[Congressional Record Volume 143, Number 12 (Tuesday, February 4, 1997)]
[Extensions of Remarks]
[Pages E142-E143]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                STATEMENT ON THE TRANSITION TO WORK ACT

                                 ______
                                 

                        HON. BARBARA B. KENNELLY

                             of connecticut

                    in the house of representatives

                       Tuesday, February 4, 1997

  Mrs. KENNELLY. Mr. Speaker, I am introducing legislation today to 
help Americans with disabilities return to work. The Transition to Work 
Act would provide Social Security Disability Insurance [SSDI] 
recipients with three important bridges to employment. First, continued 
Medicare coverage for those leaving the rolls for work; second, a 
disabled worker tax credit to cushion the loss of disability benefits 
and to make work pay; and third, greater choice in vocational 
rehabilitation providers. The legislation is supported by the Arc, the 
American Rehabilitation Association, the American Association of 
University Affiliated Programs, American Network of Community Options 
and Resources, American Psychological Association, American Speech-
Language-Hearing Association, Bazelon Center for Mental Health, 
International Association of Business, Industry and Rehabilitation, 
National Easter Seal Society, National Multiple Sclerosis Society, the 
United Cerebral Palsy Associations, and Jerry Mashaw, chairman of the 
Disability Policy Panel of the National Academy of Social Insurance 
[NACI]. The proposal is based on the work incentive recommendations of 
the NACI Disability Policy Panel.
  The primary barrier confronting many Americans with disabilities 
attempting to leave the SSDI rolls for work is the fear of losing 
health coverage. The Transition to Work Act would alleviate this 
anxiety by guaranteeing continued Medicare coverage for at least 6 
years after an individual first leaves SSDI for work, this is a 2-year 
extension over current law. Furthermore, after that time period, the 
legislation would allow an individual to buy-in to Medicare part A 
based on a capped, income-related premium. Beneficiaries would pay 10 
percent of earnings in excess of $15,000 for the Medicare buy-in 
premium, those earning less than $15,000 would continue to get Medicare 
part A free. This new Medicare coverage extension and buy-in would 
assure disabled Americans that their health coverage would not be 
pulled out from under them if they return to work.
  Second, we must recognize that there is little incentive to make the 
transition to employment if work pays little or no more than disability 
insurance. For this reason, the Transition to Work Act would establish 
a new refundable tax credit to supplement the Earned Income Tax Credit 
[EITC] for individuals leaving the disability rolls for work. The 
maximum annual credit for an individual without children would be 
$1,200 and would phase out at $18,000 in earned income. The new credit 
would be especially helpful to individuals without children since their 
current EITC is relatively small, only $306 a year.
  And, finally, the legislation would provide SSDI recipients with a 
``Ticket for Work Opportunity'' that could be used to purchase either 
private rehabilitation or State vocational rehabilitation [VR] 
services, replacing the current system which automatically refers 
individuals to the State VR agency. Under this new system, which would 
be implemented first as a demonstration project, providers of VR 
services would get paid for results, not services. Providers would 
receive one milestone payment upon an individual's initial placement 
into employment, and then for 5 years thereafter would receive 50 
percent of the amount the DI trust fund is saving because an individual 
has left the rolls for work. Payments to providers would actually occur 
in the second through sixth years of employment since individuals still 
receive cash disability payments during their first year of employment. 
Not only would this proposal increase the overall availability and 
choice of vocational rehabilitation services for disabled Americans, 
but it would also guarantee that payment for those services reflect 
savings to the SSDI trust fund.
  Let me say that it is no easy task for Americans to leave the 
disability rolls for work. After all, these same individuals were 
forced to leave employment because of the severity of their disability. 
However, we can and should do more to help disabled individuals make 
the transition back to employment. Every SSDI recipient we help return 
to work, means one more person attaining a higher standard of living. 
In addition, it also means fewer dollars leaving the Social Security 
trust fund. I hope my colleagues will join me in this effort to reduce 
the barriers facing those with disabilities who want to return to work. 
A more detailed description of the legislation follows this statement.

                   The Transition to Work Act of 1997


                   detailed description of provisions

       The Transition to Work Act would: (1) extend Medicare 
     coverage for an additional two years and provide for an 
     income-related Medicare buy-in thereafter; (2) create a 
     Disabled Worker Tax Credit; and (3) demonstrate the 
     effectiveness of encouraging people to work through Tickets 
     for Work Opportunity.
     Continued Medicare coverage and improved Medicare buy-in
       Under current law, a beneficiary who goes back to work is 
     entitled to up to 39 months of continued Medicare coverage. 
     That 39 months begins after the 9 months of trial work during 
     which the individual also continues to receive both cash 
     benefits and Medicare. After a 3-month grace period, cash DI 
     benefits cease.
       The proposal would extend the continuation of Medicare for 
     an additional 2 years. As under current law, no cash benefits 
     would be paid during this continuation period. As a result of 
     the plan, Medicare would continue for a total of 6 years 
     after the beneficiary first began to work. This would 
     eliminate one of the largest disincentives to work.
       After the individual had retained employment and his 
     Medicare continuation coverage had ended, he would be 
     permitted to purchase Medicare coverage based on an income-
     related premium. The premium would be 10% of the individual's 
     earnings in excess of $15,000. The premium would be capped at 
     the maximum premium under current law.
       Current law allows disabled and other individuals to 
     purchase Medicare coverage. DI beneficiaries may purchase 
     Medicare Part A Hospital Insurance at the full actuarial cost 
     of coverage. In 1997, that amount is $3,732 annually. 
     Beneficiaries may purchase Medicare Part B at the same 
     premium as other enrollees--about $526 a year in 1997. Under 
     current

[[Page E143]]

     law, the HI premium is reduced for former beneficiaries who 
     have at least 30 quarters of Social Security coverage. Under 
     current law, the reduction in the premium will be fully 
     phased in by 1998. In 1998 and thereafter, the reduction will 
     be 45% of the premium for HI.
       Under current law, State Medicaid programs may purchase 
     Medicare HI coverage for low-income former beneficiaries 
     known as ``Qualified Disabled and Working Individuals.''
     Disabled worker tax credit
       The plan would offer a refundable Disabled Worker Tax 
     Credit (DWTC) to encourage DI beneficiaries to leave the 
     rolls and return to work. To encourage work and cushion the 
     loss of benefits, the credit would be available to DI 
     beneficiaries whose benefits had ceased due to work. The DWTC 
     would provide a modest supplement to the Earned Income Tax 
     Credit (EITC). Like the EITC, the credit would increase as 
     earnings increased up to a maximum credit; would plateau at a 
     level designed to make work more financially rewarding than 
     collecting disability benefits; and would phase out 
     thereafter.
       The DWTC for a person with no children would increase until 
     earnings reached $8,000 and would be phased out completely at 
     $18,000. This would provide a maximum credit of $1,200 
     annually in addition to the current EITC OF $306. The credit 
     for a worker with one child would peak at $7,000 of earnings 
     and phase out at $25,800. The maximum credit would be $500 
     annually in addition to the EITC of about $2,100. Finally, 
     the credit for a worker with two-children would peak at about 
     $10,000 and would be phased out at about $29,000. The maximum 
     credit would be $750 annually in addition to the current EITC 
     of $3,560.
     Tickets for work opportunity
       The Commissioner of Social Security would be required to 
     establish a Transition to Work demonstration program in as 
     many localities as she deems appropriate. Under the 
     Transition to Work program, Social Security Disability (DI) 
     beneficiaries would be encouraged to return to work through 
     Tickets for Work Opportunity (TWO). The TWO could be used by 
     beneficiaries to seek out those providers of rehabilitation 
     services who would most effectively help them to return to 
     work. The individual could choose to receive services from a 
     private provider or from the State vocational rehabilitation 
     (VR) agency.
       Under current law and policy, Social Security Disability 
     Insurance (DI) beneficiaries are referred to State VR 
     agencies for rehabilitation when the Disability Determination 
     Service determines that the beneficiary would be eligible for 
     VR services in that State. A DI beneficiary who refuses such 
     services may lose his or her benefits. State VR agencies are 
     reimbursed for the cost of rehabilitation after the 
     individual has been gainfully employed for nine months. Under 
     the current system, less than 1% of DI beneficiaries return 
     to work.
       The Ticket for Work Opportunity would offer beneficiaries 
     additional options for rehabilitation services. Furthermore, 
     both public and private providers would have an incentive to 
     seek out beneficiaries to help them leave the disability 
     rolls. Under the plan, the TWO would be provided 
     automatically to those persons most likely to return to 
     work--to new beneficiaries and to those who are notified of 
     the commencement of a continuing disability review (CDR). All 
     other DI beneficiaries would have the option to participate 
     in the TWO plan.
       Beneficiaries would present the TWO to a public or private 
     provider of vocational rehabilitation services. Payment would 
     be made by the Commissioner of the Social Security 
     Administration to the provider for successfully returning the 
     beneficiary to work A milestone payment would be paid to the 
     provider when the beneficiary was placed in employment and 
     began to work. When the individual had engaged in Substantial 
     Gainful Activity (i.e., earnings exceeded $500 a month) 
     throughout the 9-month trial work period and his or her 
     benefits ceased, the provider would receive 50% of the 
     savings which accrued to the Disability Insurance Trust Fund. 
     Providers would receive payments on a quarterly basis. The 
     Commissioner of Social Security would be permitted to alter 
     the percentage or the period of the payments if she 
     determined that the incentive was not adequate to return 
     beneficiaries to work.
       The Social Security Administration would certify providers. 
     Providers would be defined to include a broad range of 
     rehabilitation services include job training, liaison and 
     placement. The Commissioner would be required to provide 
     beneficiaries with a list of providers of vocational 
     rehabilitation services available in each locality.
       The vocational rehabilitation provider and the beneficiary 
     would jointly develop an individual transition to work plan. 
     The plan would take effect upon approval by the beneficiary.

                          ____________________