SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pathways to Independence Act of 
2005''.

SEC. 2. STATE OPTION TO RECEIVE CREDIT FOR RECIPIENTS WHO ARE 
              DETERMINED BY APPROPRIATE AGENCIES WORKING IN 
              COORDINATION TO HAVE A DISABILITY AND TO BE IN NEED OF 
              SPECIALIZED ACTIVITIES.

    (a) In General.--Section 407(c)(2) of the Social Security Act (42 
U.S.C. 607(c)(2)) is amended by adding at the end the following:
                    ``(E) State option to receive credit for recipients 
                who are determined by appropriate agencies working in 
                coordination to have a disability and to be in need of 
                specialized activities.--
                            ``(i) Initial 3-month period.--At the 
                        option of the State, if the State agency 
                        responsible for administering the State program 
                        funded under this part determines that an 
                        individual described in clause (iv) is not able 
                        to meet the State's full work requirements, but 
                        is engaged in activities prescribed by the 
                        State, the State may deem the individual as 
                        being engaged in work for purposes of 
                        determining monthly participation rates under 
                        paragraphs (1)(B)(i) and (2)(B) of subsection 
                        (b) for not more than 3 months in any 24-month 
                        period.
                            ``(ii) Additional 3-month period.--A State 
                        may extend the 3-month period under clause (i) 
                        for an additional 3 months only if, during such 
                        additional 3-month period, the individual 
                        engages in rehabilitative services prescribed 
                        by the State and a work activity described in 
                        subsection (d) for such number of hours per 
                        month as the State determines appropriate.
                            ``(iii) Rules for credit in succeeding 
                        months.--
                                    ``(I) In general.-- If the State 
                                agency responsible for administering 
                                the State program funded under this 
                                part works in collaboration or has a 
                                referral relationship with other 
                                governmental or private agencies with 
                                expertise in disability determinations 
                                or appropriate services plans for 
                                adults with disabilities (including 
                                agencies that receive funds under this 
                                part) and one of these entities 
                                determines that an individual treated 
                                as being engaged in work under clauses 
                                (i) and (ii) continues to be unable to 
                                meet the State's full work requirements 
                                because of the individual's disability 
                                and continuing need for rehabilitative 
                                services after the conclusion of the 
                                periods applicable under such clauses, 
                                then for purposes of determining 
                                monthly participation rates under 
                                paragraphs (1)(B)(i) and (2)(B) of 
                                subsection (b), the State may receive 
                                credit in accordance with subclause 
                                (II) for certain activities undertaken 
                                with respect to the individual.
                                    ``(II) Credit for activities 
                                undertaken through collaborative agency 
                                process.--Subject to subclause (III), 
                                if the State undertakes to provide 
                                services for an individual to which 
                                subclause (I) applies through a 
                                collaborative process that includes 
                                governmental or private agencies with 
                                expertise in disability determinations 
                                or appropriate services for adults with 
                                disabilities, the State shall be 
                                credited for purposes of the monthly 
                                participation rates determined under 
                                paragraphs (1)(B)(i) and (2)(B) of 
                                subsection (b) with the lesser of--
                                            ``(aa) the sum of the 
                                        number of hours the individual 
                                        participates in an activity 
                                        described in paragraph (1), 
                                        (2), (3), (4), (5), (6), (7), 
                                        (8), or (12) of subsection (d) 
                                        for the month and the number of 
                                        hours that the individual 
                                        participates in rehabilitation 
                                        services under this clause for 
                                        the month; or
                                            ``(bb) twice the number of 
                                        hours the individual 
                                        participates in an activity 
                                        described in paragraph (1), 
                                        (2), (3), (4), (5), (6), (7), 
                                        (8), or (12) of subsection (d) 
                                        for the month.
                                    ``(III) Limitation.--A State shall 
                                not receive credit under this clause 
                                towards the monthly participation rates 
                                under paragraphs (1)(B)(i) and (2)(B) 
                                of subsection (b) unless the State 
                                reviews the disability determination of 
                                an individual to which subclause (I) 
                                applies and the activities in which the 
                                individual is participating not less 
                                than every 6 months.
                            ``(iv) Individual described.--For purposes 
                        of this subparagraph, an individual described 
                        in this clause is an individual who the State 
                        has determined has a disability, including a 
                        substance abuse problem, and would benefit from 
                        participating in rehabilitative services while 
                        combining such participation with other work 
                        activities.
                            ``(v) Definition of disability.--In this 
                        subparagraph, the term `disability' means a 
                        physical or mental impairment, including 
                        substance abuse, that--
                                    ``(I) constitutes or results in a 
                                substantial impediment to employment; 
                                or
                                    ``(II) substantially limits 1 or 
                                more major life activities.''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on October 1, 2005.
Output: Pathways to Independence Act of 2005 - Amends part A (Temporary Assistance for Needy Families) (TANF) of title IV of the Social Security Act to give States the option to receive credit for recipients who are determined by appropriate agencies to have a disability and to be in need of specialized activities.