[Federal Register Volume 70, Number 71 (Thursday, April 14, 2005)]
[Notices]
[Pages 19821-19825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-7450]


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SOCIAL SECURITY ADMINISTRATION


Social Security Disability Program Demonstration Project: Benefit 
Offset Pilot Demonstration

AGENCY: Social Security Administration.

ACTION: Notice.

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SUMMARY: We announce a demonstration project relating to the Social 
Security disability program under title II of the Social Security Act 
(the Act). In this demonstration, called the Benefit Offset Pilot 
Demonstration, we will test modifications to current program rules that 
we apply to title II disability beneficiaries who work. We will also 
modify current rules for paying outcome payments to providers of 
services under the Ticket to Work and Self-Sufficiency program (Ticket 
to Work program). We are conducting this project under the 
demonstration authority provided in section 234 of the Act.

EFFECTIVE DATES: We anticipate that we will implement the Benefit 
Offset Pilot Demonstration on or about May 1, 2005.

FOR FURTHER INFORMATION CONTACT: Mark Green by e-mail at 
[email protected], by telephone at (410) 965-9852 or by mail at Social 
Security Administration, Office of Program Development and Research, 
3520 Annex Building, 6401 Security Boulevard, Baltimore, MD 21235.

SUPPLEMENTARY INFORMATION:

The Benefit Offset Pilot Demonstration

    In this demonstration project, we will apply alternate rules for 
treating the work activity of beneficiaries under the title II 
disability program. Our ultimate goal is to enable more beneficiaries 
to return to work and maximize their employment, earnings and economic 
independence. The project will test the effects of reducing benefits $1 
for every $2 of a beneficiary's earnings above the Substantial Gainful 
Activity (SGA) amount when title II benefits otherwise would not be 
payable during the disability beneficiary's reentitlement period. This 
benefit offset will be provided in concert with other support services, 
such as benefits counseling. The demonstration also will test the 
effects of extending the duration of the reentitlement period from the 
current 36 months to 72 months. The demonstration also will test the 
effects of altering current rules that we use in continuing disability 
reviews. Only beneficiaries selected for the treatment group under the 
project will be eligible for the demonstration provisions. We will also 
modify the rules for paying outcome payments to providers participating 
in the Ticket to Work program who have accepted tickets from 
beneficiaries in the treatment group. We are conducting this 
demonstration project in the States of Connecticut, Utah, Vermont and 
Wisconsin.
    This pilot demonstration is the beginning stage of demonstration 
activities that we plan to conduct to test the effects of a benefit 
offset as an alternative approach for treating work activity of title 
II disability beneficiaries. Information available from this pilot 
demonstration will be used to assist in the development of a more 
expansive demonstration project that we plan on conducting. We plan to 
conduct a demonstration project testing alternate methods of treating 
work activity in the title II disability program at a nationally 
representative sample of sites. We intend to enter into a contract to 
obtain assistance in the design, implementation, evaluation and 
management of this project, which will test a range of employment 
supports in combination with a $1 reduction in benefits for every $2 in 
earnings for individuals receiving disability benefits under title II 
of the Act. We estimate that this national demonstration project will 
begin in 2006. The contractor for the national demonstration project 
will carefully consider the information available from this pilot 
project.
    In the Benefit Offset Pilot Demonstration, we have entered into 
contracts with Connecticut, Utah, Vermont and Wisconsin, to assist us 
in conducting a pilot demonstration designed to test a benefit offset 
in concert with various support services and inform the planning phases 
of the national demonstration. In this pilot demonstration, we are 
testing the effectiveness of certain modifications of title II 
disability program rules and a requirement under section 1148 of the 
Act. Our goal is to enable more beneficiaries to return to work and 
maximize their employment, earnings and economic independence. For 
title II disability beneficiaries who are participating in the 
treatment group of the demonstration project, we will waive title II 
rules that provide that we will stop benefits for any month, after the 
third month, in which a beneficiary performs SGA during the 
reentitlement period, and rules regarding the duration of the 
reentitlement period. In addition, we will waive certain rules relating 
to continuing disability reviews. We also will waive rules regarding 
payments to employment networks under the Ticket to Work program.
    We are conducting the Benefit Offset Pilot Demonstration under the 
authority of section 234 of the Act. Section 234 of the Act directs the 
Commissioner of Social Security to carry out experiments and 
demonstration projects to determine the relative advantages and 
disadvantages of, among other approaches, various alternative methods 
of treating work activity of individuals entitled to title II benefits 
based on disability, including such methods as a reduction in benefits 
based on earnings,

[[Page 19822]]

designed to encourage these beneficiaries to return to work.
    Section 234 of the Act authorizes the Commissioner to waive 
compliance with the benefit requirements of title II of the Act and the 
requirements of section 1148 of the Act as they relate to the program 
established under title II, and authorizes the Secretary of Health and 
Human Services to waive compliance with the benefit requirements of 
title XVIII of the Act, insofar as is necessary for a thorough 
evaluation of the alternative methods under consideration.

Participation in the Benefit Offset Pilot Demonstration

    To participate in the Benefit Offset Pilot Demonstration an 
individual must be entitled to title II benefits based on disability 
and be enrolled in the Benefit Offset Pilot Demonstration. Enrollment 
will be a function of the four States that are participating in the 
demonstration. The following rules on eligibility for participation in 
the demonstration project also will apply:
     Individuals who are entitled to title II disability 
benefits but whose benefits are suspended because of performance of SGA 
during the reentitlement period will be eligible to participate in the 
project.
     Beneficiaries whose 36-month reentitlement period has 
ended but who are still entitled to title II disability benefits will 
be eligible to participate in the project, provided that the 
beneficiary is enrolled as a project participant prior to the close of 
the 71st month following the end of his or her trial work period.
     Concurrent title II/title XVI beneficiaries will not be 
eligible to participate in the project.
     Beneficiaries for whom we have already started a 
continuing disability review will be eligible to participate in the 
project, but we will complete the continuing disability review in 
accordance with current rules.
     Beneficiaries who have received a medical cessation 
determination or decision will not be eligible to participate in the 
project unless, on appeal, they subsequently receive an administrative 
determination or decision that their disability continues.
    While consent of participants is not a requirement of demonstration 
projects under section 234, participation in this demonstration will be 
through voluntary written consent. Title II disability beneficiaries 
who are eligible for statewide programs providing employment support 
services, such as the State vocational rehabilitation (VR) agency 
program and the Benefits Planning, Assistance and Outreach program in 
the State, will be asked by the State programs to volunteer for the 
demonstration project. Beneficiaries who volunteer for the project will 
be randomly assigned to treatment and control groups. The treatment 
group will receive State-specific employment supports and will be 
eligible for the benefit offset and other title II disability program 
waivers, while the control group will receive only the employment 
supports. Since these employment supports are provided through 
statewide programs, individuals do not have to participate in the 
demonstration project to be eligible for them.
    The individual's consent to participate in the Benefit Offset Pilot 
Demonstration may be withdrawn by the individual, in writing, at any 
time. If an individual has withdrawn his or her consent or is no longer 
eligible for the demonstration project according to the terms of the 
informed consent, we will apply all the relevant provisions of title II 
and section 1148 of the Act beginning with the first day of the month 
following the month in which the revocation is signed or the individual 
ceases to be eligible for the demonstration project.

Alternate Title II Program Rules That Apply to Participants in the 
Benefit Offset Pilot Demonstration

1. The Reentitlement Period

    Current rules provide an individual entitled to title II benefits 
based on disability with an additional period, immediately following 
the individual's completion of 9 months of trial work, during which the 
individual can continue to test his or her ability to work if the 
individual has a disabling impairment. Section 223(a)(1) and sections 
202(d)(1), (e)(1), and (f)(1) of the Act provide that this additional 
period, known as the reentitlement period, ends after 36 months or, if 
earlier, when the individual ceases to have a disabling impairment. 
Under these sections of the Act, an individual's performance of SGA 
during the reentitlement period will not terminate his or her 
entitlement to disability benefits. However, section 223(e) of the Act 
provides that benefits may not be paid for any month, after the third 
month, in which the individual engages in SGA during the reentitlement 
period. Our regulation at 20 CFR 404.1592a reflects these provisions of 
the Act.
    Under section 404.1592a(a)(1) of our regulations, the first month 
that an individual entitled to title II disability benefits engages in 
SGA following completion of a 9-month trial work period, we will find 
that the individual's disability ceased because he or she has 
demonstrated the ability to do SGA. If the month disability ceased due 
to the performance of SGA occurs after the reentitlement period, 
entitlement to and payment of benefits will terminate with the second 
month after the month disability ceased. There are different rules if 
the month disability ceased due to the performance of SGA occurs during 
the reentitlement period. In this situation, section 404.1592a(a)(3) 
provides that we will find that the individual's entitlement to 
disability benefits terminates in the first month in which the 
individual engages in SGA after the end of the reentitlement period.
    If we determine that a beneficiary's disability ceased during the 
reentitlement period because he or she performed SGA, section 
404.1592a(a)(2) provides that the beneficiary will be paid benefits for 
the first month after the trial work period in which the beneficiary 
engages in SGA and for the two succeeding months, whether or not the 
beneficiary does SGA in those months. These three months are known as 
the ``grace period.'' After the grace period, we will not pay benefits 
for any month during the reentitlement period in which the beneficiary 
does SGA. However, we will pay benefits for any month during the 
reentitlement period in which the beneficiary does not do SGA. In 
determining whether an individual does SGA in a month after the grace 
period, we will consider only the individual's work in, or earnings 
for, that month. We will not apply the rules regarding averaging of 
earnings or unsuccessful work attempts.
    Section 404.1592a(b) provides that the reentitlement period ends 
with the earlier of:
     The month before the first month an individual's 
impairment no longer exists or is not medically disabling; or
     The last day of the 36th month following the end of the 
individual's trial work period.
    We are waiving specific provisions relating to the reentitlement 
period for this demonstration project. First, we are waiving the 
provisions of section 223(e)(1) of the Act and 20 CFR 404.401a and 
404.1592a(a)(2)(i) that provide that, after the grace period, we will 
not pay benefits for any month during the reentitlement period in which 
the beneficiary does SGA. For project participants selected for the 
treatment group, we are waiving these provisions to permit the payment 
of benefits for months during the reentitlement period in which the 
beneficiary does SGA, subject to the

[[Page 19823]]

application of a benefit offset. Under the benefit offset, we will 
reduce the amount of the beneficiary's monthly title II disability 
benefits by $1 for every $2 of the beneficiary's earnings above the SGA 
threshold amount (for 2004, $830 per month for non-blind beneficiaries 
and $1350 per month for blind beneficiaries). We will determine the 
amount of monthly title II disability benefits that would have been 
payable to the beneficiary had the beneficiary not engaged in SGA, 
using the current title II program rules, including the rules in 20 CFR 
404.401 et seq. regarding deductions, reductions, and nonpayment of 
benefits. We will apply the benefit offset to the disability benefits 
that would have been payable for the month had the beneficiary not 
engaged in SGA. This waiver will be effective only for benefits for 
months that begin after the month in which the disability beneficiary 
is enrolled as a participant in the treatment group of the project.
    We also are waiving the provisions in section 223(e)(2) of the Act 
and 20 CFR 404.401a and 404.1592a(a)(2)(ii), which provide that title 
II benefits of dependents entitled on the earnings record of an 
individual entitled to disability insurance benefits will not be 
payable for any month for which the individual's disability insurance 
benefits are not payable under the Act and regulations because he or 
she engages in SGA during the reentitlement period. For persons 
entitled to dependents' benefits based on the earnings record of a 
disability insurance beneficiary who is a participant in the treatment 
group, we are waiving these provisions of the Act and regulations to 
permit the payment of such dependents' benefits for months in which the 
disability insurance beneficiary does SGA after the grace period and 
during his or her reentitlement period. Using the current title II 
program rules, including the rules in 20 CFR 404.401 et seq., we will 
pay the monthly dependents' benefits that would have been payable had 
the disability insurance beneficiary not engaged in SGA. This waiver 
will be effective only for dependents' benefits for months that begin 
after the month in which the disability insurance beneficiary is 
enrolled as a participant in the treatment group of the project.
    In addition, for the purpose of this demonstration project, we are 
waiving the provisions of sections 223(a)(1) and (e)(1) and sections 
202(d)(1), (e)(1), and (f)(1) of the Act and 20 CFR 404.1592a(b) that 
limit the duration of the reentitlement period to 36 months. We are 
waiving these provisions for the purpose of providing a reentitlement 
period of up to 72 months for project participants selected for the 
treatment group. For these project participants, the reentitlement 
period will end with the earliest of the following:
     The month before the first month an individual's 
impairment no longer exists or is not medically disabling; or
     The last day of the 72nd month following the end of the 
trial work period.
    For a beneficiary whose 36-month reentitlement period has ended and 
who is enrolled as a participant in the treatment group prior to the 
close of the 71st month following the end of his or her trial work 
period, we will provide the beneficiary with an extended reentitlement 
period of up to 72 months beginning with the month immediately 
following the end of his or her trial work period. However, as 
explained above, the alternate rules for paying disability benefits 
subject to the application of the benefit offset (and for paying 
dependents' benefits, if applicable) will be effective only for 
benefits for months that begin after the month in which the disability 
beneficiary is enrolled as a participant in the treatment group of the 
project. Therefore, if a disability beneficiary in the treatment group 
(including the aforementioned category of beneficiary) does SGA in or 
before the month in which he or she is enrolled as a project 
participant, and such month of SGA occurs after the grace period and 
during the extended reentitlement period, we will suspend the payment 
of disability benefits (and any dependents' benefits, if applicable) 
for that month under the current title II program rules.
    Finally, to reduce the reporting burden we are waiving the 
provision in 20 CFR 404.1592a(a)(2) that provides that, in deciding 
whether a beneficiary does SGA in a particular month after the grace 
period and within the reentitlement period for purposes of determining 
whether benefits should be paid for that month, we will consider only 
the work in, or earnings for, that month, and we will not apply the 
provision regarding averaging of earnings. For a project participant 
who works after the grace period and within the reentitlement period, 
we will consider the individual's earnings on an annual basis and use 
averaging to determine whether the individual's average monthly 
earnings are above the SGA amount and, if so, to calculate the monthly 
benefit amount. We will pay benefits based on the individual's estimate 
of annual earnings and make necessary adjustments when the year ends, 
or sooner if relevant information is available.
    In order to ensure that beneficiaries are not disadvantaged by 
their participation in this demonstration project, the alternate title 
II program rules will affect neither entitlement to a trial work period 
nor the payment of benefits during the grace period for beneficiaries 
selected for the treatment group. The benefit offset will be effective 
beginning with the month immediately following the month in which the 
beneficiary is enrolled as a participant in the treatment group. 
However, the benefit offset will not take effect any earlier than with 
the first month in which the beneficiary engages in SGA after both the 
trial work period and the grace period. In addition, the waivers under 
this demonstration project will not affect the period of extended 
Medicare coverage that applies to an individual whose entitlement to 
title II disability benefits has terminated due to the performance of 
SGA after the reentitlement period and who continues to have a 
disabling impairment. The period of extended Medicare eligibility for 
such an individual will continue to be determined as though the 
reentitlement period were 15 months, as required under section 226(b) 
of the Act. Beneficiaries who participate in this demonstration will 
continue to be entitled to at least 93 months of hospital insurance and 
supplementary medical insurance under Medicare after the last month of 
the trial work period if they continue to have a disabling impairment.

2. Continuing Disability Reviews

    We are required under section 221(i) of the Act and our regulations 
to periodically reevaluate a disability beneficiary's impairment(s) to 
determine whether he or she continues to be under a disability. We call 
this evaluation a continuing disability review (CDR). We conduct CDRs 
at regularly scheduled intervals. However, we may begin a CDR at other 
times if circumstances warrant. Our regulations at 20 CFR 404.1589 and 
404.1590 explain when we will begin CDRs for title II disability 
beneficiaries. If we determine in a CDR that the individual is no 
longer under a disability, in most cases benefits will stop.
    We are waiving section 221(i) and related provisions of the Act and 
20 CFR 404.1589 and 404.1590 for the purpose of suspending the 
initiation of CDRs for participants in the Benefit Offset Pilot 
Demonstration for the period up to and including a participant's 
extended reentitlement period. This means that

[[Page 19824]]

we will not begin a CDR for a participant in the treatment group either 
prior to or during his or her extended reentitlement period.

Alternate Rule for Outcome Payments Under the Ticket to Work Program

    Under the Ticket to Work program under section 1148 of the Act, we 
make milestone and/or outcome payments to a provider of services which 
is serving as an employment network under that program and to which a 
disability beneficiary has assigned a ticket if certain conditions are 
met. Section 1148(h) of the Act and our regulations at 20 CFR 411.500, 
411.525 and 411.575 provide that an employment network to which a 
beneficiary has assigned a ticket will be eligible for an outcome 
payment for each month (up to a maximum of 60 months) for which title 
II disability benefits and Federal Supplemental Security Income cash 
benefits based on disability or blindness are not payable to the 
individual because of work or earnings. Thus, an employment network to 
which a title II-only beneficiary has assigned a ticket can receive an 
outcome payment for any month during the beneficiary's reentitlement 
period for which title II disability benefits are not payable to the 
beneficiary because he or she is engaging in SGA.
    For a participant in the demonstration project, we will not stop 
the payment of benefits for months during the beneficiary's extended 
reentitlement period because the beneficiary engages in SGA. Instead, 
we will reduce benefits by $1 for every $2 of the beneficiary's 
earnings above the SGA threshold amount. Thus, for employment networks 
serving beneficiaries who are project participants, a month of SGA that 
would otherwise generate an outcome payment for the employment network 
would not, because of the benefit offset, qualify as an outcome payment 
month under the Ticket to Work Program, unless the beneficiary's 
earnings are sufficient to reduce monthly benefits to zero after 
application of the benefit offset. This could impose an undue burden on 
employment networks serving these beneficiaries, since they would not 
receive outcome payments under the Ticket to Work program for which 
they would otherwise be eligible if the beneficiaries were not project 
participants.
    Therefore, for this demonstration project, we are waiving the 
requirement in section 1148(h) of the Act and 20 CFR 411.500(b)-(e), 
411.525(a)(1)(i), and 411.575(b)(1)(i)(A) that an outcome payment may 
be made to an employment network to which a title II beneficiary has 
assigned a ticket, only for a month for which title II disability 
benefits are not payable to the beneficiary because of work or 
earnings. For an employment network to which a beneficiary 
participating in this demonstration project has assigned a ticket, we 
are waiving this requirement for the purpose of permitting payment of 
an outcome payment for any month for which the employment network would 
have been eligible for such a payment if the beneficiary were not a 
participant in this demonstration project. If, but for this 
demonstration project, title II disability benefits would not have been 
payable to the beneficiary for a particular month because of the 
beneficiary's work or earnings, we will pay an outcome payment to the 
employment network for that month if all other requirements for payment 
under the Ticket to Work program are met.
    We also may pay milestone and/or outcome payments to a State VR 
agency which is serving a beneficiary under the Ticket to Work program 
if the State agency has elected to be paid under an employment network 
payment system with respect to that beneficiary. Therefore, this waiver 
also will apply to a State VR agency to which a beneficiary 
participating in the project has assigned a ticket and which has 
elected to be paid under an employment network payment system with 
respect to that beneficiary.

Objectives of the Benefit Offset Pilot Demonstration

    Through this demonstration project we expect to:
     Determine the effectiveness of the alternate rules in 
encouraging title II disability beneficiaries to return to work or 
increase their earnings;
     Obtain information that can be used in planning the 
national demonstration project;
     Support the President's New Freedom Initiative; and
     Further the goal of supporting work at all stages of our 
disability process.
    We will work with the contractors to develop appropriate 
measurements of the effects of the alternate rules to be tested under 
this demonstration project. The evaluation of the project will focus on 
issues such as the rate of return to work by project participants, 
their earnings and ability to sustain their work attempts, and the rate 
at which they leave cash benefits because of work. We also will be 
examining for whom these interventions appear to be the most effective.

Statutory and Regulatory Provisions Waived

    We waive the provisions of section 223(e)(1) of the Act and 20 CFR 
404.401a and 404.1592a(a)(2)(i) to the extent necessary to permit the 
payment of disability benefits to a beneficiary who is a participant in 
the treatment group for months during the reentitlement period in which 
the beneficiary does SGA, subject to the application of the benefit 
offset described above. We also waive the provisions of section 
223(e)(2) of the Act and 20 CFR 404.401a and 404.1592a(a)(2)(ii) to the 
extent necessary to permit the payment of dependents' benefits to 
persons entitled to such benefits based on the earnings record of a 
disability insurance beneficiary who is a participant in the treatment 
group, for months during the reentitlement period in which the project 
participant does SGA. We waive the provisions of sections 223(a)(1) and 
(e)(1) and sections 202(d)(1), (e)(1), and (f)(1) of the Act and 20 CFR 
404.1592a(b) to the extent necessary to provide participants in the 
treatment group an extended reentitlement period of up to 72 months. We 
waive the provisions of 20 CFR 404.1592a(a)(2) to the extent necessary 
to permit us to consider a project participant's earnings on an annual 
basis and use averaging to determine whether that beneficiary's average 
monthly earnings for a month during the reentitlement period are above 
the SGA amount for purposes of applying the benefit offset and 
calculating the monthly benefit amount under the offset.
    We waive section 221(i) and relevant provisions of sections 
202(d)(1), (e)(1), and (f)(1), 216(i), and 223(a)(1) of the Act and 20 
CFR 404.1589 and 404.1590 to the extent necessary to permit us to 
suspend the initiation of CDRs for a beneficiary who is a project 
participant for the period up to and including the participant's 
extended reentitlement period.
    We waive the provisions of section 1148(h) of the Act and 20 CFR 
411.500(b)-(e), 411.525(a)(1)(i), and 411.575(b)(1)(i)(A) to the extent 
necessary to permit us to make an outcome payment under the Ticket to 
Work program to an employment network (or State VR agency, if 
applicable) to which a beneficiary who is a participant in the 
treatment group has assigned a ticket, for any month for which the 
employment network (or State VR agency) would have been eligible for 
such payment if the beneficiary were not a participant in this 
demonstration project.


[[Page 19825]]


    Authority: Section 234 of the Social Security Act.

    Dated: March 23, 2005.
Jo Anne B. Barnhart,
Commissioner of Social Security.
[FR Doc. 05-7450 Filed 4-13-05; 8:45 am]
BILLING CODE 4191-02-P