I

105TH CONGRESS

1ST SESSION H. R. 534

To provide as a demonstration project a Transition to Work Program for

individuals entitled to disability benefits under title II of the Social

Security Act, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 4, 1997

Mrs. KENNELLY of Connecticut introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the

Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such

provisions as fall within the jurisdiction of the committee concerned

A BILL

To provide as a demonstration project a Transition to Work

Program for individuals entitled to disability benefits

under title II of the Social Security Act, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Transition to Work

5 Act of 1997’’.
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1 SEC. 2. TRANSITION TO WORK PROGRAM.

2 (a) IN GENERAL.—The Commissioner of Social Secu3 rity shall establish as a demonstration project, in accord4 ance with this section, a Transition to Work Program

5 (hereinafter in this section referred to as the ‘‘TWP’’) in

6 such localities as the Commissioner considers appropriate

7 to meet the purpose of the TWP. The purpose of the TWP

8 shall be to determine the best practicable means of provid9 ing individuals entitled to disability benefits prompt access

10 to vocational rehabilitation services in order to move them

11 from disability benefits to work.

12 (b) TWOS PROVIDED TO BENEFICIARIES.—

13 (1) IN GENERAL.—The Commissioner shall in14 clude with each notification to an individual covered

15 under the TWP of—

16 (A) the individual’s entitlement to disabil17 ity benefits, or

18 (B) the commencement of a review of the

19 individual’s case for purposes of continuing eli20 gibility,

21 a ticket for work opportunity (hereinafter in this

22 section referred to as a ‘TWO’), together with an ex23 planation of the purpose of, and the method of

24 using, the TWO under this subsection.

25 (2) TWO DEFINED.—For purposes of this sec26 tion, the terms ‘‘ticket for work opportunity’’ and
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1 ‘‘TWO’’ mean a document issued by the Commis2 sioner which provides that, upon presentation by the

3 individual named therein to a provider of vocational

4 rehabilitation services participating in the TWP,

5 compensation will be provided to the provider, under

6 the terms of the TWP, for the services rendered to

7 the individual.

8 (3) COMMENCEMENT OF TWP AND INDIVIDUALS

9 COVERED.—

10 (A) IN GENERAL.—Except as provided in

11 subparagraph (B), the TWP shall apply with

12 respect to beneficiaries, under any entitlement

13 to benefits—

14 (i) whose first month of such entitle15 ment commences after the date of the en16 actment of this Act or who receive after

17 such date a notice of a review for purposes

18 of continuing eligibility, and

19 (ii) who reside, on the date of the es20 tablishment of the TWP, in the localities

21 affected by the TWP.

22 The Commissioner shall establish the TWP not

23 later than January 1, 1998.

24 (B) CURRENT BENEFICIARIES.—Individ25 uals who are entitled to disability benefits for
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1 the month in which this Act is enacted and who

2 reside in a locality affected by the TWP may

3 apply to the Commissioner, in such form and

4 manner as shall be prescribed by the Commis5 sioner, for inclusion in the TWP. Any such in6 dividual making such an application shall be

7 treated as an individual covered by the TWP,

8 and the Commissioner shall issue a TWO to

9 such individual as soon as practicable after re10 ceipt of the application.

11 (d) REDEMPTION OF TWOS.—

12 (1) IN GENERAL.—After receipt, by a partici13 pating provider, of a TWO from the individual to

14 whom the TWO was issued, the provider may re15 deem the TWO, upon presentation to the Commis16 sioner, as provided in this subsection.

17 (2) TIMING AND AMOUNT OF PAYMENTS TO

18 PROVIDERS.—

19 (A) IN GENERAL.—The TWP shall provide

20 for payments from the Federal Disability Insur21 ance Trust Fund to the provider, as compensa22 tion for the provision of services to an individ23 ual, upon presentation of the TWO to the Com24 missioner, as follows:
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1 (i) upon initial placement of the indi2 vidual in employment while the individual

3 is in the course of receiving the services

4 from the provider, a milestone payment to

5 the provider in a fixed dollar amount which

6 shall be established by the Commissioner

7 from time to time in accordance with the

8 terms of the TWP; and

9 (ii) after commencement by the indi10 vidual of a period of work, payment upon

11 completion of each calendar quarter begin12 ning or ending during such period of work,

13 of an amount equal to 50 percent of the

14 total amount of the benefit payments

15 which were not payable for any month in

16 such quarter but would have been payable

17 but for the cessation of benefit payments

18 by reason of the individual’s engagement

19 in, or ability to engage in, substantial gain20 ful activity.

21 (B) PERIOD OF WORK DEFINED.—For

22 purposes of this paragraph, the term ‘‘period of

23 work’’ means, in connection with any entitle24 ment to disability benefits, a period beginning

25 with the month following the first month for
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1 which such benefits are not payable by reason

2 of engagement in, or a determination of ability

3 to engage in, substantial gainful activity, and

4 ending with the end of the 60th month follow5 ing such first month for which such benefits are

6 not payable.

7 (C) ADJUSTMENTS BY THE COMMIS8 SIONER.—The Commissioner may alter the per9 centage specified in subparagraph (A)(ii), the

10 length of the period specified in subparagraph

11 (B), or both, to the extent that the Commis12 sioner determines that such an alteration would

13 not otherwise provide an adequage incentive for

14 work.

15 (D) CERTIFICATION OF PAYMENTS.—Pay16 ments under subparagraph (A) shall be made

17 by means of certification by the Commissioner

18 to the Managing Trustee of the Federal Dis19 ability Insurance Trust Fund of the amount of

20 the payments. The Managing Trustee shall

21 make the payments from the Trust Fund in ac22 cordance with the certification.

23 (3) CHANGING OF PROVIDERS.—The Commis24 sioner shall make provision, upon the request of an

25 individual who has been issued a TWO, for changing
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1 the provider receiving compensation under the TWP

2 in connection with the TWO.

3 (e) PROVIDER REQUIREMENTS.—

4 (1) CERTIFICATION OF PROVIDERS.—A pro5 vider of vocational rehabilitation services may par6 ticipate in the TWP only if the provider is certified

7 under the TWP. Under the TWP, any such provider

8 shall be certified, irrespective of whether the pro9 vider is public or private, if the provider—

10 (A) meets criteria established under the

11 TWP to ensure to the satisfaction of the Com12 missioner reasonable access to providers who

13 meet applicable requirements for professional

14 certification,

15 (B) includes in the services provided a

16 broad range of vocational rehabilitation serv17 ices, including job training and liaison and

18 placement with employers, and

19 (C) otherwise maintains, in the provider’s

20 practice and procedures, compliance with the

21 requirements of this section and the terms of

22 the TWP.
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1 (2) EXPIRATION, CANCELLATION, RENEWAL.—

2 The TWP shall provide for reasonable terms for ex3 piration, cancellation, and renewal of certifications

4 under the TWP.

5 (3) LISTS OF PROVIDERS.—The Commissioner

6 shall establish and maintain for each locality af7 fected by the TWP lists of providers of vocational

8 rehabilitation services who are certified under the

9 TWP and shall make the lists generally available to

10 the public.

11 (f) TRANSITION TO WORK PLANS.—Providers of vo12 cational rehabilitation services under the TWP shall be re13 quired under the terms of the TWP to establish and main14 tain an individual transition to work plan for each individ15 ual receiving the services. Each such plan shall be devel16 oped jointly by the individual and the provider, taking into

17 account an employment evaluation which shall be con18 ducted in accordance with requirements of the TWP. An

19 individual transition to work plan shall take effect only

20 upon approval by the individual.

21 (g) APPEALS.—Any provider dissatisfied with any de22 termination of the Commissioner under this section shall

23 be entitled to a hearing thereon by the Commissioner to

24 the same extent as is provided in section 205(b) of the
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1 Social Security Act with respect to decisions of the Com2 missioner, and to judicial reivew of the Commissioner’s

3 final decision after such hearing as is provided in section

4 205(g) of such Act.

5 (h) DISABILITY BENEFIT DEFINED.—For purposes

6 of this section, the term ‘‘disability benefit’’ means a bene7 fit under section 223 of the Social Security Act or a bene8 fit under section 202 of such Act based on the disability

9 of the beneficiary.

10 SEC. 3. DISABLED WORKER TAX CREDIT.

11 (a) IN GENERAL.—Subpart C of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of

13 1986 (relating to refundable credits) is amended by redes14 ignating section 35 as section 36 and by inserting after

15 section 34 the following new section:

16 ‘‘SEC. 35. DISABLED WORKER CREDIT.

17 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli18 gible disabled individual, there shall be allowed as a credit

19 against the tax imposed by this subtitle for the taxable

20 year an amount equal to the credit percentage of so much

21 of such individual’s earned income for the taxable year as

22 does not exceed the earned income amount.

23 ‘‘(b) PHASEOUT OF CREDIT.—The amount of the

24 credit allowable to a taxpayer under subsection (a) for any

25 taxable year shall not exceed the excess (if any) of—
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1 ‘‘(1) the credit percentage of the earned income

2 amount, over

3 ‘‘(2) the phaseout percentage of so much of the

4 earned income of the taxpayer for the taxable year

5 as exceeds the phaseout amount.

6 ‘‘(c) PERCENTAGES AND AMOUNTS.—For purposes

7 of this section—

8 ‘‘(1) PERCENTAGES.—The credit percentage

9 and the phaseout percentage shall be determined as

10 follows:

‘‘In the case of an eligible disabled individual with: The credit

percentage is:

The phaseout

percentage is:

No qualifying children .................................... 15 17.14

1 qualifying child ............................................ 7.14 3.74

2 or more qualifying children ......................... 7.58 4.5.

11 ‘‘(2) AMOUNTS.—The earned income amount

12 and the phaseout amount shall be determined as

13 follows:

‘‘In the case of an eligible disabled individual with:

The earned

income

amount is:

The phaseout

amount is:

No qualifying children .................................... $8,000 $11,000

1 qualifying child ............................................ $7,000 $12,430

2 or more qualifying children ......................... $9,890 $12,680.

14 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur15 poses of this section—

16 ‘‘(1) ELIGIBLE DISABLED INDIVIDUAL.—The

17 term ‘eligible disabled individual’ means any individ18 ual if—

19 ‘‘(A) for any month during the taxable

20 year or any prior month after December 1996,
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1 such individual received disability insurance

2 benefits under section 223 of the Social Secu3 rity Act or benefits under subsection (d), (e), or

4 (f) of section 202 of such Act based on such in5 dividual’s disability, and

6 ‘‘(B) for any subsequent month during

7 such taxable year, such individual was not enti8 tled to such benefits solely on the basis of a de9 termination by the Commissioner of Social Se10 curity under section 223(d)(4) of the Social Se11 curity Act that earnings derived by such indi12 vidual from services demonstrated such individ13 ual’s ability to engage in substantial gainful ac14 tivity.

15 ‘‘(2) EARNED INCOME.—The term ‘earned in16 come’ has the meaning given to such term by section

17 32(c)(2).

18 ‘‘(3) QUALIFYING CHILD.—The term ‘qualifying

19 child’ has the meaning given to such term by section

20 32(c)(3).

21 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar

22 to the following rules of section 32 shall apply for

23 purposes of this section:

24 ‘‘(A) Subsection (c)(1)(E) (relating to indi25 viduals claiming benefits of section 911).
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1 ‘‘(B) Subsection (c)(1)(F) (relating to limi2 tation on eligibility of nonresident aliens).

3 ‘‘(C) Subsections (c)(1)(F)(i) and (l) (re4 lating to identification number requirement).

5 ‘‘(D) Subsection (c)(4) (relating to treat6 ment of military personnel stationed outside the

7 United States).

8 ‘‘(E) Subsection (e) (relating to taxable

9 year must be full taxable year).

10 ‘‘(F) Subsection (f) (relating to amount of

11 credit to be determined under tables).

12 ‘‘(5) JOINT RETURNS.—In the case of a joint

13 return, this section shall be applied separately with

14 respect to the earned income of each spouse.

15 ‘‘(6) PART-YEAR ELIGIBILITY.—If the period

16 referred to in paragraph (1)(B) is less than the en17 tire taxable year, the credit allowed under this sec18 tion for such taxable year shall not exceed the

19 amount which bears the same ratio to the amount

20 of credit which would be allowed under this section

21 but for this paragraph as such period bears to the

22 entire taxable year.

23 ‘‘(e) INFLATION ADJUSTMENTS.—

24 ‘‘(1) IN GENERAL.—In the case of any taxable

25 year beginning after 1998, each of the dollar
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1 amounts in subsection (c)(2) shall be increased by

2 an amount equal to—

3 ‘‘(A) such dollar amount, multiplied by

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section 1(f)(3), for the calendar

6 year in which the taxable year begins, deter7 mined by substituting ‘calendar year 1997’ for

8 ‘calendar year 1992’ in subparagraph (B)

9 thereof.

10 ‘‘(2) ROUNDING.—If any dollar amount, after

11 being increased under paragraph (1), is not a mul12 tiple of $10, such dollar amount shall be rounded to

13 the nearest multiple of $10.’’

14 (b) ADVANCE PAYMENT OF CREDIT.—Chapter 25 of

15 such Code (relating to general provisions relating to em16 ployment taxes) is amended by inserting after section

17 3507 the following new section:

18 ‘‘SEC. 3507A. ADVANCE PAYMENT OF DISABLED WORKER

19 CREDIT.

20 ‘‘(a) GENERAL RULE.—Except as otherwise provided

21 in this section, every employer making payment of wages

22 to an employee with respect to whom a disabled worker

23 credit eligibility certificate is in effect shall, at the time

24 of paying such wages, make an additional payment equal
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1 to the disabled worker credit advance amount of such em2 ployee.

3 ‘‘(b) DISABLED WORKER CREDIT ELIGIBILITY CER4 TIFICATE.—For purposes of this title, a disabled worker

5 credit eligibility certificate is a statement furnished by an

6 employee to the employer which—

7 ‘‘(1) certifies that the employee will be eligible

8 to receive the credit provided by section 35 for the

9 taxable year,

10 ‘‘(2) certifies that the employee does not have

11 a disabled worker credit eligibility certificate in ef12 fect for the calendar year with respect to the pay13 ment of wages by another employer, and

14 ‘‘(3) states whether or not the employee’s

15 spouse has such a certificate in effect.

16 For purposes of this section, a certificate shall be treated

17 as being in effect with respect to a spouse if such a certifi18 cate will be in effect on the first status determination date

19 following the date on which the employee furnishes the

20 statement in question.

21 ‘‘(c) DISABLED WORKER CREDIT ADVANCE

22 AMOUNT.—

23 ‘‘(1) IN GENERAL.—For purposes of this title,

24 the term ‘disabled worker credit advance amount’
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1 means, with respect to any payroll period, the

2 amount determined—

3 ‘‘(A) on the basis of the employee’s wages

4 from the employer for such period, and

5 ‘‘(B) in accordance with tables prescribed

6 by the Secretary.

7 ‘‘(2) ADVANCE AMOUNT TABLES.—The tables

8 referred to in paragraph (1)(B)—

9 ‘‘(A) shall be similar in form to the tables

10 prescribed under section 3402 and, to the maxi11 mum extent feasible, shall be coordinated with

12 such tables and the tables prescribed under sec13 tion 3507(c), and

14 ‘‘(B) shall be structured to carry out the

15 principles of subparagraphs (B) and (C) of sec16 tion 3507(c)(2).

17 ‘‘(d) DISABLED WORKER CREDIT.—For purposes of

18 this section, the term ‘disabled worker credit’ means the

19 credit allowable by section 35.

20 ‘‘(e) OTHER RULES.—For purposes of this section,

21 rules similar to the rules of subsections (d) and (e) of sec22 tion 3507 shall apply.

23 ‘‘(f) REGULATIONS.—The Secretary shall prescribe

24 such regulations as may be necessary to carry out the pur25 poses of this section.’’.
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1 (c) TECHNICAL AMENDMENTS.—

2 (1) Paragraph (2) of section 1324(b) of title

3 31, United States Code, is amended by inserting be4 fore the period ‘‘or from section 35 of such Code’’.

5 (2) The table of sections for subpart C of part

6 IV of subchapter A of chapter 1 of such Code is

7 amended by striking the last item and inserting the

8 following new items:

‘‘Sec. 35. Disabled worker credit.’’

‘‘Sec. 36. Overpayments of tax.’’

9 (3) The table of sections for chapter 25 of such

10 Code is amended by inserting after the item relating

11 to section 3507 the following new item:

‘‘Sec. 3507A. Advance payment of disabled worker credit.’’.

12 (d) EFFECTIVE DATES.—

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by this section

15 shall apply to taxable years beginning after Decem16 ber 31, 1997.

17 (2) ADVANCE PAYMENTS.—The amendment

18 made by subsection (b) shall apply to remuneration

19 paid after December 31, 1997.

20 SEC. 4. IMPROVED MEDICARE COVERAGE.

21 (a) PROVIDING FOR 5-YEAR PERIOD OF CONTINU22 ATION COVERAGE FOR THOSE RETURNING TO WORK.—
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1 (1) IN GENERAL.—The next to last sentence of

2 section 226(b) of the Social Security Act (42 U.S.C.

3 426) is amended—

4 (A) by striking ‘‘throughout all of which’’

5 and inserting ‘‘throughout the first 24 months

6 of which’’, and

7 (B) by striking ‘‘24 such months’’ and in8 serting ‘‘48 months’’.

9 (2) EFFECTIVE DATE.—The amendments made

10 by paragraph (1) shall apply to months beginning

11 with January 1998 and shall not apply to individ12 uals with respect to any period of entitlement to

13 benefits under section 226(b) of the Social Security

14 Act that terminated before December 31, 1997.

15 (b) ESTABLISHING CEILING ON PREMIUMS FOR DIS16 ABLED BUY-IN INDIVIDUALS.—

17 (1) IN GENERAL.—Section 1818A(d)(2) of the

18 Social Security Act (42 U.S.C. 1395i-2a(d)(2)) is

19 amended by striking the period at the end and in20 serting the following: ‘‘; except that—

21 ‘‘(A) the amount of an individual’s monthly pre22 mium for any month in a calendar year under this

section shall not exceed 1 23 ⁄12 of 10 percent of the

24 amount (if any) by which—
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1 ‘‘(i) such individual’s earned income (as

2 defined in section 32(c) of the Internal Revenue

3 Code of 1986) for taxable year ending in the

4 preceding calendar year, exceeded

5 ‘‘(ii) $15,000; and

6 ‘‘(B) section 1818(d)(4) shall be applied with7 out regard to subparagraph (A) of this paragraph.

8 The Secretary shall provide for such adjustments to pre9 miums charged as may be necessary to carry out subpara10 graph (A).’’.

11 (2) EFFECTIVE DATE.—The amendments made

12 by paragraph (1) shall apply with respect to pre13 miums for months beginning with January 1998.

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