    Vocational Rehabilitation: Earnings Increased for Many SSA
    Beneficiaries after Completing VR Services, but Few Earned Enough
    to Leave SSA's Disability Rolls (30-MAR-07, GAO-07-332).

    In 2005, about 10 million working-age people with disabilities
    were beneficiaries of federal income support programs
    administered by the Social Security Administration (SSA)--namely
    the Disability Insurance (DI) program and the Supplemental
    Security Income (SSI) program. Both of these programs have grown
    dramatically over the past decade and the federal government's
    cost of providing these benefits was almost $101 billion in 2005.
    This growing cost and the need to redefine the relationship
    between impairments and the ability to work prompted us in 2003
    to put federal disability programs on GAO's high-risk list. As we
    have previously reported, the percentage of SSA beneficiaries who
    could return to work is unknown. Some beneficiaries are unlikely
    to work because of the severity of their disabilities. Those who
    do return to the workforce may face additional challenges to
    their ability to leave the disability rolls. These include a
    potential loss of health care insurance coverage, lack of access
    to technologies, and transportation difficulties. Nevertheless,
    we have reported in the past that some beneficiaries who do
    participate in the workforce have credited vocational
    rehabilitation services, in part, for their return. Administered
    by the Department of Education (Education) since 1973, the
    Vocational Rehabilitation (VR) program provides funds to states
    to offer an array of employment services that range from
    treatment of impairments to job counseling and placement. In
    2005, the 80 state VR agencies were provided $2.6 billion in
    federal funds. The program serves about 1.2 million people each
    year, and over a quarter of those who exit are SSA recipients. On
    average, participants stay in the VR program for approximately 2
    years, and Education tracks employment and earnings outcomes for
    3 months after they exit the program. GAO examined long-term
    outcomes for SSA beneficiaries who participate in VR, on (1) the
    extent to which SSA disability beneficiaries who exit VR programs
    engage in work at the substantial gainful activity (SGA) level5
    and ultimately reduce or replace their benefits with earned
    income, (2) whether there are certain disability beneficiary
    characteristics associated with positive employment outcomes, and
    (3) whether some VR agencies have particular policies and
    approaches that can be associated with positive employment
    outcomes. GAO's Congressional brief of February 2, 2007 presented
    results on the first objective--namely, the number of SSA
    beneficiaries who gained employment or increased their earnings
    following VR, the extent to which their earnings were at the SGA
    level, whether they ultimately reduced or replaced their benefits
    with earned income, and whether they eventually left the rolls.
    This report formally conveys the information provided during that
    briefing, adjusted to reflect information provided by SSA in its
    review of our draft report.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-07-332
        ACCNO:   A67588
      TITLE:     Vocational Rehabilitation: Earnings Increased for Many
    SSA Beneficiaries after Completing VR Services, but Few Earned
    Enough to Leave SSA's Disability Rolls
         DATE:   03/30/2007
      SUBJECT:   Aid for the disabled
    	     Compensation
    	     Disability insurance
    	     Employment assistance programs
    	     Persons with disabilities
    	     Program evaluation
    	     Social security beneficiaries
    	     Supplemental security income
    	     Vocational rehabilitation
    	     Beneficiaries
    	     Disability Insurance Program
    	     SSA Supplemental Security Income
    	     Program

    	     Vocational Rehabilitation Program

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    ******************************************************************
    GAO-07-332

         * [1]Background
         * [2]Summary
         * [3]Observations from Phase One and Next Steps
         * [4]Appendix I: Briefing Slides
         * [5]Appendix II: Scope and Methodology

              * [6]Study Population

                   * [7]Analysis of Outcomes--An Overview

                        * [8]Analysis of Earnings Outcomes

                             * [9]Analysis of Annual Earnings in Relation to
                               Annualized Substa
                             * [10]Analysis of SSI Benefit Changes and Reductions
                             * [11]Analysis of Reduction of DI Benefit Payments
                             * [12]Analysis of Departures from and Returns to the
                               Disability Ro

                        * [13]Limitations of our Analyses

                             * [14]Limitations in Analyzing Earnings
                             * [15]Limitations in Analyzing "Parking"
                             * [16]Limitations in Analyzing Benefit Reductions
                             * [17]Limitations in Analyzing Beneficiaries Who
                               Left the Rolls

         * [18]Appendix III: Comments from the Department of Education
         * [19]Appendix IV: Comments from the Social Security Administratio

              * [20]GAO's Comments

         * [21]Appendix V: GAO Contacts and Staff Acknowledgments

              * [22]Order by Mail or Phone

    Report to Congressional Requesters

    United States Government Accountability Office

    GAO

    March 2007

    VOCATIONAL REHABILITATION

    Earnings Increased for Many SSA Beneficiaries after Completing VR
    Services, but Few Earned Enough to Leave SSA's Disability Rolls

    GAO-07-332

    Contents

    Letter 1

    Background 4
    Summary 6
    Observations from Phase One and Next Steps 8
    Appendix I Briefing Slides 11
    Appendix II Scope and Methodology 40
    Appendix III Comments from the Department of Education 51
    Appendix IV Comments from the Social Security Administration 53
    Appendix V GAO Contacts and Staff Acknowledgments 65

    Figure

    Figure 1: Data Sources Used to Create Analysis File on SSA Beneficiaries
    Who Completed VR in 2000 through 2003 41

    Abbreviations

    DCF Disability Control File
    DI Disability Insurance
    MEF Master Earnings File
    MBR Master Beneficiary Record
    SGA Substantial Gainful Activity
    SSA Social Security Administration
    SSI Supplemental Security Income
    SSR Supplemental Security Record
    TRF Ticket Research File
    VR Vocational Rehabilitation

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    United States Government Accountability Office
    Washington, DC 20548

    March 30, 2007

    The Honorable Charles B. Rangel
    Chairman
    The Honorable Jim McCrery
    Ranking Minority Member
    Committee on Ways and Means
    House of Representatives

    The Honorable Michael R. McNulty
    Chairman
    The Honorable Sam Johnson
    Ranking Minority Member
    Subcommittee on Social Security
    Committee on Ways and Means
    House of Representatives

    The Honorable Sander M. Levin
    House of Representatives

    In 2005, about 10 million working-age people with disabilities were
    beneficiaries of federal income support programs administered by the
    Social Security Administration (SSA)--namely the Disability Insurance (DI)
    program and the Supplemental Security Income (SSI) program. Both of these
    programs have grown dramatically over the past decade and the federal
    government's cost of providing these benefits was almost $101 billion in
    2005. This growing cost and the need to redefine the relationship between
    impairments and the ability to work prompted us in 2003 to put federal
    disability programs on GAO's high-risk list.^1

    As we have previously reported, the percentage of SSA beneficiaries who
    could return to work is unknown. Some beneficiaries are unlikely to work
    because of the severity of their disabilities. Those who do return to the
    workforce may face additional challenges to their ability to leave the
    disability rolls. These include a potential loss of health care insurance
    coverage, lack of access to technologies, and transportation
    difficulties.^2 Nevertheless, we have reported in the past that some
    beneficiaries who do participate in the workforce have credited vocational
    rehabilitation services, in part, for their return.^3

    1 GAO, High-Risk Series: An Update, [23]GAO-03-119 (Washington, D.C.:
    January 2003).

    Administered by the Department of Education (Education) since 1973, the
    Vocational Rehabilitation (VR) program provides funds to states to offer
    an array of employment services that range from treatment of impairments
    to job counseling and placement. In 2005, the 80 state VR agencies were
    provided $2.6 billion in federal funds.^4 The program serves about 1.2
    million people each year, and over a quarter of those who exit are SSA
    recipients. On average, participants stay in the VR program for
    approximately 2 years, and Education tracks employment and earnings
    outcomes for 3 months after they exit the program.

    You asked us to conduct a study examining long-term outcomes for SSA
    beneficiaries who participate in VR, on (1) the extent to which SSA
    disability beneficiaries who exit VR programs engage in work at the
    substantial gainful activity (SGA) level^5 and ultimately reduce or
    replace their benefits with earned income, (2) whether there are certain
    disability beneficiary characteristics associated with positive employment
    outcomes, and (3) whether some VR agencies have particular policies and
    approaches that can be associated with positive employment outcomes. In
    agreement with your staff, the briefing we provided on February 2, 2007
    presented results on the first objective--namely, the number of SSA
    beneficiaries who gained employment or increased their earnings following
    VR, the extent to which their earnings were at the SGA level, whether they
    ultimately reduced or replaced their benefits with earned income, and
    whether they eventually left the rolls. This report formally conveys the
    information provided to you during that briefing, adjusted to reflect
    information provided by SSA in its review of our draft report. We will
    present the final results for objectives two and three in a future report.

    ^2 GAO, Social Security: Disability Programs Lag in Promoting Return to
    Work, [24]GAO/HEHS-97-46 (Washington, D.C.: March 1997).

    ^3 GAO, Social Security Disability Insurance: Multiple Factors Affect
    Beneficiaries' Ability to Return to Work, [25]GAO/HEHS-98-39 (Washington,
    D.C.: January 1998).

    ^4 Twenty-four states have separate blind and general agencies. Twenty-six
    states, the District of Columbia, and the five territories each have a
    single combined agency.

    ^5 Individuals are considered to be engaged in substantial gainful
    activity (SGA) if they have earnings above a certain amount each month
    (after the reduction of impairment-related work expenses). The amount of
    monthly earnings is set by SSA each year.

    To answer the question posed in objective one, we obtained a newly
    available longitudinal data set--the Ticket Research File (TRF)
    subfile--which contains information from several SSA and Education
    administrative databases on all SSA beneficiaries who left the VR program
    from 1998 through 2004. The longitudinal data enabled us to study outcomes
    far beyond the 90-day period that Education uses to track VR clients. The
    TRF subfile was matched by SSA with its Master Earnings File (MEF), which
    contains information on each beneficiary's annual earnings from 1990
    through 2004.^6 The combined data provide information about each
    beneficiary's disability benefits, earnings, and VR participation. Using
    these data and focusing on SSA beneficiaries who completed VR services
    once between fiscal years 2000 and 2003,^7 we computed the number who had
    earnings after receiving VR services, the amount they earned, and whether
    their benefits were eventually reduced or discontinued. However, due to
    limitations with the data, we could not distinguish work-related earnings
    from other income sources; as a result, we reported on the number of
    beneficiaries who had earnings, but not employment, after VR. To assess
    the reliability of the SSA and Education data critical to our analyses, we
    (1) reviewed existing documentation related to the data, (2) interviewed
    knowledgeable agency officials about the data, and (3) tested the data for
    completeness and accuracy. Our findings are limited to, and cannot be
    generalized beyond, the population we studied (i.e., SSA beneficiaries who
    completed VR once from fiscal year 2000 through 2003). Additionally,
    because we were not able to identify a comparable control group, we cannot
    attribute positive earnings outcomes to the receipt of VR services. See
    appendix II for a more thorough discussion of our scope and methods,
    including study limitations. We conducted our work between October 2005
    and January 2007 in accordance with generally accepted government auditing
    standards.

    ^6 SSA contracted with Mathematica Policy Research, Inc., to build the
    Ticket Research File (TRF). The SSA administrative databases used in the
    TRF include the Supplemental Security Record (SSR), the Master Beneficiary
    Record (MBR), the Numident, the 831/832/833 Disability Files, and the
    Disability Control File (DCF). The earnings data from SSA's MEF are annual
    earnings based on Internal Revenue Service W-2 tax filings and data on the
    VR program came from the Department of Education's RSA-911 database.

    ^7 We excluded from our study SSA beneficiaries who may have exited VR
    (after receiving services) more than once between 2000 and 2003, to avoid
    double counting beneficiaries who go through VR multiple times but leave
    the rolls only once. We also excluded those who did not successfully
    complete VR services (i.e., they may have applied for or started VR, but
    did not complete the VR process). Finally, we excluded DI and SSI
    beneficiaries who left the beneficiary rolls during the time period of our
    study due to death or their reaching the age of 65 and becoming eligible
    for retirement benefits.

    Background

    Although the DI and SSI programs use the same definition of disability for
    eligibility purposes, they were designed to serve different populations
    and have different benefit structures. DI provides benefits to workers
    with disabilities who generally have a qualifying work history.^8 The
    monthly DI benefit is, therefore, based on a worker's contributions from
    prior earnings and differs for each beneficiary. In contrast, SSI provides
    cash support for people with low income, few resources, and who may have
    little or no workforce attachment. The base federal monthly SSI benefit is
    generally the same for all beneficiaries.^9 Concurrent beneficiaries
    qualify for both programs because they have a qualifying work history, but
    still fall below the SSI income and resource thresholds.

    Once a beneficiary is determined eligible for disability, the two programs
    also differ in how subsequent earnings from work affect benefits. DI
    beneficiaries are allowed a 9-month trial work period,^10 during which
    there are no limits on their earnings. Upon completion of the trial work
    period, beneficiaries move into a 36-month extended period of eligibility
    when their cash benefit ceases except for those months in which the
    beneficiary reports earning less than SGA.^11 In 2006, SGA for nonblind
    beneficiaries was set at $860 per month.^12 Recipients whose earnings are
    at least SGA upon completion of the extended period of eligibility will
    cease to receive benefits and will be removed from the disability rolls.
    In contrast, SSI benefits are reduced by $1 for every $2 of earned income
    that exceeds $65 per month, until their benefits reach zero (i.e., are
    suspended).^13 If SSI beneficiaries' monthly benefits are suspended for 12
    consecutive months, they are taken off the disability rolls.^14

    8 A qualifying work history means beneficiaries have earned the required
    amount of work credits within a certain period ending with the time period
    they became disabled.

    ^9 States may supplement the federal monthly SSI benefit amount.
    Additionally, individual benefit amounts may vary based on a variety of
    other factors, such as earned and unearned income, and marital status.

    ^10 The trial work period is any 9 months within a 60-month period where
    the beneficiary earns above a certain amount ($620 per month or more in
    2006). The 9 months do not have to be consecutive, but rather can take
    place during any 60-month rolling consecutive time period.

    ^11 After the trial work period, if beneficiaries are working at SGA, they
    receive benefits for a 3-month grace period before cash benefits cease.
    Although cash DI benefits may cease most individuals with disabilities who
    work continue to receive at least 93 months of Medicare and they may be
    eligible to participate in Medicaid Buy-in (in some states). Also, after
    the 93-month period ends, they may be eligible to buy Medicare coverage as
    long as they still have a disability.

    ^12 SGA for blind beneficiaries was $1,450 per month.

    Complexities inherent to the DI and SSI programs have been criticized for
    creating disincentives for beneficiaries to leave the rolls in favor of
    work. For example, many believe that the threat of losing health care
    coverage as a result of working for extended periods of time presents a
    significant obstacle to seek and maintain employment. In addition, the DI
    benefit structure has been referred to as having a "cash cliff," because
    beneficiaries who earn SGA stop receiving benefits entirely, whereas SSI
    benefits are reduced more gradually on a $1-benefit-reduction for
    $2-earned-income basis. To reduce some of the disincentives that DI and
    SSI beneficiaries face in returning to work, Congress enacted the Ticket
    to Work and Work Incentives Improvement Act of 1999.^15 Among other
    provisions, the law provided vouchers for vocational services, additional
    Medicaid eligibility options, and extension of Medicare eligibility. SSA
    phased in the Ticket to Work provisions gradually over a 3-year period
    beginning in 2002.

    ^13 There is a $20 general income exclusion that is first applied to
    unearned income. If the beneficiary does not have any unearned income,
    then the $20 can be added to the $65 exclusion for earned income. For
    example, if an SSI beneficiary earns $1,000 from work during the month and
    receives no other income, the first $85 would be exempted leaving $915.
    Then, the $915 would be decreased by $1 for every $2 resulting in $457.50.
    As a result, the individual's SSI benefit for that month would then be
    decreased by $457.50.

    ^14 Some SSI beneficiaries may continue to receive Medicaid coverage if
    their earnings alone, or in combination with their other income, become
    too high to receive a cash benefit.

    ^15 Ticket to Work and Work Incentives Improvement Act of 1999, Pub. L.
    No. 106-170 (1999).

    Summary

    In summary, we found the following for disability beneficiaries who
    completed VR once during fiscal years 2000 to 2003:

               o Earnings outcomes were mixed in the year following VR and also
               over time.^16 Approximately 40 percent of the over 303,500 SSA
               disability beneficiaries in our study increased their earnings
               compared to the year prior to VR services, while 32 percent did
               not have any earnings and another 28 percent had fewer earnings.
               In comparison to DI and concurrent beneficiaries, more SSI
               beneficiaries--42 percent versus 36 and 39 percent--increased
               their earnings in the year following VR. Of the disability
               beneficiaries who exited VR in fiscal year 2000, 33 percent
               sustained some level of earnings through 2004, although their
               median earnings decreased by 12 percent over this period.

               o Most beneficiaries' annual earnings remained below annualized
               SGA in the year following VR.^17 Specifically, 88 percent of all
               disability beneficiaries in our study had annual earnings below
               annualized SGA in the year following VR. Only a small percentage
               (5 percent) of beneficiaries from each cohort had annual earnings
               just below annualized SGA (i.e., earning over 75 percent of, but
               less than annualized SGA) in the year after VR. However, this does
               not provide evidence that beneficiaries either were or were not
               "parking"--i.e., deliberately remaining just below program income
               limits to retain benefits. Because SSA did not collect monthly
               earnings for DI beneficiaries during the timeframe of our study,
               we used annualized earnings for both DI and SSI beneficiaries,
               thereby limiting our ability to determine the extent of "parking"
               on a monthly basis.^18 For beneficiaries who had earned income in
               the year after VR, their median annual earnings were $4,476.

               o Some beneficiaries in our study earned enough to have their
               benefits reduced in the year after VR, resulting in decreased DI
               and SSI program expenses. Benefit reductions from DI and
               concurrent beneficiaries in our four cohorts who did not receive
               DI benefits for 1 or more months due to work in the year after VR
               resulted in an estimated reduction in DI benefit payments of over
               $106 million.^19 The average annual reduction in DI benefits due
               to work was $26.6 million. Of the 70,302 SSI and concurrent
               beneficiaries in our study who had earnings gains from the year
               before VR to the year after VR, almost 50,000 (71 percent) had a
               reduction in their SSI benefits. However, we were unable to
               reliably estimate SSI benefit reductions for SSI and concurrent
               beneficiaries because SSI benefit amounts can be affected by other
               factors besides earnings increases (e.g., changes in unearned
               income, spouse's income, etc.), and, due to data limitations, we
               could not isolate the effect of beneficiaries' earnings increases
               on their SSI benefit levels.

               o For the 2000 and 2001 exit cohorts, 10 percent of beneficiaries
               were able to leave the rolls^20 at some point by 2005; however,
               about a quarter of those who left also returned for at least 1
               month. While the SSI program saw the most departures, the lower
               rate of DI and concurrent beneficiaries leaving the rolls may be
               due to several factors. For example, DI beneficiaries are
               generally afforded a much longer working period before cash
               benefits are completely discontinued, and delays in the reporting
               of beneficiaries' earnings data to SSA are much more likely to
               occur for DI beneficiaries. The median annual earned income for
               all beneficiaries leaving the rolls was $12,027.^21 By way of
               comparison, the average annualized SGA was $9,618, and the average
               annualized disability benefit was $8,460 for the DI beneficiaries
               and $4,452 for the SSI beneficiaries in our study in the year
               after VR.^22 Those who returned were off the rolls for an average
               of 16 months.

    ^16 Earnings were calculated using posted annual earnings in SSA's Master
    Earnings File (MEF). The MEF data had several limitations that made it
    difficult to estimate beneficiaries' earnings and earnings changes due to
    employment. See appendix II for details.

    ^17 For the purposes of our study, annualized SGA is the monthly SGA
    amount for a given year multiplied by 12.

    ^18 The Supplemental Security Record (SSR) collects monthly data on SSI
    beneficiaries, however, when we compared the SSR with the MEF, we found
    that the values between the two data sources differed for our study
    population. Additionally, the most recent version of the SSR may not have
    been included in our TRF subfile. Therefore, we used the annual earnings
    from the MEF for both SSI and DI.

    ^19 According to an SSA official, this may be an underestimate as we did
    not include DI benefit reductions from auxiliary beneficiaries, such as a
    dependent child with disabilities. See appendix II for details.

    ^20 For the purposes of our study, leaving the rolls is defined as the
    cessation of cash disability benefits.

    ^21 Our estimates of disability beneficiaries' earnings when leaving the
    rolls may be an under- or overestimate because our data did not include
    earnings from certain sources not covered by Social Security (e.g.,
    earnings from state governments). See appendix II for details.

    Observations from Phase One and Next Steps

    Although the lack of a comparable control group prevents us from
    attributing our results to the receipt of VR services, our study provides
    information about long-term earnings outcomes for disability beneficiaries
    1 or more years after exiting VR. Specifically, our study shows that after
    completing VR, a number of disability beneficiaries from the 2000 through
    2003 exit cohorts achieved positive earnings outcomes, and a few left the
    disability rolls for a period of time. While only a small number of the
    beneficiaries in our study left the disability rolls, SSA benefit
    reductions were realized as a result of increased beneficiaries' earnings
    and subsequent reductions in their benefits. The decline in earnings in
    the years following VR suggests that many factors are likely involved in
    achieving long-term earnings gains. As research and our prior work
    suggests, a transition into the workforce for people with disabilities can
    be a larger leap than it first appears--for example, the episodic nature
    of many chronic conditions can make it difficult for some beneficiaries to
    maintain steady employment levels. Moreover, it is unclear the extent to
    which the potential loss of health care coverage may still present
    disincentives for SSA beneficiaries to seek and maintain employment with
    significant earnings.

    Much remains to be understood about the various factors that make it
    possible for persons with disabilities to participate in the workforce.
    State differences and local conditions may also be influences. Our next
    report will present our findings on some of these factors at the agency
    level--specifically, state economies, individual VR agency policies, and
    types of disabilities. We will analyze these factors' statistical
    significance and effect on beneficiaries' earnings outcomes.

    We received written comments on a draft of this report from Education,
    which oversees the VR program, and SSA, which manages some of the

    ^22 The average annualized SGA is an average of the annualized SGA amounts
    for 2000 to 2004 in 2004 dollars. The average DI and SSI benefits in the
    year after VR include concurrent beneficiaries.

    data we used in this report for purposes of evaluating its Ticket to Work
    efforts. In its response, Education, while acknowledging the limitations
    of the report, said our findings were consistent with its data regarding
    earnings of SSA beneficiaries upon closure from VR. See appendix III for
    Education's complete comments.

    In its response, SSA expressed concern that limitations in our data and
    analysis prevent us from adequately addressing the research objectives. We
    believe that our final report appropriately acknowledges the limitations
    in our data and analysis and accurately and fairly addresses the report's
    objectives, as agreed with the congressional requesters. SSA also
    expressed concern that our report, particularly the slides, could be
    misleading as discussed below and addressed in appendix IV. We believe
    that our final report does not overstate our findings and that we have
    adequately eliminated cause for misinterpretation. For example, SSA stated
    that policy makers could misinterpret the relative effectiveness of VR
    services from our study. However, we indicate in the letter and the slides
    that our findings cannot be attributed to completion of the VR program
    because we were not able to identify a comparable control group.
    Additionally, SSA indicated that our study population may have biased our
    findings. We defined our study population, in part, based on interviews
    with SSA and Education, and state that our findings reflect only the
    outcomes of the individuals included in our study population and cannot be
    generalized to others. SSA also expressed concern that our estimate of
    benefit reductions may overstate the impact of SSI beneficiary earnings.
    We agree that data limitations prevented us from isolating the effect of
    earnings on SSI benefit reductions, so we removed the estimate from our
    final report. We adjusted our language to address these as well as
    additional SSA comments of a more technical nature to improve the clarity
    of the report. See appendix IV for a reprinting of all of SSA's comments
    as well as our more detailed responses.

    Copies of this report are being sent to the Secretary of Education, the
    Commissioner of SSA, appropriate congressional committees, and other
    interested parties. This report is also available at no charge on GAO's
    Web site at http://www.gao.gov .

    If you have any questions about this report, please contact me at (202)
    512-7215. Contact points for our Offices of Congressional Relations and
    Public Affairs may be found on the last page of this report. GAO staff who
    made major contributions to this report are listed in appendix V.

    Denise M. Fantone
    Acting Director, Education, Workforce, and Income
      Security Issues

    Appendix I: Briefing Slides

    Appendix II: Scope and Methodology

    To conduct our work, we obtained a newly available longitudinal data
    set--a subfile of the Ticket Research File (TRF)--which contains
    information from several Social Security Administration (SSA) and
    Department of Education (Education) administrative databases on all SSA
    disability beneficiaries who completed the federal-state vocational
    rehabilitation (VR) program between 1998 and 2004.^1 SSA merged this data
    set with its Master Earnings File (MEF), which contains information on
    each beneficiary's annual earnings from 1990 through 2004. (See figure 1
    for a depiction of data sets used in our analysis.) The combined data
    provide information about each beneficiary's disability benefits,
    earnings, and VR participation.^2 With these data on long-term benefits
    and earnings, we were able to study disability beneficiaries' earnings
    levels far beyond the 90-day period that Education uses to track VR
    clients, as well as the effect that earnings changes had on benefit
    levels.

    ^1In 2003, SSA contracted with Mathematica Policy Research to conduct a
    full evaluation of the Ticket to Work Program. As part of this evaluation,
    Mathematica constructed the Ticket Research File (TRF), a compilation of
    longitudinal data from SSA. An extract of the TRF was merged with
    vocational rehabilitation data from the Department of Education's RSA-911
    database by an SSA official.

    ^2 Education's data on VR closures were available from 1998 to 2004. Data
    from SSA's TRF database were available from 1994 to 2004 with MEF earnings
    data available from 1990 to 2004. Social Security's MEF data are annual
    earnings based on Internal Revenue Service W-2 tax filings. At the time we
    obtained this data set from SSA, earnings data for 2005 were not
    available.

    Figure 1: Data Sources Used to Create Analysis File on SSA Beneficiaries
    Who Completed VR in 2000 through 2003

    We assessed the reliability of the databases used to create the TRF
    subfile and the Master Earnings File and determined that, despite the
    limitations outlined below, the data that were critical to our analyses
    were sufficiently reliable for our use. Specifically, we performed the
    following

               o reviewed documentation regarding the planning and construction
               of the administrative databases used to construct the TRF subfile,
               the results of data reliability tests conducted by SSA's database
               contractor, and whether documented plans were implemented;
               o conducted multiple interviews with SSA and Education officials
               who work with the databases from which the TRF subfile and
               earnings data were drawn to understand the construction of the
               data fields;
               o conducted our own electronic data testing to assess the accuracy
               and completeness of the data used in our analyses; and
               o consulted with GAO staff knowledgeable about these data sets.

    Study Population

    In consultation with SSA officials and contractors as well as Education
    officials, we selected as our study population working-age individuals
    receiving DI only, SSI only, or both DI and SSI benefits concurrently, who
    exited VR after having received services.^3 To use the most recent data
    available, we further refined this population to include those
    beneficiaries who

               o began receiving VR services no earlier than 1995 and who
               completed VR after having received services in fiscal years 2000
               through 2003;
               o had received a DI or SSI benefit payment at least once during
               the 3 months before application for VR services (Beneficiaries
               were defined as concurrent if they received both DI and SSI
               benefits for at least 1 month in the 3 months before VR
               application. We selected a 3-month window to account for the fact
               that many beneficiaries, SSI beneficiaries in particular,
               fluctuate in their receipt of benefits for any given month.); and
               o exited VR once during the timeframe of our study.

    We excluded from our study population those disability beneficiaries who

               o started VR prior to 1995 (Earlier disability benefit information
               was not available, therefore, including beneficiaries who started
               VR prior to 1995 would have limited our analyses of benefit
               changes before and after VR.);^4
               o completed VR after 2003, and for whom we lacked at least 1 year
               of long-term outcome data;
               o applied for or started VR services, but did not complete VR;
               o began receiving disability benefits after receiving VR services
               because these beneficiaries may have differed in certain important
               characteristics from those receiving benefits before VR
               participation;
               o reached age 65 or died at any point in their VR participation or
               during the timeframe of our study (We excluded the beneficiaries
               who died or reached age 65 because they would have left the
               disability rolls for reasons unrelated to employment. For example,
               beneficiaries who reach age 65 convert to SSA retirement
               benefits.); and
               o participated in VR more than once during the timeframe of our
               study. About 17 percent of the beneficiaries in our data, who
               received VR services more than once during the timeframe of our
               study, were excluded to avoid double counting beneficiaries who
               may have received services multiple times, but who left the rolls
               only once.

    ^3 Our study population included disabled adult children and disabled
    widow(er)s, who may receive DI benefits based on their parents' or
    spouses' Social Security earnings record. While their benefits are paid
    from the Old-Age and Survivors Insurance Trust Fund, these individuals are
    disabled and are eligible for VR services.

    ^4 Approximately 90 percent of VR consumers spend 5 years or less in VR,
    therefore, excluding those who started VR prior to 1995 decreased our
    population by 10 percent with the greatest effect on the 2000 cohort.

    Our final study population included 303,529 DI, SSI, or concurrent
    beneficiaries who had completed VR once during the timeframe of our study.

    We were not able to compare the earnings of beneficiaries who completed VR
    with a control group that had not completed VR because we could not
    identify a group that was sufficiently similar to those who completed VR
    to feel confident that any differences in outcomes that we found would be
    attributable to the VR program and not to the differences in individual
    characteristics.

    Analysis of Outcomes--An Overview

    Using the TRF subfile combined with data from SSA's Master Earnings File,
    we computed for the fiscal year 2000 through 2003 exit cohorts the number
    of beneficiaries who had earnings after receiving VR services, the amount
    they earned, how their earnings compared to the substantial gainful
    activity (SGA) amount,^5 and whether their benefits were eventually
    reduced or discontinued. We conducted separate analyses for DI, SSI, and
    concurrent beneficiaries because the programs differ in structure and
    incentives. On the advice of SSA officials, we used only the nonblind SGA
    amount in our calculations because the data did not indicate which
    beneficiaries were legally blind--a requirement to receive the blind SGA
    amount.^6

    5 Individuals are considered to be engaged in substantial gainful activity
    (SGA) if they have earnings above a certain amount each month (after the
    reduction of impairment-related work expenses). The amount of monthly
    earnings is set by SSA each year.

    ^6 Only a fraction of those individuals reporting visual impairments meet
    the criteria to be considered legally blind. While there was not an
    indicator for legal blindness in the version of the TRF subfile that we
    received from SSA, it will be included in subsequent versions.

    When we compared dollar amounts (i.e., earnings, benefits, and SGA levels)
    across cohorts and years, we needed a way to control for the impact of
    changes in the economy and inflation over time. To control for these
    changes, we standardized the dollar amounts in our calculations using the
    Consumer Price Index for All Urban Consumers (CPI-U). The CPI-U,
    maintained by the Bureau of Labor Statistics, represents changes in prices
    of all goods and services purchased for consumption by urban households.
    The CPI-U can be used to adjust for the effects of inflation, so that
    comparisons can be made from one year to the next using standardized
    dollars. We standardized the value of earnings, benefits, and SGA levels
    to 2004 dollars because this was the most recent year for which earnings
    data were available at the time of our analysis.

      Analysis of Earnings Outcomes

    We assessed earnings outcomes using annual earnings data. Specifically, we
    computed

               o the amount earned in the year after VR and how those earnings
               differed from the year prior to VR;^7 and
               o whether beneficiaries had some level of earnings over 4
               consecutive years (for the 2000 cohort only because we had the
               most years of data for this group).

    To ensure we fully captured beneficiaries' earnings before entry into VR,
    we compared earnings from the year before VR to the year after VR as well
    as earnings from 2 years before VR to the 2 years after VR. Because the
    results between these two analyses were consistent, we reported only the
    differences between the year before VR and the year after VR to allow us
    to incorporate as many cohorts as possible in our analyses. We also
    compared the date beneficiaries were determined to be eligible for
    disability benefits with their date of application to VR to ensure their
    earnings in the year before VR were after being found eligible for
    disability benefits, but prior to receipt of VR services.

      Analysis of Annual Earnings in Relation to Annualized Substantial Gainful
      Activity (SGA) Level

    To compare annual earnings with SGA, we created an annualized SGA amount.
    SGA, a monthly earnings amount updated each year by SSA, is used to
    determine whether an individual is engaging in substantial work. We used
    annual earnings for both DI and SSI because, at the time of our study,
    only annual earnings were collected for DI beneficiaries.^8 To present
    comparable information between beneficiaries' annual earnings and SGA, we
    created an annualized SGA amount for each cohort by multiplying SGA for a
    given year by 12. The nonblind monthly SGA levels for the years of our
    study were: 2000--$700; 2001--$740; 2002--$780; 2003--$800; and
    2004--$810.

    ^7 To determine a beneficiary's earnings in the year after VR, we
    calculated earnings in the calendar year after the year in which
    beneficiaries completed VR. For example, if a beneficiary completed VR in
    October 2000, earnings from January 2001 through December 2001 would have
    been used to determine earnings in the year after VR.

    To determine what percentage of annualized SGA each cohort earned in the
    year after VR, we compared beneficiaries' annual earnings for each cohort
    to the annualized SGA amount for that year. For example, we compared the
    2000 cohort's 2001 earnings to the 2001 annualized SGA level. When we
    computed the median annual earnings for beneficiaries who had
    earnings--irrespective of cohort--in the year after VR and for those who
    left the rolls, we averaged the annualized SGA amount from 2000 through
    2004 and standardized it in 2004 dollars as a point of reference.^9

    To determine whether beneficiaries might have been "parking," or earning
    amounts that were close to, but never exceeding, annualized SGA, we
    analyzed the percentage of beneficiaries in our study whose annual
    earnings were just below annualized SGA. If beneficiaries were parking, we
    would expect to find their annual earnings just below the annualized SGA
    level. While there are no clear criteria for identifying the point at
    which a beneficiary can be said to be earning "just below" SGA, consistent
    with our prior work we considered parking to be earning over 75 percent
    of, but less than, annualized SGA.^10

      Analysis of SSI Benefit Changes and Reductions

    We determined the number of SSI and concurrent beneficiaries who had SSI
    benefit reductions by comparing benefit levels in the year before VR to
    the year after VR. Because SSI benefit reductions can occur as a result of
    an increase in income from sources other than earnings, we examined
    benefit changes, and the resulting reductions, for only those
    beneficiaries who had an earnings gain from the year before VR to the year
    after VR.^11 To identify whether SSI and concurrent beneficiaries had SSI
    benefit changes from the calendar year before VR to the calendar year
    after VR, we used the benefit "due" field because it is not affected by
    under- or overpayments.^12 Of the concurrent beneficiaries who had an
    earnings gain and a benefit reduction, we determined how many also had a
    DI benefit increase during the same time period.

    ^8 The Supplemental Security Record (SSR) collects monthly data on SSI
    beneficiaries, however, when we compared the SSR with the MEF, we found
    that the values between the two data sources differed for our study
    population. Additionally, the most recent version of the SSR may not have
    been included in our TRF subfile. Therefore, we used the annual earnings
    from the MEF for both SSI and DI.

    ^9For the purposes of our study, to compute the average annualized SGA we
    converted the nonblind monthly SGA amounts for each year (2000 to 2004)
    into 2004 dollars. We then multiplied the monthly rates by 12, added the
    annual amounts for all years, and determined the average.

    ^10 GAO, SSA Disability: SGA Levels Appear to Affect the Work Behavior of
    Relatively Few Beneficiaries, but More Data Needed, [27]GAO-02-224
    (Washington, D.C.: January 2002).

      Analysis of Reduction of DI Benefit Payments

    We calculated the reduction of DI benefit payments for each cohort in the
    year after VR based on the number of months DI and concurrent
    beneficiaries were in DI benefit suspension or termination.^13 For the
    calendar year after VR completion, we calculated the percentage of
    beneficiaries who did not receive DI benefits for 1 or more months because
    they were in either benefit suspension or termination. We also determined
    the percentage who were in benefit suspension or termination for the
    majority of the year after VR by dividing the number who were in benefit
    suspension or termination for 7 to 12 months of the year by the total
    number who were in benefit suspension or termination for 1 month or more.
    To determine the estimated reduction in benefit payments resulting from
    benefit suspensions or terminations, we multiplied each DI and concurrent
    beneficiaries' monthly benefit amount (in 2004 dollars) by the number of
    months they were in benefit suspension or termination and summed the
    amounts for each cohort in the year after VR.

    ^11 SSI monthly benefits could increase or decrease for a variety of
    reasons, including changes in marital status, living arrangements, or
    unearned income.

    ^12 We also computed the average benefit reduction amount for
    beneficiaries with earnings gains, and the total benefit reduction amount,
    for all cohorts in the year after VR. To estimate the total benefit
    reductions resulting from SSI benefit changes, we summed the total SSI
    benefit changes (in 2004 dollars) for each cohort in the year after VR. We
    ultimately decided not to report these estimates because we could not
    determine the extent to which benefit reductions were due to changes in
    earnings or due to changes in other factors.

    ^13 Beneficiaries who do not receive their benefit in a given month during
    the extended period of eligibility are in benefit suspension. Those who
    have completed the extended period of eligibility and no longer receive a
    benefit are considered to have been terminated from the disability rolls.

      Analysis of Departures from and Returns to the Disability Rolls

    To determine whether disability beneficiaries in our study left the rolls
    before 2005 and if they returned before 2005, we used data from the TRF
    subfile that indicated the month in which a beneficiary left the rolls
    because of work. We also calculated beneficiaries' earnings in the year
    they left the rolls. We included beneficiaries who left the rolls after
    their VR application date and counted them as having returned if they
    returned for 1 month or more. Concurrent beneficiaries were considered to
    have left the rolls only if they stopped receiving benefits from both
    programs, and to have returned to the rolls if they returned to either
    program.

    Our data indicated that some beneficiaries in our study who left the rolls
    due to work also did not have any earnings. According to SSA, some
    beneficiaries may have earned enough to leave the rolls, but then stopped
    working in the same year that their benefits ceased. Additionally, some
    beneficiaries may have had earnings from sources that were not covered by
    Social Security--for example, earnings from state governments--and,
    therefore, would not be in our earnings data. While we included all
    beneficiaries that the data indicated left the rolls due to work in our
    calculations of the number who left the rolls, we eliminated those with
    zero earnings in the MEF from the earnings calculations of those who left
    the rolls to avoid an artificial reduction in median earnings.

    Limitations of our Analyses

    Our results cannot be generalized to the larger population of all SSA
    disability beneficiaries because we looked only at beneficiaries who
    completed VR. Because VR participation is voluntary, beneficiaries who
    participate in VR may have certain characteristics that make them
    different from other SSA beneficiaries and, therefore, more likely or less
    likely to succeed in the workforce. Also, without a control group, we
    cannot isolate the impact of VR services on outcomes. That is, we cannot
    determine whether these beneficiaries would have been either more or less
    likely to achieve positive outcomes in the absence of the VR program.

      Limitations in Analyzing Earnings

    Our earnings data had several limitations that made it difficult to
    estimate beneficiaries' earnings and earnings changes due to employment.
    For example, while the beneficiary earnings data were provided to SSA by
    the Internal Revenue Service and are considered to be the most
    comprehensive and accurate measure of earnings available, they excluded
    several categories of workers who participated in alternative retirement
    systems and whose earnings may not have been reported to SSA.^14 Such
    omissions could have resulted in an under- or overestimate of beneficiary
    earnings. On the other hand, some earnings reported to SSA may have
    included income derived from work activity in a previous year, such as
    commissions or bonuses. Further, the earnings data included some forms of
    nonwork income, such as sick leave earnings and profit sharing. These
    additional sources of income could not be identified and separated out of
    SSA's data and, therefore, could result in an overestimation of
    beneficiaries' earnings due to employment in a particular year, and either
    an over- or under-estimate of earnings changes over time. The data did not
    allow us to estimate the magnitude of the effect of these factors on our
    analyses.

    In addition, our use of annual earnings data limited our ability to
    analyze outcomes in the year following VR. Specifically, we were limited
    to using all earnings in the calendar year after VR, irrespective of the
    time gap between VR completion and the first month of the next calendar
    year. The start month for calculating earnings in the year after VR could
    have ranged from the 1st to the 12th month after VR, depending on which
    month the beneficiary exited. For example, beneficiaries who exited VR in
    June 2000 would have their 2001 annual earnings calculated beginning in
    January 2001--6 months after their exit from VR. Whereas beneficiaries who
    completed VR in December 2000, would have been out of VR for 1 month when
    their 2001 annual earnings calculation started in January 2001. We have no
    indication of clustering in earnings relative to VR completion, and,
    therefore, expect a fairly even distribution of earnings over time. We do
    not expect the time lag in the earnings calculation to vary systematically
    by year or cohort.

      Limitations in Analyzing "Parking"

    The earnings data also limited our ability to assess the extent of
    "parking" on a monthly basis. Beneficiaries may work inconsistently
    throughout the year and not have earnings in some months. Because the
    Master Earnings File only contains annual earnings data, we were not able
    to identify parking that might have occurred among beneficiaries, who, for
    example, worked for only a few months during the year and limited their
    earnings to a level near, but not exceeding, the monthly SGA level in each
    of those months.

    ^14 Workers who may have been excluded include federal civilian employees
    hired before 1984 and certain state and local government employees.

      Limitations in Analyzing Benefit Reductions

    Our calculations on DI benefit reductions may have resulted in under- and
    overestimates. For example, in calculating the DI reduction in benefit
    payments from beneficiaries in benefit suspension or termination, we did
    not include the reduction in benefit payments for auxiliary
    beneficiaries--such as a dependent child with disabilities--who would also
    not have received a benefit. According to an SSA official, this could
    result in an underestimate of benefit payment reductions. Additionally, we
    used the Consumer Price Index to inflate DI benefit amounts to 2004
    dollars. Using another inflation standard--such as the wage index--may
    have produced different results.

    With respect to SSI, while we attempted to capture SSI benefit changes due
    to earnings by limiting our analysis to beneficiaries with earnings gains,
    our data did not allow us to completely exclude benefit changes that may
    have been due to other factors. Therefore, we did not report estimated SSI
    benefit reduction amounts.

      Limitations in Analyzing Beneficiaries Who Left the Rolls

    Our finding that more SSI than DI beneficiaries ultimately left the rolls
    is likely due to several factors, including the different structures of
    the DI and SSI programs. DI beneficiaries are allowed a trial work period
    (9 months) and an extended period of eligibility (36 months) before they
    are considered off the rolls.^15 In contrast, SSI beneficiaries who earn
    enough so that they do not receive a benefit for 12 months are taken off
    the rolls. Therefore, given the 4-year timeframe of our study, many DI
    beneficiaries may not yet have entered or completed their extended period
    of eligibility or reached the point where they would be considered off the
    rolls.

    In addition, delays in the reporting of earnings may also have contributed
    to our finding that relatively more SSI than DI beneficiaries left the
    rolls due to work. There can be a significant delay--up to 3
    years--between when beneficiaries begin work and when SSA is notified or
    learns of their earnings. This delay is more likely to occur with DI
    beneficiaries, whose earnings were reviewed on a yearly basis as compared
    to monthly earnings reviews for SSI beneficiaries during the timeframe of
    our study. Because of this reporting delay, the TRF subfile data that
    indicated whether a beneficiary left the rolls may not have contained
    completely up-to-date data, especially for later cohorts.

    ^15 The 9-month trial work period must occur within a 60-month period.

    We may have under- or overestimated the earnings of those beneficiaries
    who left the rolls. Because our data did not include earnings from sources
    not covered by Social Security and we could not include their earnings in
    our analysis, we may have underestimated the earnings of beneficiaries in
    the 2000 and 2001 cohorts in the year they left the rolls. However, if the
    beneficiaries who had noncovered earnings earned less on average than
    those whose earnings were included in our data, it is possible that we
    could have overestimated earnings for those beneficiaries who left the
    rolls.

    Appendix III: Comments from the Department of Education

    Appendix IV: Comments from the Social Security Administration

    Note: GAO's comments supplementing those in the report text appear at the
    end of this appendix.

    See comment 2.

    See comment 1.

    See comment 3.

    See comment 4.

    See comment 6.

    See comment 5.

    See comment 8.

    See comment 7.

    See comment 9.

    See comment 11.

    See comment 10.

    The following are GAO's comments on the Social Security Administration's
    letter dated March 2, 2007.

    GAO's Comments

               1. We agree that there is some potential for readers to
               misinterpret the title. Therefore, we adjusted it to indicate that
               we analyzed beneficiaries' earnings after completing VR services,
               rather than workforce participation. Additionally, we removed the
               reference to SGA because we acknowledge the limitations of using
               annual earnings data in determining whether beneficiaries were
               earning SGA.
               2. We clarified our description of the Ticket Research File.
               3. Regarding the scope of our review, we disagree that our study
               population biases our findings or that we have characterized our
               findings as representing VR effectiveness for all beneficiaries
               completing VR. We indicate that our findings are based on the
               outcomes of the individuals included in our study population, are
               not intended to represent potential outcomes for groups outside
               this population, and cannot be attributed to VR. In accordance
               with our objective to determine whether beneficiaries eventually
               replace their benefits with earned income, we focused on those
               beneficiaries who could have potentially left the rolls due to
               work following completion of VR services; therefore, we excluded
               people who retired or died during the timeframe of our study
               because they would have left the disability rolls for reasons
               unrelated to an increase in earnings. We clarified why these
               groups were excluded in our discussion of scope and methods in
               appendix II. We also stated in this appendix that our findings
               cannot be attributed to VR because we were unable to identify a
               control group.

               We agree that the left-due-to-work variable distinguishes between
               those who left the rolls due to work and those who were ineligible
               for benefits for other reasons. However, the left-due-to-work
               variable was not developed by SSA's contractor until several
               months into our study. Once the variable was available, we
               incorporated it into our analysis. However we disagree, for
               reasons discussed in the preceding paragraph, that it was
               inappropriate to exclude those beneficiaries who died or reached
               65 during the timeframe of our study.

               SSA noted that the report should clarify which disability
               beneficiaries are included in our study. We adjusted our language
               to better reflect which beneficiaries were included, why we
               excluded certain beneficiaries, and the numbers and percentages of
               beneficiaries in our study population as appropriate.

               4. We agree with SSA that "benefit reductions" more accurately
               describes the analysis we conducted than "program savings" and
               have changed the report accordingly. We also clarified that
               benefit reductions included the sum of one year following VR for
               all four cohorts and added an annual average in the letter's
               Summary section and in the slides.

               While SSA stated that our methodology does not permit an
               assessment of the possible outcome in the absence of VR, we
               explicitly state in the letter and the slides that we could not
               isolate the impact of VR because we did not have a control group.
               However, we added language in the scope and methods section of the
               letter reemphasizing this point.

               We clarified, in our Scope and Methods discussion in appendix II,
               that our estimates of average annual beneficiaries' earnings when
               leaving the rolls could be either an underestimate or an
               overestimate depending on the average annual earnings of those not
               included in the data (i.e., those beneficiaries who had earnings
               not covered by Social Security).

               5. Regarding our numerical estimates of SGA, we agree that SGA is
               a monthly figure and that using annual earnings data is not ideal
               for assessing whether beneficiaries are "parking" on a monthly
               basis. However, SSA did not collect monthly earnings data on DI
               beneficiaries during the timeframe of our study. As a result, we
               limited our analysis to comparing annual earnings to an annualized
               SGA figure and included language regarding this limitation in both
               the letter and slides. Although our original language indicated
               that the finding was "not suggestive of parking," to further
               ensure that our finding is not misunderstood, we adjusted the
               language in the report to indicate that we found no evidence of
               parking. We also added language to the limitations section in
               appendix II.

               In a 2002 report, where we examined the effect of SGA on earnings
               for DI beneficiaries, we recommended, and SSA agreed, that it
               needed to improve its earnings data collection methods.^1
               According to SSA officials, since the timeframe of our study, SSA
               has begun collecting earnings information for DI beneficiaries
               through EWORK. To the extent that the data in this system are
               reliable, they may, in the future, provide an opportunity for a
               more precise analysis of "parking."

               SSA noted that because we used annual earnings data we could have
               captured low annual earnings in the year after VR for
               beneficiaries who may have completed VR mid-year, worked for the
               next several months, but then did not sustain their earnings. We
               agree that we were not able to capture earnings immediately after
               VR completion for beneficiaries who exited mid-year. However,
               Education already reports on employment and earnings 3 months
               after beneficiaries exit VR. The purpose of our study was to
               explore long-term outcomes. While we agree it would have been
               preferable to report earnings beginning with the month immediately
               upon exiting the VR program, we were unable to do so because SSA
               did not collect monthly earnings data for DI beneficiaries during
               the time period of our study.

               6. We agree with SSA's point that other factors besides
               work-related earnings (e.g., changes in unearned income and
               assets) may cause SSI benefits to increase or decrease, and that
               it is possible that concurrent beneficiaries may experience an SSI
               benefit reduction and a DI benefit increase due to the same
               increase in earnings. We initially limited our analysis to SSI and
               concurrent beneficiaries with earnings gains to better ensure that
               SSI benefit reductions were related, in part, to those earnings
               gains. However, we were still not able to determine what portion
               of remaining SSI benefit reductions were due to increased
               beneficiary earnings. Therefore, we have removed this estimate
               from our final report.

               We disagree with SSA that, for our study, SSI earnings could have
               been more accurately tracked and calculated using the monthly
               earnings in the Supplemental Security Record (SSR) rather than the
               annual earnings in the Master Earnings File (MEF). While the SSR
               provides earnings on a monthly basis, it relies on self-reported
               data that then must be verified; and the TRF subfile that SSA
               provided for our analysis may not have included the most recent
               version of the SSR data. The MEF contains annual earnings based on
               Internal Revenue Service W-2 tax filings. When we compared SSI
               earnings between the SSR and MEF data that we had for our study
               population, we found that the values differed between the two data
               sets; therefore, we used the MEF as we believed it to be more
               reliable.

               7. We disagree that the report does not adequately discuss Ticket
               to Work because our study objectives did not include measuring the
               effects of the Ticket to Work program. Therefore, we did not
               include the additional language suggested by SSA, as it might
               detract from the report's focus. However, we corrected the
               language in the letter to indicate that the Ticket to Work program
               was phased in gradually starting in 2002.
               8. We agree that our analysis of whether beneficiaries were
               employed was based on posted earnings in SSA's Master Earnings
               File (MEF). Because SSA's data does not allow us to distinguish
               earnings due to current employment from other earnings (such as
               commissions from previous employment or vacation pay), we replaced
               references to employment with earnings throughout the report.

               SSA also had concerns about the use of "sustained work" because it
               is suggestive of working month after month for several years.
               While we had defined our usage of the term, we changed it to
               "earnings in consecutive years" to avoid misinterpretation.

               9. We agree with most of SSA's comments regarding our description
               of SSI benefits and DI work incentives and have made the suggested
               changes.
               10. We disagree that a fuller discussion of extended Medicaid and
               Medicare benefits is needed for this report. However, we added
               language to the letter indicating that it is unclear the extent to
               which loss of health care coverage remains a disincentive for SSA
               beneficiaries returning to work.
               11. Regarding the clarity of the term "left the rolls" and how
               return to the rolls was measured, we added language to our report
               clarifying that leaving the rolls is defined as cessation of
               disability cash benefits and that beneficiaries who left the rolls
               were counted as returning if they returned for 1 month or more.

    ^1 GAO, SSA Disability: SGA Levels Appear to Affect the Work Behavior of
    Relatively Few Beneficiaries, but More Data Needed, [28]GAO-02-224
    (Washington, D.C.: January 2002).

    Appendix V: GAO Contacts and Staff Acknowledgments

    GAO Contact

    Denise M. Fantone, Acting Director, (202) 512-7215, fantoned@gao.gov

    Acknowledgments

    In addition to the contact named above Robert Robertson, Director; Michele
    Grgich, Assistant Director; Amy Anderson; Melinda Cordero; Erin M.
    Godtland; Robert Marek; and Nisha Unadkat made significant contributions
    to all phases of this report. In addition, Robert J. Aiken, Susan
    Bernstein, Anna Maria Ortiz, Daniel A. Schwimer, Doug Sloane, and Susan B.
    Wallace provided technical assistance.

    (130629)

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    Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S.
    Government Accountability Office, 441 G Street NW, Room 7125 Washington,
    D.C. 20548

    Public Affairs

    Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800
    U.S. Government Accountability Office, 441 G Street NW, Room 7149
    Washington, D.C. 20548

    References

    Visible links
      23. http://www.gao.gov/cgi-bin/getrpt?GAO-03-119
      24. http://www.gao.gov/cgi-bin/getrpt?GAO/HEHS-97-46
      25. http://www.gao.gov/cgi-bin/getrpt?GAO/HEHS-98-39
      27. http://www.gao.gov/cgi-bin/getrpt?GAO-02-224
      28. http://www.gao.gov/cgi-bin/getrpt?GAO-02-224
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