employment, and the impact of a younger disabled population it doesn’t take heavy mathematics to understand

the impact on the trust fund, in particular, of having people on the

Disability rolls for much longer periods of time.

Mr. MATSUI. Well, I want to thank you and the other four panelists as well for their testimony. Thank you.

Chairman SHAW. Mr. McCrery.

Mr. MCCRERY. I am sorry I missed the first two witnesses’ testimony. Mr. VanOoteghem, could you expound a little on the workrelated expenses associated with your daughter’s work?

Mr. VANOOTEGHEM. Right now, she rides the bus to work, they supply it, and she pays for the fare which is $2.87 per trip. She

doesn’t really have any other expenses. We don’t claim any other

expenses for her.

Mr. MCCRERY. How about Mr. Young?

Mr. YOUNG. Yes, I would be happy to talk about my expenses.

Mr. MCCRERY. Well, the work-related expenses that would be deductible from your income for purposes of staying under the limit.

Mr. YOUNG. Under impairment-related work expenses for

nonblind people, it has to be an expense that is incurred at work.

The majority of the expenses aren’t incurred at work, it is getting

ready for work and getting to and from work. The personal assistance that I use to get dressed in the morning, people that need

cuing and supervision to get ready, the transportation to and from.

If you have an employer, especially one of the nonprofit employers,

that provides transportation for you, it is not a problem. If you

don’t, then you are stuck with a huge bill every month trying just

to get to and from work.

Under the ADA, the employer can provide reasonable accommodations that takes care of some of the work expenses, and the

other things are deductible. But by that time, you have already incurred 75 percent of the work-related expenses that you are going

to get to in a situation.

Mr. MCCRERY. But those expenses you cannot deduct from—

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Mr. YOUNG. Those we cannot deduct, not from earnings to bring

it down below $700, nor are they available for deduction on Schedule A of the 1040 Form.

Mr. MCCRERY. If you were here earlier today when we had other

panels, there was a lot of discussion about the difference in the

earnings limit for the blind disabled and the nonblind disabled.

Would any of you like to comment on that? Do you agree or disagree that there is a rationale for the disparity?

Mr. YOUNG. I would certainly like to say that there is no rationale that I can think of for treating one disability group differently

from another disability group int he types of expenses that we

incur. The level of expense is much more related to the severity of

disability and, frankly, the geographic location in which one lives

than it is to whether you are of one type of disability or another.

I can cite any number of examples of people with various kinds of

disabilities that are going to have huge costs—a person with very

high technological needs, no matter what type of disability, is going

to have huge costs. A person on DI who is going to be much more

severely disabled is going to have higher costs than a person not

on DI, whether they are served by the VR program or not. Persons

who are not on DI are not going to be that disabled and are not

going to have the kind of work-related costs that somebody who is

on DI who, by definition, is more severely disabled will have.

Mr. MCCRERY. Anybody else? Yes?

Mr. VANOOTEGHEM. We watched in 1977 when people who are

blind received the retiree’s earning limits. We didn’t say much then

and there was no change until 1990 when the SGA level was raised

to $500 per month. I know our folks had to fight to make this happen. In 1999, SGA went to $700, but with the raises in minimum

wage within the next three years, that is going to out of our league

again. We need some help, and we need indexing for future increases in the SGA level. Even if it is not retroactive, we need to

be brought up to what people who are blind have for their SGA

level.

Dr. HANES. I would like to comment just for a moment on that.

Mr. MCCRERY. If you don’t mind, comment on that, and also comment on the cliff situation, would it be more helpful for us to

smooth out the cliff, or more helpful to just raise the earnings limit

and still have a cliff.

Dr. HANES. Well, I wanted to comment on the cost because some

of the previous testimony talked about the cost in the Vocational

Rehabilitation Program, for example, and I think it is very important that we consider the total cost of living with a severe disability. And when we think about the total cost and the costs that are

incurred to the individual, and also the costs that are incurred in

the Medicaid program—for example, I can speak with some knowledge about people with psychiatric disabilities are incurring tremendous costs through prescription drugs and intensive case management and psychotherapy.

When you look at costs across type of disability, I think it is very

easy to make a persuasive argument how all people with severe

disabilities incur a tremendous amount of cost, both personal and

to the system, in order to be able to be job ready.

93

And so, although I would not make a statement that one type of

disability is more deserving than the other, I think that it is incumbent on all of us to factor in the total cost of living with a disability.

And in terms of the cliff, I think anything to mitigate the cliff

is going to get people back to work. In my own research—and now

I have heard from probably 1700 people across the country—the

fear factor that someone spoke about earlier is so strong that until

you can deal with that fear in ways that people trust, that they

know there is a safety net there that they can trust, I don’t think

we are going to see large numbers of people going back to work no

matter how you deal with SGA.

Mr. MCCRERY. Thank you. Anybody else?

Mr. GALLAGHER. I was director of a program for five years, earn- ing over $35,000 a year with full Blue Cross, and when I had my

last esposode due to neuroleptic malignant syndrome, I had a ventricular drillout, which means I had a blood clot, I had to change

my medications to Closeral and Depokote. These medications, while

the technology is new, are very expensive. It is close to $1,000 a

month, which I don’t have the insurance to pay for. Blood is drawn

when you first start out, you get your blood drawn every day, then

it is every week, and after three years now I have been taking it,

it is every two weeks. The cost factor of the medications alone, the

factors of going back to seeing the psychiatrist, your medical doctor, and all the medical problems that come because of the medications, it is keeping me on Disability. It makes no sense at all. I am

capable of working. I do want to work. It is just it is very frustrating. Right now, I owe the Social Security Administration I don’t

know how many thousand dollars. My dad is my payee. I am 42

years old, and I have a Master’s Degree. I have been successful

over the last ten years. I don’t know. I don’t have the answers, that

is why I am here today, because I am looking for you all to help

find the answer. I don’t know what the answer is. I do know that

I am sure you will figure it out.

Mr. YOUNG. If I might, just briefly, obviously, I think we need

to take care of this earnings cash cliff because it is a huge barrier.

But the SGA level, because it is the first determiner of disability,

work disability, if you don’t index it to wage inflation, every year

the wages go up, the definition of disability changes for the worse

for people. It is like nonlegislative clamping down on the definition

because it just keeps crashing down on people. And if it goes ten

years, then you have got a substantial change in the definition.

So, I would very much urge you guys to look at the possibility

of indexing that SGA.

Chairman SHAW. Mr. Gallagher, I am interested. You said that

you earned more. How far over the limit does the Social Security

Administration claim you went?

Mr. GALLAGHER. I don’t know. This is back when I was the direct

care staff. I was three years on Disability back in the 1980s, and

I was earning over $560 a month at the time. My dad has been

taking care of my finances, and my dad and I are not on the the

best of relationship we have a business relationship, we don’t have

a very emotional relationship. I do not know the financial parameters. I do know that he is paying back out of my Social Security

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check $100 a month back to SSA because of the overpayment. I do

know that much.

Chairman SHAW. As I understand the law you may have just

stepped over the line slightly and now are incurring a huge debt.

Mr. GALLAGHER. That was back in the 1980s, I believe it was.

Correct.

Chairman SHAW. Who is your congressman?

Mr. GALLAGHER. I am from Detroit, Michigan area.

Chairman SHAW. That could be any number of people. You might

want to contact their office and ask them to take a look at it for

you. If you don’t know the figures, you are certainly entitled to

know them.

Mr. GALLAGHER. The problem is, my dad is so private about

things. He is paranoid that I am going to lose all my benefits, so

he doesn’t disclose anything to me about my finances. I live in his

house. I pay him $400 rent. It is a $150,000 house. I could not live

there without the support you know, it is just very frustrating. I

don’t have the answers. I am estranged with my father. He is my

payee, but I do work part-time currently.

Chairman SHAW. Well, this hearing is held for a definite purpose,

it is not just to allow people to vent their anger. I know Wendy told

us that she was very angry, and I think that certainly adds to the

intensity of the testimony that we have gotten today, and I think

it has been very open and forthright, and I think all the witnesses

have been great.

We are taking a look at the figures and what we can do, and we

recognize the problem. I think the abruptness of the cutoff is very

troublesome to me. Mr. Matsui and I—you wonder sometimes,

when we start whispering to each other up here, what we are talking about—we weren’t talking about the ballgame, we were talking

about the subject at hand and what we might be able to do.

Mr. McCrery has talked about putting up some type of gradual

tapering of benefits after you reach the limit. I am very troubled

by your situation, Mr. Gallagher, where you stepped over the line

and now you have got all hell to pay for it. That is a big problem,

and the law should not be that way and we need to take a close

look at it. On the other hand, we also have to be careful that these

programs don’t get out of hand and that we are concerned about

the solvency of the system, and that is something we have to constantly work on. And we are not going to stop with this hearing,

we are going to continue to work and see what we can do to change

things.

I want to thank this panel and all the panels and the people who

stayed with us all afternoon. Thank you very much for being here,

and this hearing is adjourned.

[Questions submitted by Chairman Shaw to Mr. Gallagher, Dr.

Hanes, Mr. VanOoteghem, and Mr. Young, and their respective answers, follow:]

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Mr. David Gallagher

c/o Paul Seifert

International Association of Psychosocial

Rehabilitation Services

10025 Governor Warfield Parkway, #301

Columbia, MD. 21044–3357

Dear Mr. Gallagher:

Thank you for testifying before our Subcommittee regarding work incentives for

blind and disabled Social Security beneficiaries. In order to complete our hearing

record, I would appreciate your answering the following questions:

1. Individuals with disabilities can actually earn more than the SGA limits and

stay eligible for benefits. The reason is they can subtract work expenses related to

their disability in determining earnings subject to the limit. (For example, if an individual who is disabled earns $900 per month but has $300 in work expenses, their

SGA is $600 -below the $700 limit.) Are you familiar with the provision? Is it being

used? How many individuals with disabilities take advantage of these deductions?

Is it effective? Should it be changed?

2. Does working help your medical condition? Would you work more if you weren’t

afraid of losing your disability benefits?

I thank you for taking the time to answer these questions for the record and

would appreciate your response by no later than May 19, 2000. In addition to a hard

copy of your response, please submit your response on an IBM compatible 3.5-inch

diskette in WordPerfect or Microsoft Word format. If you have any questions concerning this request, please feel free to contact Kim Hildred, Staff Director, Subcommittee on Social Security at (202) 225–9263.

Sincerely,

E. CLAY SHAW, JR.

Chairman

May 19, 2000

The Honorable Clay Shaw

Chairman, House Social Security Subcommittee

B–316 Rayburn House Office Bldg.

Washington, DC 20515

Attn: Kim Hildred, Staff Director

Dear Mr. Chairman,

Thank you for the opportunity to address questions regarding Impairment Related

Work Expenses (IRWEs) and other work-related issues. First, I want to thank you

for holding the March 23rd hearing on the Substantial Gainful Activity level in the

Social Security Disability program. For too long beneficiaries have struggled against

the unfair SGA limit placed on their ability earn. I hope that the hearing, and these

answers, will help the Subcommittee develop a response to the concerns expressed

on March 23rd.

I am aware of the IRWE provision but have never used it. Further, although I

have been on and off benefits I have never been informed by Social Security about

how the provision could benefit me. I hope that the Work Incentive Planners that

are a part of the Ticket-to-Work & Work Incentives Improvement Act will change

this all beneficiaries.

Also, as you know I have a Master’s of Social Work and conduct group self-help

counseling sessions for mental health consumers at my program in Michigan. All

the people in my groups have severe mental illnesses, and many work, yet none had

heard of the IRWE benefit. Further, no other consumers I have talked with seem

to be aware of this benefit. I should qualify this statement by saying that many

beneficiaries do not fully grasp the complicated work incentives in SSDI and SSI.

So the fact that everyone I talked with didn’t know what an Impairment Related

Work Expense deduction was or if they used it does not mean that a case manager

or other counselor didn’t utilize the deduction on their behalf.

The IRWE could benefit some SSDI beneficiaries, but overall it is a limited answer to a bigger problem, namely the SSDI SGA earnings limit/cash cliff. The IWRE

is limited in several ways. First, the beneficiary has to incur the expense in the first

place, and pay for it out of pocket. Second, to be effective the amount of the IRWE

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has to equal or surpass the amount of income above SGA. If not, then the IRWE

doesn’t protect you. Third, once you use an IRWE, you have to keep it to remain

on benefits. For example, if the costs of medications are paid for out of pocket then

they can be used as an IRWE. (The amount spent on medications, which incidentally might be more than the benefit, can’t be used for other necessities). If a person

changes jobs and the employer’s health plan pays for part of the medications, they

might lose enough of the IWRE to lose benefits without earning enough to cover the

non-reimbursed cost of the medications.

Here’s how loss of an IWRE could affect a beneficiary:

If the beneficiary’s DI check is $500 and they earn $1,300, they need over $600 in IRWEs to keep $500 of benefits. (i.e. $500 in benefits and $700 in earnings after

the IRWE ($1,300 -$600) for a total income of $1,200). Now that works out better

than losing one’s benefit AND having to pay for the medications. However, if the

employer’s health plan picks up $300 of the medication cost, the beneficiary loses

$500 in benefits and still must pay the $300 co-pay for the medications (MH parity

notwithstanding, 50% co-pays are NOT unusual for mental illness), plus the other

costs of the plan. The beneficiary earns $1,300 but loses all the DI benefit because

the IRWE is too low ($300). They also pay the $300 in co-pay for the medications,

and now has only $1,000. Now, I suppose the person could refuse the healthcare,

but how wise is that?

Also, not every one with a disability has impairment related work expenses or has

enough expenses to keep from losing all their benefits. Because of this, the IRWE

program is at best a selective solution to the cash cliff problem. I believe that the

IRWE program working in conjunction with sliding-scale cash offset in the SSDI

program would better address the cash cliff and more fairly benefit ALL working

SSDI benefits rather than just a lucky few.

Finally, in response to the second set of questions, there is much research that

proves that work does help a person cope better with their mental illness. Work

can’t be called ‘‘treatment’’ nor does it have a direct medical impact on mental illness in terms ‘‘curing’’ the medical condition (at least not that any research has

proved). However, by adding a strong sense of self-worth and providing an opportunity at independence and self-reliance, work does improve the lives, outlook, and

overall psychosocial/life condition of people with mental illness. In this respect, work

can be extremely beneficial for consumers and it has been for me.

As for working more, if the SSDI program was geared to encouraging more work

I could work more. The cash cliff is tremendously discouraging and consumers are

acutely aware of it and avoid it at any cost. Almost every consumer I talked to about

IRWEs mentioned the cash cliff as being a problem. Even if earnings don’t approach

the cliff people fear that some unforeseen circumstance, like an increase in the minimum wage or a bonus, might push them over the cliff. This keeps people from doing

the best they can.

In closing, I urge you Mr. Chairman and the Congress to eliminate the cash cliff.

Again, thank you for the opportunity to testify and to respond further to your questions.

Sincerely,

DAVID GALLAGHER, MSW

Eastpointe, MI 48021

April 26, 2000

Pamela P. Hanes, Ph.D.

Oregon Health Sciences University

3181 Southwest Sam Jackson Park Road

Portland, OR 97201

Dear Dr. Hanes:

Thank you for testifying before our Subcommittee regarding work incentives for

blind and disabled Social Security beneficiaries New Roman. In order to complete

our hearing record, I would appreciate your answering the following questions:

1. Your testimony indicates that the face of disability has changed dramatically

since 1958. The largest single category of disability in the DI and SSI population

is mental disorders followed by muscular-skeletal disorders. Each individual’s experience of functional impairment is unique and what may facilitate gainful work activity for individuals with one disability may not necessarily lead to gainful work

activity for an individual with another disability. You indicate that we should reVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00100 Fmt 6633 Sfmt 6621 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
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think and subsequently re-engineer the disability safety net. In addition, you refer

to employment and structural barriers that need to be overcome. To accomplish

what you suggest, what factors should we be focusing on?

2. Individuals with disabilities can actually earn more than the SGA limits and

stay eligible for benefits. The reason is they can subtract work expenses related to

their disability in determining earnings subject to the limit. (For example, if an individual who is disabled earns $900 per month but has $300 in work expenses, their

SGA is $600—below the $700 limit.) Are you familiar with the provision? Is it being

used? How many individuals with disabilities take advantage of these deductions?

Is it effective? Should it be changed?

3. In your research about barriers to work, did you find that barriers to work differ considerably depending on the type of impairment an individual has? Did you

find that individuals who are blind faced greater barriers than those who are not

blind?

I thank you for taking the time to answer these questions for the record and

would appreciate your response by no later than May 19, 2000. New Roman In addition to a hard copy of your response, please submit your response on an IBM compatible 3.5-inch diskette in WordPerfect or Microsoft Word format. New Roman If

you have any questions concerning this request, please feel free to contact Kim

Hildred, Staff Director, Subcommittee on Social Security at (202) 225–9263.

Sincerely,

E. CLAY SHAW, JR.

Chairman

May 16, 2000

E. Clay Shaw, Jr.

Chairman

Subcommittee on Social Security

Committee on Ways and Means

U.S. House of Representatives

Washington, D.C. 20515

Dear Chairman Shaw:

Thank you for allowing me to present further information on work incentives and

disincentives for blind and disabled beneficiaries for your hearing record. As I stated

during my oral testimony, the Oregon Health Policy Institute is currently engaged

in a very unique research project that will, when completed, provide a comprehensive picture of the dynamic relationship between disability, health, public benefits,

employment, and overall quality of life. Part of the uniqueness of this research effort

is that the detailed picture presented in our evaluation findings will focus on the

social and economic experience of living with a disability based on whether an individual’s primary disabling condition is physical, developmental, sensory, or psychiatric.

At this time I will respond to each of the three questions you presented in your

April 26, 2000 letter.

1. What factors should the subcommittee focus on in re-thinking and subsequently re-engineering the disability safety net?

I suggest that a primary focus should be on understanding the differing experience of disability that derives from whether an individual lives with a physical, cognitive, mental, or multiple impairments. For too long disability policy has assumed

a homogeneous population, that is, that all functional limitation on a continuum

from major to minor, and regardless of the underlying condition, produces the same

outcome -disability. Disability research has suffered from the same myopic view, we

study the health status of people with disabilities or the employment status of people with disabilities and have engaged in very few, if any, disability studies of employment behavior that control for type of disability and its effect on individuals’

employment patterns and earnings histories.

Although our current understanding of cross disability employment dynamics is

still quite limited, we can learn from what is known about the employment patterns,

health status, and employment-related support needs within particular disability

groups.

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I suggest that a major disability-specific focus to be considered in re-engineering

the safety net ought to concern the issues surrounding reasonable accommodation,

assistive technology and devices, and the supportive services necessary to return to

work or increase earnings to a level of economic self-sufficiency.

To illustrate this point, there have been significant advances in the development

of assistive technology and devices that allow individuals with quadriplegia to drive

their own vehicles, manage computer websites, become professional artists and

craftspeople—in each case, a technological breakthrough or device has been so designed as to overcome historic misfits between person and environment. For individuals with sensory impairments the technological advances are different but equally

impressive, for example the growing availability and uses of service dogs, large print

books and publications, advances in telecommunications and electronic media access, and the increasing numbers of individuals trained in American Sign Language,

these technologies and adaptive devices have served to mitigate many of the barriers that previously prevented individuals with sensory impairments from full integration into community affairs and the world of work.

Among the most challenging and intractable problem areas in terms of accommodation and assistance are those faced by individuals with severe psychiatric disabilities. The primary work and community integration support available to these individuals comes in the form of pharmacological assistance. Because mental disabilities

are largely invisible when the symptoms are controlled, the true costs associated

with drug therapies at the personal and societal level are not widely known or understood. Just as the gentleman who testified at your hearing reported, the drugs

that are necessary to stabilize acute psychiatric symptoms are often toxic to the

user, producing potentially life-threatening side effects that exacerbate rather than

ameliorate the misfit between individual and environment. Another important component of the support needed by individuals with psychiatric disabilities is on-going

and intensive clinical case management that relies on professional assistance as opposed to technological devices or equipment.

It is important to recognize that costs incurred in getting individuals with severe

disabilities into competitive employment are borne throughout a large number of

federal, state, and private agencies and organizations and therefore cost comparisons between disabilities groups must be made with extreme caution. For example,

a large portion of the costs associated with supporting individuals with psychiatric

disabilities in their return to work efforts is borne through the Medicaid program.

Vocational rehabilitation services have historically underserved individuals with

psychiatric disabilities so a cost comparison across disability types in this program

is not appropriate; particularly when the underlying assumption is that costs associated with vocational rehabilitation service agencies are the sole input in the vocational rehabilitation process.

Another critical dimension of a disability-specific focus is sensitivity to the impact

that the underlying disabling condition has on overall work effort, particularly from

a longitudinal perspective. For many individuals with physical disabilities once the

needed technology has been employed, there is a high likelihood of stability in the

work environment. The caveat to this statement is of course the effect that the underlying disabling condition can have on compromising the health status of individuals with physical disabilities. Many physical disabilities derive from a chronic

health condition that manifests itself in progressive loss of function, acute medical

episodes, chronic pain, and physical deterioration. Individuals with multiple sclerosis, HIV/AIDS, Parkinson’s Disease, all will experience setbacks in their work effort

that are directly related to their disabling condition. The same is true among individuals with severe psychiatric disorders whose medications cease to be effect or

worse yet, become toxic.

The primary point I want to make about a disability-sensitive focus is to encourage subcommittee members to look beyond the label ’disability’ and instead to focus

on the personal dynamics of living with a severe disability, recognizing that these

dynamics manifest themselves differently based on the type of disabling condition

and the anticipated course of the disease or chronic condition.

Reengineering the disability safety net requires an acknowledgement of the predictable nature of disability -disability does not go away over time, nor does it disappear because of earnings in excess of some fixed, albeit, arbitrary dollar figure.

It is important to remember that without accommodations, technological advances,

and changing societal attitudes, competitive employment among individuals with severe disabilities would be an unrealistic and unattainable policy goal.

I suggest that the policy goal of the disability safety net should be to maximize

the number and types of opportunities available to individuals with severe disabilities who want to work and to allow them to pursue competitive employment at

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ings. We know from a growing body of survey research conducted at the Oregon

Health Policy Institute that the vast majority of individuals with significant disabilities want to be employed, want to have meaningful life rolls, and strongly believe

that work is a primary way to give something important back to their community.

The fear that gets played out in high rates of unemployment in this population is

quite understandable when the choice is between living entirely on poverty level or

near poverty cash assistance with health insurance or the possible permanent loss

of a cash assistance and health care safety net when the possibility of failure in the

workplace looms largely.

2. Are you familiar with existing Social Security work incentives and how

widely are they being used?

Yes, I am familiar with the impairment-related work incentive (IRWE) program

as well as the 1619 (a) and (b) Work Incentive provisions and the Plan to Achieve

Self-Sufficiency (PASS) program. The best source for tracking the impact of these

work incentive programs on the work efforts of Social Security beneficiaries is the

Quarterly Report on SSI Disabled Workers and Work Incentive Provisions issued by

the Social Security Administration and available on their website. The short answer

to your question is that, with the exception of 1619, these work incentive programs

are largely unutilized. A snapshot from the March 1999 report reveals:

• Only 6% of the total SSI caseload were working during the first quarter of 1999

• 72% of SSI disabled workers had earned income below $500/month; 30% earned

$65 or less

• In general, the percentage of SSI disabled workers was higher in the Northern

states than in the Southern states

• The greatest use of a work incentive provision was 1619 ¥30% of disabled

workers used this provision

• 3% of SSI disabled workers used the IRWE provision

• 1% of blind disabled workers used the Blind Work Expense (BWE)

• .3% of disabled workers used the PASS program

My opinion about these work incentive programs is largely shaped by the professionals and advocates in the field who work on a daily basis with individuals with

severe disabilities who want to return to work, are returning to work, or are choosing not to return to work because they fear the loss of disability status, health benefits, and a cash assistance safety net. The overwhelming sentiment expressed is that

existing work incentive programs are too complicated, result in overpayments, lack

real protection against set backs in the workplace, and are subject to interpretation

based on who one talks to at which agency. More importantly, there has been a lack

of trust in the past in the individuals who administer these programs. I have come

to appreciate the elegance of the strategies employed by Wisconsin and Vermont in

their work incentive demonstration projects which are designed, simply stated, to

make return-to-work incentives as simple and straightforward as possible for the

consumer.

Work incentives that support individuals on the path to economic self-sufficiency,

that allow them to gradually work off benefits, that recognize the extraordinary expenses associated with accommodating functional impairments in the workplace and

community, and that function as a true safety net, not a way of life, should be the

goals of an efficient, user friendly disability safety system.

8. In my research did we find that barriers to work differed depending

on type of impairment? Did we find that blind individuals face greater barriers than others?

Our preliminary baseline data suggest that significant differences exist in perceived employment barriers faced by individuals based on type of impairment, particularly striking differences appear to exist between individuals with physical as

contrasted with mental impairments. The total number of individuals who are blind

and participating in the 3-state work incentive initiatives is too small to segregate

their responses from other types of physical disabilities.

I am happy to share with you and your staff the baseline frequencies related to

work attitudes and motivation, attitudes and beliefs about work and benefits, and

issues of self-esteem among individuals participating in the Wisconsin Pathways to

Independence program. These data represent 187 program participants as of 4/00.

Because of the preliminary nature of these data, I respectfully request that these

data not be made a part of the public record and that they are not duplicated or

disseminated until such time that our research team does so.

These data provide an as yet incomplete picture of the individuals who are participating in the 3-state work incentive projects, what they do illustrate is a range of

beliefs and perceptions about the value of work, fears about working, and the proVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00103 Fmt 6633 Sfmt 6621 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
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found impact that living with a disability has on the self-esteem of individuals.

When our study is completed in December, 2001 we will have linked these perceptual data with the actual work experiences and earnings of participants and be able

to discuss more fully the impact that type of impairment has on the work efforts

of a group of severely disabled Social Security beneficiaries.

Please feel free to contact me for further information as needed. I am happy to

be able to add our research findings and policy experience to this important public

policy discussion.

PAMELA P. HANES, PHD

Associate Professor of Public Health and Preventive Medicine

Associate Director

Oregon Health Policy Institute

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113

Mr. William VanOoteghem

c/o Marty Ford

The ARC

1730 K Street, N.W.

Washington, DC 20006

Dear Mr. VanOoteghem:

Thank you for testifying before our Subcommittee regarding work incentives for

blind and disabled Social Security beneficiaries. In order to complete our hearing

record, I would appreciate your answering the following question:

Individuals with disabilities can actually earn more than the SGA limits and stay

eligible for benefits. The reason is they can subtract work expenses related to their

disability in determining earnings subject to the limit. (For example, if an individual

who is disabled earns $900 per month but has $300 in work expenses, their SGA

is $600—below the $700 limit.) Are you familiar with the provision? Is it being

used? How many individuals with disabilities take advantage of these deductions?

Is it effective? Should it be changed?

114

I thank you for taking the time to answer this question for the record and would

appreciate your response by no later than May 19, 2000. In addition to a hard copy

of your response, please submit your response on an IBM compatible 3.5-inch diskette in WordPerfect or Microsoft Word format. If you have any questions concerning

this request, please feel free to contact Kim Hildred, Staff Director, Subcommittee

on Social Security at (202) 225–9263.

Sincerely,

E. CLAY SHAW, JR.

Chairman

May 18, 2000

The Honorable E. Clay Shaw

Chairman

Subcommittee on Social Security

U.S. House of Representatives

Washington, DC 20515

Dear Chairman Shaw:

This is in response to your letter of April 26 requesting additional information on

work incentives for blind and disabled Social Security beneficiaries. Specifically, you

asked:

Individuals with disabilities can actually earn more than the SGA limits and stay

eligible for benefits. The reason is they can subtract work expenses related to their

disability in determining earnings subject to the limit. (For example, if an individual

who is disabled earns $900 per month but has $300 in work expenses, their SGA

is $600 -below the $700 limit.) Are you familiar with the provision? Is it being used?

How many individuals with disabilities take advantage of these deductions? Is it effective? Should it be changed?

According to the Social Security Administration, about 9,500 people with disabilities take advantage of this provision. It can be effective in assisting an individual

to show the net value of their work efforts, after all of the disability-related expenses of work are deducted. However, I believe that it is important to point out

that a distinction is made between the expenses that an individual can deduct depending on whether they are blind or not. As I understand it, people who are blind

can deduct anywork-related expense, while all other people with disabilities who are

not blind can deduct only disability-related work expenses.

In my daughter Wendy’s case, she does not have many disability-related work expenses. Her transportation costs are minimal since her workcenter provides transportation. However, I do know that for many people with mental retardation who

cannot drive, transportation costs to and from work can be very high in relation

their earnings, particularly in rural areas or in cities without adequate public transportation systems. As I understand it, these transportation costs are excludable.

This provision should be continued.

There are also many people with needs for services while they are working. One

typical service is that of a ‘‘job coach’’ in a supported employment setting. While

many other services are deductible from SGA, supported employment services are

treated differently depending upon who provides such services. This is a problem

for many people with mental retardation and is discussed in the statement for the

record submitted by the Consortium for Citizens with Disabilities. I urge you to address that issue as well.

Thank you for this opportunity to provide additional information. Please let me

or Marty Ford (202/785–3388) know if I can help you in any further way.

Sincerely,

WILLIAM VANOOTEGHEM

William VanOoteghem

c/o The Arc of the United States

1730 K Street, NW Suite 1212

Washington, DC 20006

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April 26, 2000

Mr. Tony Young

NISH

2235 Cedar Lane

Vienna, VA 22182

Dear Mr. Young:

Thank you for testifying before our Subcommittee regarding work incentives for

blind and disabled Social Security beneficiaries. In order to complete our hearing

record, I would appreciate your answering the following question:

Individuals with disabilities can actually earn more than the SGA limits and stay

eligible for benefits. The reason is they can subtract work expenses related to their

disability in determining earnings subject to the limit. (For example, if an individual

who is disabled earns $900 per month but has $300 in work expenses, their SGA

is $600—below the $700 limit.) Are you familiar with the provision? Is it being

used? How many individuals with disabilities take advantage of these deductions?

Is it effective? Should it be changed?

I thank you for taking the time to answer this question for the record and would

appreciate your response by no later than May 19, 2000. In addition to a hard copy

of your response, please submit your response on an IBM compatible 3.5-inch diskette in WordPerfect or Microsoft Word format. If you have any questions concerning

this request, please feel free to contact Kim Hildred, Staff Director, Subcommittee

on Social Security at (202) 225–9263.

Sincerely,

E. CLAY SHAW, JR.

Chairman

June 11, 2000

The Honorable E. Clay Shaw, Chairman

Subcommittee on Social Security

House of Representatives

Washington, DC 20515

Dear Chairman Shaw:

This is in response to your letter of April 26 requesting additional information on

work incentives for blind and disabled Social Security beneficiaries. Specifically, you

asked:

Individuals with disabilities can actually earn more than the SGA limits and stay

eligible for benefits. The reason is they can subtract work expenses related to their

disability in determining earnings subject to the limit. (For example, if an individual

who is disabled earns $900 per month but has $300 in work expenses, their SGA

is $600—below the $700 limit.) Are you familiar with the provision? Is it being

used? How many individuals with disabilities take advantage of these deductions?

Is it effective? Should it be changed?

I am familiar with this work incentive provision, although I did not personally

make use of it when I was on SSDI. This provision is being used to a limited extent

by beneficiaries. According to the Social Security Administration, about 9,500 people

with disabilities take advantage of this provision.

In my view, Impairment-related work expenses could be effective in assisting an

individual to show the net value of their work efforts, if certain improvements are

made.

1. Currently, a distinction is made between the expenses that an individual can

deduct depending on whether or not they are blind. Blind beneficiaries can deduct

any work-related expense, while people with disabilities who are not blind can deduct only disability-related work expenses. Beneficiaries who have multiple significant disabilities have as many or more expenses related to work as do Blind beneficiaries. All beneficiaries who work should be allowed to deduct all work-related expenses

2. The Social Security Administration field office determines whether expenses

may be deducted from earnings. The determinations are rarely done on a consistent

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basis. These expenses are often disputed by SSA as to whether they are disabilityrelated, and are excluded inconsistently. SSA must issue better guidance to Field Office personnel and improve consistency in work incentives determinations.

3. Beneficiaries need better decision making tools to determine how IRWE can

work for them. SSA should make available decision-support software, such as

WorkWORLD, to beneficiaries and their families so that truly informed decisions can

be made.

While the IRWE could benefit some SSDI beneficiaries, overall it is a limited answer to a bigger problem, namely the SSDI SGA earnings limit/cash cliff. The IRWE

is limited in several ways.

1. The beneficiary has to incur the expense in the first place, and pay for it out

of pocket.

2. To be effective the amount of the IRWE has to equal or surpass the amount

of income above SGA. If not, then the IRWE doesn’t protect you.

3. Once you use an IRWE, you have to keep it to remain on benefits. For example,

if the costs of personal assistance services are paid for out of pocket then they can

be used as an IRWE. (The amount spent on PAS, which might be more than the

benefit, can’t be used for other necessities).

Also, not every one with a disability has impairment related work expenses or has

enough expenses to keep from losing all their benefits. Because of this, the IRWE

program is at best a selective solution to the cash cliff problem. I believe that the

IRWE program working in conjunction with sliding-scale cash offset in the SSDI

program would better address the cash cliff and more fairly benefit ALL working

SSDI benefits rather than just a lucky few.

Thank you for this opportunity to provide additional information. Please call me

at 703–425–8633 or e-mail at tyyoung@bellatlantic.net if I can help you in any way.

Sincerely,

TONY YOUNG, DIRECTOR

NISH Governmental Activities Office

Vice Chairperson

Consortium for Citizens with Disabilities

[Whereupon, at 1:50 p.m., the hearing was adjourned.]

[Submissions for the record follow:]

The Honorable E. Clay Shaw, Chair

House Committee on Ways and Means

Subcommittee on Social Security

B316 Rayburn House Office Building

Washington, DC 20515

March 27, 2000

American Council of the Blind

Dear Chairman Shaw and Members of the Subcommittee:

Please accept the appreciation of the membership of the American Council of the

Blind for the serious consideration your subcommittee is exercising in reviewing the

Social Security Administration’s program of disability insurance that impacts upon

our members throughout this land. We offer the following testimony to assist the

subcommittee with this important albeit daunting task.

There is no question that the pace of our economy is outstripping the allowable

income that a blind person can make before SSDI benefits are lost. The net effect

of this phenomena is to discourage those receiving benefits from going to work in

fear of losing the financial and medical security provided through SSDI. This situation is further complicated by the fact that blind persons must rely upon the cash

value of benefits plus whatever limited earnings we can make to pay for service and

equipment needs not available under other programs that currently address many

similar needs of persons with other disabilities. These expenses include, but are not

limited to readers, adaptive hardware and software, low vision magnification devices, dog guide medical costs, orientation and mobility equipment, and a high reliance upon taxi and other transportation costs.

If we are to arrive at a solution to the problems described above, while maintaining faith with the workforce paying into Social Security, then we simply must find

a way to help beneficiaries locate employment that offsets or eliminates reliance on

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the SSDI program while contributing to the revenue base of Social Security. Here

is how.

ACB suggests that the earnings limit for blind persons be either totally removed

(See attached letter of personal testimony from a woman who is blind) or set to the

earnings limits of what elders had before the passage of HR5. In the former case,

all disincentives to work would be removed and increased revenues to the treasury

would result. In the latter case, this would allow for an eventual $30,000 in earnings before benefit loss. ACB further proposes that the earnings limit be automatically raised based upon inflation in order to avoid recreating the current situation

where the SSDI program has become counter-productive to its original intent. Moreover, ACB recommends eliminating the cliff effect of benefits lost at a certain income level by decreasing the SSDI benefit by one dollar for every three earned over

the earnings limit. These approaches would resolve the cash benefit issues and ACB

suggests that the medical issues could be resolved by allowing the previous cash

beneficiary to purchase Medicare for his or her health needs.

ACB further believes that raising the SGA levels for other disability groups to

that of the earnings limits for the blind would be appropriate if expanded Medicare

coverage of blindness related services and equipment were to occur as a question

of equity with other disabilities. Only in this fashion could a ‘‘do no harm’’ and fairness oriented approach to blind persons be accomplished.

These concepts represent a way to provide real incentives for recipients to work,

greater revenue growth to the Social Security trust fund, equity in disability policy,

and a new view of disabilities as participating in the national economy rather than

being viewed as a cost to it.

Please feel free to communicate with me to further explore the options presented

above, and I and ACB wish the subcommittee every success in your efforts.

Sincerely,

CHARLES H. CRAWFORD

Executive Director

JENINE STANLEY

March 22, 2000

House Ways & Means, Social Security Subcommittee

RE: Earnings Income Limits for Blind People

I am writing this letter in hopes that it will be shared by representatives of the

American Council of the Blind with the House Ways & Means, Social Security Subcommittee. I would like the members of this committee to know, through my own

personal story, why removing the earnings limits for blind people is so crucial to

maintaining or even establishing independence.

I am a college graduate and have been employed in the not-for-profit sector since

1988. Since 1991 I have been receiving Social Security Disability Insurance due to

my blindness. I have also attempted to work, within the limits imposed by the Social Security Administration. For me, the ability to work, to sustain gainful employment, is vital to my mental and physical well being.

In America, people are measured, rightly or wrongly, by the work they do. What

one does for a living is often the first question asked in social conversation. For people with disabilities, especially blind people who have been the recipients of some

of the most negative stereotyping in history; being able to state a profession or employer holds a very important place. It equalizes ‘‘us’’ with ‘‘them’’ and removes the

stigma of ‘‘charity for the blind.’’

The ability to be gainfully employed also removes those old stereotypes of blind

people as simply musicians, chair caners or helpless wards of the state or their families. This ability to work, however, is often marred by the complex rules and regulations of the Social Security Administration.

Blind people are faced with significant lag time in processing any changes to their

Social Security status, such as reporting of employment or benefits decisions because all applications noted as being from ‘‘blind’’ recipients must go through a special office in Baltimore. As a result, I and many other blind people who want to

work, do so under the threat of having our benefits, income tax returns and even

salaries garnished upon decision that are often up to four years in the making.

I have worked as a private contract employee for the State of Ohio in two different departments since 1996. In 1998 my income tax refund was garnished because I failed to appeal a decision of the Social Security Administration I knew

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nothing about. This decision involved me making an amount over and above the

Substantial Gainful Activity limit. When I looked into the matter, I was told that

there was nothing I could do. My debt to the SSA was paid and it was just too bad

that I lost my tax return, but. . .

Now, I continue to work as a contract employee. I keep meticulous records and

only work eight hours a week as I continue my education. At some point, I will want

to work more. Logic says that I should be able to simply end my reliance on SSDI

benefits and return to work, but things are not that simple.

Like many Americans, I live in an urban area that suffers from ‘‘urban sprawl.’’

Many of the jobs I am qualified for are located far from public transportation. I do

not drive. Due to the low unemployment rate in my city, Columbus Ohio, it is very

difficult to secure dependable transportation, either by taxi or paratransit services.

This is only one expense associated with my blindness that keeps me from employment at the level I desire. I must also purchase my own computer equipment and

other adaptive devices if I expect to have tools to help me do my job. The consumer,

the blind person, to assure a proper fit of technology, best purchases these devices.

Although state rehabilitation services may cover some of the items I need, the time

lag is too great for my employment prospects.

Just as people over sixty-three years of age want the freedom to continue to work

while earning Social Security benefits, I, as a blind person, want and need the extra

assistance provided by SSDI. I have paid into the system for over ten years now.

I truly deserve its benefits, including the ability to work without the fear of having

everything taken away.

This fear, this reluctance to seek employment that is equal to my potential, is specific to blindness in that our claims, our decisions and our appeals are significantly

delayed by being sent to Baltimore rather than decided at the local SSA office as

such situations are for people with other types of disabilities. I would think that the

blind population is so small compared to the rest of the SSDI or SSI recipient population, that allowing no cap on Substantial Gainful Employment would not effect the

budget any more significantly than doing so for seniors who have just received such

benefits through House and Senate actions.

I urge you to please consider lifting the cap on earnings for blind people. Otherwise, we will continue to be under or unemployed and painful destructive stereotypes will continue both in the workplace and the public. I appreciate your attention

to my opinions and sincerely hope that you will take them into consideration in your

debate.

Sincerely,

JENINE STANLEY

Statement of the American Network of Community Options and Resources,

Annadale, Virginia

The American Network of Community Options and Resources (ANCOR) commends the subcommittee for its work to remove work barriers for individuals with

disabilities through passage last year of the Ticket to Work and Work Incentives

Improvement Act of 1999 and for its continued work in examining remaining work

disincentives in the Social Security Disability Insurance program (SSDI). ANCOR

is concerned about the changes being considered to the Social Security earnings

limit for SSDI beneficiaries, also known as the substantial gainful activity (SGA)

level. If there are to be changes to the earnings limit for SSDI beneficiaries, ANCOR

urges the Committee to make changes that will ensure equity among benefits for

all people with disabilities who receive SSDI benefits, not just for individuals with

one type of disability.

As the Committee members know, most SSDI beneficiaries must limit their earnings to $700 per month. At any amount over $700, beneficiaries lose all cash benefits. However, SSDI beneficiaries who are blind are allowed a greater monthly earnings limit—up to $1170—before they lose their cash benefits. While the loss of cash

benefits to beneficiaries if they earn too much money is one of the major disincentives for SSDI beneficiaries to return to work, ANCOR has long advocated to end

the disparity in the SGA for SSDI beneficiaries who are blind and those who are

not blind.

When the Committee considers reforms to the earnings limit for SSDI beneficiaries, ANCOR believes such reforms should ensure that no individuals with disabilities—whether they are blind or non-blind—should be adversely affected by

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these reforms. ANCOR also believes that reforms to the Social Security earnings

limit should ensure equity in earnings among all people with disabilities.

BAY CITY, MI 48708

March 29, 2000

Testimony on work incentives for Blind and Disabled Social Security Beneficiaries

Richard L. Davis (Father of a son that is disabled)

Congressman Shaw and other distinguished members of the Committee on Ways

and Means. I am the father of a son 33 years of age that is disabled and is eligible

to receive Social Security Benefits under title II of the Social Security Act.

I have elected to continue working and not collect benefits for the past year and

one half so that my son would not suffer from the indignity of losing all benefits

because he wants to work. This could soon change due to the bill that you have just

passed that will enable me to receive the benefits of social security now. I think this

is good legislation and I thank you for it. I hope that what you do on SGA legislation will enable David to continue working. As an advocate for people with a disability, I recognized many years ago that a person with mental retardation or other related disabilities could be a productive individual within their own community. I believe and it has been proven that these people can work side by side with their nondisabled counterparts. The unfortunate part of this is that these people usually only

get jobs at minimum wage and without benefits.

My son David works on a packaging line with Wendy VanOoteghem whom you

heard testimony from on March 23, 2000. David earns $5.43 per hour. If David

would work 40 hours per week, he would earn $217. This would put him at $241

over the $700 SGA level. Because of this, David can work no more than twenty-nine

hours per week. This penalizes both him and his employer. With the expected increase in minimum wage, which will be passed on through other wage levels, David

will only be able to work twenty-seven hours a week. Two years from now with the

second step of the minimum wage increase,David will only be able to work twentyfive hours per week. This is certainly a disincentive for David and for his employer

to keep him. If this continues, why should David continue to work? He can receive

his Social Security benefits and Medicare, after all he is totally and permanently

disabled. Why should it matter that his parents have encouraged the work ethic

within him to help him be a better person and citizen?

I have found that the work incentives that congress has passed this past year,

when they are activated, will benefit people with disabilities to get and maintain

jobs within their community. The raise, in minimum wage, will help people to make

more to support themselves. This is good for people with a disability, but all of the

good we may have done may cause a hardship to others. If a person works a 40-

hour week at minimum wage of $5.15 per hour, they will earn $893 per month,

which is $193 above the current SGA wage level of $700 per month. This will cause

the loss of all of the benefits that they need to survive such as SSI, SSDI, RSDI,

Medicaid and Medicare.

In 1999, the SGA level was increased from the $500 per month level set in 1990

to $700 per month. This will not keep all people with a disability working a full

40-hour workweek from loosing their benefits. I ask you to increase the SGA level

for all people that are Blind or Disabled and make them equal. Additionally, SGA

should be indexed or have a cost of living attached to it so that the inequities never

occur again.

I ask that you do your job so that my son David can continue to do his.

Respectfully,

RICHARD L. DAVIS

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March 23, 2000

The Honorable Clay Shaw

Subcommittee on Social Security

Committee on Ways and Means

Dear Chairman Shaw:

I would first like to commend you and the Social Security Subcommittee for holding a hearing to examine the work incentives in the Social Security Disability program for the blind and those with other disabilities. I share your commitment to

ensure that disabled workers have the opportunity and incentive to remain in the

workforce.

As you are aware, the Social Security Administration increased the monthly sub- stantial gainful activity (SGA) level from $500 to $700 for non-blind disabled adults.

I believe that this was an important first step in correcting a deterrent in the system which in effect pushes disabled adults out of the workforce.

I feel that a further increase is necessary and should be addressed this year. Time

and time again, disabled citizens have proven their invaluable contributions to the

U.S. workforce. These individuals, like our seniors and the blind disabled, should

be encouraged to work when able to do so.

I am particularly pleased that The Ticket To Work and Self-Sufficiency Act of

1999, H.R. 1180, requiring the Social Security Administration to conduct a demonstration project providing for Social Security Disability Insurance (SSDI) reductions based on earnings. Currently, disabled workers who earn over the SGA levels

face an ‘‘income cliff’’ -in effect they lose their benefits. The demonstration project

would examine the effects of gradually reducing SSDI benefits $1 for every $2 in

earnings over a level determined by the Commissioner. This is a serious problem

for disabled workers and I look forward to the Commissioner’s findings.

Thank you again for holding a hearing on this important issue. I look forward to

working with you in the future on this issue.

Sincerely,

PHIL ENGLISH

Member of Congress

Statement of Michael Freedman, Member, Board of Directors, National

Alliance for the Mentally Ill, Arlington, Virginia

Chairman Shaw and Representative Matsui, on behalf of the more than 210,000

members of NAMI (The National Alliance for the Mentally Ill) and the 50 state organizations and over 1,240 local affiliates across the nation and in Puerto Rico,

American Samoa, and Canada, I would like thank you for this opportunity to submit

testimony on work incentives for disabled beneficiaries of the disabled and income

security programs of the Social Security Administration.

NAMI is the nation’s leading grassroots organization dedicated solely to improving the lives of persons with severe mental illnesses such as schizophrenia, bipolar

disorder (manic-depressive illness), major depression, obsessive-compulsive disorder,

and anxiety disorders. NAMI’s efforts focus on support to persons with these serious

brain disorders and to their families; advocacy for ending discrimination in federal

income support and health insurance programs and education to eliminate the pervasive stigma surrounding severe mental illness. NAMI also endorses efforts to promote employment opportunities and greater independence through increased access

to rehabilitation and job training programs and extended health care coverage to

workers who need treatment in order enter and stay in the workforce.

I am Mike Freedman, member of the Board of Directors of NAMI, and a former

president of the NAMI Consumer Council, the nation’s largest organization of consumers of mental health services. I was diagnosed with Clinical Major Depression,

extreme Panic/Anxiety Disorder, and Post Traumatic Stress Disorder as a result of

a genetic disposition that came to the surface in 1976 after experiencing both war

and the suicide of my father, a decorated Air Force Pilot, and later a Federal Narcotics Officer. In addition, my spouse, a former mental health crisis counselor, became afflicted with Bi-Polar Disorder and was very suicidal until she was properly

diagnosed and medicated. During this long period of stabilization, rehabilitation,

and recovery, we did the best we could raising a child in deprivation and poverty

caused by the existing rules governing state and federal policies that deal with assistance to the psychiatrically disabled on SSI and SSDI. I know first hand the

struggles that consumers face in getting and keeping a job, and attempting to leave

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the Social Security disability programs for a productive and independent life. As a

State Program Director with the New York Association of Psychosocial Programs,

I encounter consumers every day who struggle with the confusing, unfair and complicated rules governing the SSDI program.

At the outset, I would like to express our deep appreciation to every member of

the Subcommittee for the important role and leadership displayed in the passage

of the Ticket to Work and Work Incentives Improvement Act late last year. This

law takes important steps toward self-determination in the rehabilitative process for

people with disabilities, including people with severe mental illnesses, and removes

barriers for disability beneficiaries who wish to enter the workforce and lead independent lives. NAMI is extremely grateful for the bipartisan leadership that you

and your colleagues exhibited in passing this long overdue reform.

Substantial Gainful Activity’s (SGA’s) Impact on Work

Individuals with disabilities, including people with severe mental illnesses, want

to work, but are often discouraged by many barriers existing in the current public

system. A recent Harris survey showed that 72% of unemployed people with disabilities, including people with severe mental illnesses, have a strong desire to have a

job. Several recent surveys have found this rate to be even higher for adults with

severe mental illnesses, as high as 80%. Yet 69% of those surveyed by Harris say

that their need for benefits is a major impediment to seeking employment. Employment is an essential part of recovery for people with severe mental illnesses and

recent advances in treatment services and medications have increased the capacity

of people with severe mental illnesses to join the mainstream and live independently. NAMI has heard the frustration from countless members who would like to

begin the road to recovery by gaining employment but cannot risk losing their benefits by exceeding the SGA.

Employment assistance is critical for people with severe mental illnesses to regain

independence, dignity and purpose. People with severe mental illnesses are the fastest growing population within both the SSI and SSDI programs. More importantly,

SSA data reveal that people with mental illnesses are joining the disability rolls at

an earlier age. Given how difficult it is to get off the rolls through employment—

less than 1% successfully do so—it becomes imperative to enact reforms that end

the severe penalties for those who are willing to take the tremendous risks inherent

in entering the workforce. Increasing the SGA level will certainly have a positive

impact on individuals who would like to work but cannot afford to lose their eligibility for disability benefits.

The Current SGA Level is Outdated

Although NAMI strongly supported the increase of SGA to $700 a month in 1999

and acknowledged the intent of SSA to create an environment where more beneficiaries with disabilities can ‘‘enter the workforce and lead more productive self-sufficient lives,’’ this figure does not reflect an adjustment based on the national average wage index since the inception of SGA in 1979. SGA was designed as an indicator to signal whether a beneficiary is capable of earning significant wages and provides an incentive to enter the workforce. However, the current earnings limit of

$700 a month reflects an income of only $8,400 per year, which barely raises an

individual who wants to become independent of public support to the federal poverty

level. Once making it to this meager plateau, a demarcation point that usually signals a crisis in an unimpaired workers life, a person with a disability that makes

one dollar more can lose their eligibility for cash benefits. This is referred to as the

‘‘cash cliff’’ and represents an all-or-nothing design that encourages people with disabilities to remain in poverty and dependent on the system. NAMI believes that a

more equitable approach would be to increase SGA and index it to wage growth

since the establishment of SGA.

Indexing SGA to Wage Growth

Since the establishment of SGA over twenty years ago, it has been increased only

twice, in 1990 and just recently last July in 1999. Obviously, those modest increases

have not kept up with inflation over that period. This is especially the case with

respect to cost increases in treatment, medications and support services. As wages

have increased over that same period, people with severe mental illnesses and other

disabilities receiving SSA benefits have been forced to reduce the amount of hours

they work in order to keep from exceeding SGA. Thus, SGA has become a very unreliable indicator of a beneficiary’s ability to work. As you know, Social Security has

stated that the past increase in SGA has resulted in substantial cost increases to

both the SSI and SSDI programs. Likewise, any proposed increase is projected to

increase the overall cost of Social Security’s disability programs.

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However, indexing SGA to wage growth, as is currently done for the SGA amount

for the blind, would result in costs going gradually over time. Such a move would

allow SGA to be a more reliable indicator of an individual’s ability to earn wages

and work. It would also more effectively incentivize work for all people with disabilities, including people with severe mental illnesses. This would mean that the federal government would not be hit by substantial periodic cost increases that are

needed to correct an antiquated and unreliable SGA. Finally, such a move would

also avoid placing an unfair burden on beneficiaries who are eager to attempt to

work.

Equivalence to the SGA Level for Blind Beneficiaries

NAMI believes that SSI and SSDI beneficiaries with severe mental illnesses and

other disabilities should have an SGA level equivalent to the level established for

the blind, around $1,170 per month, which is about 67% greater than the SGA level

for non-blind beneficiaries. Such an adjusted level should also be adjusted annually

for the cost of living, as is done for blind beneficiaries. This figure currently allows

a blind disabled beneficiary to earn minimum wage (or a little more) and work a

40 hour week, without a substantial loss of cash benefits.

Currently, people with disabilities (excluding blind beneficiaries), can work barely

more than 30 hours a week at minimum wage before exceeding SGA and thus risk

losing all, or part of their cash benefits. It is likely that increasing SGA for nonblind beneficiaries to that for the blind disabled would create an additional fiscal

burden for Social Security’s programs. However, this change would create greater

equity and fairness in both the SSI and SSDI programs and would more effectively

incentivize work for many beneficiaries.

The difference in SGA levels for people disabled by blindness, and for people disabled by severe mental illnesses or other disabilities, has been supported by a rationale that has not been proven by research. In fact, evidence shows that the very

characteristics thought to distinguish blind from non-blind disabled beneficiaries accurately describe the fate of non-blind beneficiaries disabled by severe mental illnesses. As was reported to the Subcommittee in the GAO testimony given by Barbara D. Bovbjerg, associate director, Education, Workforce, and Income Security

Issues, Health, Education, and Human Services Division, disadvantages thought to

separate people disabled by blindness were greater employment discrimination and

low rates of employment.

The GAO noted that likely job prospects were low-wage jobs, and higher costs for

supportive services. However, research done by the National Institute of Disability

and Rehabilitation Research shows that while people disabled by blindness are participating in the workforce at a rate of only 28.9%, they exceed the overall participation of rate of individuals disabled by severe mental illnesses (27.2%). In fact,

NIDRR found that within the broad category of severe mental illness, the participation rate of persons with depressive disorders was only 25.4% and that the rate for

individuals with schizophrenia was 11.9%, the lowest among any measured category.

The GAO testimony further compares evidence of cost differentials of supportive

services associated with disabled blind beneficiaries and beneficiaries disabled by severe mental illnesses. A study conducted by the American Foundation for the Blind

and Mississippi State University found that over 50% of legally blind individuals

spent less than $500 for devices used to support work. In comparison, literature reviewed by GAO showed that on average, people with severe mental illness incur

costs of $1,400 to $3,600 annually for supportive employment services and annual

costs for mental health services range from $3,200 to $7,000.

If the presuppositions that led to the original segregation of beneficiaries with severe mental illnesses and other disabilities are not supported by research evidence,

how can the disparities remain. If the evidence actually points to people disabled

by severe mental illnesses having a greater disadvantage, how can the disparities

remain?

NAMI does not seek to single out any group in determining fair and legitimate

SGA levels or their complete removal for all groups of people with disabilities. On

the contrary, NAMI wishes to advance fair and equitable treatment for all disability

groups. NAMI endorses the goals cited by the Consortium of Citizens with Disabilities that congressional action regarding SGA should:

1) Do No Harm—Changes made by Congress to the earnings limit, or to the Social

Security Disability programs as a whole, should ensure that no disability group os

negatively affected. Whatever Congress does, it must not enact policy detrimental

to any particular category of DI beneficiaries.

2) Establish Equity—Congress should take favorable action on legislation that addresses earnings limits and must ensure equity among all DI beneficiaries.

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NAMI would like to thank the Subcommittee for taking this important look at

long overdue steps toward greater fairness in the SSI and SSDI programs. NAMI

is hopeful that congressional action will allow more beneficiaries with severe mental

illnesses to reach their potential through employment. Thank you for the opportunity to comment on this important work disincentive in Social Security’s disability

programs.

Thank you, and with deep respect,

MICHAEL FREEDMAN

Statement of Hon. Jim Nussle, a Representative in Congress from the State

of Iowa

I appreciate this opportunity to express my views to the Subcommittee on the

issue of the Social Security Disability Insurance (SSDI) program’s substantial gainful activity (SGA) level. I would like to acknowledge the Subcommittee’s great work

on securing the enactment of the Ticket to Work and Work Incentives Act of 1999

(H.R. 1180) last fall. This legislation promotes independence and will lead to greater

employment for individuals with disabilities. If people with disabilities want to

enter the working world or return to their career or workplace, we should do everything we can to make that happen. We currently have a system that not only discourages people from going to work but also encourages them to continue collecting

public benefits. The enactment of the H.R. 1180 was the first step in providing disabled Americans with the means to add to the productivity of our nation’s workforce.

We must now continue the efforts we made last fall by exploring ways to allow

blind and non-blind disabled individuals to increase their earning potential while securing their SSDI benefits. As you are aware, during the Committee’s consideration

of the Senior Citizens’ Freedom to Work Act (H.R. 5) on February 29, I was prepared to offer an amendment to re-establish the link between the SGA level for

SSDI beneficiaries and the earnings limit for individuals receiving Social Security

Retirement benefits. I believe the SSDI proves to be a disincentive to work. While

Americans take pride in their strong work ethic, not all Americans are given to opportunity to work towards their full potential.

Throughout my career in Congress, I have heard from many Iowans who believe

they are treated unfairly by the SGA levels. Iowans are dependable and honest

Americans who work hard to support themselves and their families. However, many

disabled Iowans are being held back because of the SGA limit. I would like to share

with you a few stories of Iowans who are effected by the SGA limit.

Doug Elliott of Grinnell, Iowa, was serving his country in the Vietnam War when

he lost his sight. After the war, Doug was able to not only to get his GED, but also

graduate college and receive his masters degree. He is now a social worker in the

state of Iowa. However, Doug had to make the tough decision that many other blind

individuals in the country face to choose between being active in the workforce and

losing his SSDI benefits, or remaining unemployed and retaining his full benefits.

Doug had a wife and two children and wanted to work to support them. Doug is

unlike other blind Iowans in the fact that he had a little security behind him. Because Doug is a veteran and was injured while in the service, he is able to retain

his service-connected compensation. This is the only way Doug could remain economically stable.

Priscilla McKinney of St. Ansgar, Iowa, is currently a graduate student at the

University of Iowa pursuing a maters degree in education. Priscilla is blind and also

has a young son to look after. While Priscilla is currently receiving SSDI, she will

have to soon make the unfortunate choice of pursuing a teaching job or remaining

on SSDI. If Priscilla finds that the economic benefits of staying on SSDI and not

entering the workforce far out weigh the benefits of leaving the SSDI rolls to pursue

teaching, Iowa stands to lose a much needed qualified teacher.

Cathy Reinehart and Bruce Bivens, both of Clarksville, Iowa, have bipolar disorder. Cathy is a college graduate and a certified nurses aid. She currently works

intermittently out of fear of exceeding the $700 SGA monthly threshold. Bruce is

also a college graduate and is working in a meat locker in Clarkville. Bruce faces

the similar obstacle of having to carefully regulate his working hours in order to

remain below the SGA limit.

The federal government is contradicting the American work ethic by not allowing

these individuals to expand their employment opportunities. Disabled Americans

should not have to choose between government assistance or the opportunity to seek

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meaningful employment. For many disabled Americans, such as those with mental

retardation, the only employment they currently are eligible for is low-paying jobs

that do not offer health benefits or job security. If these individuals do have the opportunity of earning just slightly above the current minimum wage, they will lose

their SSDI benefits, even though they have no health benefits or job security

through their employment.

As the Subcommittee continues to explore this matter legislatively, I would like

to express my support for a resolution in the most fair manner to all disabled Americans. I am currently aware of many proposals that address ways do so. Members

of the blind and non-blind disabled communities would ultimately hope for complete

re-linkage of the SGA level to the Social Security earnings limit. However, if we cannot achieve complete re-linkage, we’ll have to look at alternatives to give some relief

to blind and non-blind disabled people. I would like to offer my assistance to the

Subcommittee in any way possible to seek the best legislative avenue.

Statement of Paralyzed Veterans of America

The Paralyzed Veterans of America commends the subcommittee for its interest

in ongoing work disincentives in the Social Security Disability Insurance Program

[SSDI]. We appreciate having the opportunity to share with you our thoughts on the

substantial gainful activity [SGA] level as it affects the ability of SSDI beneficiaries

to go to work.

Over half of PVA’s members have spinal cord injuries that are not connected to

their military service. As a result, they are not eligible for many of the benefits offered to service-connected disabled veterans through the Department of Veterans Affairs. Instead, they have turned to the SSDI program that has provided invaluable

support and assistance to them and their families. In fact, a survey of our members

found that over 60 percent were on SSDI and another 22 percent received supplemental security income or SSI.

Over the years, many of our members on SSDI have expressed frustration with

the SGA because of its adverse impact on their ability to return to work. Consider

PVA member Michael W. from Maryland. Michael is a fairly young man, in his mid–

40s, who was injured in the early 1980s. He has been on SSDI since 1982. Several

times he considered going back to work. However, he always rejected that course

of action because even modest earnings above SGA would have meant both the loss

of his cash benefits before he was able to support himself and his health care coverage through Medicare. He once determined that, if he went back to work, and lost

his SSDI benefits, he would be working, after taxes, for $4000 a year. Not too long

ago, he was approached for a part time job but had to ask his prospective employer

if he could limit his work hours so that his pay would not exceed $700 a month [the

current SGA level].

Last year, with significant assistance from the members of this committee, Congress passed the Ticket to Work and Work Incentives Improvement Act, Public Law

106–170. PL 106–170 was a major step forward in eliminating many of the barriers

to employment that kept recipients of federal disability benefits out of the workforce. An important provision of that law was the extension for another four and

a half years of premium free Part A Medicare. Beginning this October, someone like

Michael W. could return to work with the assurance of that additional Medicare coverage.

However, SSDI recipients will still confront the ‘‘earnings cliff’’ should they attempt to enter the workforce. As you know, an SSDI recipient who is blind faces

loss of cash benefits when his or her monthly income surpasses approximately

$1170. As noted earlier, people like Michael W. and other SSDI beneficiaries with

non-visual impairments lose their cash benefits once their earnings reach $700 a

month.

Last year, Social Security raised the SGA for SSDI beneficiaries with non-visual

impairments from $500 to $700 a month. PVA supported this action, particularly

since the last such increase occurred on January 1, 1990. Even at $700, this SGA

level is still lower than what the SGA level would have been had it been indexed

to inflation.

Indeed, at $700, the SGA level is still below minimum wage. Someone working

at the current minimum wage full time over a year would earn slightly over

$10,000. An individual on SSDI whose average monthly earnings reached $700 for

a full-time job over a full year would earn $8,400, at which time his or her cash

benefits terminate. True, the rapid loss of Medicare coverage, which once served as

an impediment to going to work, is no longer as much of a threat. However, the

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prospect of immediate elimination of cash benefits when yearly earnings reach

$8400 can be intimidating to someone who may not have been in the workforce for

many years or who may never have worked. What incentive is there for someone

to take a low-paying entry-level job when it would jeopardize approximately half of

his or her income [assuming he or she receives the average SSDI benefit of roughly

$700 per month]?

PVA has long believed that the approach used for SSI recipients, in which benefits are gradually reduced as earned income rises, should be applied to SSDI. We

know that Public Law 106–170 directed SSA to examine ways to phase out SSDI

benefits as earned income increases to alleviate the ‘‘income cliff’’ now faced by SSDI

beneficiaries who go to work. However, today’s fiscal climate is such that immediate

action by Congress may be more advisable than waiting for a study to be completed.

Congress has signaled its willingness to reconsider earnings limits with the passage

of HR 5, lifting the earnings cap for retired Social Security beneficiaries. With the

robust economy and positive budget numbers we are now enjoying, this may be a

once in many decades opportunity to address the problems in the current SGA for

people with disabilities.

PVA has always objected to the bifurcation of the substantial gainful activity level

for persons with visual impairments and all other people with disabilities on SSDI

and SSI. Individuals on SSDI who are blind can, at least, earn minimum wage with

an SGA level set at $1,170 per month and that is adjusted for inflation. The General

Accounting Office has found that the costs and rates of unemployment do not appear to be necessarily higher for the blind than those who have other disabilities.

Indeed, a study sponsored by PVA found that someone with spinal cord injury faces

initial hospital and medical costs of over $95,000. He or she will spend approximately $8000 on home modifications and will incur yearly average medical costs of

over $14,000. Average lifetime costs associated with spinal cord injury range from

$500,000 to $1,000,000 and include high medical expenses, costs of personal assistance services and the costs of special transportation. [M. Berkowitz, Ph.D., The Economic Consequences of Traumatic Spinal Cord Injury (1992).] PVA urges Congress

to rectify the imbalance in treatment of those with spinal cord and other non-visual

disabilities under SSDI earnings limits.

Another inequitable factor in SGA is the manner in which Social Security treats

impairment related work expenses [IRWEs] that can be used to keep an SSDI recipient below the substantial gainful activity level. Blind SSDI recipients can claim far

more costs as IRWEs than non-blind recipients can. For non-blind beneficiaries,

IRWEs must be directly related to work, thus eliminating expenses associated with

getting ready for and travelling to and from work.

Many people on SSDI would embrace the opportunities offered by our new economy if they did not feel they would be punished by Social Security policies for doing

so. By addressing the disparities in the SGA level, this committee can complete the

work begun by the Ticket to Work and Work Incentives Improvement Act.

In sum, PVA supports:

• An SGA level that is made consistent by raising the level for non-visually impaired recipients to, at least, the level for blind SSDI beneficiaries.

• Indexing all SGA levels to average wage growth to prevent its value as a work

incentive from eroding over time.

• Changes in the impairment related work expenses policy for non-blind SSDI recipients to allow for costs associated with preparing for and getting to and from the

workplace.

• Ongoing efforts to implement a sliding scale reduction in SSDI cash benefits

when beneficiaries go to work.

PVA appreciates your attention to our comments. We look forward to working

with your subcommittee in the future on improvements in Social Security policy to

help people with disabilities return to work.

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1See Innerebner v. Apfel, 2000 WL 274185, Case No. C–99–00794–WHA (N.D. Cal. 3/3/00) involving a DAC beneficiary whose mental retardation met Social Security’s listing of impairments

and who lost his DAC benefits because his gross earnings through a supported work program

eventually averaged more than $500 a month, the then applicable SGA level. 2Section 202(d)(6)(B) of the Social Security Act, 42 U.S.C. § 402(d)(6)(B), provides that a DAC

beneficiary whose benefits stopped before because he ceased to be under a disability, may be

reinstated to benefits if he ‘‘is under a disability . . . which began before the close of the 84th

month following the month in which his most recent entitlement to child’s insurance benefits

terminated because he ceased to be under such disability.’’ See also 20 C.F.R. § 494.351(c). The

legislative history indicates that this provision [added by § 108(d) of Pub.L. 92–603 in 1972]

was intended to enable persons whose benefits ceased because of work to be reinstated. Social

Security, however, has treated this provision as a nullity saying that performing SGA makes

you ineligible for re-entitlement. Social Security has not identified anyone who could qualify for

re-entitlement under this provision. 3 ‘‘An employer may set a specific amount as a subsidy after figuring the reasonable value of

the employee’s services.’’ 4Per the August 17, 1999, Program Memorandum from Ken McGill, Social Security will consider only a limited number of service hours provided by a supported employment program—

hours when the supported work program is actually doing the employee’s job -and values those

services at the employee’s rate of pay. Not covered are all the other tasks performed by the supported employment program which are necessary to maintain employment. Those services include providing extra supervision, training the supervisors on how to work with the employee

in light of his disability, working with the employer to restructure the job to accommodate to

the employee’s disability limitations, incorporating sequencing cues to the work site, developing

positive and appropriate interactions with coworkers, working with employer and employee to

address problem behaviors, etc.

Statement of Protection & Advocacy, Inc., Los Angeles, California

Contacts:

Marilyn Holle [marilyn@pai-ca.org], (213) 427–8747

Guy Leemhuis [guy@pai-ca.org], (213) 427–8747

Diana Honig [diana@pai-ca.org], (916) 488–9950

Protection & Advocacy, Inc. 3580 Wilshire Blvd., Suite 902, Los Angeles CA

90010–2512 Protection & Advocacy, Inc., of California appreciates the opportunity

to comment on how Social Security applies its substantial gainful activity (SGA)

rules to persons who work in supported work programs and particularly to persons

who qualify for disability benefits based on the work history of a parent and who

receive ‘‘disabled adult child’’ or DAC benefits under the parent’s Social Security

number. One of your witnesses at the March 23 hearing—Wendy VanOoteghem—

is someone who works in a sheltered or supported work program and who receives

DAC benefits. Statistics gathered by the Rehabilitation Research and Training Center of the Virginia Commonwealth University indicate that nationally, two-thirds to

three-quarters of the supported employment participants have mental retardation

diagnoses. Of the balance, the majority have diagnoses of severe psychiatric disabilities.

Protection & Advocacy, Inc., is a nonprofit agency that works with Californians

with disabilities to protect and advocate for their human, legal and service rights.

This statement is prompted by Protection & Advocacy’s work with persons with

the most severe disabilities who receive DAC benefits based on their parent’s work

history and who are working through a supported work program. It is also prompted

by our representation of Fred Innerebner 1 who lost forever his DAC benefits 2 because of his earnings through supported work program.

How Social Security applies its SGA rules to this particularly vulnerable group—

persons on DAC benefits and in supported work programs—frustrates a national

policy of encouraging individuals with significant disabilities to participate in competitive employment. Social Security interprets its regulations in a way that penalizes persons in supported employment because their supports come from an outside

publicly or charitably funded agency rather than from the employer itself. A private

employer is asked to determine the amount of any subsidies including special conditions provided to an employee when determining the value to the employer of the

employee’s work. 20 C.F.R. § 404.1574(a)(2).3 Those calculations would necessarily

include the cost of extra supervision, extra training, services to address behavior

problems, etc. Initially Social Security took the position that it would not consider

at all any subsidy including special conditions provided by a supported work program. Social Security has changed its position in that it will recognize to a limited

degree subsidy provided by a supported work program 4 but not to the extent SSA

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5See the section on unincurred business expenses in Social Security Ruling (SSR) 83–34 about

SGA determinations for self-employed persons. In that Section Social Security says it will deduct

from earnings ‘‘any business expenses which were incurred and paid for by another agency’’ including expenses paid for by the State Rehabilitation Agency: ‘‘This policy is consistent with the

principle that only income attributable to an individual’s own productive work activity should

be considered in determining SGA.’’ See, also, 20 C.F.R. § 404.1575(c). 6 House Report (Education and Labor Committee) No. 102–822 (August 10, 1992) to accompany H.R. 5492 that became Pub.L. 102–569, 1992 WL 202382, page 175. 7 Id. at page 123.

8 House Rep. No. 99–571 (Education and Labor Committee), May 5, 1986, accompanying H.R.

4021 that became Pub.L. 99–506, at page 31, reporting on testimony of Madeleine Will, Assistant Secretary for Special Education and Rehabilitative Services, U.S. Dept. of Education, 1986

U.S. Code Cong. & Adm. News 3471, 3501. 9See, e.g., 29 U.S.C. § 795j(2). 10 29 U.S.C. § § 705(36)(C), 705(13), 722(b)(3)(F)(ii), 795i. 11The term ‘disability’ means—(A) inability to engage in any substantial gainful activity by

reason of any medically determinable physical or mental impairment which can be expected to

result in death or which has lasted or can be expected to last for a continuous period of not

less than 12 months;’’ Section 223(d)(1)(A) of the Social Security Act, 42 U.S.C. § 423(d)(1)(A).

‘‘The Secretary shall be regulations prescribe the criteria for determining when services performed or earnings derived from services demonstrate an individual’s ability to engage in substantial gainful activity.’’ Section 223(d)(4) of the Social Security Act, 42 U.S.C. § 423(d)(4), emphasis added. 12 In Fred Innerebner’s case, for example, the Administrative Law Judge ruling against him

also concluded that ‘‘the claimant would have been unable to perform the job without the support services he received from the various social service agencies.’’ 13 In Fred Innerebner’s case, for example, there was no month in which his earnings came

close to SGA if the cost of his supported employment services were deducted and many months

where he was in minus territory or close to zero if the cost of supported employment services

were deducted.

will recognize subsidy provided directly by an employer -and not to the extent SSA

will recognize subsidy provided by a third party to someone who is self-employed.5

About Supported Employment

Supported employment programs administered by state rehabilitation agencies

were established by Congress ‘‘to serve individuals with severe disabilities for whom

competitive employment has not traditionally occurred or has been interrupted or

intermittent.’’ 6 They target ‘‘those with the most severe disabilities who may have

been thought to be too disabled to benefit from rehabilitation services to achieve

successful employment outcomes.’’ 7 They target those who have been traditionally

served in segregated sheltered workshops and ‘‘day activity programs because they

appear to lack the potential for unassisted employment.’’ 8

A person with a disability cannot qualify for supported employment unless he is

someone who cannot keep a job in the competitive labor market without intensive

and ongoing support services.9 Because federally funded state rehabilitation programs serve persons in supported employment for only a limited initial period of not

more than 18 months, eligibility also requires the availability of a state program to

provide the ongoing support needed to maintain someone in a competitive sector

job.10

The Role of SGA Determinations in the title II Disability Programs for Persons in

Supported Employment

SSA’s regulations defining what is and is not ‘‘substantial gainful activity’’ are all

regulations adopted to define who does or does not meet the statutory definition of

disability under the Social Security disability programs.11 Thus the determination

that a title II disability beneficiary performed substantial gainful activity based on

earnings from one particular job is also a generalized determination of the person’s

ability to perform substantial gainful activity outside that one particular job.

For a person in supported employment, a finding that work constitutes substantial gainful activity based on earnings is a finding that the supported employment

participant has demonstrated the general ability to perform work at the substantial

gainful activity level. This is so even if there is no dispute that the person could

not work at all outside the supported employment program 12 and even if there is

no dispute that the cost of the supported employment program exceeded the gross

earnings so that, if the employer were providing the supports, the person would be

found not to be performing SGA. 13

Conclusion & Request for Oversight

Supported employment provides a significant opportunity for those closed out of

competitive employment because of their disabilities. Supported employment has inVerDate 20-JUL-2000 08:48 Oct 20, 2000 Jkt 061710 PO 00000 Frm 00131 Fmt 6631 Sfmt 6602 K:\HEARINGS\66686.TXT WAYS3 PsN: WAYS3
128

creasingly come to replace the more traditional sheltered workshop because it provides a more realistic opportunity for some to transition into self-support with little

or no ongoing supports. Social Security’s interpretation of its own regulations, however, frustrates the goals of supported employment programs. Because Social Security does not consider the actual subsidy represented by supported employment

services, participants in supported employment cannot risk earning above the SGA

level. They cannot risk getting to the point of where they have a chance of becoming

self-supporting with little or no supports. If they do, they will suffer Fred

Innerebner’s fate: termination forever from DAC benefits even though they in fact

have not demonstrated a general ability to perform SGA.

Protection & Advocacy respectfully requests that the Subcommittee on Social Security review how Social Security determines when the earnings of supported employment participants constitute SGA. That would include looking at how Social Security evaluates the support services provided by supported employment programs

in that process and how the purposes of the Social Security Act and the Rehabilitation Act may be harmonized for Social Security title II disability beneficiaries participating in supported employment.

Protection & Advocacy respectfully requests that the Subcommittee on Social Security review how Social Security applies Section 202(d)(6)(B) and whether Social

Security is correct in treating that provision as a nullity without force or effect.

Æ