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10.1 Introduction

10.1.1 Scope of Chapter

This chapter discusses an annuitant's continued entitlement to a disability 

annuity. Statutory requirements necessitate that continued entitlement to an 

annuity must be reviewed periodically until the employee or child reaches age 65 

and the widow(er) reaches age 60, unless the impairment has been classified as 

so severe that medical improvement is not expected (MINE). (See DCM 8.5.2 for 

additional information on medical improvement classifications.)

The two major factors that are considered in deciding whether a disability 

continues are work and medical improvement. These factors are defined in the 

disability regulations. These regulations have been included with existing 

procedure and form the basis for this chapter.

10.1.2 Regulations Governing Continuance Or Termination Of Disability

The Disability Benefits Division (DBD) makes disability decisions for all claims of 

disability under the Railroad Retirement Act. These decisions are based either 

on the rules contained in the Board's regulations or the rules contained in the 

regulations of the Social Security Administration, whichever is controlling.

In addition to making initial disability decisions, DBD is required to periodically 

review those claimants that have been granted benefits to determine whether 

they continue to be disabled, unless the impairment upon which the disability is 

based is classified as so severe that medical improvement is not expected 

(MINE). (See DCM 8.5.2 for additional information on medical improvement 

classifications.) Subpart O, Sections 220.175 through 20.187 of the Board's 

revised regulations describes the process under which the Board makes these 

determinations. These regulations parallel the regulations of the Social Security 

Administration found in Subpart P, Part 404, of Title 20 (Determining Disability 

and Blindness).

10.1.3 Responsibility To Notify The Board Of Events Which Affect Disability

If the annuitant is entitled to a disability annuity, the annuitant should promptly tell 

the Board if - 

(a) His or her impairment(s) improves;

(b) He or she returns to any type of work;

(c) He or she increases the amount of work; or

(d) His or her earnings increase.
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10.1.4 Circumstances Which Raise A Question Of Continuing Disability

Various situations occur which may indicate a need for a continuing disability 

investigation to determine whether an issue of continuing eligibility exists. Any 

one of the following situations warrants a continuing disability investigation.

A. Disability Monitoring System - DBD is required to conduct periodic reviews 

of an annuitant's continued entitlement to a disability until an employee or 

child reaches age 65 and until a widow(er) reaches age 60, unless the 

impairment upon which the disability is based is classified as so severe 

that medical improvement is not expected (MINE). (See DCM 8.5.2 for 

additional information on medical improvement classifications.) This 

requirement has led to the development of the disability monitoring system 

which includes the following four categories. (See DCM 8.5 Detailed 

Benefit Monitoring.)

• Medical Improvement Expected (MIE) - These are medical 

examination diary cases in which the individual's impairment(s) is 

expected to improve. 

• Medical Improvement Possible (MIP) - Refers to a medical 

examination diary case in which medical improvement is possible. 

• Medical Improvement Not Expected (MINE) - These are cases in which 

the individual's impairment is so severe that medical improvement is 

not likely. 

• Administrative Appeal - These are any disability cases that were 

awarded on the basis of a decision by a hearings officer, the Board 

members or a Federal court. 

B. Third Party Reports - A notice is received from someone, in a position to 

know, indicating one of the following:

• The annuitant's physical or mental condition has improved, or; 

• The annuitant returned to work, or; 

• The annuitant is not following prescribed treatment, or; 

• The annuitant is failing to follow the provisions of the Social Security 

Act, the Railroad Retirement Act or Regulations. 

C. Earnings Involved - Substantial earnings are reported to the annuitant’s 

wage record.

D. Return to Work - The annuitant returns to work and successfully 

completes a trial work period.
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E. Annuitant Report - The annuitant tells DBD that he or she has recovered 

from his or her disability or that he or she has returned to work.

F. Current Medical Evidence - Advances in medical technology or a change 

in vocational therapy requires current medical evidence to see if the 

annuitant’s disability continues.

G. State Vocational Rehabilitation Notice - A State Vocational Rehabilitation 

Agency tells DBD that:

• The services have been completed; or

• The annuitant is now working; or

• The annuitant is able to work.

H. Questions Regarding Continuance - Evidence DBD receives raises a 

question as to whether the annuitant's disability continues.

10.1.5 Suspension Of Disability Annuity (DA)

A. Non-Payment Months - A D/A is not payable for any month in which an 

annuitant:

• Works for a railroad or other employer in the RR industry; or, 

• Earns more than the current monthly disability earnings limit after 

deduction of disability related work expenses in employment or selfemployment of any type. See DCM 10.8 for an explanation of disability 

related work expenses. Refer to the chart in FOM 1125.5.2 for the 

monthly and annual earnings limits. 

Examiners should immediately suspend payments upon receiving notice 

from the EE that he/she is currently doing any of the above events. If the 

report is from a third party, due process notification is required prior to 

suspension. However, no appeal rights should be given on the 

suspension notice.

NOTE: Payments should not be suspended when the annuitant is 

engaged in VISTA sponsored activity. Refer these cases to P&S.

B. Administrative Suspensions - D/A payments are to be suspended by DBD 

if the annuitant fails to report for a medical examination scheduled by DBD 

for policing purposes.
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10.1.6 Diaries For Suspended Disability Employee Annuitants Due To 

Earnings

A disability annuity is not payable for any month in which an annuitant works for 

an employer covered under the Railroad Retirement Act. In addition, an 

employee's disability annuity is not payable for any month in which the employee 

earns over the current monthly disability earnings limit (after deduction of 

impairment-related work expenses) in employment or self-employment of any 

kind. Refer to the chart in FOM 1125.5.2 for the monthly and annual earnings 

limits. 

When a disabled employee's annuity is suspended due to work, two diaries will 

need to be established.

A. Employee end-of-year adjustment diary: 

If an employee’s earnings are less than yearly disability earnings limit 

(computed as monthly disability earnings amount x 12 months + 50% of 

monthly disability earnings amount), all annuity payments and penalties 

withheld during the year because of earnings are payable. Therefore, 

when an employee's disability annuity is suspended due to reported 

earnings over the current monthly disability earnings limit per month, set a 

call-up for a possible end-of-year adjustment using Form G-65b (Reason 

Code 50 - Section 2(e) 4 Refund and Section Code 06 - Retirement Post 

Section). In the remarks section of Form G-65b enter, "possible end-ofyear adjustment."

B. Trial Work Period Diary (See DCM 10.5.4 and 10.5.5):

Using CDR PC call-up program, establish a call-up for the trial work period 

using earnings or return to RR service as the call-up reason.

10.1.7 Termination Causes

Entitlement to railroad retirement disability benefits may be terminated by the 

following causes:

• Death of the beneficiary;

• Medical recovery;

• Demonstration of ability to work.

Before a disability annuity is stopped for reasons other than death, the annuitant 

must be given a chance to explain why it should not be terminated. DCM 10.6.1

explains the requirements of the termination notice.
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10.1.8 Termination Of Disability And Termination Of Entitlement To A 

Disability Annuity

A. Determining the Month Disability Ends

1. In Medical Improvement Cases

The month disability ends in medical improvement cases is as 

follows:

The month DBD mails the annuitant a notice saying that DBD finds 

that he or she is no longer disabled based on evidence showing 

there has been medical improvement in the annuitant's impairments 

related to the ability to work. The annuitant has the capacity to 

engage in substantial gainful work (SGA) as described in DCM 

10.3.3 and 10.3.4.

The month in which the annuitant returns to full-time work, with no 

significant medical restrictions and acknowledges that medical 

improvement has occurred, and DBD expected the annuitant's 

impairment(s) to improve;

The first month the annuitant was told by his or her physician that 

he or she could return to work provided there is not substantial 

conflict between the physician's and the annuitant's statements 

regarding the annuitant's awareness of his or her capacity for work 

and the earlier date is supported by the medical evidence.

The month the evidence shows that the annuitant is no longer 

disabled under the rules set out in DCM 10.3, sections 3, 4, 5 and 

6, and he or she was disabled only for a specified period of time in 

the past.

2. In Other Than Death and Medical Improvement Cases

In non-medical improvement cases, a disability will end:

The month DBD mails the annuitant a notice saying that DBD finds 

that he or she is no longer disabled based on evidence showing 

there has been no medical improvement in the annuitant's 

impairments related to the ability to work but the annuitant has the 

capacity to engage in substantial gainful work and one of the 

exceptions to medical improvements set out in DCM 10.3.5 applies.

The month in which the annuitant actually does substantial gainful 

activity where such annuitant is not entitled to a trial work period;
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The first month in which the annuitant failed without good cause to 

do what DBD asked, when the rule set out in DCM 10.3.5(B) (2) 

applies;

The first month in which the question of continuing disability arose 

and DBD could not locate the annuitant after a suitable 

investigation (see DCM 10.3.5(B) (3));

The first month in which the annuitant failed without good cause to 

follow prescribed treatment (see DCM 10.3.5(B) (4));

B. Termination of Entitlement to and Payment of a Disability Annuity

1. Death

2. Medical Improvement

In medical improvement cases, entitlement to a disability annuity 

ends on the last day of the second month following the month in 

which disability ceased. Payment of the disability annuity will stop 

on the last day of the second month following the month in which 

disability ends or on the last day of the first month following the 

month the initial cessation notice is sent by DBD, whichever date is 

later. Any payment received after the payment termination date is 

considered an overpayment.

EXAMPLE 1: The employee recovered from his or her disability in 

February 1990, the month the initial cessation letter was released. 

No work was involved. The last day of the second month following 

the month in which recovery occurred in this case is April 30, 1990. 

Therefore, no annuity is payable for any month after April 1990. 

The check dated May 1, 1990 is payable because it represents the 

April 1990 payment. Benefits should be terminated effective May 1, 

1990.

EXAMPLE 2: The employee recovered from his or her disability in 

November 1989. The initial cessation letter was released in 

February 1990. Payment of the disability annuity ends on the last 

day of the month following the month in which the letter was 

released. Therefore, no annuity is payable for any month after 

March 1990. The check dated April 1, 1990, is payable because it 

represents the March 1990 payment.

NOTE: See DCM 10.6 for termination procedure. Any annuity 

suspended for an indefinite period or termination cases involving an 

overpayment should be referred by the CDR examiner to the 

appropriate post section (retirement or survivor) for determination of 
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overpayments. In employee termination or indefinite suspension 

cases which do not involve an overpayment, the CDR examiner 

should refer the case to the DBD-RASI examiner who will notify the 

Sickness and Unemployment Benefits section of the termination 

(see RCM 5.9.4B).

3. Reason Other Than Death or Medical Improvement

If the annuitant demonstrates the ability to perform the duties of his 

or her regular railroad occupation or is able to engage in substantial 

gainful activity, or fails to cooperate with the Board, entitlement to a 

disability annuity will end on the last day of the second month 

following the month in which disability ceased. Payment of the 

disability annuity will stop on the last day of the second month 

following the month in which disability ends.

C. Converting A Disability Annuity To An Age and Service Annuity

The Social Security Administration converts disability annuities to age and 

service annuities in order to effect a change in trust funds.

Under the Railroad Retirement Act, we do not switch from a disability 

annuity to an age and service (A&S) annuity for trust fund reasons. 

However, at full retirement age (FRA), a disability annuity ends and the 

individual is deemed to have filed an application for an A&S annuity. At 

that time, the annuity will be treated the same as a regular FRA annuity. 

This is a continuous entitlement with no disruption in payments. DBD 

does not have to police these cases, and we do not change our coding. 

NOTE: See RCM 2.2.20 regarding earnings restrictions on widow(er)s 

over age 60.

10.2 Occupational Disabilities

10.2.1 Effects Of Work On Occupational Disability

A. Adjusting disability onset when the employee works despite impairment - 

An employee who has stopped work in his or her regular railroad 

occupation due to a permanent physical or mental impairment(s) may 

make an effort to return to work in his or her regular railroad occupation. If 

the employee is subsequently forced to stop that work after a short time 

because of his or her impairment(s), DBD will generally consider that work 

as an unsuccessful work attempt. (See DCM 10.5.3) In this situation, 

DBD may determine that the employee became disabled for work in his or 

her regular railroad occupation before the last date the employee worked 

in his or her regular railroad occupation. No annuity will be payable,

however, until after the last date worked.
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B. Occupational disability annuitant work restrictions - The restrictions which 

apply to an annuitant who is disabled for work in his or her regular railroad 

occupation are found in DCM 10.1.5. 

10.2.2 Evaluation For Recovery From Disability For Work In The Regular 

Railroad Occupation

In evaluating annuitants receiving an occupational disability, there must be 

significant medical improvement related to the beneficiary’s ability to return to his 

regular railroad occupation, rather than the ability to engage in substantial gainful 

activity (SGA). Some examples of improvement in an individual’s impairment, 

but not to the point where the employee could return to his regular railroad 

occupation are:

• An individual who has had a laryngectomy with a stoma. Although he may 

be able to use artificial devices for speech, he could not work in a dusty 

environment because of the risk of infection. 

• An individual with a hip or knee replacement. Although the artificial joint 

may relieve pain and stabilize the joint to some extent, he may be forever 

precluded from work that requires kneeling, crawling and other 

movements requiring acute flexion of the joint. 

• An individual with a seizure disorder that may have responded to drug 

therapy. Although the number of seizures may be reduced, he may be 

forever precluded from working at heights, on ladders, and on scaffolds. 

• An individual with an impairment caused by exposure to environmental 

factors that are inherent to his railroad job. Although he may improve if no 

longer exposed to these factors, his condition will continue to affect his 

ability to work in specific occupations.

EXAMPLE 1: The individual has allergies which cause contact dermatitis when 

exposed to creosote (a railroad track tie preservative). Such an individual could 

not work as a track laborer even if his condition cleared up when he quit working.

EXAMPLE 2: The individual has a respiratory problem resulting from exposure 

to welding fumes or diesel exhaust. Such an individual could not work as a 

welder or an engineer even if his condition cleared up when he quit working.

Such cases may be classified as Medical Improvement Not Expected (MINE) 

cases. 

NOTE: Administrative factors, such as carrier disqualification, must also be 

considered.

A. General - Disability for work in the regular railroad occupation will end if:
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1. There is medical improvement in the annuitant's impairment(s) to 

the extent that the annuitant is able to perform the duties of his 

regular railroad occupation; or

2. The annuitant demonstrates the ability to perform the duties of his 

regular railroad occupation. RRB regulations provide for 

unsuccessful work attempts, trial work periods, and re-entitlement 

periods before terminating a disability annuity because of the 

annuitant's return to work. See DCM 10.5 for procedure on 

unsuccessful work attempts, trial work periods, and re-entitlement 

periods.

B. Payment of the disability annuity during the trial work period and the reentitlement period

1. The employee who is entitled to an occupational disability annuity 

will not be paid an annuity for each month in the trial work period or 

re-entitlement period in which he or she

• Works for an employer covered by the Railroad Retirement Act; 

or

• Earns more than the current monthly disability earnings limit 

after deduction of disability related work expenses in 

employment or self-employment. Refer to the chart in 

FOM 1125.5.2for the monthly and annual earnings limits. 

2. If the employee's occupational disability annuity is stopped because 

of work during the trial work period or re-entitlement period, and the 

employee discontinues that work before the end of either period, 

the disability annuity may be started again without a new 

application and a new determination of disability.

C. Notice that an annuitant is no longer disabled - The procedures explaining 

DBD’s responsibilities in notifying the annuitant, and the annuitant's rights 

when the disability annuity is stopped are found in DCM 10.6.

10.2.3 Initial Evaluation Of A Previous Occupational Disability

A. In some cases, DBD may determine that a claimant is not currently 

disabled for work in his or her regular railroad occupation but was 

previously disabled for a specified period of time in the past. This can 

occur when

• The disability application was filed before the claimant's occupational 

disability ended, but DBD did not make the initial determination of 

occupational disability until after the claimant's disability ended; or
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• The disability application was filed after the claimant's occupational 

disability ended but no later than the 12th month after the month the 

disability ended.

B. When evaluating a claim for a previous occupational disability, DBD 

follows the steps of initial occupational disability rating to determine 

whether an occupational disability existed, and follows the steps in 10.2.1 

and 10.2.2 to determine when the occupational disability ended.

EXAMPLE 1: The claimant sustained multiple fractures to his left leg in 

an automobile accident that occurred on June 16, 1982. For a period of 

18 month following the accident the claimant underwent 2 surgical 

procedures which restored the functional use of his leg. After a recovery 

period following the last surgery, the claimant returned to his regular 

railroad job on February 1, 1984. The claimant, although fully recovered 

medically and regularly employed, filed an application on December 3, 

1984, for a determination of occupational disability for the period June 16, 

1982 through January 31, 1984. A disability annuity is payable to the 

employee only for the period December 1, 1983 through January 31, 

1984. An annuity may not begin an earlier than the 1st day of the 12th 

month before the month in which the application was filed.

EXAMPLE 2: The claimant is occupationally disabled using the same 

medical facts disclosed above, beginning June 16, 1982 (the date of the 

automobile accident). The claimant files an application for an 

occupational disability annuity, dated December 1, 1983. However, as of 

February 1, 1984, and before DBD makes a disability determination, the 

claimant returns to his regular railroad job and is no longer considered 

occupationally disabled. DBD reviews the claimant’s application in May of 

1984 and finds him occupationally disabled for the period June 16, 1982 

through January 31, 1984. A disability annuity is payable to the employee 

from December 1, 1982 through January 31, 1984.

10.3 Disability For Any Regular Employment

10.3.1 Determining Whether Disability Annuity Continues Or Ends

The RRB is under a statutory duty to periodically review every annuitant's 

disability until the employee or child annuitant reaches full retirement age and the 

widow(er) annuitant reaches age 60. Please note that widow(er) medicare 

entitlement is under review until age 65. During these periodic reviews, there are 

a number of factors to be considered. First, consider whether the annuitant has 

worked and by doing so, demonstrated the ability to engage in substantial gainful 

activity. If so, the disability will end. Next consider whether there has been any 

medical improvement in the annuitant's impairment(s) and, if so, whether this 

medical improvement is related to the ability to do work. If the impairments have 

not medically improved, the examiner must consider whether one or more of the 
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exceptions to medical improvement applies. (See DCM 10.3.5.) If medical 

improvement related to ability to work has not occurred and no exception applies, 

the disability will continue.

NOTE: Even when medical improvement related to work has occurred or an 

exception applies, the examiner must show that the annuitant is currently able to 

engage in substantial gainful activity before he or she can find that the annuitant 

is no longer disabled.

10.3.2 The Sequential Evaluation Process

The continuing disability review may cease and the disability may be continued at 

any point if the examiner determines that there is sufficient evidence to find that 

the annuitant is still unable to engage in substantial gainful activity. The review 

consists of an eight-step process. Each step of the process taken must be 

documented.

The steps are as follows:

1. Is the annuitant engaging in substantial gainful activity? If he is (and any 

applicable trial work period has been completed), find the disability to have 

ended;

2. If the annuitant is not engaging in substantial gainful activity, does he have 

an impairment or combination of impairments which meets or equals the 

severity of an impairment listed in Appendix 1. If the annuitant's 

impairment(s) does meet or equal the level of severity of an impairment 

listed in Appendix 1, find his disability to continue;

3. If the annuitant's impairment(s) does not meet or equal the level of 

severity of an impairment listed in Appendix 1, has there been medical 

improvement as defined in DCM 10.3.3(A)? If there has been medical 

improvement as shown by a decrease in medical severity, see step 4. If 

there has been no decrease in medical severity, then there has been no 

medical improvement. (See step 5);

4. If there has been medical improvement, the examiner must determine 

whether it is related to the annuitant's ability to do work in accordance with 

paragraphs A through D of DCM 10.3.3, (i.e., whether or not there has 

been an increase in the residual functional capacity based on the 

impairment(s) that was present at the time of the most recent favorable 

medical determination). If medical improvement is not related to the 

annuitant's ability to do work, see step 5. If medical improvement is related 

to the annuitant ability to do work, see step 6;

5. If the examiner found at step 3 that there has been no medical 

improvement or if he found at step 4 that the medical improvement is not 
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related to the annuitant's ability to work, the examiner must consider 

whether any of the exceptions in DCM 10.3.5 apply. If none of them 

apply, disability continues. If one of the first group of exceptions to 

medical improvements applies, the disability ends. The second group or 

exceptions to medical improvement may be considered at any point in this 

process;

6. If medical improvement is shown to be related to the annuitant's ability to 

do work or if one of the first groups of exceptions to medical improvement 

applies, determine whether all of the annuitant's current impairments in 

combination are severe. This determination will consider all current 

impairments and the impact of the combination of those impairments on 

the ability to function. If the residual functional capacity assessment in 

step 4 above shows significant limitation of ability to do basic work 

activities, see step 7. When the evidence shows that all current 

impairments in combination do not significantly limit physical or mental 

abilities to do basic work activities, these impairments will not be 

considered severe in nature, and the annuitant will no longer be 

considered to be disabled;

7. If the annuitant's impairment(s) is severe, assess his current ability to 

engage in substantial gainful activity. That is, assess the annuitant's 

residual functional capacity based on all of his current impairments and 

consider whether he can still do work that was done in the past. If he can 

do such work, disability will be found to have ended; and

8. If the annuitant is not able to do work he has done in the past, consider 

one final step. Given the residual functional capacity assessment and 

considering the annuitant's age, education and past work experience, can 

he do other work? If the annuitant can do other work, disability will be 

found to have ended. If he cannot do other work, disability will be found to 

continue.

In cases that are not of listing severity, medical improvement may permit work at 

a lower level of exertion, but not at a higher level of exertion. If the individual’s 

past relevant work (PRW) was low-exertion work, any significant improvement 

may result in a decision supporting termination based on an ability to return to 

the low-exertion PRW.

Conversely, medical improvement may occur, but not to the point at which the 

annuitant would be found no longer disabled on a medical vocational basis.

EXAMPLE: An amputee unable to wear a prosthetic device was initially rated 

with a listing level impairment. After a passage of time, enough healing occurred 

to permit ambulation with prosthesis. This may permit an RFC for light or 

sedentary work. But if the individual is age 55 or older, this RFC will still result in 

a finding of disability.
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10.3.3 Terms And Definitions Applicable In Disability For Any Regular 

Employment Situations

A. Medical improvement - Medical improvement is any decrease in the 

medical severity of an impairment(s) which was present at the time of the 

most recent favorable medical decision that the annuitant was disabled or 

continued to be disabled. A determination that there has been a decrease 

in medical severity must be based on a comparison of prior and current 

medical evidence showing changes (improvement) in the symptoms, signs 

or laboratory findings associated with the impairment(s).

EXAMPLE 1: The annuitant was awarded a disability annuity due to a 

herniated disc. At the time of the DPS's prior decision granting the 

annuity, he had had a laminectomy. Postoperatively, a myelogram still 

shows evidence of a persistent deficit in his lumbar spine. The was pain 

in his back, and a burning sensation in his right foot and leg. There were 

no muscle weaknesses or neurological changes and a modest decrease 

in motion in his back and leg. When DPS reviewed the annuitant's claim 

to determine whether his disability should be continued, his treating 

physician reported that he had seen the annuitant regularly every 2 to 3 

months for the past 2 years. No further myelograms had been done, 

complaints of pain in the back and right leg continued especially on sitting 

or standing for more than a short period of time. The annuitant's doctor 

further reported a moderately decreased range of motion in the annuitant's 

back and right leg, but again no muscle atrophy occurred because there 

has been no decrease in the severity of the annuitant's back impairment 

as shown by changes in symptoms, signs or laboratory findings.

EXAMPLE 2: The annuitant was awarded a disability annuity due to 

rheumatoid arthritis. At the time, laboratory findings were positive for this 

impairment. The annuitant's doctor reported persistent swelling and 

tenderness of the annuitant's fingers and wrists and that he complained of 

joint pain. Current medical evidence shows that while laboratory tests are 

still positive for rheumatoid arthritis, the annuitant's impairment has 

responded favorably to therapy so that for the last year his fingers and 

wrists have not been significantly swollen or painful. Medical improvement 

has occurred because there has been a decrease in the severity of the 

annuitant's impairment as documented by the current symptoms and signs 

reported by his physician. Although the annuitant's impairment is subject 

to temporary remission and exacerbations, the improvement that has 

occurred has been sustained long enough to permit a finding of medical 

improvement. DPS would then determine if this medical improvement is 

related to the annuitant's ability to work.

B. Medical improvement not related to ability to do work - Medical 

improvement is not related to the annuitant's ability to work if there has 

been a decrease in the severity of the impairment(s) (as defined in 
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paragraph A of this section) present at the time of the most recent 

favorable medical decision, but no increase in that annuitant's functional 

capacity to do basic work activities as defined in paragraph D of this 

section. If there has been any medical improvement in an annuitant's 

impairment(s), but it is not related to the annuitant's ability to do work and 

none of the exceptions applies, the annuity will be continued.

EXAMPLE: An annuitant was 65 inches tall and weighed 246 pounds at 

the time his disability was established. He had venous insufficiency and 

persistent edema in his leg. At the time, the annuitant's ability to do basic 

work activities was affected because he was able to sit for 6 hours, but 

was able to stand or walk only occasionally. At the time of DPS's 

continuing disability review, the annuitant had undergone a vein stripping 

operation. He now weighed 220 pounds and had intermittent edema. He 

is still able to sit for 6 hours at a time and to stand or walk only 

occasionally although he reports less discomfort on walking. Medical 

improvement has occurred because there has been a decrease in the 

severity of the existing impairment as shown by his weight loss and the 

improvement in his edema. This medical improvement is not related to his 

ability to work, however, because his functional capacity to do basic work 

activities (i.e., the ability to sit, stand and walk) has not increased.

C. Medical improvement that is related to ability to do work - Medical 

improvement is related to an annuitant's ability to work if there has been a 

decrease in the severity (as defined in paragraph A of this section) of the 

impairment(s) present at the time of the most recent favorable medical 

decision and an increase in the annuitant's functional capacity to do basic 

work activities as discussed in paragraph D of this section. A 

determination that medical improvement related to an annuitant's ability to 

do work has occurred does not, necessarily, mean that such annuitant's 

disability will be found to have ended unless it is also shown that the 

annuitant is currently able to engage in substantial gainful activity as 

discussed in paragraph E of this section.

EXAMPLE 1: The annuitant has a back impairment and has had a 

laminectomy to relieve the nerve root impingement and weakness in his 

left leg. At the time of DPS's prior decision, basic work activities were 

affected because he was able to stand less than 6 hours, and sit no more 

than 1/2 hour at a time. The annuitant had a successful fusion operation 

on his back about 1 year before DPS's review of his entitlement.

At the time of DPS's review, the weakness in his leg has decreased. The 

annuitant's functional capacity to perform basic work activities now is 

unimpaired because he now has no limitation on his ability to sit, walk, or 

stand. Medical improvement has occurred because there has been a 

decrease in the severity of his impairment as demonstrated by the 

deceased weakness in his leg. This medical improvement is related to his 
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ability to work because there has also been an increase in his functional 

capacity to perform basic work activities (or residual functional capacity) 

as shown by the absence of limitation on his ability to sit, walk, or stand. 

Whether or not his disability is found to have ended, however, will depend 

on DPS's determination as to whether he can currently engage in 

substantial gainful activity.

EXAMPLE 2: The annuitant was injured in an automobile accident 

receiving a compound fracture to his right femur and a fractured pelvis. 

When he applied for disability annuity 10 months after the accident his 

doctor reported that neither fracture had yet achieved solid union based 

on his clinical examination. X-rays supported this finding. The annuitant's 

doctor estimated that solid union and a subsequent return to full weight 

bearing would not occur for at least 3 more months. At the time of the 

continuing disability review 6 months later, solid union had occurred and 

the annuitant had been returned to full weight-bearing for over a month. 

His doctor reported this and the fact that his prior fractures no longer 

placed any limitation on his ability to walk, stand, and lift, and, that in fact, 

he could return to full-time work if he so desired.

Medical improvement has occurred because there has been a decrease in 

the severity of the annuitant's impairments as shown by X-ray and clinical 

evidence of solid union had his return to full weight-bearing. This medical 

improvement is related to his ability to work because he no longer meets 

the same listed impairment in Appendix I. Whether or not the annuitant's 

disability is found to have ended will depend on the DPS's determination 

as to whether he can currently engage in substantial gainful activity (see 

step D).

D. Functional capacity to do basic work activities

1. Under the law, disability is defined, in part, as the inability to do any 

regular employment by reason of a physical or mental 

impairment(s). "Regular employment" is defined as "substantial 

gainful activity". In determining whether the annuitant is disabled 

under the law, DPS will measure, therefore, how and to what extent 

the annuitant's impairment(s) has affected his or her ability to do 

work. DPS does this by looking at how the annuitant's functional 

capacity for doing basic work activities has been affected. Basic 

work activities mean the abilities and aptitudes necessary to do 

most jobs. Included are exertional abilities such as walking,

standing, pushing, pulling, reaching and carrying, and non 

exertional abilities and aptitudes such as seeing, hearing, speaking, 

remembering, using judgment, dealing with changes in a work 

setting and dealing with both supervisors and fellow workers. The

annuitant who has no impairment(s) would be able to do all basic 

work activities at normal levels; he or she would have an unlimited 
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functional capacity to do basic work activities. Depending on its 

nature and severity, an impairment(s), is called his or her residual 

functional capacity. Unless an impairment is so severe that it is 

deemed to prevent the annuitant from doing substantial gainful 

activity (i.e., the impairment(s) meets or equals the severity of a 

listed impairment in Appendix 1), it is this residual functional 

capacity that is used to determine whether the annuitant can still do 

his or her past work or, in conjunction with his or her age, education 

and work experience, do any other work.

2. A decrease in the severity of an impairment as measured by 

changes (improvement) in symptoms, signs or laboratory findings 

can, if great enough, result in an increase in the functional capacity 

to do work activities. Vascular surgery (e.g., femoropopliteal 

bypass) may sometimes reduce the severity of the circulatory 

complications of diabetes so that better circulation results and the 

annuitant can stand or walk for longer periods. When new evidence 

showing a change in medical findings established that both medical 

improvement has occurred and the annuitant's functional capacity 

to perform basic work activities, or residual functional capacity, has 

increased, DPS will find that medical improvement which is related 

to the annuitant's ability to do work has occurred. A residual 

functional capacity assessment is also used to determine whether 

an annuitant can engage in substantial gainful activity and, thus, 

whether he or she continues to be disabled (see paragraph E of 

this section).

3. Many impairment-related factors must be considered in assessing 

an annuitant's functional capacity for basic work activities. Age is 

one key actor. Medical literature shows that there is a gradual 

decrease in organ function with age; that major losses and deficits 

become irreversible over time and that maximum exercise 

performance diminished with age. Other changes related to 

sustained periods o inactivity and the aging process include muscle 

atrophy, degenerative joint changes, decrease in range of motion, 

and changes in the cardiac and respiratory systems which limit the 

exertional range.

4. Studies have also shown that the longer the annuitant is away from 

the workplace and is inactive, the more difficult it becomes to return 

to ongoing gainful employment. In addition, a gradual change 

occurs in most jobs so that after about 15 years, it is no longer 

realistic to expect that skills and abilities acquired in these jobs will 

continue to apply to the current workplace. Thus, if the annuitant is 

age 50 or over and has been receiving a disability annuity for a 

considerable period of time, consider this factor along with his or 

her age in assessing the residual functional capacity. This will 
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ensure that the disadvantages resulting from inactivity and the 

aging process during a longer period of disability will be considered. 

In some instances where available evidence does not resolve what 

the annuitant can or cannot do on a sustained basis, DPS can 

provide for special work evaluations or other appropriate testing.

E. Ability to engage insubstantial gainful activity - In most instances, the 

examiner must show that the annuitant is able to engage in substantial 

gainful activity before terminating his or her annuity. When doing this, 

consider all of the annuitant's current impairments not just that 

impairment(s) present at the time of the most recent favorable 

determination. If the examiner cannot determine that the annuitant is still 

disabled based on medical considerations alone, use the new symptoms, 

signs and laboratory findings to make an objective assessment of 

functional capacity to do basic work activities (or residual functional 

capacity) and consider vocational factors.

F. Evidence and basis for the decision - Decisions under this section will be 

made on a neutral basis without any initial inference as to the presence or 

absence of disability being drawn from the fact that the annuitant had 

previously be determined to be disabled. Consider all of the evidence the 

annuitant submits, as well as all evidence obtained from treating 

physician(s) and other medical or nonmedical sources. What constitutes 

"evidence" and DPS procedures for obtaining it will be set out in DCM 

Chapter 3 . DPS will review all medical evidence received to determine

whether a disability continues. 

G. Point of comparison - For purposes of determining whether medical 

improvement has occurred, compare the current medical severity of that 

impairment(s), which was present at the time of the most recent favorable 

medical decision that the annuitant was disabled or continued to be 

disabled, to the medical severity of that impairment(s) at that time. If 

medical improvement has occurred, compare the annuitant's current 

functional capacity to do basic work activities (i.e., his or her residual 

functional capacity) based on this previously existing impairment(s) with 

the annuitant's prior residual functional capacity in order to determine 

whether the medical improvement is related to his or her ability to do work. 

The most recent favorable medical decision is the latest decision involving 

a consideration of the medical evidence and the issue of whether the 

annuitant was disabled or continued to be disabled which became final.

10.3.4 Determining Medical Improvement And Its Relationship To The 

Annuitant's Ability To Do Work

A. General - Paragraphs A, B, and C of Chapter 10.3.3 discuss what is 

meant by medical improvement, medical improvement not related to the 

ability to work and medical improvement that is related to the ability to 
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work. How DPS will arrive at the decision that medical improvement has 

occurred and its relationship to the ability to do work, is discussed in 

paragraphs B and C of this section.

B. Determining that medical improvement is related to ability to work - If there 

is a decrease in medical severity as shown by the symptoms, signs and 

laboratory findings, the rating examiner must then determine if it is related 

to the annuitant's ability to do work. In determining whether medical 

improvement that has occurred is related to the annuitant's ability to do 

work, the examiner should assess the annuitant's residual functional 

capacity (RFC) based on the current severity of the impairment(s) which 

was present at the annuitant's last favorable medical decision. Unless the 

increase in the current RFC is based on changes in the signs, symptoms, 

or laboratory findings, any medical improvement that has occurred will not 

be considered to be related to the annuitant's ability to work.

C. Additional factors and considerations

1. RFC not previously determined - If the most recent favorable 

decision was based on the fact that the annuitant's impairment(s) at 

the time met or equaled the severity contemplated by the Listing of 

Impairments, an assessment of his or her RFC would not have 

been made. If medical improvement has occurred and the severity 

of the prior impairment(s) no longer meets or equals the same 

listing, find that the medical improvement was related to the 

annuitant's ability to work. This is because meeting or equaling the 

listing level of severity is evidence that the annuitant is unable to 

work. Since meeting or equalling the level of severity of the listing 

deems an annuitant unable to work, not meeting the level of 

severity of the listing deems an annuitant potentially able to work. 

Being deemed "potentially able to work" simply means that the 

rating examiner can make the determination as to whether the 

annuitant can currently engage in gainful activity. The examiner 

must, of course, also establish that the annuitant can currently 

engage in gainful activity before finding that his or her disability has 

ended.

2. Prior RFC assessment made - Compare the RFC assessment used 

in making the most recent favorable medical decision with the RFC 

assessment based on current evidence to determine whether an 

annuitant's functional capacity for basic work activities has 

increased. Do not attempt to reassess the prior RFC.

3. Prior RFC should have been assessed but wasn't - In cases where 

an RFC assessment should have been made for the prior most 

favorable decision but wasn't either because this assessment is 

missing from the annuitant's file or because it was not done, the 
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doctor or medical consultant must reconstruct the residual 

functional capacity. In reconstructing the RFC, assign the 

maximum functional capacity consistent with an allowance. This 

reconstructed RFC should accurately and objectively assess the 

annuitant's functional capacity to do work.

EXAMPLE: The annuitant was previously found to be disabled on 

the basis that while his impairment did not meet or equal a listing, it 

did prevent him from doing his past or any other work. The prior 

examiner did not, however, include a residual functional capacity 

assessment in the rationale of that decision and a review of the 

prior evidence does not show that such an assessment was ever 

made. If a decrease in medical severity, i.e., medical improvement, 

has occurred, the residual functional capacity based on the current 

level of severity of the annuitant's impairment will have to be 

compared with his residual functional capacity based on its prior 

severity in order to determine if the medical improvement is related 

to his ability to do work. In order to make this comparison, the 

medical consultant must review the prior evidence and make an 

objective assessment of the annuitant's residual functional capacity 

at the time of its most recent favorable medical determination, 

based on the symptoms, signs and laboratory findings as they then 

existed.

4. Impairment subject to temporary remission - If the evidence shows 

that the annuitant's impairment(s) is subject to temporary remission, 

carefully consider the history of the impairment(s), including the 

occurrence of any prior remissions, and the prospects for future 

worsening. A remission that is only temporary, that is, less than 

one year, will not warrant a finding of medical improvement.

5. When the prior file cannot be located - If the prior file cannot be 

located, determine whether the annuitant is able to engage in 

substantial gainful activity. If the annuitant can engage in SGA, do 

not attempt to reconstruct prior evidence. If the annuitant is not 

able to engage in SGA, his or her disability will continue unless one 

of the second group of exceptions applies (see 10.3.5(B)).

10.3.5 Exceptions To Medical Improvement

A. The First Group of Exceptions to Medical Improvement - General - The 

law provides for certain limited situations when the annuitant's disability 

can be found to have ended even though medical improvement has not 

occurred. These exceptions to medical improvement are intended to 

provide a way of finding that the annuitant is no longer disabled in those 

limited situations where, even though there has been no decrease in the 

severity of the impairment(s), evidence shows that the annuitant should no 
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longer be considered disabled or never should have been considered 

disabled.

For one of these exceptions to apply, the examiner must also show that 

taking all of the annuitant's current impairment(s) into account, not just 

those that existed at the time of the most recent favorable medical 

decision, the annuitant is now able to engage in SGA before his or her 

annuity can be found to have ended.

As part of the exception review process, ask the annuitant about any 

medical or vocational therapy that he or she has received or is receiving. 

The examiner should use these answers, the evidence gathered and all 

other evidence as the basis for finding that an exception applies.

1. Substantial evidence shows that the annuitant is the beneficiary of 

advances in medical or vocational therapy or technology (related to 

his or her ability to work) - Advances in medical or vocational 

therapy or technology are improvements in a treatment or 

rehabilitative methods which have increased the annuitant's ability 

to do basic work activities. To apply this exception, the examiner 

has to show by substantial evidence that the annuitant has been 

the beneficiary of services which reflect these advances and they 

have favorably affected the severity of his or her impairment (s) or 

ability to do basic work activities.

This decision must always be based on new medical evidence and 

a new RFC assessment. Since, in many instances, an advance 

medical or vocational technology will result in a decrease in severity 

as shown by symptoms, signs and laboratory findings which will 

meet the definition of medical improvement, this exception will see 

very limited application.

2. Substantial evidence shows that the annuitant has undergone 

vocational therapy (related to his or her ability to work) - Vocational 

therapy (related to the annuitant's ability to work) may include, but 

is not limited to, additional education, training, or work experience 

that improves his or her ability to meet the vocational requirements 

of more jobs. This decision will be based on substantial evidence 

which includes new medical evidence and a new residual functional 

capacity assessment. If, at the time of the continuing disability 

review the annuitant has not completed vocational therapy which 

could affect the continuance of his or her disability, review such 

annuitant's claim upon completion of the therapy.

EXAMPLE 1: The annuitant was found to be disabled because the 

limitations imposed on him by his impairment(s) allowed him to only 

do work that was at a sedentary level of exertion. The annuitant's 
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prior work experience was work that required a medium level of 

exertion with no acquired skills that could be transferred to 

sedentary work. His age, education, and past work experience at 

the time did not qualify him for work that was below this medium 

level of exertion. The annuitant enrolled in and completed a 

specialized training course which qualifies him for a job in data 

processing as a computer programmer in the period since he was 

awarded a disability annuity. On review of his claim, current 

evidence shows that there is no medical improvement and that he 

can still do only sedentary work. As the work of a computer 

programmer is sedentary in nature, he is now able to engage in 

substantial gainful activity when his new skills are considered.

EXAMPLE 2: The annuitant was previously entitled to a disability 

annuity because the medical evidence and assessment of his 

residual functional capacity showed he could only do light work. His 

prior work was considered to be of a heavy exertional level with no 

acquired skills that could be transferred to light work. His age, 

education, and past work experience did not qualify him for work 

that was below the heavy level of exertion. The current evidence 

and residual functional capacity show there has been no medical 

improvement and that he can still do only light work. Since he was 

originally entitled to a disability annuity, his vocational rehabilitation 

agency enrolled him in and he successfully completed a trade 

school course so that he is now qualified to do small appliance 

repair. This work is light in nature, so when his new skills are 

considered, he is now able to engage in substantial gainful activity 

even though there has been no change in his residual functional 

capacity. 

3. Substantial evidence shows that based on new or improved 

diagnostic or evaluative techniques the annuitant's impairment(s) is 

not as disabling as it was considered to be at the time of the most 

recent favorable decision - Changing methodologies and advances 

in medical and other diagnostic or evaluative techniques have 

given, and will continue to give, rise to improved methods for 

measuring and documenting the effect of various impairments on 

the ability to do work. Where, by such new or improved methods, 

substantial evidence shows that the annuitant's impairment(s) is not 

as severe as was determined at the time of the most recent 

favorable medical decision, such evidence may serve as a basis for 

finding that the annuitant can engage in substantial gainful activity 

and is no longer disabled. In order to be used under this exception, 

however, the new or improved techniques must have become 

generally available after the date of DPS's most recent favorable 

medical decision.
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The RRB will determine which methods and techniques are new 

and improved and when they become generally available. The 

RRB will learn about these new techniques when they are 

presented as evidence in specific cases and when they are 

discussed in medical literature by medical professional groups and 

other governmental entities. The RRB will develop a listing of new 

techniques and publication of this listing in the Federal Register will 

determine the date the duty to inform our annuitant of these 

changes through this listing and its publication in the Federal 

Register.

EXAMPLE: The electrocardiographic exercise test has replaced 

the Master's 2-step test as a measurement of heart function since 

the time of the annuitant's last favorable medical decision. Current 

evidence shows that the annuitant's impairment, which was 

previously evaluated based on the Master's 2-step test, is not now 

as disabling as was previously thought. If, taking all his current 

impairments into account, the annuitant is now able to engage in 

substantial gainful activity, this exception would be used to find that 

he is no longer disabled even if medical improvement has not 

occurred.

4. Substantial evidence shows that the prior disability decision was in 

error - There are three situations in which an exception to medical 

improvement will be found based on error. The three situations 

are: (a) when substantial evidence on its face shows that the 

decision should not have been made, (b) when required and 

material evidence of the severity of the annuitant's impairment(s) 

was missing, and (c) when new evidence relating to the prior 

determination (of allowance or continuance) refutes the conclusions 

that were based upon the prior evidence. Apply this exception to 

medical improvement if substantial evidence (which may be 

evidence on the record at the time any prior determination of the 

entitlement to a disability annuity was made, or newly obtained 

evidence which relates to that determination) demonstrates that a 

prior determination was in error.

a. Errors on the face of the evidence - Substantial evidence 

shows on its face that the decision in question should not 

have been made (e.g., the evidence in file such as 

pulmonary function study values was misread or an 

adjudicative standard such as a listing in Appendix 1 or a 

medical/vocational rule in Appendix 2 was misapplied).

EXAMPLE 1: The annuitant was granted a disability annuity 

when it was determined that his epilepsy met Listing 11.02. 

This listing calls for a finding of major motor seizures more 
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frequently than once a month as documented by EEG 

evidence and by a detailed description of a typical seizure 

pattern. A history of either diurnal episodes or nocturnal 

episodes with residuals interfering with daily activities is also 

required. On review, it is found that a history f the frequency 

of his seizures showed that they occurred only once or twice 

a year. The prior decision would be found to be in error, and 

whether the annuitant was still considered to e disabled 

would be based on whether he could currently engage 

insubstantial gainful activity.

EXAMPLE 2: The annuitant's prior award of a disability 

annuity was based on vocational rule 201.14 in Appendix 2. 

This rule applies to a person age 50-54 who has at least a 

high school education, whose previous work was entirely at 

semiskilled level, and who can do only sedentary work. On 

review it is found that at the time of the prior determination 

the annuitant was actually only age 46 and vocational rule 

201.21 should have been used. This rule would have called 

for a denial of his claim and the prior decision is found to 

have been in error. Continuation of his disability would 

depend on a finding of his current inability to engage in 

substantial gainful activity.

b. Required and material evidence is missing - This situation 

arises when at the time of the prior evaluation, required and 

material evidence of the severity of the annuitant's 

impairment(s) was missing. This evidence becomes 

available upon review, and substantial evidence 

demonstrates that had such evidence been present at the 

time of the prior determination, disability would not have 

been found.

EXAMPLE: The annuitant was found disabled on the basis 

of chronic obstructive pulmonary disease. The severity of 

his impairment was documented primarily by pulmonary 

function testing results. The evidence showed that he could 

do only light work. Spirometric tracings of this testing, 

although required, were not obtained, however. On review, 

the original report is resubmitted by the consultative 

examining physician along with the corresponding 

spirometric tracing. A review of the tracings shows that the 

test was invalid. Current pulmonary function testing 

supported by spirometric tracings reveals that the annuitant's 

impairment does not limit his ability to perform basic work 

activities in any way. Error is found based on the fact that 

required material evidence, which was originally missing, 
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now becomes available and shows that if it had been 

available at the time of the prior determination, disability 

would not have been found.

c. New evidence contradicts the conclusions of prior evidence - 

This situation arises when substantial evidence, which is 

new evidence relating to the prior determination (of 

allowance or continuance), refutes the conclusions that were 

based upon the prior evidence (e.g., a tumor thought to be 

malignant was later shown to have actually been benign.) 

Substantial evidence must show that had the new evidence 

(which relates to the prior determination) been considered at 

the time of the prior decision, the disability would not have 

been allowed or continued. A substitution of current 

judgment for that used in the prior favorable decision will not 

be the basis for applying this exception.

EXAMPLE: The annuitant was previously found entitled to a 

disability annuity on the basis of diabetes mellitus which the 

prior adjudicator believed was equivalent to the level of 

severity contemplated in the Listing of Impairments. The 

prior record shows that the annuitant has "brittle" diabetes 

for which he was taking insulin. The annuitant's urine was 

3+ for sugar, and he alleged occasional hypoglycemic 

attacks caused by exertion. His doctor felt the diabetes was 

never really controlled because he was not following his diet 

or taking his medication regularly. On review, symptoms, 

signs and laboratory findings are unchanged. The current 

adjudicator feels, however, that the annuitant's impairment 

clearly does not equal the severity contemplated by the 

listings. Error cannot be found because it would represent a 

substitution of current judgment for that of the prior 

adjudicator that the annuitant's impairment equaled a listing. 

The exception for error will not be applied retroactively under 

the conditions set out above unless the conditions for 

reopening the prior decision are met.

5. The annuitant is currently engaging in substantial gainful activity - If 

the annuitant is currently engaging in substantial gainful activity, 

before DPS determines whether he or she is no longer disabled 

because of his or her work activity, DPS will consider whether he or 

she is entitled to a trial work period as set out in DCM 10.5.4. DPS 

will find that the annuitant's disability has ended in the month in 

which he or she demonstrated the ability to engage in substantial 

gainful activity (following completion of a trial work period, where it 

applies). This exception does not apply in determining whether the 
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annuitant continues to have a disabling impairment(s) for purposes 

of deciding his or her eligibility for a reentitlement period.

B. The Second Group of Exceptions to Medical Improvement - General - In 

the second group of exceptions, the continuance decision will be made 

without a determination that the annuitant has medically improved or can 

engage in SGA.

1. A prior determination was fraudulently obtained - If DPS finds that 

any prior favorable determination was obtained by fraud, it may find 

that the annuitant is not disabled. In addition, DPS may reopen the 

claim.

2. Failure to cooperate - If there is a question about whether the 

annuitant continues to be disabled and DPS requests that he or she 

submit medical or other evidence or go for a physical or mental 

examination by a certain date, DPS will find that the annuitant's 

disability has ended if he or she fails (without good cause) to do 

what is requested. The month in which the annuitant's disability 

ends will be the first month in which he or she failed to do what was 

requested.

3. Inability to locate the annuitant - If there is a question about 

whether the annuitant continues to be disabled and DPS is unable 

to find him or her to resolve the question, DPS will suspend annuity 

payments. If, after a suitable investigation, DPS is still unable to 

locate the annuitant, DPS will determine that the annuitant's 

disability has ended. The month such annuitant's disability ends 

will be the first month in which the question arose and the annuitant 

could not be found.

4. Failure of the annuitant to follow prescribed treatment which would 

be expected to restore the ability to engage in substantial gainful 

activity - If treatment has been prescribed for the annuitant which 

would be expected to restore his or her ability to work, he or she 

must follow that treatment in order to be paid a disability annuity. If 

the annuitant is not following that treatment and he or she does not 

have good cause for failing to follow the treatment, DPS will find 

that his or her disability has ended. The month such annuitant's 

disability ends will be the first month in which he or she failed to 

follow the prescribed treatment.

10.3.6 If The Annuitant Becomes Disabled By Another Impairment During 

The Continuance Determination

If a new severe impairment begins in or before the month in which the last 

impairment ends, DPS will find that the disability is continuing. The impairment 
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need not be expected to last 12 months or to result in death, but it must be 

severe enough to keep the annuitant form doing substantial gainful activity, or 

severe enough so that he or she is still disabled.

10.4 Substantial Gainful Activity

10.4.1 General

The work that a claimant has done during any period in which the claimant 

believes he or she is disabled may show that the claimant is able to do work at 

the substantial gainful activity (SGA) level. If a claimant is able to engage in 

SGA, find that the claimant is not disabled for any regular employment under the 

Railroad Retirement Act. Even if the work the claimant has done was not SGA, it 

may show that the claimant is able to do more work than he/she actually did. 

Consider all medical and vocational evidence in the claimant's file to decide 

whether or not the claimant has the ability to engage in SGA.

10.4.2 Substantial Gainful Activity Defined

Substantial gainful activity is work activity that is both substantial and gainful.

A. Substantial work activity - Substantial work activity is work activity that 

involves doing a significant physical or mental activities. The annuitant's 

work may be substantial even if it is done on a part-time basis or if the 

annuitant does less, gets paid less, or has less responsibility than when 

the annuitant worked before.

B. Gainful work activity - Gainful work activity is work activity that the 

annuitant does for pay or profit. Work activity is gainful if it is the kind of 

work usually done for pay or profit, whether or not a profit is realized.

C. Some other activities - Generally, do not consider activities like taking care 

of one's self, household tasks, hobbies, therapy, school attendance, club 

activities, or social programs to be substantial gainful activity.

10.4.3 General Information About Work Activity

A. The nature of the claimant's work - If the claimant's duties require use of 

the claimant's experience, skills, supervision and responsibilities, or 

contribute substantially to the operation of a business, this tends to show 

that the claimant has the ability to work at the substantial gainful activity 

level.

B. How well the claimant performs - Consider how well the claimant does his 

or her work when determining whether or not the claimant is doing 

substantial gainful activity.
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If the claimant's performance is satisfactory, this may be evidence that his 

or her work is SGA.

If the claimant is unable to work at a satisfactory level of performance 

because of his or her impairment, this is evidence that the work is not 

SGA.

If the claimant's work involves only minimal duties, this may be evidence 

that the work is not SGA.

C. The claimant's work is done under special conditions - Even though the 

work the claimant is doing takes into account his or her impairment, such 

as work done in a sheltered workshop or as a patient in a hospital, it may 

still show that the claimant has the necessary skills and ability to work at 

the substantial gainful activity level.

D. The claimant is self-employed - Supervisory, managerial, advisory or other 

significant personal services that the claimant performs as a selfemployed person may show that the claimant is able to do substantial 

gainful activity.

E. Time spent in work - While the time the claimant spends in work is 

important, do not decide whether or not the claimant is doing substantial 

gainful activity only on that basis. Evaluate the work to decide whether it 

is substantial and gainful regardless of whether the claimant spends more

time or less time at the job than workers who are not impaired and who 

are doing similar work as a regular means of their livelihood.

10.4.4 Evaluation Guides For An Employed Annuitant

A. General - Evaluating SGA consists of 3 steps: 

1. Developing for gross earnings, employer subsidies, and impairment 

related work expenses;

2. Subtract the subsidies and IRWE's from the gross earnings; and 

3. Determine the net earnings from employment. The net earnings are then 

compared with the earnings table in section B.2.

The earnings test is not applied mechanically. When making SGA 

evaluation, keep the following points in mind:

a. The claimant's earnings may show the annuitant has done substantial 

gainful activity - The amount of the claimant's earnings from work the

claimant has done may show that he or she has engaged in substantial 

gainful activity. Generally, if the claimant worked for substantial 

earnings, this shows that he or she is able to do substantial gainful 
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activity. On the other hand, the fact that the claimant's earnings are 

not substantial does not necessarily show that the claimant is not able 

to do substantial gainful activity. Generally, consider work that the 

claimant is forced to stop after a short time because of his or her 

impairment(s) as an unsuccessful work attempt (See DCM 10.5.3) and 

the claimant's earnings from that work will not show that the claimant is 

able to do substantial gainful activity.

b. Consider only the amounts the claimant earns

(i) If the claimant's earnings are subsidized, the amount of the subsidy 

is not counted when determining whether or not the claimant's work 

is substantial gainful activity. Thus, where work is done under 

special conditions, consider only the part of the claimant's pay 

which the claimant actually "earns." For example, where a 

handicapped person does simple tasks under close and continuous 

supervision, do not determine that the person worked at the 

substantial gainful activity level only on the basis of the amount of 

pay. A railroad or non-railroad employer may set a specific amount 

as a subsidy after figuring the reasonable value of the employee's 

services. If the claimant's work is subsidized and the claimant's 

railroad and non-railroad employer does not set the amount of the 

subsidy or does not adequately explain how the subsidy was 

figured, investigate to see how much the claimant's work is worth.

(ii) The following circumstances indicate a subsidy might exist:

A. The employment is sheltered, or

B. Childhood disability is involved, or

C. Mental impairment is involved, or

D. There appears to be a marked discrepancy between the 

amount of pay and the value of the services, or

E. The employer, employee, or other interested party alleges 

that the employee does not fully ear his or her pay (e.g., the 

employee receives unusual help from others in doing the 

work, or

F. The nature and severity of the impairment indicate that the 

employee receives unusual help from others in doing the 

work, or

G. The employee is involved in a government sponsored job 

training and employment program.
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c. If the claimant is working in a sheltered or special environment - If the 

claimant is working in a sheltered workshop, the claimant may or may 

not be earning the amounts he or she is being paid. The fact that the 

sheltered workshop or similar facility is operating at a loss or is 

receiving some charitable contributions or governmental aid does not 

establish that the claimant is not earning all he or she is being paid. 

Persons in military service being treated for a severe impairment 

usually continue to receive full pay. Therefore evaluate work activity in 

a therapy program while on limited duty by comparing it with similar 

work in the civilian work force or on the basis of reasonable worth of 

the work, rather than on the actual amount of the earnings.

B. Earnings guidelines

1. How to determine "Countable Earnings." *

a. First determine gross earnings i.e., the total earnings reported for work 

activity. Gross earnings include payments in kind (e.g., room and 

board) which are made for the performance of work in lieu of cash

* "Countable earnings" are that portion of an individual's earnings 

representing the actual value of the work he or she performed. See 

worksheet IV of Appendix E for a summary sheet that can be used in making 

this determination.

b. Once gross earnings are determined, deduct:

(i) The amount of any subsidized earnings provided by the 

employer (See Sec. A.2) and

(ii) The amount of any impairment-related work expenses paid by 

the employee. (See 10.4.6) 

c. Finally, compare the claimant's net or countable earnings with the 

applicable amounts shown in sec. 2, below. If a claimant's average 

"countable earnings" exceed the earnings guidelines, he or she will be 

found to engage in SGA.

NOTE: In those cases in which the earnings or work activity vary 

somewhat from month to month, the claimant's earnings will have to be 

averaged. (See Appendix D.)

2. Table of SGA earnings guidelines and effective dates

a. All RRB Annuitants and all SSA Title II Blind and Non-blind 

Beneficiaries. Click here for chart: All RRB Annuitants and all SSA 

Title II Blind and Non-Blind Beneficiaries (1977 and earlier). 
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b. RRB and SSA Title II Non-blind Beneficiaries. Amounts begin January 

1st of the year unless otherwise indicated. Click here for chart: All RRB 

Annuitants and all SSA Title II Blind and Non-blind Beneficiaries (1978 

and later). 

c. RRB and SSA Title II Blind Beneficiaries. Amounts begin on January 

1st of the year unless otherwise indicated. Click here for chart: RRB 

and SSA Title II Blind Beneficiaries (1978 and later). 

d. If the claimant's earnings fall between the primary and secondary 

amounts - Consider other information in addition to the claimant's 

earnings, such as whether:

o The disability application was filed after the claimant's 

occupational disability ended but no later than the 12th month 

after the month the disability ended; or

o The claimant's work, although significantly less than that done 

by unimpaired persons, is clearly worth the amounts shown in 

the earnings guidelines according to pay scales in the claimant's 

community. 

If the work meets either of these tests, it is SGA.

10.4.5 Evaluation Guides For A Self-Employed Annuitant

A. General - DBD will consider the following three tests, two of which concern 

the amount of income received, when dealing with self-employed persons. 

This is because the amount of income the annuitant actually receives in selfemployment may depend upon a number of different factors like capital 

investment and profit sharing that tend to decrease the amount of current 

income. Consider that the annuitant has engaged in SGA if:

1. The comparability of work test - The annuitant's work activity, in terms of 

factors such as hour, skills, energy output, efficiency, duties, and 

responsibilities, is comparable to that of unimpaired persons in the 

annuitant's community who are in the same or similar businesses as their 

means of livelihood; or
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2. The worth of work test - The annuitant's work activity, although not 

comparable to that of unimpaired persons, is clearly worth the amount 

shown in DCM10.4.4 B.2 when considered in terms of its value to the 

business, or when compared to the salary that an owner would pay to an 

employed person to do the work the annuitant is doing; or

3. The significant services and substantial income test - The annuitant 

renders services that are significant to the operation of the business and 

receives a substantial income from the business.

(i) "Significant Services."

Annuitants who are not farm landlords - If the annuitant is not a farm 

landlord and the annuitant operates a business entirely by himself or 

herself, and services that the annuitant renders are significant to the 

business. If the annuitant's business involves the services of more 

than one person, consider the annuitant to be rendering significant 

services if he or she contributes more than half the total time required 

for the management of the business or he or she renders management 

services for more than 45 hours a month regardless of the total 

management time required by the business.

Claimants who are farm landlords - If the claimant is a farm landlord 

consider the claimant to be rendering significant services if he or she 

materially participates in the production or the management of the 

things raised on the rented farm.

Material Participation means that:

1. The claimant furnishes a large portion of the material stock i.e., 

the machinery, tools, and livestock used on the farm, or

2. The claimant furnishes the monies or assumes financial 

responsibility for the farm. Advising or consulting with the farm 

tenant or inspecting the farm's production is strong evidence 

that the annuitant is materially participating.

NOTE: If the claimant was given social security wage credits 

based on his or her activity as a farm landlord and he or she 

continues in these activities: consider the claimant to be 

rendering significant services.

Production means the physical work performed and the 

expenses incurred in producing the things raised on the farm. It 

includes activities like the actual work of planting, cultivating, 

and harvesting of crops, and the furnishing of machinery, 

implements, seed, and livestock.
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Management of the production refers to services performed in 

making managerial decisions about the production of the crop, 

such as when to plant, cultivate, dust, spray or harvest. It 

includes advising and consulting, making inspections, and 

making decisions on matters, such as rotation of crops, the type 

of crops to be grown, the type of livestock to be raised, and the 

type of machinery and implements to be furnished.

(ii) "Substantial Income - Substantial income is net income after 

deductions are made for the reasonable value of any unpaid help, soil 

bank payments included as farm income, and any impairment-related 

work expenses. Consider this net income to be substantial if:

• It average more than the primary amounts described in 

DCM 10.4.4 B.2; or

• It averages less than the primary amounts described in 

DCM 10.4.4 B.2 but the livelihood which the annuitant gets from the 

business is either comparable to what it was before the annuitant 

became severely impaired or is comparable to that of unimpaired 

self-employed persons in the claimant's community who are in the 

same or similar businesses as their means of livelihood.

B. Blind Persons Operating Vending Machines

The Randolph-Sheppard Act (R-S Act) established a program for blind 

persons to operate vending facilities as a business on Federal property. 

Various states have established similar programs for blind persons to operate 

vending facilities as a business on state and local government property. A 

blind vendor who operates a vending facility may also receive income from 

vending machines that are located on the same property even though he/she

does not service, operate, or maintain the vending machines.

Social Security Ruling (SSR) 12-1p provides that income that blind selfemployed vendors receive under the R-S Act and similar state programs from 

vending machines that are located on the same property but are not serviced, 

operated, or maintained by the blind vendor should not be counted toward 

SGA purposes.

On a case-by-case basis, if the evidence suggests that a blind 

applicant/annuitant may be a licensed vendor at a Federal, state, or other 

facility and a DEQY and/or report from The Work Number (TWN) shows that 

that income is likely to be SGA, the responsible adjudicating unit shall attempt 

development to find out if at least some of the total income is from vending 

machines. If at least some of the total income is from vending machines, then 

attempt to determine how much of the income was from vending machines 
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which he/she services, operates, and maintains and how much was from 

vending machines which he/she does not service, operate, or maintain. 

SSR 12-1p only applies to disability freeze and Medicare claims under the 

Social Security Act. After developing for the information in the previous 

paragraph, refer any case to Policy and Systems - RAC for a determination 

how that income should be treated for SGA purposes for disability claims 

under the Railroad Retirement Act.

10.4.6 Impairment Related Work Expenses

A. General - When figuring the claimant's earnings in making an SGA test, 

subtract the reasonable costs to the claimant of certain items and services 

which, because of his or her impairments, the claimant needs to be able to 

work. The costs are deductible even though the claimant also needs or 

uses the items and services to carry out daily living functions unrelated to 

his or her work. (See DCM 10.8 for Disability Related Work Expenses.) 

B. Requirements for Deducting Impairment-Related Work Expenses - Deduct 

IRWE's if - 

1. The claimant is disabled for any regular employment and not

occupationally disabled;

2. The severity of the claimant's impairment(s) requires the claimant to 

purchase (or rent) certain items and services in order to work;

3. The claimant pays the cost of the item or service. No deduction will 

be allowed to the extent that payment has been, could be or will be 

made by another source. No deduction will be allowed to the 

extent that the claimant has been, could be, or will be reimbursed 

for such cost by any other source (such as through a private 

insurance plan, Medicare or Medicaid, or other plan or agency). 

For example, if the claimant purchases crutches for $80 but the 

claimant was, could be, or will be reimbursed $64 by some agency, 

plan, or program, deduct only $16.

4. The claimant pays for the item or service in a month he or she is 

working (in accordance with paragraph (D) of this section); and

5. The claimant's payment is in cash (including checks or other forms 

of money). Payment in kind is not deductible.

C. What Expenses may be Deducted

1. Payments for attendant care services
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(i) If because of the claimant's impairment(s) the claimant 

needs assistance in traveling to and from work, or while at 

work the claimant needs assistance with personal functions 

(e.g., eating, toileting) or with work-related functions (e.g., 

reading, communicating), the payments the claimant makes 

for those services may be deducted.

(ii) If because of the claimant's impairment(s) the claimant 

needs assistance with personal functions (e.g., dressing 

administering medications) at home in preparation for going 

to and assistance in returning from work, the payments the 

claimant makes for those services may be deducted.

(iii) Deduct payments the claimant makes to a family member for 

attendant care services only if such person, in order to 

perform the services, suffers an economic loss by 

terminating his or her employment or by reducing the 

number of hours he or she worked.

Consider a family member to be anyone who is related to the 

claimant by blood, marriage or adoption, whether or not that 

person lives with the claimant.

(iv) If only part of the claimant's payment to a person is for 

services that come under the provisions of this section, 

deduct that part of the payment that is attributable to those 

services. For example, an attendant gets the claimant ready 

for work and helps the claimant in returning from work, which 

takes about 2 hours a day. The rest of the attendant's 8 

hour day is spent cleaning the claimant's house and doing 

the claimant's laundry, etc. Deduct one-fourth of the 

attendant's daily wages as an impairment-related work 

expense. 

2. Payment for medical devices - If the claimant's impairment(s) 

requires that the claimant utilize medical devices in order to work, 

the payments the claimant makes for those devices may be 

deducted. As used in this subparagraph, medical devices include 

durable medical equipment that can withstand repeated use, is 

customarily used for medical purposes, and is generally not useful 

to a person in the absence of an illness or injury. Examples of 

durable medical equipment are wheelchairs, hemodialysis 

equipment, canes, crutches, inhalators and pacemakers.

3. Payments for prosthetic devices - If the claimant's impairment(s) 

requires that the claimant utilize a prosthetic device in order to 

work, the payments the claimant makes for that device can be 
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deducted. A prosthetic device is that which replaces an internal 

body organ or external body part. Examples of prosthetic devices 

are artificial replacements of arms, legs and other parts of the body.

4. Payments for equipment

(i) Work-related equipment - If the claimant's impairment(s) 

requires that the claimant utilize special equipment in order 

to do his or her job, the payments the claimant makes for 

that equipment may be deducted. Examples of work-related 

equipment are one-hand typewriters, vision aids, sensory 

aids for the blind, telecommunication devices for the deaf 

and tools specifically designed to accommodate a person's 

impairment(s).

(ii) Residential modifications

If the claimant is employed away from home, only the cost of 

changes made outside of the claimant's home to permit the 

claimant to get to his or her means of transportation (e.g., 

the installation of an exterior ramp for a wheelchair confined 

person or special exterior railings or pathways for someone 

who requires crutches) will be deducted. Costs relating to 

modifications of the claimant's home will not be deducted.

If the claimant works at home, the costs of modifying the 

inside of the claimant's home in order to create a working 

space to accommodate the claimant's impairment(s) will be 

deducted to the extent that the changes pertain specifically 

to the space in which the claimant works. Examples of such 

changes are the enlargement of a doorway leading into the 

workspace or modification of the workspace to 

accommodate problems in dexterity. However, if the 

claimant is self-employed at home, any cost deducted as a 

business expense cannot be deducted as an impairmentrelated work expense.

(iii) Non-medical appliances and equipment - Expenses for 

appliances and equipment that the claimant does not 

ordinarily use for medical purposes are generally not 

deductible. Examples of these items are portable room 

heaters, air conditioners, humidifiers, dehumidifiers, and 

electric air cleaners. However, expenses for such items may 

be deductible when unusual circumstances clearly establish 

an impairment-related and medically verified need for such 

an item because it is for the control of the claimant's 

disabling impairment(s), thus enabling the claimant to work. 
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To be considered essential, the item must be of such a 

nature that if it were not available to the claimant there would 

be an immediate adverse impact on the claimant's ability to 

function in his or her work activity. In this situation the 

expense is deductible whether the item is used at home or in 

the working place. An example would be the need for an 

electric air cleaner by a person with severe respiratory 

disease who cannot function in a non-purified air 

environment. An item such as an exercycle is not deductible 

if used for general physical fitness. If an exercycle is 

prescribed and used as necessary treatment to enable the 

claimant to work, deduct payments the claimant makes 

toward its cost.

5. Payments for drugs and medical services

(i) If the claimant must use drugs or medical services (including 

diagnostic procedures) to control his or her impairment(s), 

the payments the claimant makes for them may be 

deducted. The drugs or services must be prescribed (or 

utilized) to reduce or eliminate symptoms of the claimant's 

impairment(s) or to slow down its progression. The 

diagnostic procedures must be performed to ascertain how 

the impairment(s) is progressing or to determine what type of 

treatment should be provided for the impairment(s).

(ii) Examples of deductible drugs and medical services are: 

• anticonvulsant drugs to control epilepsy or anticonvulsant 

blood level monitoring; 

• antidepressant medication for mental impairments; 

• medication used to allay the side effects of certain 

treatments;

• radiation treatment or chemotherapy for cancer patients; 

• corrective surgery for spinal impairments; 

• electroencephalograms and brain scans related to a 

disabling epileptic impairment; 

• tests to determine the efficacy of medication on a diabetic 

condition; and
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• immunosuppressive medications that kidney transplant 

patients regularly take to protect against graft rejection. 

(iii) Deduct only the costs of drugs or services that are directly 

related to the claimant's impairment(s). Examples of nondeductible items are routine annual physical examinations, 

optician services (unrelated to a disabling visual impairment) 

and dental examinations.

6. Payments for similar items and services

(i) General - If the claimant is required to utilize items and 

services not specified in paragraphs (C)(1) through (5) of this 

section, but which are directly related to his or her 

impairment(s) and which the claimant needs to work, their 

costs are deductible. Examples of such items and services 

are medical supplies and services not discussed above, the 

purchase and maintenance of a guide dog that the claimant 

needs to work, and transportation.

(ii) Medical supplies and services not described above - Deduct 

payments the claimant makes for expendable medical 

supplies, such as incontinence pads, catheters, bandages, 

elastic stockings, face masks, irrigating kits, and disposable 

sheets and bags. Also deduct payments the claimant makes 

for physical therapy which the annuitant requires because of 

his or her impairment(s) and which the claimant needs in 

order to work.

(iii) Payments for transportation costs - Deduct transportation 

costs in these situations:

(a) The claimant's impairment(s) requires that in order to 

get to work the claimant needs a vehicle that has 

structural or operational modifications. The 

modifications must be critical to the claimant's 

impairment(s). Deduct the cost of the modifications, 

but not the cost of the vehicle. Also deduct a mileage 

allowance for the trip to and from work. The 

allowance will be based on data compiled by the 

Federal Highway Administration relating to vehicle 

operating costs. (See Appendix G).

(b) The claimant's impairment(s) requires the claimant to 

use driver assistance, taxicabs or other hired vehicles 

in order to work. Deduct amounts paid to the driver 
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and, if the claimant's own vehicle is used, also deduct 

a mileage allowance for the trip to and from work.

(c) The claimant's impairment(s) prevents the claimant 

from taking available public transportation to and from 

work and the claimant must drive his or her 

(unmodified) vehicle to work. If DPS can verify 

through the claimant's physician or other sources that 

the need to drive is caused by the claimant's 

impairment(s) (and not due to the unavailability of 

public transportation), deduct a mileage allowance for 

the trip to and from work.

7. Payments for installing, maintaining, and repairing deductible items

- If the device, equipment, appliance, etc., that the claimant utilizes 

qualifies as a deductible item as described in paragraphs (C)(2), 

(3), (4) and (6) of this section, the costs directly related to installing, 

maintaining and repairing these items are also deductible. (The 

costs that are associated with modifications to a vehicle are 

deductible. Except for a mileage allowance, the costs that are 

associated with the vehicle itself are not deductible.)

D. When expenses may be deducted

1. Effective date - To be deductible, an expense must be incurred 

after November 30, 1980. An expense may be considered incurred 

after that date if is paid thereafter even though pursuant to a 

contract or other arrangement entered into before December 1, 

1980.

2. Payments for services - A payment the claimant makes for services 

may be deducted if the services are received while the claimant is 

working and the payment is made in a month the claimant is 

working.

3. Payments for items - A payment the claimant makes toward the 

cost of a deductible item (regardless of when it is acquired) may be

deducted if payment is made in a month the claimant is working. 

See paragraph (E)(4) of this section when purchases are made in 

anticipation of work.

E. How expenses are allocated

1. Recurring expenses - The claimant may pay for services on a 

regular periodic basis, or the claimant may purchase an item on 

credit and pay for it in regular periodic installments or the claimant 

may rent an item. If so, each payment the claimant makes for the 
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services and each payment the claimant makes toward the 

purchase or rental (including interest) is deductible in the month it is 

made.

EXAMPLE: B starts work in October 1981, at which time she 

purchases: a medical device at a cost of $4,800 plus interest 

charges of $720. Her monthly payments begin in October. She 

earns and receives $400 a month. The term of the installment 

contract is 48 months. No down payment is made. The monthly 

allowable deduction for the item would be $115 ($5.20 divided by 

48) for each month of work during the 48 months.

2. Non-recurring expenses - Part or all of the claimant expenses may 

not be recurring. For example, the claimant may make a one-time 

payment in full for an item or service or make a down payment. If 

the claimant is working when he or she makes the payment, either 

deduct the entire amount in the month the claimant pays it or 

allocate the amount over a 12 consecutive month period beginning 

with the month of payment, whichever the claimant selects.

EXAMPLE: A begins working in October 1981 and earns $525 a 

month. In the same month, he purchases and pays for a deductible 

item at a cost of $250. In this situation, allow a $250 deduction for 

October 1981, reducing A's earnings below the substantial gainful 

activity level for that month.

If A's earnings had been $15 above the substantial gainful activity 

earnings amount, A probably would select the option of projecting 

the $250 payment over the 12-month period, October 1981 - 

September 1982, giving A an allowable deduction of $20.83 a 

month for each month of work during that period. This deduction 

would reduce A's earnings below the substantial gainful activity 

level for 12 months.

3. Allocating down payments - If the claimant makes a down payment, 

make a separate calculation for the down payment in order to 

provide for uniform monthly deductions, if the claimant chooses. In 

this situation, determine the total payment that the claimant will 

make over a 12 consecutive month period beginning with the month 

of the down payment and allocate that amount over the 12 months. 

Beginning with the 13th month, the regular monthly payment will be 

deductible. This allocation process will be for a shorter period if the 

claimant's regular monthly payments will extend over a period of 

less than 12 months.

EXAMPLE 1: C starts working in October 1981, at which time he 

purchases special equipment at a cost of $4,800, paying $1,200 
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down. The balance of $3,600, plus interest of $540, is to be repaid 

in 36 installments of $115 a month beginning November 1981. C 

earns $500 a month. He chooses to have the down payment 

allocated. In this situation, allow a deduction of $205.42 a month for 

each month of work during the period October 1981 through 

September 1982. After September 1982, the deduction amount 

would be the regular monthly payment of $115 for each month of 

work during the remaining installment period.

Explanation:

Down payment in October 1981. . . . . . . . . .$1,200

Monthly payments:

November 1981 through September 1982.. $1,265

12/ $2,465 = $205.42

EXAMPLE 2: D, while working, buys a deductible item in July 

1981, paying $1,450 down. However, his first monthly payment of 

$125 is not due until September 1981. D chooses to have the 

down payment allocated. In this situation, allow a deduction of 

$225 a month for each month of work during the period July 1981 

through June 1982. After June 1982, the deduction amount would 

be the regular monthly payment of $125 for each month of work.

Explanation:

Down payment in July 1981. . . . . . . .$1,450

Monthly payments:

September 1981 through June 1982. . . . $1,250

12/$2,700 = $225

4. Payments made in anticipation of work - A payment made toward 

the cost of a deductible item that the claimant made in any of the 11 

months preceding the month he or she started working will be taken 

into account in determining the claimant's impairment-related work 

expenses. When an item is paid for in full during the 11 month 

preceding the month the claimant started working, the payment will 

be allocated over the 12 consecutive month period beginning with 

the month of the payment. However, the only portion of the 

payment which may be deductible is the portion allocated to the 

month work begins and the following months. For example, if an 

item is purchased 3 months before the month work began and is 
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paid for with a one-time payment of $600, the deductible amount 

would be $450 ($600 divided by 12, multiplied by 9).

Installment payments (including a down payment) that the claimant 

made for a particular item during the 11 months preceding the 

month he or she started working, will be totaled and considered to 

have been made in the month of the annuitant's first payment for 

that item within this 11 month period. The sum of these payments 

will be allocated over the 12 consecutive month period beginning 

with the month of the claimant's first payment (but never earlier 

than 11 months before the month work began). However, the only 

portion of the total which may be deductible is the portion allocated 

to the month work begins and the following months. For example, if 

an item is purchased three months before the month work and it is 

being paid for in three monthly installments of $200 each, the total 

payment of $600 will be considered to have been made in the 

month of the first payment, that is, three months before the month 

work began. The deductible amount would be $450 ($600 divided 

by 12, multiplied by 9).

The amount, as determined by these formulas is to be considered 

to have been paid in the first month of work. Deduct either this 

entire amount in the first month of work or allocate it over a 12 

consecutive month period, beginning with the first month of work, 

whichever the claimant selects. In the above example, the claimant 

would have the choice of having the entire $450 deducted in the 

first month of work or having $37.50 a month ($450 divided by 12) 

deducted for each month that he or she works over a 12 

consecutive month period, beginning with the first month of work. 

To be deductible, the payment must be for durable items such as 

medical devices, prostheses, work-related equipment, residential 

modifications, non-medical appliances and vehicle modifications. 

Payments for services and expendable items such as drugs, 

oxygen, diagnostic procedures, medical supplies and vehicle 

operating costs are not deductible for the purpose of this 

paragraph.

F. Limits on deductions

1. Deduct the actual amounts the claimant pays towards his or her 

impairment-related work expenses unless the amounts are 

unreasonable. Consider the amount the claimant pays to be 

reasonable if it does not exceed the standard or normal charge for 

the same or similar item or service in the claimant's community.

2. Impairment-related work expenses are not deducted in computing 

the claimant's earnings for purposes of determining whether the 
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claimant's work was "services" as described in 10.5.4 - The Trial 

Work Period.

3. The decision as to whether the claimant performed substantial 

gainful activity in a case involving impairment-related work 

expenses for items or services necessary for the claimant to work 

will be based generally upon the claimant's "earnings" and not on 

the value of "services" the claimant rendered. This is not 

necessarily so, however, when the claimant is in a position to 

control or manipulate his or her earnings, i.e., a self-employed 

individual.

4. No deduction will be allowed to the extent that any other source has 

paid or will pay for an item or service. No deduction will be allowed 

to the extent than the claimant has been, could be, or will be 

reimbursed for payments he or she made. (See paragraph (B)(3) 

of this section.)

G. Verification - Verify the claimant's need for items or services for which 

deductions are claimed, and the amount of the charges for those items or 

services. The claimant will also be asked to provide proof that he or she 

paid for the items or services.

10.5 Work Incentives

10.5.1 Return To Work Less Than One Year From Disability Onset

When a beneficiary returns to work less than one year after onset, the issue is 

raised as to whether the 12-month duration requirement for disability is met. To 

determine the correct action to be taken, the examiner must know:

• Whether the work was SGA (or regular railroad occupation or had similar 

duties), and whether the return to work occurred on, before, or after the 

date of the final determination. The date of the final determination is the 

date that the determination notice is received by the annuitant. The date 

of the receipt of notice is presumed to be the fifth day following the date of 

the mailing of the determination notice. For purposes of disability 

determination and onset date, the “determination notice” is the RL-121f. 

(All RL-121f letters must contain the onset date and reconsideration 

paragraph.)

• In cases where the return to work occurred on or before the final 

determination, whether the notice of the work was received on, before, or 

after the date the final disability determination was made, and

• In cases where the return to work occurred after the final determination, 

whether the work began during or after the five-month waiting period.
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NOTE: Any time a notice is received that a disability annuitant has returned to 

railroad service or an employee disability annuitant has returned to any work for 

more than the current monthly disability earnings limit, the annuity must 

immediately be suspended. Refer to the chart in FOM 1125.5.2 for the monthly 

and annual earnings limits. 

10.5.1.1 Return to Work Occurred On or Prior to Date of Final Determination

Determine whether the work information was received on, before, or after the 

date of final determination. 

A. Information Received Before the Final Determination

If the claimant returned to work within 12 months of the disability onset and 

prior to the final determination date, and the return to work information is 

received before the final determination, there are two possible actions:

1. Deny the disability based on not meeting the duration requirement if 

the claimant returns to SGA (or to regular railroad or similar 

occupation for employee occupational disabilities) and the work 

continues. 

EXAMPLE: The claimant alleges an onset date of 5/1/2005. No 

decision has yet been made when DBD receives a notice that the 

claimant has returned to work in SGA on 12/31/2005 and continues 

to work. Deny the claim.

2. Grant the disability if it is determined that:

• The work activity was not SGA (or regular railroad or similar 

occupation for employee occupational disabilities), or

EXAMPLE: The claimant alleges an onset date of 5/1/2005. 

No decision has yet been made when DBD receives a notice 

that the claimant has returned to non-railroad work on 

12/31/2005 and continues to work. The work is not SGA and is 

not similar to railroad duties. The work will not affect the 

decision.

• If the work was SGA (or regular railroad or similar occupation for 

employee occupational disabilities) but was later stopped. 

Consider granting with possible later onset date than the 

claimed onset date or applying an unsuccessful work attempt 

(UWA). (See DCM 10.5.3 for UWA criteria.) 

EXAMPLE: The claimant alleges an onset date of 5/1/2005. 

No decision has yet been made when DBD receives a notice 
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that the claimant has returned to non-railroad work on 

12/31/2005. The work stopped on 2/5/2006. Consider UWA.

B. Information Received After the Final Determination Date

If the claimant returned to work within 12 months of the disability onset and 

prior to or on the final determination date, but the return to work information is 

received after the final determination date, there are three possible actions:

1. Re-open and deny the disability based on not meeting the duration 

requirement if the claimant returns to SGA (or to regular railroad or 

similar occupation for employee occupational disabilities) and the 

work continues, and it has been at least six months since the 

claimant returned to work. Check payment status to determine 

whether the case needs to be dumped from RASI or payments 

terminated.

EXAMPLE: The final decision date is 3/1/2006 to grant disability 

with an onset date 2/4/2005. On 3/15/2006, DBD receives a notice 

that the claimant returned to work in SGA on 8/13/2005 and the 

work continues. Re-open and deny claim.

If it has been less than six months since the claimant returned to 

work, set a call-up for six months after the return to work date. 

Check payment status to determine whether the case needs to be 

dumped from RASI or payments suspended. When the call-up 

expires, determine whether claimant has stopped working. If yes, 

go to 3. If no, re-open and deny based on not meeting the duration 

requirement.

EXAMPLE: The final decision date is 3/1/2006 to grant disability 

with an onset date of 2/4/2005. On 3/15/2006, DBD receives a 

notice that the claimant returned to work in SGA on 12/1/2005. 

Suspend payments and set call-up for 6/1/2006. If the claimant has 

stopped work, consider UWA. If the work continues, re-open and 

deny claim; or,

2. Uphold the original grant decision if the work activity was not SGA 

(or similar to regular railroad occupation for employee occupational 

disabilities).

EXAMPLE: The final decision date is 3/12/2006 to grant disability 

with an onset date of 2/4/2005. On 3/15/2006 DBD receives a 

notice that the claimant returned to non-railroad work on 1/13/2006. 

The work is not SGA. Uphold grant; or.
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3. If the work activity was SGA (or regular railroad or similar 

occupation for employee occupational disabilities) but was later 

stopped, consider applying an unsuccessful work attempt (UWA). 

(See DCM 10.5.3 for UWA criteria) or consider re-opening to revise 

to a later onset than the claimed onset date..

EXAMPLE: The final decision date is 3/1/2006 to grant disability 

with an onset date of 2/4/2005. On 3/15/2006, DBD receives a 

notice that the claimant returned to work in SGA on 12/13/2005. 

The work stopped on 2/3/2006. Consider UWA.

C. Information Received On the Final Determination Date

If the claimant returned to work within 12 months of the disability onset and 

prior to or on the final determination date, but the return to work information is 

received on the final determination date,

1. Re-open and deny the disability based on not meeting the duration 

requirement if the claimant returns to SGA (or to regular railroad or 

similar occupation for employee occupational disabilities) and the 

work continues, and it has been at least six months since the 

claimant returned to work. Check payment status to determine 

whether the case needs to be dumped from RASI or payments 

terminated.

EXAMPLE: The final decision date is 3/1/2006 to grant disability 

with an onset date 2/4/2005. On 3/1/2006, DBD receives a notice 

that the claimant returned to work in SGA on 7/13/2005 and the 

work continues. Re-open and deny claim.

If it has been less than six months since the claimant returned to 

work, set a call-up for six months after the return to work date. 

Check payment status to determine whether the case needs to be 

dumped from RASI or payments suspended. When the call-up 

expires, determine whether claimant has stopped working. If yes, 

go to 3. If no, re-open and deny based on not meeting the duration 

requirement. 

EXAMPLE: The final decision date is 6/20/2006 to grant disability 

with an onset date of 8/8/2005. On 6/20/2006, DBD receives a 

notice that the claimant returned to work in SGA on 6/19/2006. 

Suspend payments and set call-up for 1/1/2007. If the claimant has 

stopped work, consider UWA. If the work continues, re-open and 

deny claim; or,
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2. Uphold the original grant decision if the work activity was not SGA 

(or similar to regular railroad occupation for employee occupational 

disabilities).

EXAMPLE: The final decision date is 6/20/2006 to grant disability 

with an onset date of 8/8/2005. On 6/20/2006, DBD receives a 

notice that the claimant returned to non-railroad work on 3/20/2006. 

The work is not SGA. Uphold grant; or.

3. If the work activity was SGA (or regular railroad or similar 

occupation for employee occupational disabilities) but was later 

stopped, consider applying an unsuccessful work attempt (UWA). 

(See DCM 10.5.3 for UWA criteria) or consider re-opening to revise 

to a later onset than the claimed onset date. 

EXAMPLE: The final decision date is 6/20/2006 to grant disability 

with an onset date of 8/5/2005. On 6/20/2006, DBD receives a 

notice that the claimant returned to work in SGA on 3/1/2006. The 

work stopped on 5/31/2006. Consider UWA or revision to later 

onset date. 

10.5.1.2 Return to Work Occurred After Date of Final Determination 

If the return to work occurred after the date of final determination, determine 

whether the return to work occurred during or after the waiting period.

A. Return to Work Occurred During the Waiting Period

When a claimant returns to work at the SGA level (or to regular railroad or 

similar occupation for employee occupational disabilities) during the waiting 

period and after the final determination, the action to be taken depends upon 

whether this work continues or has stopped. 

1. If this work continues, the determination of allowance on the claim 

must be re-opened and revised to a denial. 

EXAMPLE: The final decision date is 2/15/2005 to grant disability 

with onset date of 12/1/2004. On 3/2/2006, DBD receives notice 

that the claimant returned to work in SGA on 3/2/2005, and the 

work continues. Re-open and deny claim.

2. When a claimant returns to work during the waiting period but this 

work later stops, the claim must be reviewed to determine whether 

a UWA can be established. A UWA during the waiting period will 

not preclude a finding of disability. (See DCM 10.5.3 for UWA 

criteria.)
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EXAMPLE: The final decision date is 2/15/2005 to grant disability 

with onset date of 12/1/2004. On 3/2/ 2006, DBD receives notice 

that the claimant returned to work in SGA on 3/2/2005, but the work 

stopped on 5/30/2005. Consider UWA.

3. When a claimant returns to work at the SGA level during the waiting 

period and later stops this work and the criterion for a UWA are not 

met, determine whether a later disability onset date can be granted

EXAMPLE: The final decision date is 2/15/2005 to grant disability 

with onset date of 12/1/2004. On 3/2/2006, DBD receives notice 

that the claimant returned to work in SGA on 3/2/2005. The work 

stopped on 2/5/2006. Consider a later onset date.

B. Return to Work Occurred After the Waiting Period

In cases where the return to work occurred after the date of the final 

determination and after the waiting period, the appropriate action will depend 

on whether an MIE diary is indicated. (See DCM 8.5.3 for diary criteria.)

1. Medical Improvement Expected (MIE) Diary Established - If the 

claimant returns to SGA (or to regular railroad or similar occupation 

for employee occupational disabilities) after the waiting period and 

after the date of the final determination, and an MIE diary has been 

established or would be set based on the diary call-up criteria, 

develop for possible medical recovery. While this claimant gets a 

TWP, if it is determined that medical recovery has occurred, 

terminate the D/A irrespective of any remaining TWP months.

EXAMPLE: The final decision date is 2/15/2005 to grant disability 

with onset date of 12/1/2004. On 3/2/2006, DBD receives notice 

that the claimant returned to work in SGA on 8/2/2005. A MIE diary 

was set.

2. No MIE Diary Established - If the claimant returns to SGA (or to 

regular railroad or similar occupation for employee occupational 

disabilities) after the waiting period, and after the date of the final 

determination, and no MIE diary has been established or would be 

set based on the diary call-up criteria, apply the TWP provisions.

EXAMPLE: The final decision date is 2/15/2005 to grant disability 

with onset date of 12/1/2004. On 3/2/2006, DBD receives notice 

that the claimant returned to work in SGA on 8/2/2005. A MIP diary 

was set. Apply TWP provisions.
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10.5.1.3 Actions to Be Taken When a Case is Re-opened for Denial

When a decision is made to re-open a disability rating to deny, take the following 

actions:

A. The Disability Initial Section (DIS) examiner shall:

1. Write rationale for decision. Use RRAILS G325B, Disability Briefing 

Document. Indicate on the new rationale that it “supersedes” prior 

decision dated MM/DD/CCYY (insert date of prior decision). Submit 

rationale to DIS auth folder for review.

2. Enter the decision onto OLDDS G-325. Use code 2 in Items 22a and 28. 

Notate in OLDDS remarks “reopen to deny because XXXXXX; supersedes 

OLDDS dated MM/DD/CCYY”. Replace the XXXXXX with your 

explanation of why the case was reopened.and cite date of previous 

OLDDS entry being superseded.

3. Compose a disability custom denial letter. Indicate that the letter 

“supersedes” prior disability notice dated MM/DD/CCYY (insert date of 

prior notice). Submit the denial letter to DIS auth folder for review.

4. Leave DDIREO USTAR code at PE. Send email to Disability Post Section 

(DPS) mailbox (DPS-DisabilityPostSectionGroupMailbox@rrb.gov) to 

indicate that the DIS case is ready for review. The email should contain 

the claimant’s name and RRA claim number. Indicate in the email which 

Post reviewer originally handled the case that is being submitted for 

reopening (DIS supervisor should advise if original reviewer is no longer in 

the Disability Benefits Division (DBD)).

B. The DPS reviewer shall:

1. Authorize the case on OLDDS. 

2. Submit the denial letter to be printed/imaged. 

3. Submit image of the rationale to WorkDesk. 

4. Enter FAST termination code 08 (employee) or code 42 (survivors). Use 

annuity beginning date (ABD)/onset beginning date (OBD) as the effective 

date for termination. 

5. Make sure that PREH/DATAQ updates the following day with the 

termination code. 
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6. Once PREH has updated, send an email notice to both DIS Leads 

advising case was reopened to deny. Provide case details, which explain

the prior ABD/OBD and why the case action was reopened.

C. The DIS Lead Examiner shall:

1. Create Retirement Survivor Benefit Division (RSBD) USTAR code as 

needed. 

a. RBDDER = DIB reopen to deny/overpayment. 

b. SBDDER = DIB reopen to deny/overpayment. 

2. Email RSBD group mailbox to advise them of the reopening action and 

indicate that an USTAR code was created for RSBD review/handling. Cut 

and paste the sent email into the RBDDER/SBDDER USTAR referral 

under “general remarks”.

3. Email P&S-RAC mailbox (RAC-Return to Work (Disability Denial)) to 

advise the PREH analyst that the information in PREH must be corrected 

because the annuity and disability freeze (if applicable) information was 

changed from an allowance to a denial based on additional information 

received. The email should include “reopen to deny” in the subject line 

and should include the claimant’s name, RRA claim number, and type of 

benefit being adjusted. Image a copy of the sent email to WorkDesk. 

4. Email the Sickness, Unemployment Benefit Division’s (SUBD) group

mailbox to advise them that there is no disability annuity entitlement due to 

case being reopened and denied. See RCM 5.9.4, Notifying SUBD of 

Suspension or Termination of Annuity. The email should include “reopen 

to deny” in the subject line and should include the claimant’s name, RRA 

claim number, and types of benefits being adjusted. Image a copy of the 

sent email to WorkDesk. 

NOTE: One email can be written and sent to P&S-RAC and SUBD, as 

long as details for each office are included. 

10.5.1.4 Actions to Be Taken When a Case is Re-opened to Set a Later 

Onset Date

If the decision is revised to a later onset, take the following actions:

A. The Disability Initial Section (DIS) examiner shall:

1. Write rationale for decision. Use RRAILS G325B, Disability Briefing 

Document. Submit rationale to DIS auth folder for review.
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2. Enter the new decision onto OLDDS G-325. Use code 2 in Items 22. If 

disability freeze onset is also being revised, enter code 2 in Item 28. Add 

comments to OLDDS Remarks: “Case reopen to change onset from 

MM/DD/CCYY to MM/DD/CCYY. Annuity beginning (ABD) date needs to 

be adjusted”.

3. Compose a custom disability letter to advise the annuitant of the change in 

onset/ABD. Submit letter to DIS auth folder for review.

4. Leave DDIREO USTAR code at PE. Send an email to the Disability Post 

Section (DPS) group mailbox (DPSDisabilityPostSectionGroupMailbox@rrb.gov) to indicate that the DIS case 

is ready for review. The email should contain the annuitant’s name and 

RRA claim number. Indicate in the email which Post reviewer originally 

handled the case that is being submitted for reopening (DIS supervisor 

should advise if original reviewer is no longer in the Disability Benefits 

Division (DBD)).

B. The DPS reviewer shall:

1. Authorize the DIS case on OLDDS.

2. Submit the letter to be printed/imaged.

3. Submit image of the rationale to WorkDesk.

4. Check PREH the next business day to make sure the onset date change 

has updated on PREH Screen 3255.

5. After PREH has updated, send an email to both DIS Leads to have them 

notify RSBD regarding the reopening, change in onset/ABD and possible 

overpayment.

C. The DIS Lead Examiner shall:

1. Create RSBD USTAR code as needed.

a. RBDABD = Change in onset/ABD.

b. SBDABD = Change in onset/ABD.

2. Email RSBD group mailbox to advise them of the reopening action and 

indicate that an USTAR code was created for RSBD review/handling. Cut 

and paste the sent email into the RBDABD/SBDABD USTAR referral 

under “general remarks”.
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10.5.2 Return to Work More Than One Year After Disability Onset Date

The appropriate action will depend on whether the return to work occurred before 

or after the date of the final determination.

10.5.2.1 Return to Work Prior to Date of Final Determination

In these cases, the appropriate action will depend on whether an MIE diary is 

indicated. (See DCM 8.5.3 for diary criteria.)

1. MIE Diary Scheduled - If the case is diaried for an MIE review, or an MIE 

diary would be set based on the call-up criteria, develop for and make an 

SGA (or regular railroad or similar occupation for employee occupational 

disabilities) determination.

2. No MIE Diary Schedule - If the case is not diaried for an MIE review, or a 

MIP or MINE diary would be set based on the call-up criteria, and the 

TWP is not excluded, a trial work diary must be established. Handle the 

case following regular TWP provisions.

For more information on how to handle Occupational and Total and Permanent 

cases when the return to work is more than one year after the disability onset 

date (meets 12 month duration) and prior to final determination click here: 

DBD Initial and Post Examiner Action When 12 month Duration is met

10.5.2.2 Return to Work After Date of Final Determination 

If the final determination has been made, the issue involved is strictly one of 

continuing disability. Handle the case under medical recovery or SGA 

procedures.

10.5.3 Unsuccessful Work Attempts

A. Definition of Unsuccessful Work Attempt - An "Unsuccessful work attempt" 

is an effort to do substantial work in employment or self-employment. 

However, the work is then discontinued after a short time (no more than 6 

months) due to the worsening of an impairment, a new impairment, or the 

removal of special conditions related to the impairment that allowed the 

performance of work.
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B. Beginning and Ending Dates - There must be a significant break in the 

continuity of an individual's regular employment before we can consider 

the work to be unsuccessful. Such a break in continuity would occur 

because of the impairment or the removal of conditions essential to further 

performance of the work. The individual must be out of work for 30 

consecutive days, or forced to change to another type of work or change 

to a different employer.

After the initial "significant break in continuity," the subsequent period of 

work should be considered continuous until a similar change occurs, i.e., 

there is an absence from work of 30 days or a change to another type of 

work or employer, which is caused by the impairment or the removal of 

conditions essential to further performance of the work. Each continuous 

period, separated by significant breaks in continuity, may constitute an 

"unsuccessful work attempt." This is true if the criteria related to duration 

and conditions of work, described in C below, are met. However, as 

indicated in C below, seasonal and other types of patterned, recurring 

work should not be considered as a series of unsuccessful work attempts.

C. Unsuccessful Work Attempt Distinguished from Seasonal and Other 

Patterned, Recurring Work - Seasonal and other types of patterned, 

recurring work should not be determined as a series of "unsuccessful work 

attempts," because the termination of each period of work is unrelated to 

the impairment. Seasonal work does not mean that the individual is unable 

to repeat the work.

The nature and amount of work performed in seasonal and other types of 

patterned, recurring work may indicate that the individual has the ability to 

perform SSA substantial gainful activity, even if they are not actually 

performing SGA. Disability examiners will resolve issues of this type by 

taking into account all vocational and medical factors relevant to a 

decision of ability to engage in SGA.

D. Criteria - Duration and Conditions of Work - The following requirements 

must be met in order for a period of work to be considered an 

unsuccessful work attempt:

1. Claimant Worked 6 Months or Less - The work must have 

terminated within 6 months due to impairment or the removal of 

special conditions that allowed performance of work; or
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2. Claimant Worked More Than 6 Months – An unsuccessful work 

attempt does not apply. 

E. Performance of Work Under Special Conditions – Work may be performed 

at SGA because of special conditions. 

Examples include:

1. Required and received special assistance from other employees in

performing the job; or

2. Was allowed to work irregular hours or take frequent rest periods; or

3. Was provided with special equipment or was assigned work especially 

suited to the impairment; or

4. Was able to work only with a framework of especially arranged 

circumstances, such as where other persons helped him or her 

prepare for or get to and from work; or

5. Was permitted to perform at a lower standard of productivity or 

efficiency than other employees; or

6. Was granted the opportunity to work, despite their handicap, because 

of family relationship, past association with the firm, or other altruistic 

reason. 

Removal of such special conditions can reduce work to less than SGA and 

suggest an UWA. Specifically, “the removal of special conditions related to 

the impairment that are essential to the further performance of work” 

suggest an UWA. 

NOTE: The work under special circumstances may cease because of the 

impairment. The impairment may cause worsening of symptoms, changes 

in complaints, or medical evidence supports impairment changes. For 

example, evidence of hospitalization for alleged or documented 

impairment may cause work to cease or reduce to less than SGA. 

 

. 
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10.5.4 The Trial Work Period

A. Definition - The trial work period is a period during which the annuitant 

may test his or her ability to work and still be considered occupationally 

disabled or disabled for any regular employment. The trial work period 

begins and ends as described in paragraphs F. and G. of this section. 

During this period, the annuitant may perform "services" (see paragraph 

B. of this section) in as many as nine months, but these months do not 

have to be consecutive. DPS will not consider those services as showing 

that the annuitant's disability has ended until the annuitant has performed 

services in at least nine months. However, after the trial work period has 

ended, DPS will consider the work the annuitant did during the trial work 

period in determining whether the annuitant's disability has ended at any 

time after the trial work period. Effective January 1992, the trial work 

period is complete only when the disabled annuitant completes 9 service 

months on or after January 1992 and within 60 consecutive months (see 

DCM 10.5.5).

B. "Services" 

1. Services for an occupational disability - When used in occupational 

disability situations, "services" means any activity which, even 

though it may not be substantial gainful activity as defined in DCM 

10.4, is

(i) Done by a person in employment or self-employment for pay 

or profit, or is the kind normally done for pay or profit; and

(ii) The activity is a return to the same duties of the annuitant's 

regular railroad occupation or the activity so closely 

approximates the duties of the regular railroad occupation as 

to demonstrate the ability to perform those duties.

2. Service for annuitants disabled for any regular employment - When 

used in total and permanent disability situations, "services" means 

any activity, even though it is not substantial gainful activity, which 

is done by the annuitant in employment or self-employment for pay 

or profit, or is the kind normally done for pay or profit. If the 

annuitant is employed, DPS will consider his or her work to be 

"services" if in any calendar year the annuitant earns more than the 

allowable amount. Click here for monthly earnings threshold chart 

for Trial Work Period: Monthly Earnings Threshold for Trial Work 

Period. 
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3. Services in Self-Employment - If the annuitant is self-employed, DPS 

will consider his or her activities "services" if the annuitant's net 

earnings are based on the monthly earnings threshold for trial work 

period or the annuitant works more than 80 hours a month in the 

business (40 hours a month is the figure for any calendar year before 

2001 and 15 hours a month is the figure for calendar years before 

1990). Do not consider work to be "services" when it is done without 

remuneration or merely as therapy or training, or when it is work 

usually done in a daily routine around the house or in self-care. Click 

here for earnings threshold for trial work period: Monthly Earnings 

Threshold for Trial Work Period. 

NOTE: Activity performed by an annuitant for which payment in 

excess of the monthly earnings threshold for trial work period does 

not constitute "services" if the activity, although resembling services 

in employment for remuneration or gain, is:

(i) part of a prescribed program of medical therapy; and

(ii) carried out in a hospital under the supervision of medical and 

administrative staff; and

(iii) not performed in an employer/employee relationship; and

(iv) not normally performed for remuneration or gain.

4. Impact of Impairment Related Work Expenses (IRWE's) and 

Vocational Rehabilitation Programs on the Assessment of Trial 

Work Service Months

(i) Impairment Related Work Expenses- The IRWE deduction 

for items or services necessary for work does not apply for 

the purpose of determining whether a month of service is 

chargeable for TWP. In other words, deductions will not be 

made to determine whether a person's monthly earnings can 

be reduced based on the monthly earnings threshold for trial 

work period. Click here for earnings threshold for trial work 

period chart: Monthly Earnings Threshold for Trial Work 

Period.

(ii) Vocational Rehabilitation Programs - The earnings derived 

from work in a vocational rehabilitation program is 

chargeable for TWP purposes.
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C. Limitations on the number of trial work periods - An employee may have 

only one trial work period during each period in which he or she is 

occupationally disabled or disabled for any regular employment.

D. Entitlement to a Trial Work Period

1. Generally, the annuitant is entitled to a trial work period if he or she 

is entitled to an annuity based on disability.

2. Prior to January 1992, an annuitant is not entitled to a trial work 

period if he or she is in a second period of disability for which he or 

she did not have to complete a waiting period before qualifying for a 

disability annuity. The annuitant is entitled to a TWP in a second 

period of entitlement for which no waiting period was served if 

entitlement exists as of January 1992 or later (see DCM 10.5.5D).

NOTE: There are cases, however, where a person becomes reentitled to DIB within 5 years after a prior termination but is not paid 

for the full number of months of disability. This can occur where the 

subsequent application is not filed until 17 or more months after the 

onset of the subsequent disability; since benefits can be paid 

retroactively for only 12 months, a beneficiary in this situation will 

have a period of 5 or more months after onset in which benefits are 

not payable. This period of 5 or more nonpayment months 

constitutes a "deemed" waiting period, thus, the TWP provisions 

would apply.

3. A disabled child annuitant whose disability has been suspended 

because of SGA following completion of a trial work period, and 

who subsequently becomes re-entitled to a disabled child's annuity 

(DCIA) based on a disability which began before age 22, or within 

84 months following the month in which the most recent entitlement 

to a DCIA terminated is again entitled to a trial work period.

E. Payment of the Disability Annuity During the Trial Work Period

1. The disability annuity of an employee, child, or widow(er) will not be 

paid for any month in the trial work period in which the annuitant 

works for an employer covered by the Railroad Retirement Act.

2. The disability annuity of an employee will not be paid for any month 

in this period in which the employee annuitant earns more than the 

monthly disability earnings limit. Click here for monthly disability 

earnings limit chart: Disability Earnings Periods. 
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All amounts are after deduction of disability related work expenses

in employment or self-employment. 

3. If a disability annuity for an employee, child, or widow(er) is 

suspended because of work during the trial work period, and the 

disability annuitant discontinues that work before the end of the trial 

work period, the disability annuity may be reinstated again without a 

new application and a new determination of disability.

F. When the trial work period begins and how trial work months are counted

1. When the TWP begins - The trial work period begins with 

whichever of the following calendar months is the later - 

(i) The annuity beginning date; or

(ii) The month the application for disability is filed.

1a. In the case of a disabled child annuitant, who has attained age 18, 

the entitlement to a trial work period begins with the later of the 

month in which age 18 is attained or the month entitlement to a 

disabled child annuity is attained.

1b. A person entitled to a disabled widow(er) annuity is not entitled to a 

trial work period prior to December 1980. 

2. When to begin counting TWP service months - The months of trial 

work will be counted beginning with the first month within the TWP 

in which the annuitant, who has not recovered medically, performs 

services as defined in DCM 10.5.3B.

EXAMPLE 1: An annuitant becomes entitled to a disability annuity 

effective November 1984, based on an application filed in 

November 1984 and begins work in March 1988. The entitlement to 

a TWP begins in November 1984, and the counting of trial work 

months begins in March 1988.

EXAMPLE 2: An annuitant becomes entitled to a disability annuity 

effective January 1985 based on an application filed in January 

1985. An onset date of July 15, 1984, was established. After the 

award, it was discovered that she returned to work for one month in 

December 1984 (during the waiting period). However, the work 

during the waiting period was determined not to be SGA. The TWP 

and the counting of months of trial work begin in January 1985.

EXAMPLE 3: An annuitant becomes entitled to a disability annuity 

effective July 1983 based on an application filed in July 1984. The

annuitant started work in April 1984 earning only $80 per month 
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(non-SGA) and continued this work through July 1985. Since TWP 

service months cannot begin prior to date of application, the TWP 

began July 1984 and ended March 1985.

3. Counting TWP Service Months - It is very important to determine 

how many months in the TWP are service months since the case 

processing in work activity cases is dependent upon distinguishing 

between those situation where 9 service months have been 

completed, thus ending the TWP, and those situations where 9 

service months have not been completed.

Non-discrepant earnings from any reliable source, are sufficient for 

TWP purposes. However, such information cannot be used as the 

sole basis for determining if a person engaged in SGA. A 

continuing disability review should be done at the end of the TWP 

to verify if medical recovery has occurred.

Counting the number of service months in a TWP is not very 

complicated when only one period of work activity is involved. 

However, since the 9 service months need not be consecutive, 

work in several periods over several years may have to be 

considered. Thus, it may be necessary to combine the findings from 

a current review with the findings of previous reviews to arrive at 

the total service months expired in the TWP. The claim folder 

should always contain evidence as well as a G-325a, OLDDS 

printout documenting a monthly breakdown so that the 9 service 

months can be properly established as composing the TWP. 

Effective January 1992, the TWP is complete only when the 

annuitant completes 9 service months on or after January 1992 and 

within 60 consecutive months (see DCM 10.5.4G). 

G. When the trial work period ends and how work activity is evaluated

1. When the TWP ends - The trial work period ends with the close of 

whichever of the following calendar months is the earlier

(i) The ninth month (whether or not the months have been 

consecutive) in which the annuitant performed services 

effective January 1992, the 9 months must be completed 

within a 60 consecutive month period (see DCM 10.5.4.F); or

(ii) The month in which new evidence, other than evidence 

relating to any work the annuitant is not disabled, even 

though he or she has not worked a full nine months. DPS 

may find that the annuitant's disability has ended at any time 

during the trial work period if the medical or other evidence 

shows that the annuitant is no longer disabled.
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EXAMPLE 1: An annuitant became entitled to disability benefits in 

July 1984 based on an application filed in July 1984 (no medical 

improvement expected (MIE) diary was established and medical 

recovery has not occurred): she began work in January 1985 

performed and continued services in all succeeding months. The 

TWP ended with September 1985.

EXAMPLE 2: An annuitant became entitled in July 1984 based on 

an application filed in April 1984 (no (MIE) diary was established); 

he began trial work in June 1985. In September 1985 he submitted 

a medical report from his attending physician indicating recovery 

(i.e., affirmative evidence). Based on further medical development, 

cessation of disability was found in October 1985 based upon 

medical recovery. The TWP ends with October 1985.

EXAMPLE 3: An annuitant became entitled in July 1984 based on 

an application filed in September 1984 (MIE diary was established 

for June 1985); he began work in January 1985. Evidence showed 

medical recovery in January 1985. Disability ceased and the TWP 

ended with January 1985 based on a current medical cessation.

EXAMPLE 4: An annuitant became entitled in July 1984 based on 

an application filed in July 1984. An MIE diary was established for 

June 1985. She began work in January 1985 and continued 

working in all succeeding months. Since return to work is an 

indication of possible medical recovery, DPS conducted a CDR but 

found that she was still disabled and prepared a continuance 

determination in March 1985. Counting of the TWP service months 

began in January 1985, the first month in which she performed 

services, and ended with September 1985 (assuming performed 

services in all months).

2. Evaluation of Work Activity - After a TWP has ended, it must be 

decided whether continuing work activity demonstrates an ability to 

engage in SGA. If it does, disability ceases. If it does not, and 

there is no medical issue, disability continues. When work activity 

continues for at least one month at the SGA level following 

completion of the TWP, the SGA exception (see DCM 10.3) to 

medical improvement permits a finding that disability ceased if all 

the other rules i.e., earnings limitations, subsidies, etc., related to 

SGA cessations are met. (See DCM 10.4) The individual must 

actually engage in SGA in the month for which disability is found to 

have ceased. For example, the 9th TWP month is 12/85 and an 

SGA decision is made in 01/86. There must be actual performance 

of SGA in 1/86 before disability can be found to have ceased in 

01/86.
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If work activity does not continue for at least one month at the SGA 

level, the SGA exception to medical improvement does not apply, 

and a DPS medical decision might be needed in order to make a 

decision that the disability had ceased. Disability ceases when the 

annuitant demonstrates a continuing ability to engage in SGA. 

Therefore, the decision must take into consideration whether 

substantial gainful work is continuing, or, if it has stopped, how long 

it lasted and the reason it stopped.

If there is no medical issue, the annuitant completes the 9 service 

months, and the work demonstrates an ability to engage in SGA, 

cessation should be found effective with the first month of SGA 

following completion of the TWP. If the beneficiary is not entitled to 

a TWP, a cessation will be found effective with the first month the 

annuitant engages in SGA.

10.5.5 The Rolling 60-Month Trial Work Period

A. General - This section contains continuing disability review (CDR) 

instructions to implement the new rolling 60-month TWP provisions 

contained in Section 5112 of the Omnibus Budget Reconciliation Act of 

1990. Effective January 1992, the Rolling 60-Month TWP provision 

provides that the TWP is complete only when a disability annuitant 

completes 9 service months within 60 consecutive months and the TWP 

provisions apply to subsequent periods of disability for which no waiting 

period is served. The rolling 60-month trial work period applies to 

annuitants who are considered occupationally disabled or disabled for any 

regular employment. Prior to January 1992, an employee or widow(er) 

disability annuitant was not entitled to a TWP if (s)he was in a 2nd period 

of entitlement for which (s)he did not have to complete a waiting period 

(see DCM 10.5.4 D2).

B. The rolling 60-month TWP applies in an initial or subsequent period of 

disability when:

The disability annuitant completes less than 9 TWP service months as of 

1/92 (i.e., 8 or less TWP service months are credited prior to 1/92) and 

has not medically recovered (i.e., disability has not been found to have 

ceased due to medical improvement (MI) or due to work activity).

C. The rolling 60-Month TWP does not apply in an initial or subsequent 

period of disability when:

1) The disability annuitant completes the TWP under the old rules 

prior to 1/92 (i.e., completes 9 TWP service months prior to 1/92) or
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2) The disability is found to have ceased 1/92 or earlier due to MI or 

work activity.

D. When the rolling 60-month TWP provision applies in a subsequent period 

of disability - The rolling 60-month TWP provision applies in a subsequent 

period of disability for which no waiting period was served if entitlement 

exists as of 1/92 or later. Therefore, the rolling 60-month TWP applies in 

a subsequent period of disability when the disability annuitant:

1) Returns to work 1/92 or later, or

2) Returned to work prior to 1/92 but the work was not SGA (i.e., 

disability continued after 12/91).

E. When the rolling 60-Month TWP provisions does not apply in a 

subsequent period of disability - The rolling 60-Month TWP provision does 

not apply in a subsequent period of disability for which no waiting period 

was served when the disability is found to have ceased 1/92 or earlier due 

to MI or work activity (e.g., SGA).

F. When the rolling 60-Month TWP begins and ends - January 1992 is the 

earliest 9th service month that can be credited under the rolling 60-month 

TWP provisions. Thus, 2/87-1/92 is the earliest 60-month period in which 

the TWP can be completed and 2/87 is the earliest first service month that 

can be credited under the new TWP provisions. Therefore, the rolling 60-

month TWP begins with the later of the month of entitlement or the month 

of filing, but no earlier than 2/87. Since the rolling 60-month TWP can 

begin no earlier than 2/87, months of work prior to 2/87 are disregarded. 

The TWP ends when 9 service months fall with a 60 consecutive month 

period ending no earlier than 1/92.

G. Counting the rolling 60-Month TWP months - When a disability beneficiary 

has worked his or her first 9 service months (the 9th service month 

occurring no earlier than 1/92 - otherwise the TWP was completed under 

the old rules), count back 60 consecutive months to see if the 9 service 

months were completed in that 60-month period. If not, the service 

months that fall before the 60-month period are disregarded, the service 

months that fall within the 60-month period are counted, and the TWP 

continues. Each time thereafter that a service month is used, count to 

determine if 9 service months have been completed. When 9 have been 

completed, count back 60 consecutive months from the 9th service month 

to determine whether the 9 months were completed within 60 months. 

When 9 service months are identified within a 60-month period, the TWP 

has been completed. Some examples of counting the rolling 60-month 

TWP months are as follows:
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EXAMPLE 1 - In February 2014, a disabled employee annuitant reports 

that he returned to work in November 2013, continues to work, and earns 

$770 per month. Review of the file reveals that the annuitant previously 

worked for two months in 2011. Since the annuitant has less than 9 

service months as of January 2014, he is entitled to the rolling 60-month 

provisions. A TWP diary call-up is established for May 2014 in 

anticipation of the completion of the 9th TWP service month. If the 

annuitant works through May 2014, he completes 9 TWP months as of 

May 2014 (2 months were completed in 2011, 2 months completed in 

2013 and 5 months completed in 2014). The TWP ending date would be 

May 2014. Counting 60 months back from May 2014 reveals that the 

rolling 60-month TWP begins June 2010. Since the 9 months are 

completed within the 60 consecutive month period, the TWP is completed.

EXAMPLE 2 - In February 1992, a disabled child reports that he returned 

to work in August 1991, stopped work in February 1992, and earned $800 

per month. Review of the file reveals that he previously work for 2 months 

in February and March of 1987. Since he completed less than 9 months 

of trial work under the old TWP provisions as of January 1992, he is 

entitled to the rolling 60-month TWP provisions. The 9th TWP is 

completed in February 1992. Counting back 60 months reveals that the 

beginning date of that 60-month period is March 1987. Counting the 

service months within the period March 1987 - February 1992, we find that 

this disabled child only has 8 service months (March 1987 and August 

1991 thru February 1992). Therefore in this case, the TWP has not been 

completed. The service month February 1987 is not counted under the 

rolling 60-month TWP provisions.

EXAMPLE 3 - In February 1992, a disabled widow report that she started 

work in July 1991, continues to work and earns $800 per month. Review 

of the file reveals that the disabled widow previously worked from July 

1990 through October 1990 earning $250 per month. Since the disabled 

widow completed 9 TWP service months prior to January 1992 (July 1990 

through October 1990 and July 1991 through November 1991), the rolling 

60 month TWP provisions do not apply and the TWP ends November 

1991.

EXAMPLE 4 - In February 1992, a disabled employee annuitant reports 

that he returned to work in September 1991, is continuing to work, and 

earns $250 per month. A review of the folder reveals that this is a 

subsequent period of entitlement prior to January 1992. It is determined 

that the annuitant's most recent work activity beginning in September 1991 

is below SGA; therefore, disability continues September 1991 on. 

Because the annuitant's subsequent period of entitlement continues 

through January 1992, he is entitled to a TWP under the new provisions. 

A TWP diary call-up is established for May 1992 in anticipation of the 

completion of the 9th TWP service month.
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EXAMPLE 5 - In March 2015, disabled employee annuitant reports that he 

returned to work November 2014, continues to work, and earns $780 per 

month.

A review of the folder reveals that this annuitant is in a subsequent period 

of entitlement. A counting disability review determines that the disability 

has ceased due to SGA. Since the work was SGA as of January 2014, or 

earlier, this annuitant is not entitled to TWP and a disability cessation 

applies.

10.5.6 The Re-entitlement Period

A. General

1. The re-entitlement period is an addition period after the nine 

months of trial work during which the annuitant may continue to test 

his or her ability to work if he or she has a disabling impairment(s).

1a. Effective 1/92 the re-entitlement period (EPE) begins the month 

after the 9th service month completed within 60 consecutive 

months.

2. The disability annuity of an employee, child, or widow(er) will not be 

paid for - 

(i) Any month, after the third month, in this period in which the 

annuitant does substantial gainful activity; or

(ii) Any month in this period in which the annuitant works for an 

employer covered by the Railroad Retirement Act.

3. The disability annuitant of an employee will not be paid for any 

month in this period in which the employee annuitant earns more 

than the current monthly disability earnings limit (refer to the chart 

in FOM1 1125.5.2 for the monthly and annual earnings limits). 

4. If the disability annuity of any annuitant is suspended because of 

work during the trial work period or re-entitlement period, and the 

disability annuitant discontinues that work before the end of either 

period, the disability annuity may be reinstated again without a new 

application or a new determination of disability.

B. When the re-entitlement period begins and ends - The re-entitlement 

period begins with the first month following completion of nine months of 

trial work but cannot begin earlier than December 1, 1980. Effective 

January 1992, the re-entitlement period (EPE) begins the month after the 
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9th service month completed within 60 consecutive months. It ends with 

whichever is earlier:

1. The month before the first month in which the annuitant's 

impairment(s) no longer exists or is not medically disabling; or

2. The month before the first month of SGA earnings after the 36th 

month following the TWP.

If the annuitant employee does not perform any SGA after the 36-month 

period, the extended period of eligibility continues indefinitely and payment 

continues if all other eligibility factors are met.

NOTE: If an employee is considered not disabled due to SGA after the 

TWP, benefits are then placed in suspense for the months of earnings 

over the current monthly disability earnings limit after deduction of 

disability related work expenses and reinstated for months with earnings 

less than the current monthly disability earnings limit during the remaining 

months of the 36-month period.

Reinstatement of payments can occur only within 37 months following the 

9th month of the TWP. If the individual's work attempt does not end until 

after 37 months following the TWP, he/she would have engaged in SGA in 

the 37th month and his/her re-entitlement period would have ended.

EXAMPLE: John Smith completes the TWP in December 1987. He was 

working at an SGA level in December 1987. His re-entitlement period 

began January 1, 1988 and he continued to perform SGA in each of the 

first thirty-six consecutive months of the re-entitlement period and each 

month thereafter. His re-entitlement period ends December 31, 1990 the 

thirty-sixth month after completion of the TWP.

The old (15 month re-entitlement period) rule still applies if we are 

processing a retroactive SGA cessation, and:

a. the first month of the extended period of eligibility (EPE is October 

1986, or earlier (i.e., the 15th month of the EPE is December 1987, 

or earlier), and

b. no benefits are payable after December 1987 due to SGA.

10.6 Notices

10.6.1 Content Of Termination Notice

When it has been determined that entitlement to an annuity has ended because 

of disability cessation, a written notice of the decision to terminate must be 

released to the annuitant or representative payee within 30 days of the 
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termination decision. This must allow the annuitant a specified period (always a 

minimum of 30 calendar days) to respond to our notice before the termination is 

processed.

Each notice must contain the following:

• The date of cessation of disability.

• A detailed summary of the evidence and rationale upon which the decision 

is based.

• The effective dates of annuity, freeze and/or Medicare termination.

• If applicable, an explanation that any annuity payments received for 

months after the effective date of termination are erroneous and must be 

repaid, unless conditions for waiver are met, and will be the subject of a 

future notice.

• An opportunity for the annuitant or representative payee to submit 

evidence within a specified period to support continuance of disability 

before the decision to terminate becomes final.

• The stipulation that, if the annuitant does not respond in writing within the 

specified period, that the decision to terminate would become final.

• The right to appeal the decision after it becomes final (do not use AB-25 

back). 

NOTE: In many cases payments will be in suspense at the cessation effective 

date, so overpayments usually will not exist. However, in the event that there is 

an overpayment, the folder will be released to the adjudication unit after 

termination action has been completed for preparation of an overpayment notice 

according to current procedure.

10.6.2 Special Situations

A. Death of Annuitant Causes Termination

No written notice is needed with an annuitant's entitlement to an annuity 

ends because of his death. In addition, a written notice of the decision to 

terminate a spouse's annuity is not required when the employee dies and 

SSA has jurisdiction of survivor benefits.

B. Coordination of Joint Freeze Decisions with SSA

Take the following action when coordinating a termination decision with 

the Social Security Administration.
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Joint Freeze Cases - The Board is responsible for development and 

arriving at a decision. The decision is then sent to SSA for coordination. 

If SSA indicates they do not wish to handle the case at this time, we will 

finalize our decision and send SSA a copy of the decision and the 

evidence on which it was based. Use Form G-26F for transmitting this 

material.

SSA-415 Case - If a case is called-up for review and the decision was 

based on SSA's evidence, we must ask SSA if their review has been done 

and if so, to send a copy of their decision. I f no review as been conducted 

by SSA, we will develop and make our own decision. Once the decision is 

finalized, we will send SSA a copy of the decision and the evidence on 

which it was based.

C. Competing Claimants or Third Party Information Causes Termination

When an individual other than the annuitant or his payee submits 

information which would cause termination of an annuity, have the field 

attempt to verify the information from the annuitant or payee directly. If

the field is able to verify the information, prepare a termination FAST 

transaction and G-811 if applicable, to stop the next check and release a 

letter explaining the termination. That letter should be released within 30 

days of the termination decision and must have AB-25 appeals backing. If 

the field is unable to obtain the information from the annuitant or payee 

directly, handle the case in the manner described below.

Whenever there are competing claimants or third party informants who 

submit information which would cause the termination of an annuity, a 

written notice of the decision to terminate must be sent at least 30 days 

before the annuity is terminated. This 30 day notice should allow the 

annuitant or representative payee 30 calendar days to respond to our 

letter before a FAST transaction is processed.

The advance notice should inform the annuitant or representative payee 

of:

• The reasons for the annuity termination; AND

• The fact that the annuitant or representative payee has 30 days to 

submit any evidence or writing which he wants the Board to 

consider in a review; AND

• The fact that payment of the annuity will either cease or a decision 

to continue payment shall be made after the Board considers any 

evidence or writing submitted within the 30 day period and if no 

evidence is received within this time, the annuity will be terminated 

as scheduled.
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This initial notice should not have AB-25 appeals backing. See 10.6.5 

below for action to be taken when any significant evidence or writing is 

submitted as a result of this notice. See 10.6.4 below for action to be 

taken when no significant evidence or writing is submitted.

10.6.3 Maintenance Of The Folder After Notice Is Released

The DPS examiner will prepare an advance-dated G-811, if appropriate. This 

form, together with both copies of G-325a, will be held with the folder in DPS. A 

call-up will be set to allow any evidence the annuitant may have submitted to

match the folder UP TO 15 DAYS after the specified period has ended.

10.6.4 Annuitant Does Not Submit Evidence Within Specified Period

If no written request for review or additional evidence is received at the expiration 

of the call-up, the DPS examiner will process the FAST transaction and release 

the G-325a and G-811 as scheduled.

10.6.5 Request For Reconsideration Of A Decision To Terminate

When evidence or writing is submitted to the Board as a response to the notice to 

terminate, take action as described below:

A. Request for Reconsideration Received Before the Payment Termination 

Date but Reconsideration Determination not Made by Payment 

Termination Date

If a request for reconsideration is timely received, but a reconsideration 

determination has not been made by the payment termination date, the 

following action should be taken:

Terminate the annuity the day after the payment termination date using 

FAST termination code 08 or 20. No letter to the annuitant is necessary at 

this time because the initial cessation letter advised the annuitant that his 

or her annuity would be terminated if a favorable determination is not 

made by the payment termination date.

If the reconsideration determination when rendered is favorable, the 

annuity should be reinstated following the procedure in RCM 8.6 for 

reinstating an annuity. If the reconsideration is unfavorable, the annuitant 

should be sent a letter advising of the decision. Appeals code paragraph 

189 should be used in the letter.

B. Request for Reconsideration Received After the Payment Termination 

Date

Payments should be terminated the day after the payment termination 

date.
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If an acceptable request for reconsideration is received after the payment 

termination date and payments have not been terminated, payments 

should be terminated pending the reconsideration determination.

If an acceptable request for reconsideration is received after payments 

have been terminated, do not reinstate payments unless the 

reconsideration determination, when rendered, is favorable.

If the reconsideration determination is favorable, reinstate the annuity 

following the procedure for reinstating an annuity. If the reconsideration 

determination is unfavorable, the annuitant should be sent a letter advising 

of the decision. Appeals code paragraph 189 should be used in the letter. 

Also, if the annuity was not timely terminated, take appropriate action 

regarding the overpayment.

NOTE: The Social Security Disability Benefits Reform Act of 1984 (P.L. 

98-460) enacted on October 9, 1984, does provide specified beneficiaries 

with the option to elect to continue receiving disability benefits and 

Medicare coverage, if applicable, pending a reconsideration and/or a 

hearing decision before an Administrative Law Judge (ALJ) on a medical 

cessation determination. Any continued benefits paid are overpayments 

subject to recovery if the medical decision is upheld on reconsideration or 

appeal.

Unlike the Social Security Administration, we cannot allow payments to 

continue while a reconsideration determination is pending because the 

Railroad Retirement Act does not have a comparable provision. 

Payments under the Railroad Retirement Act must be terminated the day 

after the payment termination date, and subsequently reinstated if the 

reconsideration determination is favorable.

10.6.6 Notifying DQRRB's Of Termination When TWP, Re-entitlement Period 

And Extended Medicare Provisions Apply

DPS will prepare an RR and/or SS Act disability termination notice at the time 

Form G-325a is prepared, recording SS Act disability cessation in the manner 

outlined in this chapter. When the DQRR's disability ceased because of SGA, 

DPS will include information in the cessation notice about the TWP, Reentitlement Period and/or the extended Medicare coverage and its ending date if 

it is before age 65.

Special language about the reason for adjustment must be included in the 

adjustment notices when one of these special rules apply. The following are 

samples of language that could be used to explain these provisions.

A. Inserts for items B, C, D and E
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1: the month and year SS Act disability CEASED (item 7b of G-325a)

2: the last month and year of extended Medicare coverage

3: the thirty-sixth month and year of the re-entitlement period

4: the last month and year in the re-entitlement period

5: months after the 3rd month in the re-entitlement period, through the 

36th month in the re-entitlement period, in which SGA was 

performed

6: the first month after the 3rd month in the re-entitlement period but 

before the 36th month in which SGA ceases to be performed

7: the first month after the 3rd month in the re-entitlement period in 

which SGA was performed

8: date of notice by DPS that SS Act disability ceased

B. Sample Language for Use by DPS in SS Act Cessation Notices to 

DQRRB's Not Entitled to a Re-entitlement Period

"Your disability Medicare coverage will continue for up to 24 months after 

1 _____ unless your condition improves. This means that your coverage 

will end after 2 _____. You will be billed every 3 months for your medical 

insurance premiums; please pay them promptly to avoid duplicate billing 

or loss of coverage for failure to pay on time."

C. Sample Language for Use by DPS in SS Act Cessation Notices to 

DQRR's Entitled to a Re-entitlement Period

1. The Re-entitlement Period has not Expired

a) SGA Causes Suspension During the Re-entitlement Period

"If your condition forces (you) (_______) to stop or limit 

working through 3 _______, your annuity may be paid for 

those months through 3 _______ in which this work stopped 

or was reduced below a certain level. Notify the nearest 

district office of the Board if this occurs.

In addition (your) (_______'s) coverage will continue for up 

to 24 additional months after 4 _______, unless 

(your)(his)(her) condition improves. This means that 

Medicare coverage will end after 2 _______.
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b) No SGA After 3rd Month of Reentitlement Period Prevents 

Suspension

"Although (your) (_______'s) disability under the SS Act 

ceased because of work on 1 _______, an increased 

amount in your annuity may still be paid through 4 _______, 

since (you are)(he is)(she is) not working. If (you begin)(he 

begins)(she begins) working again, notify the nearest district 

office of the Board.

In addition, (your) (_______'s) disability Medicare coverage 

may continue unless (your)(his)(her) condition improves or 

(you begin)(he begins)(she begins) working after 3 

_______."

2. The Re-entitlement Period has Expired

a) SGA After 3rd Month of Re-entitlement Period

"Although (you) SS Act disability ceased on 1 _______, 

because of work, (your)(his)(her) disability Medicare 

coverage will continue until 2 ______ unless (your)(his)(her) 

condition improves. You will receive a separate notice if we 

owe you money of if you are overpaid."

b) No SGA After 3rd Month of Re-entitlement Period

"Although (your) (_______'s) SS Act disability ceased on 1

______, because of work, an increased amount in your 

annuity was still payable through 3 _______ since 

(you)(he)(she) had not worked. This amount is no longer 

payable. You will receive a separate notice if we owe you 

money or if you are overpaid.

However, (your)(his)(her) disability Medicare coverage will 

continue through 2 _______, unless (your)(his)(her) 

condition improves."

3. Miscellaneous IRWE Sample Language For Use by DPS

a) Allow IRWE Insufficient to Reduce Earnings Below SGA 

Level

"Although (you)(_______) reported impairment related work 

expenses which we allowed, they were not enough to reduce 

(your) (_______'s) earnings below the monthly amount 

usually considered to be substantial gainful work."
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b) "Although (you)(_______) reported impairment related work 

expenses, we cannot allow them because they do not meet 

the definition of impairment related work expenses."

10.7 Medicare

10.7.1 Termination Of SMI Coverage

A. General Rule - When an annuitant recovers from disability, SMI coverage 

ends with the later of:

The last month of entitlement to a monthly disability benefit, or

The month after the month the beneficiary is notified in writing of the 

termination of monthly disability benefits.

B. Extended Medicare Coverage - Beginning December 1, 1980, Medicare 

coverage may continue for up to 24 additional months but only if disability 

is terminated solely due to SGA. This provision is part of Public Law 96-

265, the SS Disability Amendments of 1980.

10.7.2 How To Apply Extended Medicare Coverage

If the annuitant is not entitled to a TWP, the extended Medicare coverage begins 

the first month after the disability benefit entitlement ends due to SGA.

If the annuitant is entitled to a re-entitlement period, the extended Medicare 

coverage begins the first month after the end of the re-entitlement period. (See 

10.5.5) In this case, Medicare coverage would run 48 months after the 

beneficiary returned to SGA. That is the 9-month TWP plus the 15-month reentitlement period plus the 24 months of extended coverage.

NOTE: If medical recovery occurs at any point during the TWP or Re-entitlement 

period, Medicare coverage ceases according to the general rule in DCM 

10.7.1(A).

10.7.3 Who Is Eligible For Extended Medicare Coverage

All railroad retirement or survivor disability Medicare beneficiaries whose 

disability terminates under SS Act rules (DQRRB's) because of SGA are entitled.

10.7.4 Mechanical Termination Of Medicare Coverage

The following action is required to ensure that Medicare will terminate 

mechanically at the end of the applicable extension period:

1) If CHICO shows a disability annuity in current pay status or suspense
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Prepare Form G-96, enter termination code "20" in item 7. Enter the last 

month of disability annuity entitlement in item 12.

Reminder - When terminating a suspended annuity, do not enter an "X" in 

item 10.

2) If CHICO shows annuity terminated, but either no termination effective 

date is shown, or the termination effective date is earlier than the one presently 

on record

Prepare Form G-96 (same as above). Enter termination code "20" in item 

7 and last month of disability annuity entitlement in item 12.

3) If CHICO shows annuity terminated and the termination effective date in 

the record is correct or earlier than the correct effective date

Prepare Form G-811. Enter activity code "51" in item 3. In item 8, enter 

event code "9" and the last month of disability annuity entitlement.

4) If no record on CHICO

Prepare Form G-811. Enter activity code "51" in item 3. In item 8, enter 

event code "9" and the last month of disability annuity entitlement.

5) If entitlement of a DQRRB annuitant terminates after the re-entitlement 

period due to SGA

Prepare Form G-811. Enter activity code "51" in item 3. In item 8, enter 

event code "9" and the last month of the re-entitlement period.

Following the action created by G-96 or G-811, the MIRTEL system will reflect a 

future HI/SMI termination date effective the 25th month after the last month f the 

re-entitlement period or disability annuity entitlement, and a term code "3". The 

record status will remain unchanged until the actual termination action 

processes. At the scheduled time of termination, the following action will occur:

If the beneficiary is an employee or spouse now over age 65 entitlement to 

Medicare based on the attainment of age 65 will override the scheduled 

termination. No manual action is necessary in these cases. The record will be 

mechanically cleared of the termination and entitlement will continue 

uninterrupted.

If the beneficiary is an employee or spouse not yet 65 or any other type 

beneficiary (widow(er), child, etc., regardless of age) Medicare will be terminated 

effective with the 25th month after "the last month of the re-entitlement period or 

disability annuity entitlement. The record status will become "90". The HI/SMI 

termination code shown would still be "3". A folder notice will be prepared 
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showing the termination processing action completed. The reason for 

termination shown on the folder notice will be "cess of DIB".

If for any reason, it is determined that a termination action should not be taken 

when the record has been set up to do so, sent the case to MPS to remove the 

scheduled termination from the record.

If a beneficiary scheduled for Medicare termination becomes entitled to an 

annuity, Medicare premiums will automatically be deducted mechanically. Since 

the reinstated annuity is possibly not based on disability (e.g., a retirement 

annuity based on the 60/30 provisions), a referral will be produced for MPS:

"Alert - Annuity Adjusted During Medicare Extension Period."

MPS will determine whether or not Medicare deductions should continue.

10.8 Disability Related Work Expenses

10.8.1 Overview

The cost of what a person needs in order to work can be deducted from the 

earnings used to determine whether a disability annuitant has performed 

substantial gainful employment. The cost of these items and service, called 

impairment-related work expenses (IRWE), can be deducted even if the services 

and items are also needed for non-work activities. 

Effective January 1, 1989, the cost of these same items and services can also be 

deducted from a disability annuitant's earnings which are used to determine 

whether work deductions must be imposed. Prior to the 1988 Amendments, 

these expenses were not deductible for this purpose. When these expenses are 

deducted for work deduction purposes, they are called disability related work 

expenses (DRWE). 

DRWE can be considered when deductions to the payment of an occupational 

disability annuity (RRA section 2(a)(4)) or total and permanent disability annuity 

(RRA section 2(a)(5)) are being considered.

These expenses which include attendant care, medical devices, equipment, 

prosthesis, or similar items or services are exactly the same as impairment 

related work expenses (DCM 10.4.6) and are subject to the same limitations.

10.8.2 How To Develop DRWE

Annuitants with DRWE and earnings over the current monthly disability earnings 

limit are being instructed to contact field offices in order to establish DRWE. 

Refer field personnel to FOM 310.55.1 which contains instructions on how to 

develop DRWE and IRWE.
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10.8.3 Handling Of DRWE

DPS will use the guidelines in DCM 10.4.6(c) about IRWE to determine the 

amount deductible for DRWE. Worksheets in Appendix E may be used for both 

IRWE and DRWE.