Social Security Disability Insurance: Factors Affecting Beneficiaries'
Return to Work (Testimony, 07/29/98, GAO/T-HEHS-98-230).

GAO discussed the factors affecting the return to work of the
beneficiaries in the Social Security Disability Insurance (DI) program,
focusing on: (1) factors that working beneficiaries believe are helpful
in becoming and staying employed; and (2) tradeoffs and challenges that
exist in improving work incentives.

GAO noted that: (1) the group of DI beneficiaries interviewed identified
a range of factors that enabled them to return to work; (2) factors most
prominently cited were an improved ability to function in the workplace
as a result of successful health care and encouragement from family,
friends, health care providers, and coworkers; (3) on the other hand, DI
work incentives--such as purchasing Medicare upon exit from the
rolls--and assistance from Social Security Administration staff appeared
to play a limited role in helping beneficiaries become employed; (4) a
number of respondents said, however, that the provisions that allow them
to work for a period of time without losing cash and medical benefits
and to retain health care coverage for a limited time period after cash
assistance ends were helpful; (5) availability of worksite-based health
insurance appears to differentiate respondents who plan to leave the
rolls in the future from respondents who plan to stay; (6) in addition,
GAO's analysis of some of the proposed changes to work incentives--such
as gradually reducing the DI cash benefit level as earnings
increase--indicates that there will be difficult tradeoffs in any
attempt to change the work incentives; and (7) although GAO's work sheds
additional light on this issue, the lack of empirical analysis with
which to accurately predict outcomes of possible interventions
reinforces the value of testing and evaluating alternatives to determine
what strategies can best tap the work potential of beneficiaries without
jeopardizing the availability of benefits for those who cannot work.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-98-230
     TITLE:  Social Security Disability Insurance: Factors Affecting 
             Beneficiaries' Return to Work
      DATE:  07/29/98
   SUBJECT:  Disability benefits
             Disability insurance
             Federal social security programs
             Social security benefits
             Persons with disabilities
             Vocational rehabilitation
IDENTIFIER:  Social Security Disability Insurance Program
             Medicare Program
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Before the Subcommittee on Social Security and Family Policy,
Committee on Finance, U.S.  Senate

For Release on Delivery
Expected at 2:00 p.m.
Wednesday, July 29, 1998

SOCIAL SECURITY DISABILITY
INSURANCE - FACTORS AFFECTING
BENEFICIARIES' RETURN TO WORK

Statement of Cynthia M.  Fagnoni, Director
Income Security Issues
Health, Education, and Human Services Division

GAO/T-HEHS-98-230

GAO/HEHS-98-230T


(207042)


Abbreviations
=============================================================== ABBREV

  ADA - acronym
  DI - acronym
  HIV - acronym
  PASS - acronym
  SSA - acronym

SOCIAL SECURITY DISABILITY
INSURANCE:  FACTORS AFFECTING
BENEFICIARIES' RETURN TO WORK
============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

Thank you for inviting me to testify on factors affecting the return
to work of beneficiaries in the Social Security Disability Insurance
(DI) program.  DI is one of the largest federal programs providing
cash assistance to people with disabilities.  In 1996, about 4.4
million working-age people (aged 18 to 64) received DI cash benefits. 
The average monthly cash benefit in 1996 was $704, and the overall
amount of cash benefits paid was about $40 billion. 

Over the years, the Congress has enacted various work incentive
provisions designed to safeguard beneficiaries' cash and medical
benefits and encourage them to test their ability to engage in work. 
For example, for ongoing eligibility determinations, beneficiaries
are allowed to deduct from their gross earnings the costs of certain
impairment-related items and services needed to work.  The Social
Security Administration (SSA), which determines beneficiary
eligibility, is also responsible for encouraging DI beneficiaries to
return to work whenever possible.  Despite statutory provisions and
SSA efforts--as well as medical and technological interventions that
have afforded greater potential for some beneficiaries to work--not
more than 1 of every 500 DI beneficiaries has left the rolls by
returning to work. 

Yet relatively small improvements in return-to-work outcomes offer
the potential for significant savings in cash benefit outlays.  For
example, if an additional 1 percent of the 4.4 million DI
beneficiaries were to leave SSA's disability rolls by returning to
work, lifetime cash benefits would be reduced by an estimated $2.4
billion.\1 To help improve return-to-work outcomes, Members of the
Congress and advocates for people with disabilities have recently
proposed various reforms--such as allowing working beneficiaries to
keep more of their earnings, safeguarding medical coverage, and
enhancing vocational rehabilitation. 

Today, I would like to focus my remarks on (1) factors that working
beneficiaries believe are helpful in becoming and staying employed
and (2) trade-offs and challenges that exist in improving work
incentives.  My testimony is based on a series of GAO reports on
Social Security disability program design and implementation as well
as our more recent report on factors facilitating work for a group of
DI beneficiaries.\2 (A list of related GAO products appears at the
end of this statement.) In our recent work, we conducted survey
interviews with 69 people who were receiving DI benefits and working
in one of three metropolitan areas. 

In summary, the group of DI beneficiaries we interviewed identified a
range of factors that enabled them to return to work.  Factors most
prominently cited were an improved ability to function in the
workplace as a result of successful health care and encouragement
from family, friends, health care providers, and coworkers.  On the
other hand, DI work incentives--such as purchasing Medicare upon exit
from the rolls--and assistance from SSA staff appeared to play a
limited role in helping beneficiaries become employed.  A number of
respondents said, however, that the provisions that allow them to
work for a period of time without losing cash and medical benefits
and to retain health care coverage for a limited time period after
cash assistance ends were helpful. 

Availability of worksite-based health insurance appears to
differentiate respondents who plan to leave the rolls in the future
from respondents who plan to stay.  In addition, our analysis of some
of the proposed changes to work incentives--such as gradually
reducing the DI cash benefit level as earnings increase--indicates
that there will be difficult trade-offs in any attempt to change the
work incentives.  Although our work sheds additional light on this
issue, the lack of empirical analysis with which to accurately
predict outcomes of possible interventions reinforces the value of
testing and evaluating alternatives to determine what strategies can
best tap the work potential of beneficiaries without jeopardizing the
availability of benefits for those who cannot work. 


--------------------
\1 The estimated reductions are based on fiscal year 1995 data
provided by SSA's actuarial staff and represent the discounted
present value of the cash benefits that would have been paid over a
lifetime if the individual had not left the disability rolls by
returning to work.  These reductions, however, would be offset, at
least in part, by rehabilitation and other costs that might be
necessary to return a person with disabilities to work. 

\2 SSA Disability:  Program Redesign Necessary to Encourage Return to
Work (GAO/HEHS-96-62, Apr.  24, 1996); SSA Disability: 
Return-to-Work Strategies From Other Systems May Improve Federal
Programs (GAO/HEHS-96-133, July 11, 1996); Social Security: 
Disability Programs Lag in Promoting Return to Work (GAO/HEHS-97-46,
Mar.  17, 1997); and Social Security Disability Insurance:  Multiple
Factors Affect Beneficiaries' Ability to Return to Work
(GAO/HEHS-98-39, Jan.  12, 1998). 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

Established in 1956, DI is an insurance program funded by Social
Security payroll taxes.  There are a number of criteria an individual
must meet to be eligible for DI benefits, including a sufficient work
history and a lost capacity to work due to a disability.  Medicare
coverage is provided to DI beneficiaries after they have received
cash benefits for 24 months (individuals do not have the option to
purchase Medicare during this waiting period). 

To be considered disabled for DI benefits, an adult must be unable to
engage in any substantial gainful activity because of any medically
determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last at
least 1 year.  Moreover, the impairment must be of such severity that
a person not only is unable to do his or her previous work
but--considering age, education, and work experience--is unable to do
any other kind of substantial work that exists in the national
economy. 

The Social Security Act states that SSA is required to promptly refer
people applying for disability benefits to state vocational
rehabilitation agencies for services in order to maximize the number
of such individuals who can return to productive activity.\3

To reduce the risk a beneficiary faces in trading guaranteed monthly
income and subsidized health coverage for the uncertainties of
employment, the Congress established various work
incentives--including a trial work period, an extended period of
eligibility, and Medicare coverage buy-in.  These incentives are
intended to safeguard cash and health benefits while a beneficiary
tries to return to work. 

The trial work period allows DI beneficiaries to work for a limited
time without their earnings affecting their disability benefits. 
Each month in which earnings are more than $200 is counted as a month
of the trial work period.  When the beneficiary has accumulated 9
such months (not necessarily consecutive) within a 60-month rolling
period, the trial work period is completed.  The extended period of
eligibility begins the month following the end of the trial work
period.  The extended period is defined as a consecutive 36-month
period during which cash benefits will be reinstated for any month
the beneficiary's earnings are less than the substantial gainful
activity level (in 1997, $500 for people with disabilities; $1,000
for people who are blind).  Cash benefits may be paid for an even
longer period of time if a person is unable to perform any
substantial gainful activity. 

Another work incentive allows for continued Medicare coverage for at
least 39 months following a trial work period, as long as the
individual continues to be medically disabled.  When this
premium-free period ends, medically disabled individuals may elect to
purchase Medicare coverage at the same monthly premium--over $300 for
full coverage in 1996--paid by individuals age 65 or older who are
not insured for Social Security retirement benefits. 


--------------------
\3 State vocational rehabilitation agencies also provide
rehabilitation services to people not involved with the DI program. 


   FACTORS THAT AFFECT
   BENEFICIARIES' MOVEMENT INTO
   THE WORKFORCE
---------------------------------------------------------- Chapter 0:2

Most working DI beneficiaries we interviewed reported that financial
need and enhancing self-esteem were the main reasons for attempting
work.  They reported a number of factors as helpful to becoming
employed (see table 1).  The two most frequently reported
factors--health interventions and encouragement--appear to have been
the most critical in helping beneficiaries become employed.  First,
health interventions--such as medical procedures, medications,
physical therapy, and psychotherapy--reportedly helped beneficiaries
by stabilizing their conditions and, consequently, improving
functioning.  Not only were health interventions perceived as
important precursors to work, but they were also seen as important to
maintaining ongoing work attempts.  Encouragement to work was also
critical.  Respondents told us they received encouragement from
family, friends, health professionals, and coworkers. 



                                     Table 1
                     
                       Factors That Facilitated Working DI
                     Beneficiaries' Employment, by Frequency
                                   of Reporting

Factor          Description                     Significance
--------------  ------------------------------  --------------------------------
Primary
--------------------------------------------------------------------------------
Health          Health interventions provided   Early return to work without
intervention    medical stabilization and       health intervention may be
                improved functioning.           difficult for some.

Encouragement   Family, friends, coworkers,     Desire to work can be influenced
                and health professionals        positively, and possibly
                provided encouragement and      negatively, by social forces.
                emotional support.


Secondary
--------------------------------------------------------------------------------
Flexible work   Number of hours and work        Typical 5-day, 40-hour work week
schedule        schedule were responsive to     may be unrealistic for some
                respondents' needs and          beneficiaries.
                capabilities.

Job-related     Training and services were      Has implications for retaining
training and    directly related to finding     workers in the labor force who
services        and performing a job.           otherwise might apply for Social
                                                Security disability benefits.

Trial work      SSA provisions allowed          Trial work period reported as
period/         beneficiaries to test their     useful, although some felt that
extended        work capacity without           9 months is too short and $200
period of       jeopardizing benefits and ease  earnings level is too low.
eligibility     transition to workforce.

High self-      Respondents strongly wanted or  Motivation to work may develop
motivation      needed to work, especially      over time, as about 3 in 10 did
                compared with disabled peers    not expect to work upon program
                without jobs.                   entry.


Tertiary
--------------------------------------------------------------------------------
Religious       Religious faith reported as     Interview did not specifically
faith           providing source of strength    address religious faith; it may
                and guidance.                   be more important than reported.

Job coaches     On-site job coach or similar    Has implications for retaining
                specialist taught work skills.  workers in the labor force who
                                                otherwise might apply for Social
                                                Security disability benefits.

Assistive       Among most frequently           Usefulness of assistive devices
devices and     mentioned items were back/leg   and equipment is largely limited
equipment       braces, canes/crutches,         to people with physical
                adapted computers/keyboards,    impairments.
                and wheelchairs.

Provisions      Respondents reported that ADA   About one-third were aware of
provided by     provided rights,                ADA, and over one-half of those
Americans With  accommodations, and hiring      who were aware said ADA was not
Disabilities    opportunities.                  helpful.
Act (ADA)
--------------------------------------------------------------------------------
Note:  Factors are categorized into three groups--primary, secondary,
and tertiary--on the basis of how often all respondents reported
them.  In some instances, we combined related

A number of beneficiaries described the factors that helped them
return to work.  For example, Carol, an administrative support worker
in her thirties with a manic depressive disorder, pointed to
encouragement and medical intervention as factors that enabled her to
continue working: 

     My family members.  .  .  .encourag[ed] me to go to work and not
     rely on disability income.  They were helpful to me in assessing
     the merits and benefits of potential job offers.  .  .  .  I am
     using a combination of Prozac and lithium medications to control
     my condition and [allow] me to work regularly where I don't use
     my sick days.  Therapy with my counselor for over 4 years has
     really allowed me to work and function in a work environment. 

Similarly, Mark, a maintenance worker in his thirties with epilepsy,
said

     Medication[s] for [my] epilepsy help keep [my] condition under
     control, which minimizes seizures and the risk of getting fired. 
     .  .  .[My supervisor] check[s] from time to time to make sure
     everything is okay [and] even suggests taking days off. 

Stephen, a bartender in his thirties with HIV, identified various
individuals in the community who support him: 

     [My] infectious disease doctor [is] encouraging and is very
     supportive.  He wrote a letter to [my] employer explaining [my]
     condition and my capabilities.  [My] parents are very supportive
     [and my] medications have made me physically able to work. 
     [Coworkers are] providing emotional support. 

In addition to medical intervention, Louis--a financial counselor in
his twenties who has cancer--credited the ADA for providing him
rights to continue working: 

     All my treatments--chemo, radiation, and my eye surgery--helped
     me to get well and become physically able to work.  If I did not
     have treatments, I would be dead.  [The ADA] keeps employers
     aware that employees cannot be dismissed because of .  .  . 
     .disabilities. 

Yvonne, a cashier in her forties with an anxiety disorder, also
found--in addition to medical intervention and community support--ADA
helpful: 

     Psychotherapy and group therapy [have] been helpful.  Also,
     medication has been
     helpful.  .  .  .  My psychotherapist has gone out of his way to
     help me.  I can call him at any time.  The pastor of my church
     has also counseled me.  At the college I attended, a director of
     the disabled talks to my professors and tells them about my
     condition so that they can take this into account when assigning
     work and evaluating my performance.  .  .  .  ADA has helped
     because I believe that they would not have hired me because of
     my problems. 

Other, less frequently reported factors also enabled beneficiaries to
work.  Although these factors were less prominent overall, any single
factor may be the key determinant in an individual's becoming
employed.  These factors include a flexible schedule (particularly to
have time off to visit a health professional), job-related training
and vocational rehabilitation services (especially job search and
on-the-job training), the trial work period and extended period of
eligibility, and high self-motivation.  To a somewhat lesser extent,
religious faith, job coaches, assistive devices and equipment, and
ADA provisions were useful.  In general, similar proportions of
respondents with physical impairments and those with psychiatric
impairments cited these factors as helpful to being employed. 
However, people with physical impairments found coworkers and the
trial work period more helpful than did those with psychiatric
impairments. 

Our study results are generally consistent with published research
regarding factors associated with employment for people with
disabilities.  For instance, many of the respondents we talked to
reported a high motivation to work, were educated beyond high school,
or were in their thirties or forties.  For many, work seemed to be
economically advantageous because they were earning at least
moderate-level wages and receiving very few program benefits--such as
housing assistance and food stamps--that are contingent upon low
earnings.  Consistent with other research, medical interventions,
technology, accommodations, and social support were found to
facilitate return to work.  Unlike other studies, transportation
appears to be neither a strong facilitator for nor an impediment to
employment.  However, this may be due to the fact that our
respondents were selected from major metropolitan areas. 


      ROLE OF SSA WORK INCENTIVES
      AND STAFF INVOLVEMENT
-------------------------------------------------------- Chapter 0:2.1

Based on our discussions with beneficiaries, DI program incentives
for reducing risks associated with attempting work appear to have
played a limited role in beneficiaries' efforts to become employed. 
Although the trial work period was considered helpful by 31
respondents, several indicated it had shortcomings.  For instance,
they indicated the amount signifying a "successful" month of earnings
($200) was too low, an all-or-nothing cutoff of benefits after 9
months was too abrupt, and having only one trial period did not
recognize the cyclical nature of some disabilities.  Respondents'
mixed views of the design of the trial work period suggest that while
they value a transitional period between receiving full cash benefits
and losing some benefits because of work, they might be more
satisfied with a different design.  Finally, over one-fifth were
unaware of the trial work period and therefore may have unknowingly
been at risk of losing cash benefits. 

Many respondents were unaware of other work incentives as well. 
Consequently, fewer respondents reported these incentives as helpful
than might have had they been better informed.  For example, 41
respondents were unaware of the provision that allows beneficiaries
to deduct impairment-related work expenses from the amount SSA
considers the threshold for determining continued eligibility.\4
Using the deduction could make it easier for a beneficiary to
continue working while on the rolls without losing benefits. 
Moreover, 42 respondents were unaware of the option to purchase
Medicare upon leaving the rolls.  As a result, some of these
beneficiaries may decide to limit their employment for fear of losing
health care coverage, while others, planning to leave the rolls, may
think they are putting themselves at risk of foregoing health care
coverage entirely upon program termination. 

Generally, respondents told us SSA staff with whom they interacted
provided neither much help in nor much of a hindrance to
return-to-work efforts.  Fifty-nine respondents answered "no" when
asked if people from SSA assisted them in becoming employed. 
However, 52 respondents told us that they did not have experiences
with SSA that made it difficult to become employed.  For the 17
people reporting difficulties, the most common examples cited were
the limited assistance offered and poor information provided by SSA. 
Also, some beneficiaries noted that the $500 monthly earnings
threshold used in the formula to determine if a person with a
disability other than blindness is working at a gainful activity
level (and therefore no longer eligible for benefits) is set too low. 

When examining respondents' comments indirectly related to our
questions, we found that about one-third indicated frustration or
dissatisfaction with some aspect of SSA or the DI program.  For
example, some respondents told us they felt that the program was
humiliating and lost sight of people's needs.  Moreover, some
respondents indicated that SSA suddenly informed them that they
needed to repay cash benefits mistakenly paid to them in the past. 

We previously reported that DI beneficiaries were confused by program
provisions and recommended that SSA better implement existing
return-to-work mechanisms.\5

Recently, SSA told us that its strategy to better promote return to
work is evolving and that it envisions a partnership between field
office staff and the private sector.  SSA noted it continues to train
field office staff about work incentives and to disseminate
multimedia publications about work incentives.  In addition, SSA said
it has been using the private sector to help inform beneficiaries and
encourage them to work and expects to do so more in the future. 
Also, SSA has funded (in conjunction with the Department of
Education's Rehabilitation Service Agency) a research project that
developed models for training private sector disability case managers
about Social Security DI provisions and work incentives.  Moreover,
SSA expects that private vocational rehabilitation providers,
participating under its experimental Alternate Provider Program and
other proposed initiatives, will provide beneficiaries information
and encourage them to work. 


--------------------
\4 Examples of expenses likely to be deductible include attendant
care services performed in the work setting, structural modifications
to a vehicle used to drive to work, wheelchairs, and regularly
prescribed medical treatment or therapy that is necessary to control
a disabling condition. 

\5 See GAO/HEHS-96-62, Apr.  24, 1996. 


      LONGER TERM WORK DECISIONS
      WERE ALSO AFFECTED BY HEALTH
      CONCERNS
-------------------------------------------------------- Chapter 0:2.2

Not surprisingly, personal health appears to be an overriding issue
as beneficiaries consider their future status in the DI program and
at the worksite.  Among the 44 respondents without employer-based
health insurance coverage, 29 plan to stay on the DI rolls into the
foreseeable future or are unsure of their future plans.  In contrast,
15 of 24 respondents with such coverage plan to exit the rolls. 
Moreover, when asked if anything would make it harder to work, about
one-half of the 46 respondents who responded affirmatively said that
poorer health would inhibit employment.  Similarly, some said that
improved health would facilitate work.  Again, we found little
difference in future work and program plans between people with
physical and psychiatric impairments. 


   WORK INCENTIVES ILLUSTRATE
   DIFFICULT TRADE-OFFS IN
   DISABILITY REFORM
---------------------------------------------------------- Chapter 0:3

As noted earlier, some work incentives were perceived to be more
helpful than others.  However, changes to work incentives may help
some individual beneficiaries or groups of beneficiaries more than
others.  Data from Virginia Commonwealth University's Employment
Support Institute illustrate this point.\6 For example, figure 1
shows that under current law, a DI beneficiary's net income may drop
at two points, even as gross earnings increase.  The first "income
cliff" occurs when a person loses all of his or her cash benefits
because countable earnings are above $500 a month and the trial work
and grace periods have ended.  A second income cliff may occur if
Medicare is purchased when premium-free Medicare benefits are
exhausted. 

   Figure 1:  Comparison of Net
   Income for DI Beneficiaries
   Under Current Law and Under
   Proposed Tax Credit and
   Sliding-Scale Medicare Buy-In

   (See figure in printed
   edition.)

Source:  Employment Support Training Institute, Virginia Commonwealth
University. 

Figure 1 also illustrates what happens to net income when a tax
credit is combined with a Medicare buy-in that adjusts premiums to
earnings.\7 In this particular example, although the tax credit may
cushion the impact of the drop in net income caused by loss of
benefits, it does not eliminate the entire drop.  However, as figure
2 shows, this income cliff is eliminated when benefits are reduced $1
for every $2 of earnings above the substantial gainful activity
level. 

   Figure 2:  Comparison of Net
   Income for DI Beneficiaries
   Under Current Law and Under
   Proposed 50-Percent Benefit
   Reduction Rate and
   Sliding-Scale Medicare Buy-In

   (See figure in printed
   edition.)

Source:  Employment Support Training Institute, Virginia Commonwealth
University. 

These illustrations underscore the complex interactions between
earnings and benefits.  Changing work incentives may or may not
increase the work effort of current beneficiaries, depending on their
behavior in response to the type of change and their capacity for
work and earnings.  But even if the changes in work incentives
increase the work effort of the current beneficiaries, a net increase
in work effort may not be achieved.  This point is emphasized by
economists who have noted that improving work incentives may make the
program attractive to those not currently in it.\8 Allowing people to
keep more of their earnings would make the program more generous and
could cause people who are currently not in the program to enter it. 
Such an effect could reduce overall work effort because those
individuals not in the program could reduce their work effort to
become eligible for benefits.  Moreover, improving the work
incentives could also keep some in the program who might otherwise
have left.  Allowing people to keep more of their earnings would also
mean that they would not leave the program, as they once did, for a
given level of earnings.  Such a decrease in this exit rate could
reduce overall work effort because people on the disability rolls
tend to work less than people off the rolls.  The extent to which
increased entry occurs and decreased exit occurs will affect how
expensive these changes could be in terms of program costs. 

The costs of proposed reforms are difficult to estimate with
certainty because of the lack of information on entry and exit
effects.  Moreover, determining the effectiveness of any of these
proposed policies in increasing work effort and reducing caseloads
would require that major gaps in existing research be filled. 


--------------------
\6 The Employment Support Institute at Virginia Commonwealth
University developed WorkWORLD software, which allows individuals to
compare what happens to their net income (defined as an individual's
gross income plus noncash subsidies minus taxes and medical and work
expenses) as earnings levels change under current law and when work
incentives are changed. 

\7 The tax credit used in this example assumes that the credit is
refundable and supplements the existing Earned Income Tax Credit. 

\8 See Hillary Williamson Hoynes and Robert Moffitt, "The
Effectiveness of Financial Work Incentives in Social Security
Disability Insurance and Supplemental Security Income:  Lessons From
Other Transfer Programs," in Disability, Work, and Cash Benefits,
edited by Jerry L.  Mashaw and others (Kalamazoo, Mich.:  W.  E. 
Upjohn Institute for Employment Research, 1996), and Hillary
Williamson Hoynes and Robert Moffitt, "Tax Rates and Work Incentives
in the Social Security Disability Insurance Program:  Current Law and
Alternative Reforms," May 1997, unpublished. 


-------------------------------------------------------- Chapter 0:3.1

Mr.  Chairman, this concludes my formal remarks.  I will be happy to
answer any questions you or other Members of the Subcommittee may
have. 

RELATED GAO PRODUCTS

Social Security Disability Insurance:  Multiple Factors Affect
Beneficiaries' Ability to Return to Work (GAO/HEHS-98-39, Jan.  12,
1998). 

Social Security Disability:  Improving Return-to-Work Outcomes
Important, but Trade-offs and Challenges Exist (GAO/T-HEHS-97-186,
July 23, 1997). 

Social Security:  Disability Programs Lag in Promoting Return to Work
(GAO/HEHS-97-46, Mar.  17, 1997). 

People With Disabilities:  Federal Programs Could Work Together More
Efficiently to Promote Employment (GAO/HEHS-96-126, Sept.  3, 1996). 

SSA Disability:  Return-to-Work Strategies From Other Systems May
Improve Federal Programs (GAO/HEHS-96-133, July 11, 1996). 

Social Security:  Disability Programs Lag in Promoting Return to Work
(GAO/T-HEHS-96-147, June 5, 1996). 

SSA Disability:  Program Redesign Necessary to Encourage Return to
Work (GAO/HEHS-96-62, Apr.  24, 1996). 

PASS Program:  SSA Work Incentive for Disabled Beneficiaries Poorly
Managed (GAO/HEHS-96-51, Feb.  28, 1996). 

Social Security Disability:  Management Action and Program Redesign
Needed to Address Long-Standing Problems (GAO/T-HEHS-95-233, Aug.  3,
1995). 

Supplemental Security Income:  Growth and Changes in Recipient
Population Call for Reexamining Program (GAO/HEHS-95-137, July 7,
1995). 

Disability Insurance:  Broader Management Focus Needed to Better
Control Caseload (GAO/T-HEHS-95-164, May 23, 1995). 

Social Security:  Federal Disability Programs Face Major Issues
(GAO/T-HEHS-95-97, Mar.  2, 1995). 

Social Security:  Disability Rolls Keep Growing, While Explanations
Remain Elusive (GAO/HEHS-94-34, Feb.  8, 1994). 

Vocational Rehabilitation:  Evidence for Federal Program's
Effectiveness Is Mixed (GAO/PEMD-93-19, Aug.  27, 1993). 


*** End of document. ***