Vocational Rehabilitation
Earnings Increased for Many SSA Beneficiaries after Completing VR Services, but Few Earned Enough to Leave SSA's Disability Rolls Gao ID: GAO-07-332 March 30, 2007In 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.
Earnings outcomes were mixed in the year following VR and also over time. 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. Most beneficiaries' annual earnings remained below annualized SGA in the year following VR. 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. 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. 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. 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. 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. For the 2000 and 2001 exit cohorts, 10 percent of beneficiaries were able to leave the rolls 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. The median annual earned income for all beneficiaries leaving the rolls was $12,027. 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. Those who returned were off the rolls for an average of 16 months.
GAO-07-332, Vocational Rehabilitation: Earnings Increased for Many SSA Beneficiaries after Completing VR Services, but Few Earned Enough to Leave SSA's Disability Rolls
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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:
Background:
Summary:
Observations from Phase One and Next Steps:
Appendix I: Briefing Slides:
Appendix II: Scope and Methodology:
Appendix III: Comments from the Department of Education:
Appendix IV: Comments from the Social Security Administration:
Appendix V: GAO Contacts and Staff Acknowledgments:
Figure:
Figure 1: Data Sources Used to Create Analysis File on SSA
Beneficiaries Who Completed VR in 2000 through 2003:
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:
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.[Footnote 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.[Footnote 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.[Footnote 3]
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.[Footnote 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[Footnote 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.
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.[Footnote 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,[Footnote 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.
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.[Footnote 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.[Footnote 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,[Footnote 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.[Footnote 11] In 2006, SGA for nonblind beneficiaries was
set at $860 per month.[Footnote 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).[Footnote 13] If SSI beneficiaries' monthly
benefits are suspended for 12 consecutive months, they are taken off
the disability rolls.[Footnote 14]
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.[Footnote 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.
Summary:
In summary, we found the following for disability beneficiaries who
completed VR once during fiscal years 2000 to 2003:
* Earnings outcomes were mixed in the year following VR and also over
time.[Footnote 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.
* Most beneficiaries' annual earnings remained below annualized SGA in
the year following VR.[Footnote 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.[Footnote 18] For beneficiaries who had earned income in the year
after VR, their median annual earnings were $4,476.
* 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.[Footnote 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.
* For the 2000 and 2001 exit cohorts, 10 percent of beneficiaries were
able to leave the rolls[Footnote 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.[Footnote 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.[Footnote 22] Those who returned were off
the rolls for an average of 16 months.
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 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.
Signed by:
Denise M. Fantone:
Acting Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Briefing Slides:
Vocational Rehabilitation:
Earnings Increased for Many SSA Beneficiaries after Completing VR
Services, but Few Earned Enough to Leave SSA's Disability Rolls:
Briefing to Congressional Staff*
February 2, 2007:
* The briefing slides were subsequently updated to reflect comments
that SSA provided on our draft report. See appendix IV for SSA's
comments and our response.
Introduction:
Significant Challenges for Disability Beneficiaries to Participating in
the Workforce:
In 2005, about 10 million* working-age people were receiving Social
Security Administration (SSA) disability benefits. Some disability
beneficiaries may never work because of the severity of their
disability. Those who do work may still face additional challenges in
leaving the disability rolls:
potential loss of health insurance coverage,
lack of access to technologies that could increase their work
potential,
transportation difficulties, or:
other potential barriers, such as tight labor markets.
According to SSA, historically, very few disability beneficiaries have
left the rolls because they increased their earnings through work. In
1999, the Ticket to Work Act was passed to reduce the disincentives for
SSA beneficiaries to return to work.
*As of December 2005.
A Small Percentage of Disability Beneficiaries Use VR Services:
The Department of Education funds state Vocational Rehabilitation (VR)
agencies that provide an array of services to people with disabilities.
Although a very small percentage of all SSA disability beneficiaries
choose to participate in the VR program, over 25% who completed VR were
SSA beneficiaries, according to Education's data.*
In an earlier study, we reported that some disability beneficiaries who
have participated in the workforce indicated that vocational
rehabilitation played a role in their ability to return to work.
* From 2002 through 2005, SSA disability beneficiaries increased from a
quarter to over one-third of the population who completed VR.
Study Objectives:
Examine Employment Outcomes for Disability Beneficiaries Who Have
Completed VR:
Phase One:
Today's briefing is on the extent to which disability beneficiaries who
completed VR once in fiscal years 2000 through 2003 subsequently earned
income at the substantial gainful activity (SGA) level* and ultimately
reduced or replaced their benefits with earned income in one or more
years after VR.
Phase Two of our study, to be completed in May 2007, will examine:
whether there are certain disability beneficiary characteristics
associated with positive employment outcomes, and:
whether some VR agencies have particular policies and approaches that
can be associated with positive employment outcomes.
* Individuals are considered to be engaged in substantial gainful
activity if they have earnings above a certain amount (after the
reduction of impairment-related work expenses).
Scope and Methods:
Scope and Methods for Phase One:
Obtained disability beneficiary information from SSA on:
those who completed the VR program from 1998 through 2004,
their benefit amounts from 1994 through 2004, and:
their annual posted earnings from 1990 through 2004.
Computed for the fiscal year 2000 to 2003 exit cohorts in the calendar
year following VR completion and over time*:
the number of beneficiaries with earnings through 2004,
the amounts they earned through 2004, and:
whether their benefits were eventually reduced (through 2004) or
discontinued due to earnings (for the 2000 and 2001 exit cohorts
through 2005).
We determined the data critical to our analyses were sufficiently
reliable for our use and conducted our work in accordance with
generally accepted government auditing standards. See appendix II for
details on scope and methods.
* Our cohorts included only beneficiaries who exited VR with services
once during the timeframe of our study.
Limitations:
Study Limitations:
Our results cannot be generalized to the larger population of all
disability beneficiaries because we looked only at those who completed
VR. Beneficiaries who participate in or complete VR may have certain
characteristics that make them different from other SSA beneficiaries
and, therefore, either more or less likely to succeed in the workforce.
Also, without a control group, we could not isolate the impact of VR
services on earnings. That is, we could not determine whether these
beneficiaries would have been either more or less likely to achieve
positive outcomes in the absence of the VR program.
Due to data limitations, we used annual instead of monthly earnings
data for both DI and SSI beneficiaries, which restricted our ability to
evaluate earnings one year after VR and relative to SGA.
We may have under-or overestimated beneficiaries' annual earnings,
earnings changes, and earnings when leaving the rolls due to work
because our data did not include earnings from sources not covered by
Social Security (e.g., earnings from state governments), and included
some earnings unrelated to employment.
DI benefit reductions are likely underestimates because they did not
include benefit reductions for dependents.
We were unable to estimate SSI benefit reductions due to work because,
unlike DI benefits, SSI benefits may be affected by changes in unearned
income and assets, and data limitations prevented us from isolating SSI
benefit changes due solely to changes in earned income.
See appendix II for a detailed discussion of our study limitations.
Summary:
Phase One Findings for the 2000 to 2003 Exit Cohorts:
1) Beneficiaries' earnings outcomes were mixed in the 1 to 4 years
following VR completion.
2) 88% of beneficiaries' annual earnings remained below annualized SGA
in the year after VR.
3) Some earned enough income to have their benefits reduced in the year
after VR, resulting in decreased DI and SSI program expenses:
Disability Insurance (DI) and concurrent* beneficiaries who did not
receive DI benefits in some months due to earnings resulted in more
than an estimated $106 million in benefit reductions.**
71% of Supplemental Security Income (SSI) and concurrent* beneficiaries
who increased their earnings also had their SSI benefits reduced, but
data limitations prevented us from determining the extent to which this
was due to increased earnings versus some other change in their income.
4) 2000/2001 Cohorts: By 2005, 10% of beneficiaries earned enough to
leave the rolls, but about a quarter subsequently returned for at least
1 month.
* Concurrent beneficiaries receive benefits from both DI and SSI
programs.
** Total DI benefit reductions may be underestimated because benefit
reductions for dependents are not included.
Background:
SSA Administers Two Disability Programs:
The Social Security Administration (SSA) administers two disability
benefit programs: Disability Insurance (DI) and Supplemental Security
Income (SSI).
While both use the same definition of disability, the programs serve
somewhat different populations:
DI - people with disabilities who generally have a qualifying work
history*; and:
SSI - people with disabilities who fall below certain income and
resource thresholds and who do not have a qualifying work history.
Some (concurrent beneficiaries) qualify for both programs: They have a
work history, but also fall below SSI's income and resource thresholds.
* A qualifying work history means beneficiaries have earned the
required number of work credits within a certain period ending with the
time they became disabled.
Each Program Has Distinct Provisions:
Table 1: SSA Disability Program Characteristics:
Benefit amount;
DI:
* Based on work history;
* Varies by beneficiary;
* In 2005, average federal monthly benefit was $887;
SSI:
* Based on low income and few resources;
* Same federal base amount, although states may supplement;
* In 2006, individual federal base benefit was $603 per month.
Effect of earnings on benefits;
DI:
* Can earn unlimited income during a trial work period (TWP) without
benefit reduction;
* TWP is followed by a 36-month extended period of eligibility where
benefits are not received (after 3-month grace period) in months with
earnings at or above substantial gainful activity (SGA);
* In 2006, SGA was $860 per month ($1,450 if blind);
SSI:
* Benefits reduced by $1 for every $2 earned over $65 per month;
* General income exclusion of $20 first applied to unearned income. If
no unearned income, then may be added to $65 earned income exclusion.
When off the rolls;
DI:
* Earnings at or above SGA after completion of 36-month extended period
of eligibility;
SSI:
* Monthly benefit suspended for 12 consecutive months.
Source: GAO presentation of SSA information.
Note: SSI benefits are also reduced $1 for $1 for any unearned income
after the $20 general income exclusion. Disability beneficiaries may
also leave the rolls when they no longer meet SSA's definition of
disability or reach age 65 and are converted to retirement benefits.
[End of table]
Finding One: Earnings Outcomes Were Mixed:
Earnings Outcomes Were Mixed 1 Year after VR:
About 40% of the beneficiaries in our study (i.e., over 303,500
beneficiaries who completed VR once in 2000 to 2003) increased their
annual earnings. The percentages by beneficiary type were:
42% of all SSI beneficiaries,
36% of all DI beneficiaries, and:
39% of all concurrent beneficiaries in our study.
Of the remainder:
32% did not have any earnings, and:
28% had fewer earnings.
Changes in Earnings 1 Year after VR:
Figure 1: Changes in Disability Beneficiaries' Annual Earnings from the
Year before VR to the Year after VR for the 2000 to 2003 Cohorts
(N=303,529).
[See PDF for image]
Source: GAO analysis of SSA data.
[A] Beneficiaries' median annual earnings in the year before VR were
$2,830.
[End of figure]
The Total Percentage with Earnings Decreased 1 to 4 Years after VR
Completion:
Figure 2: Total Percentage of Beneficiaries with Earnings in Each Year
after VR.
[See PDF for image]
Source: GAO analysis of SSA data.
[End of figure]
2000 Cohort: 33% Had Some Level of Earnings over a Consecutive 4-Year
Period:
Of the 55% (41,367) who had earnings the year after VR:
* 42% were DI,
* 40% were SSI, and;
* 18% were concurrent beneficiaries.
By 2004, the percentage of those who had earnings in each consecutive
year was 33% - a 40% decrease. Proportionately, fewer SSI and
concurrent beneficiaries sustained some earnings in each year.
Figure 3: Percentage of Beneficiaries from the Fiscal Year 2000 Cohort
Who Had Earnings for 4 Consecutive Years after VR.
[See PDF for Image]
Source: GAO analysis of SSA data.
[End of figure]
2000 Cohort: Median Earnings Fell Slightly for Those with 4 Years of
Consecutive Earnings:
Of the 33% (24,583) who had some level of earnings for 4 consecutive
years after VR, their median earnings declined by 12%.
Our data do not allow us to determine the reasons for the decrease in
earnings (e.g., whether the beneficiaries worked fewer hours or their
wages decreased).
Figure 4: Median Annual Earnings for the Fiscal Year 2000 Cohort
Beneficiaries Who Had Earnings for 4 Consecutive Years after VR
(N=24,583).
[See PDF for Image]
Source: GAO analysis of SSA data.
[End of figure]
Finding Two: Earnings Remained Below SGA:
88% of Beneficiaries Had Annual Earnings Below Annualized SGA 1 Year
after VR:
Figure 5: Percentage of Annualized SGA Earned by Beneficiaries in the
Year after VR for the 2000 to 2003 Cohorts (N=303,528).
[See PDF for image]
Source: GAO analysis of SSA data.
Note: Figure represents percentage of annualized SGA in the year after
VR for all exit cohorts combined and includes those who did not have
any earnings. Annualized SGA is the monthly SGA for a given year
multiplied by 12.
[End of figure]
Annual Earnings after VR Do Not Provide Evidence of "Parking"
Only a small percentage of beneficiaries from each cohort had annual
earnings just below annualized SGA:
In the year after VR, 5% of beneficiaries earned just below the
annualized SGA level (see figure on previous slide).*:
By 2004, the percentage of beneficiaries just below annualized SGA had
decreased to 3.8% for both the 2000 and 2001 cohorts.
However, this does not provide evidence that beneficiaries either were
or were not "parking" - i.e., deliberately remaining just below monthly
program income limits so as not to lose their disability benefits.
Because monthly earnings for DI beneficiaries were not collected for
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.
* Consistent with past GAO reports, we considered annual earnings that
were over 75% of, but less than annualized SGA, to be just below the
annualized SGA level.
Median Earnings Were $4,476 in the Year after VR for Those Who Had
Earnings:
In the year after VR, the median annual earnings for all disability
beneficiaries from the 2000 to 2003 cohorts who had earnings (almost
153,000 people) were $4,476 or less than half of the average annualized
SGA of $9,618.*
Specifically, median annual earnings by program were:
$5,474 for DI,
$3,757 for SSI, and:
$3,596 for concurrent beneficiaries.
* Median earnings and average annualized SGA are in 2004 dollars. The
average annualized SGA is the annualized SGA averaged over the 2000 to
2004 time period.
2000/2001 Cohorts: Fewer Earned at or above Annualized SGA over Time:
The percentage who had annual earnings at or above annualized SGA
decreased slightly from 1 year after VR through 2004, as follows:
2000 Cohort - decreased from 14.6% in 2001 to 11.8% in 2004, and:
2001 Cohort - decreased from 12.4% in 2002 to 11.0% in 2004.
Finding Three: Some Reduced Their Benefits:
DI: Benefit Reductions Due to Work Totaled About $106 Million:
Almost 9% of DI and concurrent beneficiaries in our study did not
receive any DI benefits at some point in the year after VR due to work,
with the majority not receiving DI benefits for over half the year.
DI benefit reductions for DI and concurrent beneficiaries in our study
totaled over an estimated $106 million (2004 dollars):*
2000 cohort - over 4,700 beneficiaries had their benefits reduced by
$30.0 million in 2001,
2001 cohort - almost 4,600 beneficiaries had their benefits reduced by
$29.8 million in 2002,
2002 cohort - almost 3,700 beneficiaries had their benefits reduced by
$22.9 million in 2003, and:
2003 cohort - almost 3,700 beneficiaries had their benefits reduced by
$23.8 million in 2004.
The average annual benefit reduction across cohorts was $26.6 million.
* This may be an underestimate as we did not include benefit reductions
for auxiliary beneficiaries, such as a dependent child with
disabilities. See appendix II for details.
SSI: Benefit Reductions Due to Work Cannot Be Reliably Estimated:
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 %) had a reduction in their SSI benefits.
For concurrent beneficiaries (who comprised over 16,000 of the 50,000
who had earnings gains and benefit reductions), 70% may have earned
enough to also increase their DI benefit during the same time period.
We were unable to reliably estimate SSI benefit reductions due to
earnings for SSI and concurrent beneficiaries because SSI benefit
amounts can be affected by other factors besides earnings increases
(such as 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 benefit levels.
Finding Four: 10% Left, but Some of These Returned:
2000/2001 Cohorts: 10% Were Able to Leave the Rolls at Some Point
before 2005:
Of the beneficiaries who completed VR in 2000 or 2001 (for whom we have
the most years of earnings data), the percentages who left the rolls by
program were:
16% of all SSI beneficiaries (over 9,600 people),
9% of all DI beneficiaries (almost 5,900 people), and:
3% of all concurrent beneficiaries (over 800 people) in our study.*
While 3% of the concurrent beneficiaries in our study had their
benefits from both programs discontinued, during the same time period:
19% of concurrent beneficiaries stopped receiving only their SSI
benefits, and:
4% stopped receiving only their DI benefits.
* Leaving the rolls is defined as cessation of cash disability benefits
due to work even though the individual remains medically eligible.
Concurrent beneficiaries were considered to have left the rolls if
their benefits were discontinued from both programs. Those concurrent
beneficiaries who left only DI or SSI were not included in the
percentages who left the rolls for those specific programs.
Differences in Program Rates of Leaving the Rolls May Be Affected by
Several Factors:
The fact that more SSI beneficiaries from the 2000 and 2001 cohorts
left the rolls...
16% of all SSI,
9% of all DI, and:
3% of all concurrent beneficiaries in our study left the rolls.
...may be due to several factors, including:
program rule differences, such as DI being afforded a much longer
working period before cash benefits cease entirely, and:
delays in the reporting of earnings data to SSA, with delays more
likely for DI.
2000/2001 Cohorts: Annual Earnings of Many Beneficiaries Who Left the
Rolls Were Low:
Figure 6: Annual Earnings Distribution (in 2004 dollars) for
Beneficiaries from the 2000 and 2001 Cohorts in the Year They Left the
Rolls through 2004 (N=15,066).
[See PDF for image]
Source: GAO analysis of SSA data.
Note: Excludes those beneficiaries who left the rolls due to work, but
did not have any earnings. See appendix II for details.
[End of figure]
2000/2001 Cohorts: Annual Earnings for Those Who Left the Rolls
Differed by Program:
Beneficiaries' median annual earnings (in 2004 dollars) in the year
they left the rolls was $12,027. By program, median earnings were:
$17,166 for DI,
$14,323 for concurrent, and:
$ 8,128 for SSI beneficiaries in our study.*
By comparison, the average annualized SGA for 2000 to 2004 was $9,618
and the average annualized disability benefits (in 2004 dollars) for
the 2000 to 2003 cohorts in the year after VR were:
$8,460 for DI, and:
$4,452 for SSI beneficiaries in our study.**
* Excludes those beneficiaries who left the rolls due to work, but did
not have any earnings. Earnings for those who left the rolls are only
through 2004, as we did not have 2005 earnings data.
** Includes concurrents.
2000/2001 Cohorts: About a Quarter of Those Who Left the Rolls Returned
by 2005:
By 2005, of the over 16,000 beneficiaries in our study who had left the
rolls, 24% (over 3,900 people) were again receiving disability benefits
for at least 1 month. By beneficiary type:
25% of DI beneficiaries who left the rolls returned,
21 % of SSI beneficiaries who left the rolls returned, and:
48% of concurrent beneficiaries who left the rolls returned (to DI,
SSI, or both).
Those who returned had been off the rolls for an average of 16 months.
2000/2001 Cohorts: Percentage Who Left the Rolls and Returned by
Program:
Figure 7: Percentage of Beneficiaries from the 2000 and 2001 Cohorts
Who Left the Rolls and Returned for at Least 1 Month by 2005
(N=157,915):
[See PDF for image]
Source: GAO analysis of SSA data.
[End of figure]
Observations and Next Steps:
Observations from Phase One:
A number of disability beneficiaries who completed VR in 2000 to 2003
achieved positive earnings outcomes, and a few left the disability
rolls; however, because we were not able to identify a comparable
control group, we cannot attribute these outcomes to receipt of VR
services.
Benefit reductions were realized for our exit cohorts as a result of
increased beneficiary earnings even for some beneficiaries who did not
leave the rolls, although we were unable to reliably estimate SSI
benefit reductions due to data limitations.
The decline in earnings in the years following VR suggests that many
complex factors are likely involved in achieving long-term employment.
Next Steps:
Our next report will analyze beneficiary characteristics at the agency
level.
We will present our findings on factors that may affect the success of
beneficiaries in the workforce - specifically, state economies,
individual VR agency policies, and types of disabilities.
We will analyze their statistical significance and effect on earnings
outcomes.
[End of section]
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.[Footnote 23] 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.[Footnote 24] 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.
Figure 1: Data Sources Used to Create Analysis File on SSA
Beneficiaries Who Completed VR in 2000 through 2003:
[See PDF for image]
Source: GAO.
[End of figure]
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:
* 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;
* 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;
* conducted our own electronic data testing to assess the accuracy and
completeness of the data used in our analyses; and:
* 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.[Footnote 25] To use the
most recent data available, we further refined this population to
include those beneficiaries who:
* began receiving VR services no earlier than 1995 and who completed VR
after having received services in fiscal years 2000 through 2003;
* 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:
* exited VR once during the timeframe of our study.
We excluded from our study population those disability beneficiaries
who:
* 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.);[Footnote 26]
* completed VR after 2003, and for whom we lacked at least 1 year of
long-term outcome data;
* applied for or started VR services, but did not complete VR;
* 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;
* 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:
* 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.
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,[Footnote 27] 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.[Footnote 28]
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:
* the amount earned in the year after VR and how those earnings
differed from the year prior to VR;[Footnote 29] and:
* 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.[Footnote 30] 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.
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.[Footnote 31]
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.[Footnote 32]
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.[Footnote 33] 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.[Footnote 34] 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.
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.[Footnote
35] 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.
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.[Footnote 36] 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.
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.[Footnote 37] 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.
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.
[End of section]
Appendix III: Comments from the Department of Education:
United States Department Of Education:
Office Of Special Education And Rehabilitative Services:
The Assistant Secretary:
Denise M. Fantone, Acting Director:
Education, Workforce, and Income Security Issues:
United States Government Accountability Office:
441 G Street N.W.
Washington, D.C. 20548:
Mar 1 2007:
Dear Ms. Fantone:
Thank you for providing the U.S. Department of Education (Department)
with the opportunity to review your draft report: Vocational
Rehabilitation--Workforce Participation Increases for Many SSA
Beneficiaries After Receiving VR Services, But Most Incomes Were Below
"Substantial Gainful Activity" (GAO-07-332). We note you briefed
Congressional staff on your findings and your draft report includes
your briefing slides.
The report does not make any recommendations to the Department, and is
generally positive with regard to outcomes for vocational
rehabilitation (VR) clients who are SSA beneficiaries. Up to ten
percent were able to leave the benefit rolls compared to the historical
unassisted departure percentage of less than one percent. These are, of
course, the very individuals who had previously undergone stringent
reviews demonstrating their incapacity to work.
Findings showed that one year after receiving VR services and exiting
the program, employment continued for about 40 percent of SSA
beneficiaries. Supplemental Security Income beneficiaries performed
somewhat better in this regard when compared to Social Security
Disability Insurance beneficiaries. The report found that most (88
percent) earnings fell below the substantial gainful activity (SGA)
level. The general conclusion that most beneficiaries exit VR in
employment outcomes with earnings below SGA is consistent with our own
information regarding earnings at closure. However, this initial report
has many limitations, as you noted, and there are a great many other
complicating and qualifying factors related to rehabilitation success
and client behavior.
For example, eligibility criteria for non-cash services and benefits
from other government assistance programs, such as housing programs,
may have major effects on earnings behavior. Also, hours worked may
reflect vocational capacity. opportunity or desire. The interactions of
these factors with pay rates to produce any given level of economic
activity are difficult to determine. Over one third of the individuals
served by state VR agencies are individuals with developmental
disabilities or mental disabilities. These individuals are also served
by state developmental disability (DD) or mental health agencies that
use Medicaid funds for the provision of residential and other supports.
Work activity for many of these individuals may be conditioned or
subordinated to the need to maintain the supports provided by the DD or
mental health agencies.
We recognize and appreciate the unique aspect of your work: the linkage
of the Department's employment program participants with the SSA's
record of their earnings. We are interested in discussing in detail the
technical and methodological issues inherent in comparing large data
files, and the extent to which results of the study could be further
explained by characteristics such as disabling condition.
Thank you for your interest in the operation and efficiency of the
Department's programs for individuals with disabilities. We look
forward to reviewing GAO's next phase of work regarding agency-level
data for Social Security rehabilitation.
Sincerely,
Signed by:
john H. Hager:
[End of section]
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.
Social Security:
The Commissioner:
March 02, 2007:
Ms. Denise M. Fantone:
Acting Director, Education, Workforce, and Income Security Issues:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, D.C. 20548:
Dear Ms. Fantone:
Thank you for the opportunity to review and comment on the draft
report, "Vocational Rehabilitation: Workforce Participation Increases
for Many SSA Beneficiaries after Receiving VR Services, But Most
Earnings Were Below Substantial Gainful Activity" (GAO-07-332). At the
exit conference phase, we provided informal verbal and written comments
stating our concerns regarding GAO's methodology, and the accompanying
analysis and findings. We continue to believe that the report, as
written and presented, could lead policymakers to misinterpret the
results of the study and the relative effectiveness of Vocational
Rehabilitation services.
While the report itself contains information about the limitations to
the data and the analytical approach, these weaknesses are not
adequately conveyed in the slide show that policymakers will view. The
presentation could be misleading and result in policymakers drawing
erroneous conclusions, which your auditors intentionally did not make
due to the weakness of the analysis. We believe the analysis is
inadequate for addressing the questions raised by Congressman Rangel
and should not be overrepresented. A complete description of our
concerns and the supporting rationale can be found in the attached
detailed comments.
If you have any questions, please contact Ms. Candace Skumik, Director,
Audit Management and Liaison Staff, at (410) 965-4636.
Sincerely,
Signed by:
Michael J. Astrue:
Enclosure:
Social Security Administration Baltimore MD 21235-0001:
Comments On The Government Accountability Office (GAO) Draft Report,
"Vocational Rehabilitation: Workforce Participation Increases For Many
SSA Beneficiaries After Receiving VR Services But Most Earnings Were
Below Substantial Gainful Activity" (GAO-07-332)
Thank you for the opportunity to review and comment on the draft report
and briefing slides. At the formal exit conference, we discussed a
number of concerns with respect to the "Results Review Summary Fact
Sheet" provided on January 22, 2007. We are disappointed to see that
the final slide show presentation and accompanying narrative did not
address the core of our concerns that were: 1) discussed formally on
January 24, 2007; 2) provided in writing via e-mail on January 29,
2007; and 3) discussed in great detail in a subsequent conference call
held on January 31, 2007. We remain concerned that the results of this
analysis do not address the pertinent questions and may not be relevant
to policymakers. Specifically, we believe the report and particularly
the slide show overstate the findings of the study and are likely to
result in a misinterpretation of the evidence of the effectiveness of
Vocational Rehabilitation (VR) services by policymakers. In addition,
there are several technical mistakes and/or oversimplifications in the
discussion of Social Security Administration (SSA) programs and
policies that need to be corrected and/or clarified. The following
detailed information and specific examples provide the rationale for
our response.
Title of the Report:
The title of the report "Vocational Rehabilitation: Workforce
Participation Increases for Many SSA Beneficiaries after Receiving VR
Services, But Most Earnings Were Below Substantial Gainful Activity" is
misleading. While the paper itself contains information about the
limitations to the data and the analytical approach, these weaknesses
are not adequately conveyed in the slide show. The presentation could
be very misleading and result in policymakers drawing erroneous
conclusions; conclusions that GAO auditors intentionally did not make
due to the weakness of the analysis. A title that accurately reflects
the analysis would be "Inflation Adjusted Social Security Taxable
Earnings Increase for Some SSA Beneficiaries after Successfully
Completing a Vocational Rehabilitation Program, But Most Annual
Earnings Did Not Exceed Twelve Times the Monthly Substantial Gainful
Activity Amount."
Ticket Research File:
On page 3, and elsewhere, the discussion on the Ticket Research File
(TRF) is not accurate. The TRF is a file built by SSA under contract
with Mathematica Policy Research (MPR) Inc. MPR is SSA's Ticket to Work
evaluation contractor and supports SSA's evaluation of the TTW Program
and other SSA employment-related disability research and evaluation
needs. The file used by GAO is a sub-file of the TRF that had been
matched to the 199&-2004 Rehabilitation Services Administration's (RSA)
911 closure files. SSA did not match the TRF-RSA sub-file to the Master
Earnings File (MEF) at the request of GAO. We matched the TRF, RSA-911,
and earnings files for ongoing SSA and RSA research activities that
have been in development since 2001. GAO learned of these files through
entrance interviews with RSA and SSA. At that time, GAO requested, and
was provided with, a copy of these matched TRF-RSA-MEF files and was
provided extensive support in using them.
Scope of the Review:
There are many places (pages 4, 6, 17, 29, 30, 41, 42) that refer to a
number or percentage of "all beneficiaries." This is misleading as the
percentage is not calculated among all beneficiaries, but among
beneficiaries in the very limited sample used in the analysis, as
defined by the exclusions. The sample size suggests roughly 3 percent
of all disabled beneficiaries are included in the sample, so as a
percentage of all beneficiaries the percentages would be 1/33rd, as
large as the percentage that is reported and that was calculated only
for beneficiaries in the study sample. The term "sample cases" or
"beneficiaries in this study" should be used in place of "all
beneficiaries" to accurately describe the population covered by the
study. Similarly, since these cases were limited to a very select
group, the term "VR participants" should be changed to "successful VR
case closures" (page 13 and 43) to more accurately describe the
population.
There are a number of exclusions that were made which we believe
potentially bias the findings. Specifically, limiting the analysis to
"receiving services once" (i.e., excluding individuals with multiple
spells of VR services), removing individuals who died, and removing
those who retired during their VR participation, all potentially bias
the findings. Individuals in the excluded groups represent a
significant portion of beneficiaries who are likely to be
systematically different from those who were included in the study.
Care must be taken not to present the analysis as representing VR
effectiveness for all SSA beneficiaries receiving such services. We do
not believe sufficient care in this regard has been exercised in this
report, and this is likely to lead to misinterpretation of the evidence
by policy makers.
The last bullet on page 38 is not accurate. This bullet says "We
excluded the beneficiaries who reached age 65 because the data may have
indicated they left the disability rolls, when, in fact, they may have
converted to SSA retirement benefits" [emphasis added]. The TRF data
used by GAO, and the SSA constructed left-due-to-work (LDW) variable in
particular (which was used by GAO extensively for this analysis),
clearly distinguish between those who left the rolls due to work
(LDW=2), and those who were ineligible for benefits due to death,
converted to retirement benefits, or medical recovery (LDW=9). We do
not understand why GAO excluded the beneficiaries who reached age 65 or
died at any point in their VR participation.
It is unclear as to whether disabled adult children (DACs) and disabled
widow(er) s (DWBs) are included in this study, even though both groups
are eligible for VR services. It was impossible to determine whether
they were included due to some inconsistencies in the report. The
report begins by citing the number of "working aged people with
disabilities (who) were beneficiaries of federal income support
programs administered by the Social Security Administration-namely the
Disability Insurance program and the Supplemental Security Income
program." DACs and DWBs would, in most cases, fit the definition of
"working aged people with disabilities (who) were beneficiaries of
federal income support programs administered by the Social Security
Administration." However, most DACs and all DWBs (except those DWBs
dually entitled as workers) are not technically within the Disability
Insurance (DI) program, since their benefits are paid from the OASI
program. Adding DI workers, DACs paid from the DI trust fund,
Supplemental Security Income (SSI) recipients age 18-64, and not double
counting concurrent beneficiaries, the number of working aged persons
paid from the DI and SSI programs is slightly less than the 10 million
figure that is cited, suggesting that all Social Security disability
beneficiaries are included (i.e., it includes DACs and DWBs paid from
the OASI trust funds). However, later in the report there is language
stating that all DI beneficiaries have a qualifying work history (e.g.,
page 15). This is not generally true for DACs and DWBs, although some
dually entitled DACs and DWBs may be insured and also receive a DI
benefit. The report should clarify which Social Security disability
beneficiaries are included and which are not. Whether DACs and DWBs are
included or not, there are additional edits that need to be made to the
report so that it is technically correct and internally consistent.
Pages 20-21, (slides 13 and 14), are somewhat confusing. It appears
slide 13 excludes beneficiaries who started working after 2001, and
slide 14 excludes beneficiaries who started or stopped working after
2001. The population included should be made clearer.
Program Savings:
The DI finding in the first bullet on page 6 is misleading in that it
reports "savings" to SSA, when the figures reported are for non-
payments of SSA benefits (the text is correctly phrased for SSI). Also,
in numerous places (e.g., pages 6, 13, 14, 28, 35, 41, 42, 43) there
are references to "program savings." However, the report contains no
analysis on program savings; instead GAO simply assessed benefit
reductions that may or may not relate to or coincide with the
participation in, and successful completion of, VR services. In order
to assess actual program savings costs, as well as the savings
associated with benefit reductions, would have to be evaluated. Among
those costs are:
1) actual VR costs (from SSA's perspective, the costs of reimbursing VR
for services or making Ticket outcome and milestone payments),
2) any costs associated with higher DI benefits paid after
recomputations made due to work while on the rolls that did not lead to
termination, and:
3) costs associated with continued benefit payments to those who
medically recover, but continue to receive benefits under section 301
provisions, amount of social security taxes paid, etc.
In addition to the misnomer of program savings, as described above, the
total estimates of "savings" does not reflect a specific time period.
The slides break this out to give some context to this estimate;
however, it is difficult to understand what the total estimate means.
The text needs to clarify that these figures include four annual (one-
year) savings figures for the four cohorts studied (not totals over all
post-VR years), summed to a total estimate that represents 4 years
worth of savings. We believe providing the average for all of the
cohorts would be more meaningful as a yearly savings concept (i.e.,
divide the total estimated savings by 4).
Footnote 20 on page 6 seems to be incorrect. GAO's estimates of
beneficiary earnings when leaving the rolls could be either
underestimates or overestimates depending on the average earnings of
those not included in the MEF earnings (i.e., those not covered by
Social Security). For example, if those in State government (and thus
not included in the MEF earnings data) on average earned less than
those in the MEF data, then the GAO estimates would overestimate
earnings by the population who left the rolls.
Finally, and most importantly, the methodology used does not permit an
assessment of the possible outcome in the absence of VR. Therefore, it
is unknown whether any of the benefit reductions are even related to
the VR services that were received. At a minimum, the term "benefit
reductions" or similar specific wording should be used instead of
"program savings." However, that terminology could also be misleading
due to the lack of a proper methodology.
Numerical Estimates:
The finding in the second bullet on page 5 and elsewhere, (i.e., slide
16, page 23), that "the majority of disability beneficiaries were not
"parking" is misleading. What GAO found is "no evidence of parking,"
but the data used is poorly suited for examining this question. Not
finding evidence of "parking" is not the same thing as fording that
"parking" did not occur. The earnings data used by GAO is annual data
and "parking" can only be analyzed as a monthly event. GAO could say
that the majority of disability beneficiaries were not "parked" in all
months in each year for which GAO had earnings data, but this is not
very meaningful because we know most beneficiaries do not work in all
months of any given year. What is more likely happening in these data
is that non-work in some months of a given year is pulling down the
monthly average earnings for the year. How this relates to monthly
"parking" is thus masked by the annual nature of the earnings data and
the tendency of SSA beneficiaries with disabilities to work
inconsistently throughout the year. As a result, a finding that the
majority of disability beneficiaries were not "parking" is inaccurate.
In addition, the problems of using annual earnings data to assess
monthly earnings should be thoroughly explained under the limitations
section and in the summary text as well. It is well known that SSA
beneficiaries with disabilities have irregular work patterns that are
masked by annual data. This is important because it makes it impossible
to match monthly earnings with monthly benefit status. Further, any
adjustments to annualize the monthly status or to create monthly
averages of annual earnings can lead to misleading results in the data.
The issues with assessing "parking," as noted above, is one example of
the problems created by this mismatch in the data. This mismatch
creates problems in other areas of analysis as well. Low annual
earnings would result, for example, for beneficiaries who have exited
the program for less than all of the months included in the annual
calendar earnings figure. Beneficiaries who exit VR mid-year could have
earnings above SGA in the I2 months following exit, but if that work is
not sustained, the 12 months of earnings will be split between the
calendar year of exit and the calendar year after exit, with both
values substantially below the annualized SGA value. Appropriate
caution needs to be exercised in using and interpreting this data.
On page 6, the dollar increases in earnings among SSI recipients does
not seem to translate into the fairly large benefit reductions for this
group. It seems likely that this estimate captures more than benefit
reductions due to earnings, perhaps even including reductions in SSI
benefits for concurrent's whose DI benefits increase due to post-
entitlement earnings (or whose work results in insured status and
entitlement to a DI benefit). Earning among SSI recipients (and their
benefit reductions) can be more accurately tracked and calculated using
the Social Security Record rather than the MEF.
The measure of changes in benefits on slide 19 seems illogical, and
possibly misleading. If the point is to measure benefit changes, those
whose earnings fell should be included as well. By including only those
whose earnings increased, benefits are surely going to fall due to the
mechanics of the SSI program and the result becomes fairly meaningless.
In the discussion of program savings (pages 41-42), it is not clear
whether GAO used the amount that was due to the beneficiary or the
amount that was paid. Generally for such calculations, the amount due
would be used because this amount is not affected by overpayments or
underpayments. In footnote 10 (page 42), however, GAO notes that SSI
benefits may "decrease because of an overpayment." This suggests that
GAO may have used the amount paid for their calculations and this would
introduce many problems into the benefit analysis. GAO should clarify
which amount was used. If the amount paid was used for these
calculations, then GAO should consider redoing the analysis using the
amount due instead since this will give a more accurate indication of
benefit changes.
Ticket to Work Initiatives:
We do not believe the report adequately discusses Ticket to Work (TTW)
and the changes associated with the roll-out of TTW over the time
period under this study. Although TTW legislation is mentioned and
cited, the timeframes of the study do not allow for measurement of the
effects of the TTW program. The study covers 2000-2003 VR usage with
employment results from 2000 through 2004, a period marked by the
phased rollout of the Ticket in the States. This was a period of flux
and is neither representative of the older VR reimbursement scheme nor
of the TTW program. Any benefits from TTW would not be fully evident
during this time period. This phased program change could have had an
impact on VR outcomes. Specifically, there is the possibility that
creaming, (i.e., selecting those who are most likely to succeed), by
Employment Networks has contributed to reductions in successful State
VR outcomes over this period (pages 25, 27, 28). Additional information
on the TTW program and its relationship to VR should be more thoroughly
discussed on page 2 and on the slides.
Page 5, first paragraph continuing from page 4, the TTW implementation
date of "beginning in 2001" is not correct. Ticket to Work was phased
in gradually beginning in February 2002.
Employment and Earnings Data:
There are a number of references to "employment" of beneficiaries.
However, there is no data about employment. Instead, the analysis is
based on an assumption that posted earnings are earnings derived from
"employment." However, posted earnings do not necessarily relate to
current employment. In addition, GAO notes that earnings not covered by
Social Security are not included and that non-covered employment is
unknown. More importantly, there are earnings that are posted to the
earnings record that have no connection to current employment,
including commissions from prior employment, sick pay, vacation pay,
and certain profit sharing arrangements. The end result may be an
overstatement of employment and earnings, rather than the
understatement that is asserted on page 13 and the footnote on page 32.
At a minimum, this needs to be clarified as this group represents
"persons with posted earnings," not necessarily "employment."
In several places there are references to "duration" and "sustained
work" (pages 20, 21, and 40). This language is misleading. Having
positive earnings in more than one consecutive year does not
necessarily imply sustained work or an extended duration of work.
Positive earnings in more than one year may be, at best an indicator of
intermittent work. An individual may have worked a few scattered weeks
over a multi-year period and meet the definition of "sustained work."
Additionally, as presented in the comment above, posted earnings are
not a definitive indicator of work or employment. In summary, the word
"sustained" is suggestive of working month after month for several
years. The term "posted earnings in consecutive years" rather than
"sustained" should be used to more accurately describe this group and
to avoid misinterpretation.
Description of SSA Programs:
The discussion of SSI benefits is inaccurate. For example, on pages 3
and 4, it is stated that SSI benefits are generally the same for all
beneficiaries. This is only true of the base benefit rate; benefits can
vary from individual to individual based on a number of factors
including earnings, unearned income, marital status, living
arrangements, institutionalization, in-kind support and maintenance,
and a number of other factors. Nowhere in the report is there
information that SSI benefits are reduced $1 for $1, after a $20
disregard, for unearned income. At a minimum, this should be added to
the slide shown on page 16. This variation in SSI benefit amount is
most obvious in the case of concurrent beneficiaries, who are
specifically discussed in the report. Moreover, the discussion of the
reduction in SSI for earnings is erroneous. Earnings are reduced $1 for
$2 above $65 per month, not $85 per month. If the individual has no
unearned income, the $20 disregard can be added to the $65 disregard.
Concurrent beneficiaries would never have an $85 disregard.
The most important factor likely to be driving the result on slides 22
and 23 is not included at the bottom of slide 23, (see pages 29 and
30). Lower program exits are likely to be affected by the length of the
nine-month Trial Work Period (TWP), but the 36 month Extended Period of
Eligibility (EPE) is a much more important factor. For SSI, program
exit would occur after 12 months in suspense. For DI, however, there is
both the 9 month TWP and 36 month EPE, for a total of 45 months (33
months longer than the SSI measure). Given this, and the fact that the
GAO follow up period is at most 4 years, it would be expected that few
DI beneficiaries left the rolls after VR during this follow-up period.
Most likely, the only beneficiaries who did leave the rolls were those
already working for significant periods before they left VR.
The report and the slides note program differences between SSI and
Social Security. On page 30 it is stated that the length of the TWP is
different. This is technically inaccurate as there is no TWP for SSI.
On page 4, the TWP is mentioned for DI beneficiaries, though it is not
limited to DI workers or DI beneficiaries (e.g., a DAC paid from the
OASI trust fund is eligible for a TWP). A more important difference is
that SGA no longer has any meaning for SSI exit from the rolls due to
1619A provisions. We do not believe that either difference in the
treatment of work and earnings is adequately discussed in the report.
On page 4, the discussion of the EPE has a minor error. Benefits do not
stop at the beginning of the EPE. The cessation month is the first
month of SGA level earnings after the completion of the TWP and the
individual is paid benefits (regardless of the level of earnings) for
the 3 months after cessation of benefits (which would be the first 3
months of the EPE if earnings are above SGA). Also, benefits are not
automatically paid in months the individual earns less than SGA. The
individual or representative must report that earnings are below SGA
and request reinstatement of benefits (i.e., SSA does not routinely
monitor earnings of persons in the EPE and automatically make benefit
payments when earnings fall below SGA).
On pages 6 and 7, the report refers to "benefit reductions" for the
Social Security disability program. Benefits are not reduced for
earnings in the case of Social Security benefits for the disabled. The
monthly benefit is either paid or not paid. Reductions in benefits
generally occur in the case of overpayments. This language should be
changed to reflect the non-payment of benefits, rather than reductions
in benefits.
Description of Health Insurance:
The report and slides mention the potential loss of health insurance
coverage, presumably Medicare and/or Medicaid, as a challenge in
leaving the disability rolls (e.g., pages 4, 7, and 9). The report,
particularly the slides, does not fully address the extended Medicare
and Medicaid benefits. Medicare continues at least 93 months after the
end of the TWP, and Medicaid can continue indefinitely (1619B) for
those on SSI who work their way off the rolls. There is a Medicare buy-
in and a Medicaid buy-in (in some States) for the disabled who work and
eventually lose their coverage under Medicare and Medicaid. Many
legislative changes have been enacted that offer access to continued
health care coverage making this a considerably less important factor.
Left the Rolls:
The report repeatedly uses various forms of the term "left the rolls"
(e.g., pages 28, 29, 30, and 33). Leaving the rolls usually suggests
termination of benefits, yet the figures shown seem to reflect "leaving
the rolls" is related more to suspension of benefits, particularly for
the disabled receiving Social Security. The 36 month EPE would seem to
preclude the observation of many DI terminations in these cohorts. We
believe the report should use alternative language that clearly
specifies whether the figures reflect suspension of benefits or
termination of benefits. These two concepts are quite different. Prior
research shows significant numbers of DI beneficiaries who enter the
EPE yet do not terminate benefits (Muller, L. Scott "Disability
Beneficiaries Who Work and Their Experience under Program Work
Incentives" Social Security Bulletin, Vol. 55, No 2. Summer 1992).
Finally, on page 6, clarification is needed in the second bullet, and
elsewhere (especially slide 26, shown on page 33), regarding how return
to SSA benefits was measured, among those who left the DI program. Such
beneficiaries may have returned to the program briefly, permanently, or
somewhere in between. One could assume "returned to benefits" was
defined as one or more months, but the definition should be made
explicit.
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.[Footnote 38] 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.
[End of section]
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.
FOOTNOTES
[1] GAO, High-Risk Series: An Update, GAO-03-119 (Washington, D.C.:
January 2003).
[2] GAO, Social Security: Disability Programs Lag in Promoting Return
to Work, GAO/HEHS-97-46 (Washington, D.C.: March 1997).
[3] GAO, Social Security Disability Insurance: Multiple Factors Affect
Beneficiaries' Ability to Return to Work, 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.
[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.
[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.
[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).
[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.
[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.
[23] In 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.
[24] 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.
[25] 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.
[26] 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.
[27] 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.
[28] 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.
[29] 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.
[30] 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.
[31] For 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.
[32] GAO, SSA Disability: SGA Levels Appear to Affect the Work Behavior
of Relatively Few Beneficiaries, but More Data Needed, GAO-02-224
(Washington, D.C.: January 2002).
[33] SSI monthly benefits could increase or decrease for a variety of
reasons, including changes in marital status, living arrangements, or
unearned income.
[34] 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.
[35] 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.
[36] Workers who may have been excluded include federal civilian
employees hired before 1984 and certain state and local government
employees.
[37] The 9-month trial work period must occur within a 60-month period.
[38] GAO, SSA Disability: SGA Levels Appear to Affect the Work Behavior
of Relatively Few Beneficiaries, but More Data Needed, GAO-02-224
(Washington, D.C.: January 2002).
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