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105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-537
_______________________________________________________________________


 
            TICKET TO WORK AND SELF-SUFFICIENCY ACT OF 1998

                                _______
                                

  May 18, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3433]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 3433) to amend the Social Security Act to establish 
a Ticket to Work and Self-Sufficiency Program in the Social 
Security Administration to provide beneficiaries with 
disabilities meaningful opportunities to return to work and to 
extend Medicare coverage for such beneficiaries, and to amend 
the Internal Revenue Code of 1986 to provide a tax credit for 
impairment-related work expenses, having considered the same, 
report favorably thereon with amendments and recommend that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Introduction....................................................19
          A. Purpose and Summary.................................    19
          B. Background and Need for Legislation.................    19
          C. Legislative History.................................    20
 II. Explanation of Provisions.......................................21
          A.  Short Title and Table of Contents..................    21
          B. The Ticket to Work and Self-Sufficiency Program.....    21
          C. Extending Medicare Coverage for OASDI Disability 
              Benefit Recipients Who are Using Tickets to Work 
              and Self-Sufficiency...............................    28
          D. Technical Amendments Relating to Drug Addicts and 
              Alcoholics.........................................    29
          E. Extension of Disability Insurance Program 
              Demonstration Project Authority....................    30
          F. Perfecting Amendments Related to Withholding from 
              Social Security Benefits...........................    30
          G. Treatment of Prisoners..............................    31
              1. Implementation of Prohibition Against Payment of 
                  Title II Benefits to Prisoners.................    31
              2. Elimination of Title II Requirement That 
                  Confinement Stem From Crime Punishable by 
                  Imprisonment for More Than 1 Year..............    32
              3. Conforming Title XVI Amendments.................    33
              4. Continued Denial of Benefits to Sex Offenders 
                  Remaining Confined to Public Institutions Upon 
                  Completion of Prison Term......................    34
          H. Revocation by Members of the Clergy of Exemption 
              From Social Security Coverage......................    34
          I. Additional Technical Amendment Relating to 
              Cooperative Research or Demonstration Projects 
              Under Titles II and XVI............................    35
III. Vote of the Committee...........................................35
 IV. Budget Effects of the Bill-.....................................35
          A. Committee Estimate of Budgetary Effects.............    35
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures.......................................    35
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    36
  V. Other Matters Required To Be Discussed Under the Rules of the 
     House...........................................................49
          A. Committee Oversight Findings and Recommendations....    49
          B. Summary of Findings and Recommendations of the 
              Government and Oversight Committee.................    49
          C. Constitutional Authority Statement..................    49
 VI. Applicability of the Federal Advisory Committee Act.............50
VII. Changes in Existing Law Made by the Bill, as Reported...........50

  The amendments are as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Ticket to Work and 
Self-Sufficiency Act of 1998''.
  (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
Sec. 2. The Ticket to Work and Self-Sufficiency Program.
Sec. 3. Extending medicare coverage for OASDI disability benefit 
recipients who are using tickets to work and self-sufficiency.
Sec. 4. Technical amendments relating to drug addicts and alcoholics.
Sec. 5. Extension of disability insurance program demonstration project 
authority.
Sec. 6. Perfecting amendments related to withholding from social 
security benefits.
Sec. 7. Treatment of prisoners.
Sec. 8. Revocation by members of the clergy of exemption from social 
security coverage.
Sec. 9. Additional technical amendment relating to cooperative research 
or demonstration projects under titles II and XVI.

SEC. 2. THE TICKET TO WORK AND SELF-SUFFICIENCY PROGRAM.

  (a) In General.--Part A of title XI of the Social Security Act (42 
U.S.C. 1301 et seq.) is amended by adding at the end the following new 
section:
           ``the ticket to work and self-sufficiency program
  ``Sec. 1147. (a) In General.--The Commissioner of Social Security 
shall establish a Ticket to Work and Self-Sufficiency Program, under 
which a disabled beneficiary may use a ticket to work and self-
sufficiency issued by the Commissioner in accordance with this section 
to obtain employment services, vocational rehabilitation services, or 
other support services from an employment network which is of the 
beneficiary's choice and which is willing to provide such services to 
such beneficiary.
  ``(b) Ticket System.--
          ``(1) Distribution of tickets.--The Commissioner of Social 
        Security may issue a ticket to work and self-sufficiency to 
        disabled beneficiaries for participation in the Program.
          ``(2) Assignment of tickets.--A disabled beneficiary holding 
        a ticket to work and self-sufficiency may assign the ticket to 
        any employment network of the beneficiary's choice which is 
        serving under the Program and is willing to accept the 
        assignment.
          ``(3) Ticket terms.--A ticket issued under paragraph (1) 
        shall consist of a document which evidences the Commissioner's 
        agreement to pay (as provided in paragraph (4)) an employment 
        network, which is serving under the Program and to which such 
        ticket is assigned by the beneficiary, for such employment 
        services, vocational rehabilitation services, and other support 
        services as the employment network may provide to the 
        beneficiary.
          ``(4) Payments to employment networks.--The Commissioner 
        shall pay an employment network under the Program in accordance 
        with the outcome payment system under subsection (h)(2) or 
        under the outcome-milestone payment system under subsection 
        (h)(3) (whichever is elected pursuant to subsection (h)(1)). An 
        employment network may not request or receive compensation for 
        such services from the beneficiary.
  ``(c) State Participation.--
          ``(1) Periodic elections.--Each State agency administering or 
        supervising the administration of the State plan approved under 
        title I of the Rehabilitation act of 1973 may elect to 
        participate in the Program (or to revoke any such election) as 
        an employment network. The Commissioner shall provide for 
        periodic opportunities for exercising such elections (and 
        revocations).
          ``(2) Treatment of state agencies.--Any such election (or 
        revocation) by a State agency described in paragraph (1) taking 
        effect during any period for which an individual residing in 
        the State is a disabled beneficiary and a client of the State 
        agency shall not be effective with respect to such individual 
        to the extent that such election (or revocation) would result 
        in any change in the method of payment to the State agency with 
        respect to the individual from the method of payment to the 
        State agency with respect to the individual in effect 
        immediately before such election (or revocation).
          ``(3) Effect of participation by state agency.--
                  ``(A) State agencies participating.--In any case in 
                which a State agency described in paragraph (1) elects 
                under paragraph (1) to participate in the Program--
                          ``(i) the employment services, vocational 
                        rehabilitation services, and other support 
                        services which, upon assignment of tickets to 
                        work and self-sufficiency, are provided to 
                        disabled beneficiaries by the State agency 
                        acting as an employment network shall be 
                        governed by plans for vocational rehabilitation 
                        services approved under title I of the 
                        Rehabilitation Act of 1973, and
                          ``(ii) the provisions of section 222(d) and 
                        the provisions of subsections (d) and (e) of 
                        section 1615 shall not apply with respect to 
                        such State.
                  ``(B) State agencies administering maternal and child 
                health services programs.--Subparagraph (A) shall not 
                apply with respect to any State agency administering a 
                program under title V of this Act.
          ``(4) Special requirements applicable to cross-referral to 
        certain state agencies.--
                  ``(A) In general.--In any case in which an employment 
                network has been assigned a ticket to work and self-
                sufficiency by a disabled beneficiary, no State agency 
                shall be deemed required, under this section, title I 
                of the Rehabilitation Act of 1973, or a State plan 
                approved under such title, toaccept any referral of 
such disabled beneficiary from such employment network unless such 
employment network and such State agency have entered into a written 
agreement that meets the requirements of subparagraph (B).
                  ``(B) Terms of agreement.--An agreement required by 
                subparagraph (A) shall specify, in accordance with 
                regulations prescribed pursuant to subparagraph (C)--
                          ``(i) the extent (if any) to which the 
                        employment network holding the ticket will 
                        provide to the State agency--
                                  ``(I) reimbursement for costs 
                                incurred in providing services 
                                described in subparagraph (A) to the 
                                disabled beneficiary, and
                                  ``(II) other amounts from payments 
                                made by the Commissioner to the 
                                employment network pursuant to 
                                subsection (h), and
                          ``(ii) any other conditions that may be 
                        required by such regulations.
                  ``(C) Regulations.--The Commissioner of Social 
                Security and the Secretary of Education shall jointly 
                prescribe regulations specifying the terms of 
                agreements required by subparagraph (A) and otherwise 
                necessary to carry out the provisions of this 
                paragraph.
                  ``(D) Penalty.--No payment may be made to an 
                employment network pursuant to subsection (h) in 
                connection with services provided to any disabled 
                beneficiary if such employment network makes referrals 
                described in subparagraph (A) in violation of the terms 
                of the contract required under subparagraph (A) or 
                without having entered into such a contract.
  ``(d) Responsibilities of the Commissioner of Social Security.--
          ``(1) Selection and qualifications of program managers.--The 
        Commissioner of Social Security shall enter into agreements 
        with one or more organizations in the private or public sector 
        for service as a program manager to assist the Commissioner in 
        administering the Program. Any such program manager shall be 
        selected by means of a competitive bidding process, from among 
        organizations in the private or public sector with available 
        expertise and experience in the field of vocational 
        rehabilitation or employment services.
          ``(2) Tenure, renewal, and early termination.--Each agreement 
        entered into under paragraph (1) shall provide for early 
        termination upon failure to meet performance standards which 
        shall be specified in the agreement and which shall be weighted 
        to take into account any performance in prior terms. Such 
        performance standards shall include (but are not limited to)--
                  ``(A) measures for ease of access by beneficiaries to 
                services, and
                  ``(B) measures for determining the extent to which 
                failures in obtaining services for beneficiaries fall 
                within acceptable parameters, as determined by the 
                Commissioner.
          ``(3) Preclusion from direct participation in delivery of 
        services in own service area.--Agreements under paragraph (1) 
        shall preclude--
                  ``(A) direct participation by a program manager in 
                the delivery of employment services, vocational 
                rehabilitation services, or other support services to 
                beneficiaries in the service area covered by the 
                program manager's agreement, and
                  ``(B) the holding by a program manager of a financial 
                interest in an employment network or service provider 
                which provides services in a geographic area covered 
                under the program manager's agreement.
          ``(4) Selection of employment networks.--The Commissioner 
        shall select and enter into agreements with employment networks 
        for service under the Program. Such employment networks shall 
        be in addition to State agencies serving as employment networks 
        pursuant to elections under subsection (c).
          ``(5) Termination of agreements with employment networks.--
        The Commissioner shall terminate agreements with employment 
        networks for inadequate performance, as determined by the 
        Commissioner.
          ``(6) Quality assurance.--The Commissioner shall provide for 
        such periodic reviews as are necessary to provide for effective 
        quality assurance in the provision of services by employment 
        networks. The Commissioner shall take into account the views of 
        consumers and the program manager under which the employment 
        networks serve and shall consult with providers of services to 
        develop performance measurements. The Commissioner shall ensure 
        that the results of the periodic reviews are made available to 
        beneficiaries who are prospective service recipients as they 
        select employment networks. The Commissioner shall ensure the 
        performance of periodic surveys of beneficiaries receiving 
        services under the Program designed to measure customer service 
        satisfaction.
          ``(7) Dispute resolution.--The Commissioner shall provide for 
        a mechanism for resolving disputes between beneficiaries and 
        employment networks and between program managers and employment 
        networks. The Commissioner shall afford a party to such a 
        dispute a reasonable opportunity for a full and fair review of 
        the matter in dispute.
  ``(e) Program Managers.--
          ``(1) In general.--A program manager shall conduct tasks 
        appropriate to assist the Commissioner in carrying out the 
        Commissioner's duties in administering the Program.
          ``(2) Recruitment of employment networks.--A program manager 
        shall recruit, and recommend for selection by the Commissioner, 
        employment networks for service under the Program. The program 
        manager shall carry out such recruitment and provide such 
        recommendations, and shall monitor all employment networks 
        serving in the Program in the geographic area covered under the 
        program manager's agreement, to the extent necessary and 
        appropriate to ensure that adequate choices of services are 
        made available to beneficiaries. Employment networks may serve 
        under the Program only pursuant to an agreement entered into 
        with the Commissioner under the Program incorporating the 
        applicable provisions of this section and regulations 
        thereunder, and the program manager shall provide and maintain 
        assurances to the Commissioner that payment by the Commissioner 
        to employment networks pursuant to this section is warranted 
        based on compliance by such employment networks with the terms 
        of such agreement and this section. The program manager shall 
        not impose numerical limits on the number of employment 
        networks to be recommended pursuant to this paragraph.
          ``(3) Facilitation of access by beneficiaries to employment 
        networks.--A program manager shall facilitate access by 
        beneficiaries to employment networks. The program manager shall 
        ensure that each beneficiary is allowed changes in employment 
        networks for good cause, as determined by the Commissioner, 
        without being deemed to have rejected services under the 
        Program. The program manager shall establish and maintain lists 
        of employment networks available to beneficiaries and shall 
        make such lists generally available to the public. The program 
        manager shall ensure that all information provided to disabled 
        beneficiaries pursuant to this paragraph is provided in 
        accessible format.
          ``(4) Ensuring availability of adequate services.--The 
        program manager shall ensure that employment services, 
        vocational rehabilitation services, and other support services 
        are provided to beneficiaries throughout the geographic area 
        covered under the program manager's agreement, including rural 
        areas.
          ``(5) Reasonable access to services.--The program manager 
        shall take such measures as are necessary to ensure that 
        sufficient employment networks are available and that each 
        beneficiary receiving services under the Program has reasonable 
        access to employment services, vocational rehabilitation 
        services, and other support services. Such services may include 
        case management, benefits counseling, supported employment, 
        career planning, career plan development, vocational 
        assessment, job training, placement, follow-up services, and 
        such other services as may be specified by the Commissioner 
        under the Program. The program manager shall ensure that such 
        services are coordinated.
  ``(f) Employment Networks.--
          ``(1) Qualifications for employment networks.--Each 
        employment network serving under the Program shall consist of 
        an agency or instrumentality of a State (or a political 
        subdivision thereof) or a private entity, which assumes 
        responsibility for the coordination and delivery of services 
        under the Program to individuals assigning to the employment 
        network tickets to work and self-sufficiency issued under 
        subsection (b). No employment network may serve under the 
        Program unless it demonstrates to the Commissioner substantial 
        expertise and experience in the field of employment services, 
        vocational rehabilitation services, or other support services 
        for individuals with disabilities and provides an array of such 
        services. An employment network shall consist of either a 
        single provider of such services or of an association of such 
        providers organized so as to combine their resources into a 
        single entity. An employment network may meet the requirements 
        of subsection (e)(4) by providing services directly, or by 
        entering into agreements with other individuals or entities 
        providing appropriate employment services, vocational 
        rehabilitation services, or other support services.
          ``(2) Requirements relating to provision of services.--Each 
        employment network serving under the Program shall be required 
        under the terms of its agreement with the Commissioner to--
                  ``(A) serve prescribed service areas,
                  ``(B) meet, and maintain compliance with, both 
                general selection criteria (such as professional and 
                governmental certification and educational credentials) 
                and specific selection criteria (such as the extent of 
                work experience by the provider with specific 
                populations), and
                  ``(C) take such measures as are necessary to ensure 
                that employment services, vocational rehabilitation 
                services, and other support services provided under the 
                Program by, or under agreements entered into with, the 
                employment network are provided under appropriate 
                individual work plans meeting the requirements of 
                subsection (g).
          ``(3) Annual financial reporting.--Each employment network 
        shall meet financial reporting requirements as prescribed by 
        the Commissioner.
          ``(4) Periodic outcomes reporting.--Each employment network 
        shall prepare periodic reports, on at least an annual basis, 
        itemizing for the covered period specific outcomes achieved 
        with respect to specific services provided by the employment 
        network. Such reports shall conform to a national model 
        prescribed under this section. Each employment network shall 
        provide a copy of the latest report issued by the employment 
        network pursuant to this paragraph to each beneficiary upon 
        enrollment under the Program for services to be received 
        through such employment network. Upon issuance of each report 
        to each beneficiary, a copy of the report shall be maintained 
        in the files of the employment network pertaining to the 
        beneficiary. The program manager shall ensure that copies of 
        all such reports issued under this paragraph are made available 
        to the public under reasonable terms.
  ``(g) Individual Work Plans.--
          ``(1) In general.--Each employment network shall--
                  ``(A) take such measures as are necessary to ensure 
                that employment services, vocational rehabilitation 
                services, and other support services provided under the 
                Program by, or under agreements entered into with, the 
                employment network are provided under appropriate 
                individual work plans as defined by the Commissioner, 
                and
                  ``(B) develop and implement each such individual work 
                plan, in the case of each beneficiary receiving such 
                services, in a manner that affords such beneficiary the 
                opportunity to exercise informed choice in selecting an 
                employment goal and specific services needed to achieve 
                that employment goal.
        A beneficiary's individual work plan shall take effect upon 
        approval by the beneficiary.
          ``(2) Vocational evaluation.--In devising the work plan, the 
        employment network shall undertake a vocational evaluation with 
        respect to the beneficiary. Each vocational evaluation shall 
        set forth in writing such elements and shall be in such format 
        as the Commissioner shall prescribe. The Commissioner may 
        provide for waiver by the beneficiary of such a vocational 
        evaluation, subject to regulations which shall be prescribed by 
        the Commissioner providing for the permissible timing of, and 
        the circumstances permitting, such a waiver.
  ``(h) Employment Network Payment Systems.--
          ``(1) Election of payment system by employment networks.--
                  ``(A) In general.--The Program shall provide for 
                payment authorized by the Commissioner to employment 
                networks under either an outcome payment system or an 
                outcome-milestone payment system. Each employment 
                network shall elect which payment system will be 
                utilized by the employment network, and, for such 
                period of time as such election remains in effect, the 
                payment system so elected shall be utilized exclusively 
                in connection with such employment network (except as 
                provided in subparagraph (B)).
                  ``(B) Method of payment to employment networks.--Any 
                such election by an employment network taking effect 
                during any period for which a disabled beneficiary is 
                receiving services from such employment network shall 
                not be effective with respect to such beneficiary to 
                the extent that such election would result in any 
                change in the method of payment to the employment 
                network with respect to services provided to such 
                beneficiary from the method of payment to the 
                employment network with respect to services provided to 
                such beneficiary as of immediately before such 
                election.
          ``(2) Outcome payment system.--
                  ``(A) In general.--The outcome payment system shall 
                consist of a payment structure governing employment 
                networks electing such system under paragraph (1)(A) 
                which meets the requirements of this paragraph.
                  ``(B) Payments made during outcome payment period.--
                The outcome payment system shall provide for a schedule 
                of payments to an employment network, in connection 
                with each individual who is a beneficiary, for each 
                month, during the individual's outcome payment period, 
                for which benefits (described in paragraphs (2) and (3) 
                of subsection (k)) are not payable to such individual.
                  ``(C) Computation of payments to employment 
                network.--The payment schedule of the outcome payment 
                system shall be designed so that--
                          ``(i) the payment for each of the 60 months 
                        during the outcome payment period for which 
                        benefits (described in paragraphs (2) and (3) 
                        of subsection (k)) are not payable is equal to 
                        a fixed percentage of the payment calculation 
                        base for the calendar year in which such month 
                        occurs, and
                          ``(ii) such fixed percentage is set at a 
                        percentage which does not exceed 40 percent.
          ``(3) Outcome-milestone payment system.--
                  ``(A) In general.--The outcome-milestone payment 
                system shall consist of a payment structure governing 
                employment networks electing such system under 
                paragraph (1)(A) which meets the requirements of this 
                paragraph.
                  ``(B) Early payments upon attainment of milestones in 
                advance of outcome payment periods.--The outcome-
                milestone payment system shall provide for one or more 
                milestones, with respect to beneficiaries receiving 
                services from an employment network under the Program, 
                which are directed toward the goal of permanent 
                employment. Such milestones shall form a part of a 
                payment structure which provides, in addition to 
                payments made during outcome payment periods, payments 
                made prior to outcome payment periods in amounts based 
                on the attainment of such milestones.
                  ``(C) Limitation on total payments to employment 
                network.--The payment schedule of the outcome milestone 
                payment system shall be designed so that the total of 
                the payments to the employment network with respect to 
                each beneficiary is less than, on a net present value 
                basis (using an interest rate determined by the 
                Commissioner that appropriately reflects the cost of 
                funds faced by providers), the total amount to which 
                payments to the employment network with respect to the 
                beneficiary would be limited if the employment network 
                were paid under the outcome payment system.
          ``(4) Definitions.--For purposes of this subsection--
                  ``(A) Payment calculation base.--The term `payment 
                calculation base' means, for any calendar year--
                          ``(i) in connection with a title II 
                        disability beneficiary, the average disability 
                        insurance benefit payable under section 223 for 
                        all beneficiaries for months during the 
                        preceding calendar year, and
                          ``(ii) in connection with a title XVI 
                        disability beneficiary (who is not concurrently 
                        a title II disability beneficiary), the average 
                        payment of supplemental security income 
                        benefits based on disability payable under 
                        title XVI (excluding State supplementation) for 
                        months during the preceding calendar year to 
                        all beneficiaries who have attained at least 18 
                        years of age.
                  ``(B) Outcome payment period.--The term `outcome 
                payment period' means, in connection with any 
                individual who had assigned a ticket to work and self-
                sufficiency to an employment network under the Program, 
                a period--
                          ``(i) beginning with the first month, ending 
                        after the date on which such ticket was 
                        assigned to the employment network, for which 
                        benefits (described in paragraphs (2) and (3) 
                        of subsection (k)) are not payable to such 
                        individual by reason of engagement in work 
                        activity, and
                          ``(ii) ending with the 60th month 
                        (consecutive or otherwise), ending after such 
                        date, for which such benefits are not payable 
                        to such individual by reason of engagement in 
                        work activity.
          ``(5) Periodic review and alterations of prescribed 
        schedules.--
                  ``(A) Percentages and periods.--The Commissioner of 
                Social Security shall periodically review the 
                percentage specified in paragraph (2)(C), the total 
                payments permissible under paragraph (3)(C), and the 
                period of time specified in paragraph (4)(B) to 
                determine whether such percentages, such permissible 
                payments, and such period provide an adequate incentive 
                for employment networks to assist beneficiaries to 
                enter the workforce, while providing for appropriate 
                economies. The Commissioner may alter such percentage, 
                such total permissible payments, or such period of time 
                to the extent that the Commissioner determines, on the 
                basis of the Commissioner'sreview under this paragraph, 
that such an alteration would better provide the incentive and 
economies described in the preceding sentence.
                  ``(B) Number and amount of milestone payments.--The 
                Commissioner shall periodically review the number and 
                amounts of milestone payments established by the 
                Commissioner pursuant to this section to determine 
                whether they provide an adequate incentive for 
                employment networks to assist beneficiaries to enter 
                the workforce, taking into account information provided 
                to the Commissioner by program managers, the Ticket to 
                Work and Self-Sufficiency Advisory Panel, and other 
                reliable sources. The Commissioner may from time to 
                time alter the number and amounts of milestone payments 
                initially established by the Commissioner pursuant to 
                this section to the extent that the Commissioner 
                determines that such an alteration would allow an 
                adequate incentive for employment networks to assist 
                beneficiaries to enter the workforce. Such alteration 
                shall be based on information provided to the 
                Commissioner by program managers, the Ticket to Work 
                and Self-Sufficiency Advisory Panel, or other reliable 
                sources.
  ``(i) Suspension of Disability Reviews.--During any period for which 
an individual is using a ticket to work and self-sufficiency issued 
under this section, the Commissioner (and any applicable State agency) 
may not initiate a continuing disability review or other review under 
section 221 of whether the individual is or is not under a disability 
or a review under title XVI similar to any such review under section 
221.
  ``(j) Authorizations.--
          ``(1) Title ii disability beneficiaries.--There are 
        authorized to be transferred from the Federal Old-Age and 
        Survivors Insurance Trust Fund and the Federal Disability 
        Insurance Trust Fund each fiscal year such sums as may be 
        necessary to carry out the provisions of this section with 
        respect to title II disability beneficiaries. Money paid from 
        the Trust Funds under this section with respect to title II 
        disability beneficiaries who are entitled to benefits under 
        section 223 or who are entitled to benefits under section 
        202(d) on the basis of the wages and self-employment income of 
        such beneficiaries, shall be charged to the Federal Disability 
        Insurance Trust Fund, and all other money paid from the Trust 
        Funds under this section shall be charged to the Federal Old-
        Age and Survivors Insurance Trust Fund. The Commissioner of 
        Social Security shall determine according to such methods and 
        procedures as shall be prescribed under this section--
                  ``(A) the total amount to be paid to program managers 
                and employment networks under this section, and
                  ``(B) subject to the provisions of the preceding 
                sentence, the amount which should be charged to each of 
                the Trust Funds.
          ``(2) Title xvi disability beneficiaries.--Amounts authorized 
        to be appropriated to the Social Security Administration under 
        section 1601 (as in effect pursuant to the amendments made by 
        section 301 of the Social Security Amendments of 1972) shall 
        include amounts necessary to carry out the provisions of this 
        section with respect to title XVI disability beneficiaries.
  ``(k) Definitions.--For purposes of this section--
          ``(1) Disabled beneficiary.--The term `disabled beneficiary' 
        means a title II disability beneficiary or a title XVI 
        disability beneficiary.
          ``(2) Title ii disability beneficiary.--The term `title II 
        disability beneficiary' means an individual entitled to 
        disability insurance benefits under section 223 or to monthly 
        insurance benefits under section 202 based on such individual's 
        disability (as defined in section 223(d)). An individual is a 
        title II disability beneficiary for each month for which such 
        individual is entitled to such benefits.
          ``(3) Title xvi disability beneficiary.--The term `title XVI 
        disability beneficiary' means an individual eligible for 
        supplemental security income benefits under title XVI on the 
        basis of blindness (within the meaning of section 1614(a)(2)) 
        or disability (within the meaning of section 1614(a)(3)). An 
        individual is a title XVI disability beneficiary for each month 
        for which such individual is eligible for such benefits.
          ``(4) Supplemental security income benefit.--The term 
        `supplemental security income benefit under title XVI' means a 
        cash benefit under section 1611 or 1619(a), and does not 
        include a State supplementary payment, administered federally 
        or otherwise.
  ``(l) Regulations.--The Commissioner of Social Security shall 
prescribe such regulations as are necessary to carry out the provisions 
of this section.''.
  (b) Conforming Amendments.--
          (1) Amendments to title ii.--
                  (A) Section 221(c) of such Act (42 U.S.C. 421(c)) is 
                amended by adding at the end the following new 
                paragraph:
  ``(4) For suspension of reviews under this subsection in the case of 
an individual using a ticket to work and self-sufficiency, see section 
1147(i).''.
                  (B) Section 222(a) of such Act (42 U.S.C. 422(a)) is 
                repealed.
                  (C) Section 222(b) of such Act (42 U.S.C. 422(b)) is 
                repealed.
                  (D) Section 225(b)(1) of such Act (42 U.S.C. 
                425(b)(1)) is amended by striking ``a program of 
                vocational rehabilitation services'' and inserting ``a 
                program consisting of the Ticket to Work and Self-
                Sufficiency Program under section 1147 or another 
                program of vocational rehabilitation services, 
                employment services, or other support services''.
          (2) Amendments to title xvi.--
                  (A) Section 1615(a) of such Act (42 U.S.C. 1382d(a)) 
                is amended to read as follows:
  ``Sec. 1615. (a) In the case of any blind or disabled individual 
who--
          ``(1) has not attained age 16, and
          ``(2) with respect to whom benefits are paid under this 
        title,
the Commissioner of Social Security shall make provision for referral 
of such individual to the appropriate State agency administering the 
State program under title V.''.
                  (B) Section 1615(c) of such Act (42 U.S.C. 1382d(c)) 
                is repealed.
                  (C) Section 1631(a)(6)(A) of such Act (42 U.S.C. 
                1383(a)(6)(A)) is amended by striking ``a program of 
                vocational rehabilitation services'' and inserting ``a 
                program consisting of the Ticket to Work and Self-
                Sufficiency Program under section 1147 or another 
                program of vocational rehabilitation services, 
                employment services, or other support services''.
                  (D) Section 1633(c) of such Act (42 U.S.C. 1383b(c)) 
                is amended--
                          (i) by inserting ``(1)'' after ``(c)''; and
                          (ii) by adding at the end the following new 
                        paragraph:
  ``(2) For suspension of continuing disability reviews and other 
reviews under this title similar to reviews under section 221 in the 
case of an individual using a ticket to work and self-sufficiency, see 
section 1147(i).''.
  (c) Effective Date.--Subject to subsection (d), the amendments made 
by subsections (a) and (b) shall take effect with the first month 
following one year after the date of the enactment of this Act.
  (d) Graduated Implementation of Program.--
          (1) In general.--Not later than one year after the date of 
        the enactment of this Act, the Commissioner of Social Security 
        shall commence implementation of the amendments made by this 
        section (other than paragraphs (1)(C) and (2)(B) of subsection 
        (b)) in graduated phases at phase-in sites selected by the 
        Commissioner. Such phase-in sites shall be selected so as to 
        ensure, prior to full implementation of the Ticket to Work and 
        Self-Sufficiency Program, the development and refinement of 
        referral processes, payment systems, computer linkages, 
        management information systems, and administrative processes 
        necessary to provide for full implementation of such 
        amendments. Subsection (c) shall apply with respect to 
        paragraphs (1)(C) and (2)(B) of subsection (b) without regard 
        to this subsection.
          (2) Requirements.--Implementation of the Program at each 
        phase-in site shall be carried out on a wide enough scale to 
        permit a thorough evaluation of the alternative methods under 
        consideration, so as to ensure that the most efficacious 
        methods are determined and in place for full implementation of 
        the Program on a timely basis.
          (3) Full implementation.--The Commissioner shall ensure that 
        the Program is fully implemented as soon as practicable on or 
        after the effective date specified in subsection (c) but not 
        later than six years after such date.
          (4) Ongoing evaluation of program.--
                  (A) In general.--The Commissioner shall design and 
                conduct a series of evaluations to assess the cost-
                effectiveness of activities carried out under this 
                section and the amendments made thereby, as well as the 
                effects of this section and the amendments made thereby 
                on work outcomes for beneficiaries receiving tickets to 
                work and self-sufficiency under the Program.
                  (B) Methodology.--
                          (i) Design and implementation.--The 
                        Commissioner shall design the series of 
                        evaluations after receiving relevant advice 
                        from experts in the fields of disability, 
                        vocational rehabilitation, and program 
                        evaluation and individuals using tickets to 
                        work and self-sufficiency under the Program. In 
                        designing and carrying out such evaluations, 
                        the Commissioner shall consult with the 
                        Comptroller General of the United States and 
                        other agencies of the Federal Government and 
                        with private organizations with appropriate 
                        expertise. Before provision of services begins 
                        under any phase of Program implementation, the 
                        Commissioner shall ensure that plans for such 
                        evaluations and data collection methods are in 
                        place and ready for implementation.
                          (ii) Specific matters to be addressed.--Each 
                        such evaluation shall address (but is not 
                        limited to):
                                  (I) the annual cost (including net 
                                cost) of the Program and the annual 
                                cost (including net cost) that would 
                                have been incurred in the absence of 
                                the Program;
                                  (II) the determinants of return to 
                                work, including the characteristics of 
                                beneficiaries in receipt of tickets 
                                under the Program;
                                  (III) the types of employment 
                                services, vocational rehabilitation 
                                services, and other support services 
                                furnished to beneficiaries in receipt 
                                of tickets under the Program who return 
                                to work and to those who do not return 
                                to work;
                                  (IV) the duration of employment 
                                services, vocational rehabilitation 
                                services, and other support services 
                                furnished to beneficiaries in receipt 
                                of tickets under the Program who return 
                                to work and the duration of such 
                                services furnished to those who do not 
                                return to work and the cost to 
                                employment networks of furnishing such 
                                services;
                                  (V) the employment outcomes, 
                                including wages, occupations, benefits, 
                                and hours worked, of beneficiaries who 
                                return to work after receiving tickets 
                                under the Program and those who return 
                                to work without receiving such tickets;
                                  (VI) the characteristics of providers 
                                whose services are provided within an 
                                employment network under the Program;
                                  (VII) the extent (if any) to which 
                                employment networks display a greater 
                                willingness to provide services to 
                                disabled beneficiaries;
                                  (VIII) the characteristics (including 
                                employment outcomes) of those 
                                beneficiaries who receive services 
                                under the outcome payment system and of 
                                those beneficiaries who receive 
                                services under the outcome-milestone 
                                payment system;
                                  (IX) measures of satisfaction among 
                                beneficiaries in receipt of tickets 
                                under the Program; and
                                  (X) reasons for (including comments 
                                solicited from beneficiaries regarding) 
                                their choice not to use their tickets 
                                or their inability to return to work 
                                despite the use of thier tickets.
                  (C) Periodic evaluation reports.--Following the close 
                of the third and fifth fiscal years ending after the 
                effective date under subsection (c), and prior to the 
                close of the seventh fiscal year ending after such 
                date, the Commissioner shall transmit to the Committee 
                on Ways and Means of the House of Representatives and 
                the Committee on Finance of the Senate a report 
                containing the Commissioner's evaluation of the 
                progress of activities conducted under the provisions 
                of this section and the amendments made thereby. Each 
                such report shall set forth the Commissioner's 
                evaluation of the extent to which the Program has been 
                successful and the Commissioner's conclusions on 
                whether or how the Program should be modified. Each 
                such report shall include such data, findings, 
                materials, and recommendations as the Commissioner may 
                consider appropriate.
          (5) Extent of state's right of first refusal in advance of 
        full implementation of amendments in such state.--
                  (A) In general.--In the case of any State in which 
                the amendments made by subsection (a) have not been 
                fully implemented pursuant to this subsection, the 
                Commissioner shall determine by regulation the extent 
                to which--
                          (i) the requirement under section 222(a) of 
                        the Social Security Act for prompt referrals to 
                        a State agency, and
                          (ii) the authority of the Commissioner under 
                        section 222(d)(2) of such Act to provide 
                        vocational rehabilitation services in such 
                        State by agreement or contract with other 
                        public or private agencies, organizations, 
                        institutions, or individuals,
                shall apply in such State.
                  (B) Existing agreements.--Nothing in subparagraph (A) 
                or the amendments made by subsection (a) shall be 
                construed to limit, impede, or otherwise affect any 
                agreement entered into pursuant to section 222(d)(2)of 
the Social Security Act before the date of the enactment of this Act 
with respect to services provided pursuant to such agreement to 
beneficiaries receiving services under such agreement as of such date, 
except with respect to services (if any) to be provided after six years 
after the effective date provided in subsection (c).
  (e) The Ticket to Work and Self-Sufficiency Advisory Panel.--
          (1) Establishment.--There is established in the executive 
        branch a panel to be known as the ``Ticket to Work and Self-
        Sufficiency Advisory Panel'' (in this subsection referred to as 
        the ``Panel'').
          (2) Duties of panel.--It shall be the duty of the Panel to--
                  (A) advise the Commissioner of Social Security on 
                establishing phase-in sites for the Ticket to Work and 
                Self-Sufficiency Program and on fully implementing the 
                Program thereafter,
                  (B) advise the Commissioner with respect to the 
                refinement of access of disabled beneficiaries to 
                employment networks, payment systems, and management 
                information systems and advise the Commissioner whether 
                such measures are being taken to the extent necessary 
                to ensure the success of the Program,
                  (C) advise the Commissioner regarding the most 
                effective designs for research and demonstration 
                projects associated with the Program or conducted 
                pursuant to subsection (h),
                  (D) advise the Commissioner on the development of 
                performance measurements relating to quality assurance 
                under section 1147(d)(6) of the Social Security Act, 
                and
                  (E) furnish progress reports on the Program to the 
                President and each House of the Congress.
          (3) Membership.--
                  (A) Number and appointment.--The Panel shall be 
                composed of 6 members as follows:
                          (i) 1 member appointed by the Chairman of the 
                        Committee on Ways and Means of the House of 
                        Representatives;
                          (ii) 1 member appointed by the ranking 
                        minority member of the Committee on Ways and 
                        Means of the House of Representatives;
                          (iii) 1 member appointed by the Chairman of 
                        the Committee on Finance of the Senate;
                          (iv) 1 member appointed by the ranking 
                        minority member of the Committee on Finance of 
                        the Senate; and
                          (v) 2 members appointed by the President, who 
                        may not be of the same political party.
                  (B) Representation.--Of the members appointed under 
                subparagraph (A), at least 4 shall have experience or 
                expert knowledge as a recipient, provider, employer, or 
                employee in the fields of, or related to, employment 
                services, vocational rehabilitation services, and other 
                support services, of whom--
                          (i) at least one shall represent the 
                        interests of recipients of employment services, 
                        vocational rehabilitation services, and other 
                        support services,
                          (ii) at least one shall represent the 
                        interests of providers of employment services, 
                        vocational rehabilitation services, and other 
                        support services,
                          (iii) at least one shall represent the 
                        interests of private employers,
                          (iv) at least one shall represent the 
                        interests of employees, and
                          (v) at least one shall be an individual who 
                        is or has been a recipient of benefits under 
                        title II or title XVI based on disability.
                  (C) Terms.--
                          (i) In general.--Each member shall be 
                        appointed for a term of 4 years (or, if less, 
                        for the remaining life of the Panel), except as 
                        provided in clauses (ii) and (iii). The initial 
                        members shall be appointed not later than 90 
                        days after the date of the enactment of this 
                        Act.
                          (ii) Terms of initial appointees.--As 
                        designated by the President at the time of 
                        appointment, of the members first appointed--
                                  (I) 3 of the members appointed under 
                                subparagraph (A) shall be appointed for 
                                a term of 2 years, and
                                  (II) 3 of the members appointed under 
                                subparagraph (A) shall be appointed for 
                                a term of 4 years.
                          (iii) Vacancies.--Any member appointed to 
                        fill a vacancy occurring before the expiration 
                        of the term for which the member's predecessor 
                        was appointed shall be appointed only for the 
                        remainder of that term. A member may serve 
                        after the expiration of that member's term 
                        until a successor has taken office. A vacancy 
                        in the Panel shall be filled in the manner in 
                        which the original appointment was made.
                  (D) Basic pay.--Members shall each be paid at a rate 
                equal to the daily equivalent of the rate of basic pay 
                for level 4 of the Senior Executive Service, as in 
                effect from time to time under section 5382 of title 5, 
                United States Code, for each day (including travel 
                time) during which they are engaged in the actual 
                performance of duties vested in the Panel.
                  (E) Travel expenses.--Each member shall receive 
                travel expenses, including per diem in lieu of 
                subsistence, in accordance with sections 5702 and 5703 
                of title 5, United States Code.
                  (F) Quorum.--4 members of the Panel shall constitute 
                a quorum but a lesser number may hold hearings.
                  (G) Chairperson.--The Chairperson of the Panel shall 
                be designated by the President. The term of office of 
                the Chairperson shall be 4 years.
                  (H) Meetings.--The Panel shall meet at least 
                quarterly and at other times at the call of the 
                Chairperson or a majority of its members.
          (4) Director and staff of panel; experts and consultants.--
                  (A) Director.--The Panel shall have a Director who 
                shall be appointed by the Panel. The Director shall be 
                paid at a rate not to exceed the maximum rate of pay 
                payable for GS-15 of the General Schedule.
                  (B) Staff.--Subject to rules prescribed by the Panel, 
                the Director may appoint and fix the pay of additional 
                personnel as the Director considers appropriate.
                  (C) Experts and consultants.--Subject to rules 
                prescribed by the Panel, the Director may procure 
                temporary and intermittent services under section 
                3109(b) of title 5, United States Code.
                  (D) Staff of federal agencies.--Upon request of the 
                Panel, the head of any Federal department or agency may 
                detail, on a reimbursable basis, any of the personnel 
                of that department or agency to the Panel to assist it 
                in carrying out its duties under this Act.
          (5) Powers of panel.--
                  (A) Hearings and sessions.--The Panel may, for the 
                purpose of carrying out its duties under this 
                subsection, hold such hearings, sit and act at such 
                times and places, and take such testimony and evidence 
                as the Panel considers appropriate.
                  (B) Powers of members and agents.--Any member or 
                agent of the Panel may, if authorized by the Panel, 
                take any action which the Panel is authorized to take 
                by this section.
                  (C) Mails.--The Panel may use the United States mails 
                in the same manner and under the same conditions as 
                other departments and agencies of the United States.
                  (D) Administrative support services.--Upon the 
                request of the Panel, the Administrator of General 
                Services shall provide to the Panel, on a reimbursable 
                basis, the administrative support services necessary 
                for the Panel to carry out its duties under this 
                subsection.
          (6) Reports.--
                  (A) Interim reports.--The Panel shall submit to the 
                President and the Congress interim reports at least 
                annually.
                  (B) Final report.--The Panel shall transmit a final 
                report to the President and the Congress not later than 
                eight years after the date of the enactment of this 
                Act. The final report shall contain a detailed 
                statement of the findings and conclusions of the Panel, 
                together with its recommendations for legislation and 
                administrative actions which the Panel considers 
                appropriate.
          (7) Termination.--The Panel shall terminate 30 days after the 
        date of the submission of its final report under paragraph 
        (6)(B).
          (8) Authorization of appropriations.--There are authorized to 
        be appropriated from the Federal Old-Age and Survivors 
        Insurance Trust Fund, the Federal Disability Insurance Trust 
        Fund, and the general fund of the Treasury, as appropriate, 
        such sums as are necessary to carry out this subsection.
  (f) Specific Regulations Required.--
          (1) In general.--The Commissioner of Social Security shall 
        prescribe such regulations as are necessary to implement the 
        amendments made by this section.
          (2) Specific matters to be included in regulations.--The 
        matters which shall be addressed in such regulations shall 
        include (but are not limited to)--
                  (A) the form and manner in which tickets to work and 
                self-sufficiency may be distributed to beneficiaries 
                pursuant to section 1147(b)(1) of such Act;
                  (B) the format and wording of such tickets, which 
                shall incorporate by reference any contractual terms 
                governing service by employment networks under the 
                Program;
                  (C) the form and manner in which State agencies may 
                elect participation in the Ticket to Work and Self-
                Sufficiency Program (and revoke such an election) 
                pursuant to section 1147(c)(1) of such Act and 
                provision for periodic opportunities for exercising 
                such elections (and revocations);
                  (D) the status of State agencies under section 
                1147(c)(2) at the time that State agencies exercise 
                elections (and revocations) under such section 
                1147(c)(1);
                  (E) the terms of agreements to be entered into with 
                program managers pursuant to section 1147(d) of such 
                Act, including (but not limited to)--
                          (i) the terms by which program managers are 
                        precluded from direct participation in the 
                        delivery of services pursuant to section 
                        1147(d)(3) of such Act,
                          (ii) standards which must be met by quality 
                        assurance measures referred to in paragraph (6) 
                        of section 1147(d) and methods of recruitment 
                        of employment networks utilized pursuant to 
                        paragraph (2) of section 1147(e), and
                          (iii) the format under which dispute 
                        resolution will operate under section 
                        1147(d)(7).
                  (F) the terms of agreements to be entered into with 
                employment networks pursuant to section 1147(d)(4) of 
                such Act, including (but not limited to)--
                          (i) the manner in which service areas are 
                        specified pursuant to section 1147(f)(2)(A) of 
                        such Act,
                          (ii) the general selection criteria and the 
                        specific selection criteria which are 
                        applicable to employment networks under section 
                        1147(f)(2)(B) of such Act in selecting service 
                        providers,
                          (iii) specific requirements relating to 
                        annual financial reporting by employment 
                        networks pursuant to section 1147(f)(3) of such 
                        Act, and
                          (iv) the national model to which periodic 
                        outcomes reporting by employment networks must 
                        conform under section 1147(f)(4) of such Act;
                  (G) standards which must be met by individual work 
                plans pursuant to section 1147(g) of such Act;
                  (H) standards which must be met by payment systems 
                required under section 1147(h) of such Act, including 
                (but not limited to)--
                          (i) the form and manner in which elections by 
                        employment networks of payment systems are to 
                        be exercised pursuant to section 1147(h)(1)(A),
                          (ii) the terms which must be met by an 
                        outcome payment system under section 
                        1147(h)(2);
                          (iii) the terms which must be met by an 
                        outcome-milestone payment system under section 
                        1147(h)(3);
                          (iv) any revision of the percentage specified 
                        in paragraph (2)(C) of section 1147(h) of such 
                        Act or the period of time specified in 
                        paragraph (4)(B) of such section 1147(h); and
                          (v) annual oversight procedures for such 
                        systems; and
                  (I) procedures for effective oversight of the Program 
                by the Commissioner of Social Security, including 
                periodic reviews and reporting requirements.
  (g) Work Incentive Specialists.--The Commissioner shall establish a 
corps of trained, accessible, and responsive work incentive specialists 
to specialize in title II and title XVI disability work incentives for 
the purpose of disseminating accurate information to disabled 
beneficiaries (as defined in section 1147(k)(1) of the Social Security 
Act as amended by this Act) with respect to inquiries and issues 
relating to work incentives.
  (h) Demonstration Projects Providing for Reductions in Disability 
Insurance Benefits Based on Earnings.--
          (1) Authority.--The Commissioner shall conduct demonstration 
        projects for the purpose of evaluating, through the collection 
        of data, a program for title II disability beneficiaries (as 
        defined in section 1147(k)(2) of the Social Security Act, as 
        amended by this Act) under which each $1 of benefits payable 
        under section 223, or under section 202 based on the 
        beneficiary's disability, is reduced for each $2 of such 
        beneficiary's earnings that is above a level to be determined 
        by the Commissioner. Such projects shall be conducted at a 
        number of localities which the Commissioner shall determine is 
        sufficient to adequately evaluate the appropriateness of 
        national implementation of such a program. Such projects shall 
        identify reductions in Federal expenditures that may result 
        from the permanent implementation of such a program.
          (2) Scope and scale and matters to be determined.--
                  (A) In general.--The demonstration projects developed 
                under paragraph (1) shall be of sufficient duration, 
                shall be of sufficient scope, and shall be carried out 
                on a wide enough scale to permit a thorough evaluation 
                of the project to determine--
                          (i) the effects, if any, of induced entry and 
                        reduced exit,
                          (ii) the extent, if any, to which the project 
                        being tested is affected by whether it is in 
                        operation in a locality within an area under 
                        the administration of the Ticket to Work and 
                        Self-Sufficiency Program, and
                          (iii) the savings that accrue to the Trust 
                        Funds and other Federal programs under the 
                        project being tested.
                The Commissioner shall take into account advice 
                provided by the Ticket to Work and Self-Sufficiency 
                Advisory Panel pursuant to subsection (e)(2)(C).
                  (B) Additional matters.--The Commissioner shall also 
                determine with respect to each project--
                          (i) the annual cost (including net cost) of 
                        the project and the annual cost (including net 
                        cost) that would have been incurred in the 
                        absence of the project,
                          (ii) the determinants of return to work, 
                        including the characteristics of the 
                        beneficiaries who participate in the project, 
                        and
                          (iii) the employment outcomes, including 
                        wages, occupations, benefits, and hours worked, 
                        of beneficiaries who return to work as a result 
                        of participation in the project.
                The Commissioner may include within the matters 
                evaluated under the project the merits of trial work 
                periods and periods of extended eligibility.
          (3) Waivers.--The Commissioner may waive compliance with the 
        benefit provisions of title II of the Social Security Act, and 
        the Secretary of Health and Human Services may waive compliance 
        with the benefit requirements of title XVIII of such Act, 
        insofar as is necessary for a thorough evaluation of the 
        alternative methods under consideration. No such project shall 
        be actually placed in operation unless at least 90 days prior 
        thereto a written report, prepared for purposes of notification 
        and information only and containing a full and complete 
        description thereof, has been transmitted by the Commissioner 
        to the Committee on Ways and Means of the House of 
        Representatives and to the Committee on Finance of the Senate. 
        Periodic reports on the progress of such projects shall be 
        submitted by the Commissioner to such committees. When 
        appropriate, such reports shall include detailed 
        recommendations for changes in administration or law, or both, 
        to carry out the objectives stated in paragraph (1).
          (4) Interim reports.--On or before June 9 in 2000 and each of 
        the succeeding years thereafter, the Commissioner shall submit 
        to the Congress an interim report on the progress of the 
        demonstration projects carried out under this subsection 
        together with any related data and materials which the 
        Commissioner may consider appropriate.
          (5) Final report.--The Commissioner shall submit to the 
        Congress a final report with respect to all demonstration 
        projects carried out under this section no later than one year 
        after their completion.
          (6) Expenditures.--Expenditures made for demonstration 
        projects under this subsection shall be made from the Federal 
        Disability Insurance Trust Fund and the Federal Old-Age and 
        Survivors Insurance Trust Fund, as determined appropriate by 
        the Commissioner, and from the Federal Hospital Insurance Trust 
        Fund and the Federal Supplementary Medical Insurance Trust 
        Fund, as determined appropriate by the Secretary of Health and 
        Human Services, to the extent provided in advance in 
        appropriation Acts.
  (i) Study by General Accounting Office of Existing Disability-Related 
Employment Incentives.--
          (1) Study.--As soon as practicable after the date of the 
        enactment of this Act, the Comptroller General of the United 
        States shall undertake a study to assess existing tax credits 
        and other disability-related employment incentives under the 
        Americans with Disabilities Act of 1990 and other Federal laws. 
        In such study, the Comptroller General shall specifically 
        address the extent to which such credits and other incentives 
        would encourage employers to hire and retain individuals with 
        disabilities under the Ticket to Work and Self-Sufficiency 
        Program.
          (2) Report.--Not later than 3 years after the date of the 
        enactment of this Act, the Comptroller General shall transmit 
        to the Committee on Ways and Means of the House of 
        Representatives and the Committee on Finance of the Senate a 
        written report presenting the results of the Comptroller 
        General's study conducted pursuant to this subsection, together 
        with such recommendations for legislative or administrative 
        changes as the Comptroller General may determine to be 
        appropriate.
  (j) Study by General Accounting Office of Existing Coordination of 
the DI and SSI Programs as They Relate to Individuals Entering or 
Leaving Concurrent Entitlement.--
          (1) Study.--As soon as practicable after the date of the 
        enactment of this Act, the Comptroller General of the United 
        States shall undertake a study to evaluate the coordination 
        under current law of the disability insurance program under 
        title II of the Social Security Act and the supplemental 
        security income program under title XVI of such Act, as such 
        programs relate to individuals entering or leaving concurrent 
        entitlement under such programs. In such study, the Comptroller 
        General shall specifically address the effectiveness of work 
        incentives under such programs with respect to such individuals 
        and the effectiveness of coverage of such individuals under 
        titles XVIII and XIX of such Act.
          (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Comptroller General shall transmit 
        to the Committee on Ways and Means of the House of 
        Representatives and the Committee on Finance of the Senate a 
        written report presenting the results of the Comptroller 
        General's study conducted pursuant to this subsection, together 
        with such recommendations for legislative or administrative 
        changes as the Comptroller General may determine to be 
        appropriate.

SEC. 3. EXTENDING MEDICARE COVERAGE FOR OASDI DISABILITY BENEFIT 
                    RECIPIENTS WHO ARE USING TICKETS TO WORK AND SELF-
                    SUFFICIENCY.

  (a) In General.--The next to last sentence of section 226(b) of the 
Social Security Act (42 U.S.C. 426) is amended--
          (1) by striking ``throughout all of which'' and inserting 
        ``throughout the first 24 months of which'', and
          (2) by inserting after ``but not in excess of 24 such 
        months'' the following: ``(plus 24 additional such months in 
        the case of an individual who the Commissioner determines is 
        using a ticket to work and self-sufficiency issued under 
        section 1147, but only for additional months that occur in the 
        7-year period beginning on the date of the enactment of the 
        Ticket to Work and Self-Sufficiency Act of 1998)''.
  (b) Report.--Not later than 6 months prior to the end of the 7-year 
period beginning on the date of the enactment of this Act, the 
Secretary of Health and Human Services and the Commissioner of Social 
Security shall submit in writing to each House of the Congress their 
recommendations for further legislative action with respect to the 
amendments made by subsection (a), taking into account experience 
derived from efforts to achieve full implementation of the Ticket to 
Work and Self Sufficiency Program under section 1147 of the Social 
Security Act.

SEC. 4. TECHNICAL AMENDMENTS RELATING TO DRUG ADDICTS AND ALCOHOLICS.

  (a) Clarification Relating to the Effective Date of the Denial of 
Social Security Disability Benefits to Drug Addicts and Alcoholics.--
Section 105(a)(5) of the Contract with America Advancement Act of 1996 
(Public Law 104-121; 110 Stat. 853) is amended--
          (1) in subparagraph (A), by striking ``by the Commissioner of 
        Social Security'' and ``by the Commissioner''; and
          (2) by adding at the end the following new subparagraphs:
                  ``(D) For purposes of this paragraph, an individual's 
                claim, with respect to benefits under title II of the 
                Social Security Act based on disability, which has been 
                denied in whole before the date of the enactment of 
                this Act, may not be considered to be finally 
                adjudicated before such date if, on or after such 
                date--
                          ``(i) there is pending a request for either 
                        administrative or judicial review with respect 
                        to such claim, or
                          ``(ii) there is pending, with respect to such 
                        claim, a readjudication by the Commissioner of 
                        Social Security pursuant to relief in a class 
                        action or implementation by the Commissioner of 
                        a court remand order.
                  ``(E) Notwithstanding the provisions of this 
                paragraph, with respect to any individual for whom the 
                Commissioner of Social Security does not perform the 
                entitlement redetermination before the date prescribed 
                in subparagraph (C), the Commissioner shall perform 
                such entitlement redetermination in lieu of a 
                continuing disability review whenever the Commissioner 
                determines that the individual's entitlement is subject 
                to redetermination based on the preceding provisions of 
                this paragraph, and the provisions of section 223(f) of 
                the Social Security Act shall not apply to such 
                redetermination.''.
  (b) Correction to Effective Date of Provisions Concerning 
Representative Payees and Treatment Referrals of Social Security 
Beneficiaries Who Are Drug Addicts and Alcoholics.--Section 
105(a)(5)(B) of such Act (Public Law 104-121; 110 Stat. 853) is amended 
to read as follows:
                  ``(B) The amendments made by paragraphs (2) and (3) 
                shall take effect on July 1, 1996, with respect to any 
                individual--
                          ``(i) whose claim for benefits is finally 
                        adjudicated on or after the date of the 
                        enactment of this Act, or
                          ``(ii) whose entitlement to benefits is based 
                        upon an entitlement redetermination made 
                        pursuant to subparagraph (C).''.
  (c) Effective Dates.--The amendments made by this section shall take 
effect as if included in the enactment of section 105 of the Contract 
with America Advancement Act of 1996 (Public Law 104-121; 110 Stat. 852 
et seq.).

SEC. 5. EXTENSION OF DISABILITY INSURANCE PROGRAM DEMONSTRATION PROJECT 
                    AUTHORITY.

  (a) In General.--Section 505 of the Social Security Disability 
Amendments of 1980 (Public Law 96-265; 94 Stat. 473), as amended by 
section 12101 of the Consolidated Omnibus Budget Reconciliation Act of 
1985 (Public Law 99-272; 100 Stat. 282), section 10103 of the Omnibus 
Budget Reconciliation Act of 1989 (Public Law 101-239; 103 Stat. 2472), 
section 5120(f) of the Omnibus Budget Reconciliation Act of 1990 
(Public Law 101-508; 104 Stat. 1388-282), and section 315 of the Social 
Security Independence and Program Improvements Act of 1994 (Public Law 
103-296; 108 Stat. 1531), is further amended--
          (1) in paragraph (1) of subsection (a), by adding at the end 
        the following new sentence: ``The Commissioner may expand the 
        scope of any such demonstration project to include any group of 
        applicants for benefits under such program with impairments 
        which may reasonably be presumed to be disabling for purposes 
        of such demonstration project, and may limit any such 
        demonstration project to any such group of applicants, subject 
        to the terms of such demonstration project which shall define 
        the extent of any such presumption.'';
          (2) in paragraph (3) of subsection (a), by striking ``June 
        10, 1996'' and inserting ``June 10, 2001'';
          (3) in paragraph (4) of subsection (a), by inserting ``and on 
        or before October 1, 2000,'' after ``1995,''; and
          (4) in subsection (c), by striking ``October 1, 1996'' and 
        inserting ``October 1, 2001''.
  (b) Effective Date.--The amendments made by subsection (a) shall take 
effect on the date of the enactment of this Act.

SEC. 6. PERFECTING AMENDMENTS RELATED TO WITHHOLDING FROM SOCIAL 
                    SECURITY BENEFITS.

  (a) Inapplicability of Assignment Prohibition.--Section 207 of the 
Social Security Act (42 U.S.C. 407) is amended by adding at the end the 
following new subsection:
  ``(c) Nothing in this section shall be construed to prohibit 
withholding taxes from any benefit under this title, if such 
withholding is done pursuant to a request made in accordance with 
section 3402(p)(1) of the Internal Revenue Code of 1986 by the person 
entitled to such benefit or such person's representative payee.''.
  (b) Proper Allocation of Costs of Withholding Between the Trust Funds 
and the General Fund.--Section 201(g) of such Act (42 U.S.C. 401(g)) is 
amended--
          (1) by inserting before the period in paragraph (1)(A)(ii) 
        the following: ``and the functions of the Social Security 
        Administration inconnection with the withholding of taxes from 
benefits, as described in section 207(c), pursuant to requests by 
persons entitled to such benefits or such persons' representative 
payee'';
          (2) by inserting before the period at the end of paragraph 
        (1)(A) the following: ``and the functions of the Social 
        Security Administration in connection with the withholding of 
        taxes from benefits, as described in section 207(c), pursuant 
        to requests by persons entitled to such benefits or such 
        persons' representative payee'';
          (3) in paragraph (1)(B)(i)(I), by striking ``subparagraph 
        (A)),'' and inserting ``subparagraph (A)) and the functions of 
        the Social Security Administration in connection with the 
        withholding of taxes from benefits, as described in section 
        207(c), pursuant to requests by persons entitled to such 
        benefits or such persons' representative payee,'';
          (4) in paragraph (1)(C)(iii), by inserting before the period 
        the following: ``and the functions of the Social Security 
        Administration in connection with the withholding of taxes from 
        benefits, as described in section 207(c), pursuant to requests 
        by persons entitled to such benefits or such persons' 
        representative payee'';
          (5) in paragraph (1)(D), by inserting after ``section 232'' 
        the following: ``and the functions of the Social Security 
        Administration in connection with the withholding of taxes from 
        benefits as described in section 207(c)''; and
          (6) in paragraph (4), by inserting after the first sentence 
        the following: ``The Board of Trustees of such Trust Funds 
        shall prescribe the method of determining the costs which 
        should be borne by the general fund in the Treasury of carrying 
        out the functions of the Social Security Administration in 
        connection with the withholding of taxes from benefits, as 
        described in section 207(c), pursuant to requests by persons 
        entitled to such benefits or such persons' representative 
        payee.''.
  (c) Effective Date.--The amendments made by subsection (b) shall 
apply to benefits paid on or after the first day of the second month 
beginning after the month in which this Act is enacted.

SEC. 7. TREATMENT OF PRISONERS.

  (a) Implementation of Prohibition Against Payment of Title II 
Benefits to Prisoners.--
          (1) In general.--Section 202(x)(3) of the Social Security Act 
        (42 U.S.C. 402(x)(3)) is amended--
                  (A) by inserting ``(A)'' after ``(3)''; and
                  (B) by adding at the end the following new 
                subparagraph:
  ``(B)(i) The Commissioner shall enter into an agreement under this 
subparagraph with any interested State or local institution comprising 
a jail, prison, penal institution, or correctional facility, or 
comprising any other institution a purpose of which is to confine 
individuals as described in paragraph (1)(A)(ii). Under such 
agreement--
          ``(I) the institution shall provide to the Commissioner, on a 
        monthly basis and in a manner specified by the Commissioner, 
        the names, social security account numbers, dates of birth, 
        confinement commencement dates, and, to the extent available to 
        the institution, such other identifying information concerning 
        the individuals confined in the institution as the Commissioner 
        may require for the purpose of carrying out paragraph (1); and
          ``(II) the Commissioner shall pay to the institution, with 
        respect to information described in subclause (I) concerning 
        each individual who is confined therein as described in 
        paragraph (1)(A), who receives a benefit under this title for 
        the month preceding the first month of such confinement, and 
        whose benefit under this title is determined by the 
        Commissioner to be not payable by reason of confinement based 
        on the information provided by the institution, $400 (subject 
        to reduction under clause (ii)) if the institution furnishes 
        the information to the Commissioner within 30 days after the 
        date such individual's confinement in such institution begins, 
        or $200 (subject to reduction under clause (ii)) if the 
        institution furnishes the information after 30 days after such 
        date but within 90 days after such date.
  ``(ii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to make a 
payment to the institution with respect to the same individual under an 
agreement entered into under section 1611(e)(1)(I).
  ``(iii) The provisions of section 552a of title 5, United States 
Code, shall not apply to any agreement entered into under clause (i) or 
to information exchanged pursuant to such agreement.
  ``(iv) There is authorized to be transferred from the Federal Old-Age 
and Survivors Insurance Trust Fund and the Federal Disability Insurance 
Trust Fund, as appropriate, such sums as may be necessary to enable the 
Commissioner to make payments to institutions required by clause 
(i)(II). Sums so transferred shall be treated as direct spending for 
purposes of the Balanced Budget and Emergency Deficit Control Act of 
1985 and excluded from budget totals in accordance with section 13301 
of the Budget Enforcement Act of 1990.
  ``(v) The Commissioner is authorized to provide, on a reimbursable 
basis, information obtained pursuant to agreements entered into under 
clause (i) to any agencyadministering a Federal or federally-assisted 
cash, food, or medical assistance program for eligibility purposes.''.
          (2) Effective date.--The amendments made by this subsection 
        shall apply to individuals whose period of confinement in an 
        institution commences on or after the first day of the fourth 
        month beginning after the month in which this Act is enacted.
  (b) Elimination of Title II Requirement That Confinement Stem From 
Crime Punishable by Imprisonment for More Than 1 Year.--
          (1) In general.--Section 202(x)(1)(A) of such Act (42 U.S.C. 
        402(x)(1)(A)) is amended--
                  (A) in the matter preceding clause (i), by striking 
                ``during'' and inserting ``throughout'';
                  (B) in clause (i), by striking ``an offense 
                punishable by imprisonment for more than 1 year 
                (regardless of the actual sentence imposed)'' and 
                inserting ``a criminal offense''; and
                  (C) in clause (ii)(I), by striking ``an offense 
                punishable by imprisonment for more than 1 year'' and 
                inserting ``a criminal offense''.
          (2) Effective date.--The amendments made by this subsection 
        shall apply to individuals whose period of confinement in an 
        institution commences on or after the first day of the fourth 
        month beginning after the month in which this Act is enacted.
  (c) Conforming Title XVI Amendments.--
          (1) Fifty percent reduction in title xvi payment in case 
        involving comparable title ii payment.--Section 1611(e)(1)(I) 
        of the Social Security Act (42 U.S.C. 1382(e)(1)(I)) is 
        amended--
                  (A) in clause (i)(II), by inserting ``(subject to 
                reduction under clause (ii))'' after ``$400'' and after 
                ``$200'';
                  (B) by redesignating clauses (ii) and (iii) as 
                clauses (iii) and (iv) respectively; and
                  (C) by inserting after clause (i) the following new 
                clause:
  ``(ii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to make a 
payment to the institution with respect to the same individual under an 
agreement entered into under section 202(x)(3)(B).''.
          (2) Expansion of categories of institutions eligible to enter 
        into agreements with the commissioner.--Section 
        1611(e)(1)(I)(i) of such Act (42 U.S.C. 1382(e)(1)(I)(i)) is 
        amended in the matter preceding subclause (I) by striking 
        ``institution'' and all that follows through ``section 
        202(x)(1)(A),'' and inserting ``institution comprising a jail, 
        prison, penal institution, or correctional facility, or with 
        any other interested State or local institution a purpose of 
        which is to confine individuals as described in section 
        202(x)(1)(A)(ii),''.
          (3) Effective date.--The amendments made by this subsection 
        shall take effect as if included in the enactment of section 
        203(a) of the Personal Responsibility and Work Opportunity 
        Reconciliation Act of 1996 (Public Law 104-193; 110 Stat. 
        2186). The reference to section 202(x)(1)(A)(ii) of the Social 
        Security Act in section 1611(e)(1)(I)(i) of such Act as amended 
        by paragraph (2) shall be deemed a reference to such section 
        202(x)(1)(A)(ii) as amended by subsection (b)(1)(C).
  (d) Continued Denial of Benefits to Sex Offenders Remaining Confined 
to Public Institutions Upon Completion of Prison Term.--
          (1) In general.--Section 202(x)(1)(A) of the Social Security 
        Act (42 U.S.C. 402(x)(1)(A)) is amended--
                  (A) in clause (i), by striking ``or'' at the end;
                  (B) in clause (ii)(IV), by striking the period and 
                inserting ``, or''; and
                  (C) by adding at the end the following new clause:
          ``(iii) immediately upon completion of confinement as 
        described in clause (i) pursuant to conviction of a criminal 
        offense an element of which is sexual activity, is confined by 
        court order in an institution at public expense pursuant to a 
        finding that the individual is a sexually dangerous person or a 
        sexual predator or a similar finding.''.
          (2) Conforming amendment.--Section 202(x)(1)(B)(ii) of such 
        Act (42 U.S.C. 402(x)(1)(B)(ii)) is amended by striking 
        ``clause (ii)'' and inserting ``clauses (ii) and (iii)''.
          (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to benefits for months ending after 
        the date of the enactment of this Act.

SEC 8. REVOCATION BY MEMBERS OF THE CLERGY OF EXEMPTION FROM SOCIAL 
                    SECURITY COVERAGE.

  (a) In General.--Notwithstanding section 1402(e)(4) of the Internal 
Revenue Code of 1986, any exemption which has been received under 
section 1402(e)(1) of such Code by a duly ordained, commissioned, or 
licensed minister of a church, a member of a religious order, or a 
Christian Science practitioner, and which is effective for the taxable 
year in which this Act is enacted, may be revoked by filing an 
application therefor (in such form and manner, and with such official, 
as may be prescribed in regulations made under chapter 2 of such Code), 
if such application is filed no later than the due date of the Federal 
income tax return (including any extension thereof) for the applicant's 
second taxable year beginning after December 31, 1998. Any such 
revocation shall be effective (for purposes of chapter 2 of the 
Internal Revenue Code of 1986 and title II of the Social Security Act), 
as specified in the application, either with respect to the applicant's 
first taxable year beginning after December 31, 1998, or with respect 
to the applicant's second taxable year beginning after such date, and 
for all succeeding taxable years; and the applicant for any such 
revocation may not thereafter again file application for an exemption 
under such section 1402(e)(1). If the application is filed after the 
due date of the applicant's Federal income tax return for a taxable 
year and is effective with respect to that taxable year, it shall 
include or be accompanied by payment in full of an amount equal to the 
total of the taxes that would have been imposed by section 1401 of the 
Internal Revenue Code of 1986 with respect to all of the applicant's 
income derived in that taxable year which would have constituted net 
earnings from self-employment for purposes of chapter 2 of such Code 
(notwithstanding section 1402 (c)(4) or (c)(5) of such Code) except for 
the exemption under section 1402(e)(1) of such Code.
  (b) Effective Date.--Subsection (a) shall apply with respect to 
service performed (to the extent specified in such subsection) in 
taxable years beginning after December 31, 1998, and with respect to 
monthly insurance benefits payable under title II of the Social 
Security Act on the basis of the wages and self-employment income of 
any individual for months in or after the calendar year in which such 
individual's application for revocation (as described in such 
subsection) is effective (and lump-sum death payments payable under 
such title on the basis of such wages and self-employment income in the 
case of deaths occurring in or after such calendar year).

SEC. 9. ADDITIONAL TECHNICAL AMENDMENT RELATING TO COOPERATIVE RESEARCH 
                    OR DEMONSTRATION PROJECTS UNDER TITLES II AND XVI.

  (a) In General.--Section 1110(a)(3) of the Social Security Act (42 
U.S.C. 1310(a)(3)) is amended by striking ``title XVI'' and inserting 
``title II or XVI''.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect as if included in the enactment of the Social Security 
Independence and Program Improvements Act of 1994 (Public Law 103-296; 
108 Stat. 1464).

  Amend the title so as to read:

      A bill to amend the Social Security Act to establish a 
Ticket to Work and Self-Sufficiency Program in the Social 
Security Administration to provide beneficiaries with 
disabilities meaningful opportunities to work, to extend 
Medicare coverage for such beneficiaries, and to make 
additional miscellaneous amendments relating to social 
security.

                            I. INTRODUCTION

                         A. Purpose and Summary

    The Ticket to Work and Self-Sufficiency Act of 1998 would 
provide real opportunities for those Social Security Disability 
Insurance (SSDI) and Supplemental Security Income (SSI) 
disabled beneficiaries who want to work.

                 B. Background and Need for Legislation

    Historically, less than 1 percent of disabled beneficiaries 
leave the rolls because of successful rehabilitation. State 
Vocational Rehabilitation (VR) agencies have a limited capacity 
to serve all those who need services and therefore have had a 
negligible impact on the number of disabled beneficiaries who 
enter the workforce. According to the General Accounting 
Office, on average, State Disability Determination Services 
(DDSs) refer for VR services only about 8 percent of SSDI and 
SSI applicants awarded benefits and less than 10 percent of 
beneficiaries referred by DDSs are accepted as clients.
    In hearings held by the Subcommittee on Social Security 
over the past 3 years, witnesses, including individuals with 
disabilities, their advocates, rehabilitation experts, and 
various providers of services, have repeatedly noted that, due 
to advances in medicine, technology, and the field of 
rehabilitation, many individuals with severe disabilities could 
work and want to work. Witnesses indicated that providing 
beneficiary choice in needed rehabilitation and support 
services and removing Social Security program barriers would 
facilitate beneficiaries' self-sufficiency through employment.
    In addition, beneficiaries with disabilities are staying on 
the rolls longer than in the past because of: (1) increased 
life expectancy; (2) a lower average age of disability 
beneficiaries due to the baby boom cohort; and (3) an increase 
in the number of awardees with disabling mental impairments who 
tend to be younger and physically healthier. SSA's disability 
programs have experienced tremendous growth in recent years. 
Between 1986 and 1996, the number of working-age beneficiaries 
on the SSDI and SSI disability rolls increased 64 percent. 
During this period, cash benefits to adults and children with 
disabilities increased from about $25 billion to $61 billion 
annually. These facts underscore the need for initiatives 
designed to encourage disabled beneficiaries to obtain 
employment and rehabilitation services and to enter the 
workforce.
    The Social Security disability insurance program insures 
workers and their families against the loss of income due to 
disability. Nearly 4.5 million people with disabilities who 
have paid into the Social Security system receive Social 
Security disability benefits. Another 4 million adults with 
disabilities receive Supplemental Security Income (SSI) 
payments. Americans rely on the safety net these programs 
provide in the event of severe illness or injury.
    Given the choice, however, many disability beneficiaries 
would rather be working. In hearings and through personal 
contacts, Members of the Subcommittee on Social Security have 
learned about the obstacles Social Security disability 
beneficiaries face in attempting to work including: fear of 
losing health and cash benefits, little known and complex work 
incentives, and the ``all or nothing'' nature of SSDI cash 
benefits that can make work at low wages financially 
unattractive. Thus, after consultation with individuals with 
disabilities, advocates, rehabilitation experts, providers of 
services, and the Administration, the Committee has developed a 
proposal that is supported on a widespread bipartisan basis.
    The Ticket to Work and Self-Sufficiency Act of 1998 would 
create a program to ease the transition of Social Security 
Disability Insurance (SSDI) and Supplemental Security Income 
(SSI) disabled beneficiaries into the workforce. In addition, 
the Subcommittee proposal contains several technical amendments 
to title II of the Social Security Act that have previously 
passed in the House and for which similar title XVI provisions 
were passed in last year's Balanced Budget Act. The proposal 
also provides a two-year period allowing members of the clergy 
to revoke their exemption from Social Security coverage.

                         C. Legislative History

    Since 1995, the Subcommittee on Social Security has held 5 
hearings, including testimony from 28 witnesses, addressing 
needed Social Security program changes to encourage individuals 
with disabilities to work. The Subcommittee held a two-part 
hearing on July 23 and July 24, 1997, to specifically address 
barriers preventing Social Security disability recipients from 
returning to work. The hearing included testimony from the 
Administration, the U.S. General Accounting Office, 
beneficiaries, rehabilitation experts, and providers of 
services.
    On March 11, 1998, Mr. Bunning, on behalf of himself and 
Mrs. Kennelly, introduced H.R. 3433, the Ticket to Work and 
Self-Sufficiency Act of 1998. The Subcommittee held a hearing 
on March 17, 1998, and received testimony in support of H.R. 
3433 from individuals with disabilities, advocates for the 
disabled, and providers of services. The Subcommittee on Social 
Security ordered favorably reported to the Full Committee H.R. 
3433, as amended, by a voice vote, with a quorum present on 
March 25, 1998.
    On May 6, 1998, the Full Committee ordered favorably 
reported, H.R. 3433, the ``Ticket to Work and Self-Sufficiency 
Act of 1998,'' as amended, by a voice vote, with a quorum 
present.

                     II. EXPLANATION OF PROVISIONS

                       A. Section 1. Short Title

    The short title of the bill is the Ticket to Work and Self-
Sufficiency Act of 1998.

     B. Section 2. The Ticket to Work and Self-Sufficiency Program

Present law

    Social Security Disability Insurance (SSDI) and 
Supplemental Security Income (SSI) disabled individuals 
applying for or awarded benefits shall be promptly referred to 
the State vocational rehabilitation (VR) agency for necessary 
VR services. The Commissioner of Social Security is authorized 
to use trust fund and general revenue monies to reimburse State 
VR agencies for reasonable and necessary costs of VR services 
when such services result in an individual performing work at 
the substantial gainful level ($500 a month) for 9 months.

Explanation of provision

    The proposal would create a Ticket to Work and Self-
Sufficiency Program. The proposal would authorize the 
Commissioner of Social Security to provide SSDI and SSI 
disabled beneficiaries with a ticket which they may use to 
obtain services of their choice from an employment network 
(provider of services) of their choice to enable them to enter 
the workforce.
    The bill would provide State VR agencies with the option of 
participating in the Program as an employment network or 
remaining in the current law reimbursement system. State VR 
agencies which elect to participate in the Program would be 
reimbursed under current law provisions for those beneficiaries 
who began receiving services prior to Program election. 
Services provided by State VR agencies participating in the 
Program would be governed by plans for VR services approved 
under title I of the Rehabilitation Act. State VR agencies 
would not be required to accept referrals from employment 
networks unless the agency has entered into an agreement with 
the employment network.
    The Commissioner would contract with program managers--one 
or more organizations in the private or public sector with 
expertise and experience in the field of vocational 
rehabilitation or employment services--through a competitive 
bidding process, to help the Social Security Administration 
(SSA) administer the Program. Agreements with program managers 
would include performance standards (including measures for 
ease of access and measures of success). Program managers would 
be precluded from delivering services in their own service 
area. The Commissioner would select and enter into agreements 
with employment networks, provide periodic quality assurance 
reviews of employment networks, and establish a method for 
resolving disputes between beneficiaries and employment 
networks.
    Program managers would recruit and recommend employment 
networks to the Commissioner, ensure adequate choices of 
services are available to beneficiaries, ensure beneficiary 
access to services, and provide assurances to SSA that 
employment networks are complying with agreement terms. In 
addition, program managers will make certain that beneficiaries 
are allowed changes in employment networks for good cause.
    Employment networks would consist of a single provider 
(public or private) or an association of providers combined 
into a single entity which assumes responsibility for the 
coordination and delivery of services. The employment networks 
would be required to demonstrate substantial expertise and 
experience in the field of employment services, vocational 
rehabilitation services, or other support services for 
individuals with disabilities and would provide an array of 
such services under the Program. Employment networks would meet 
financial reporting requirements as prescribed by the 
Commissioner and would prepare periodic performance reports 
which would be provided to beneficiaries holding a ticket and 
would be made available to the public.
    Employment networks and beneficiaries would together 
develop an individual work plan in such a way that the 
beneficiary could exercise informed choice in selecting an 
employment goal and specific services needed to achieve that 
goal. Employment networks would undertake an vocational 
evaluation (as determined by the Commissioner) in order to 
devise the work plan, however, the Commissioner could provide 
for beneficiary waiver of the vocational evaluation. The bill 
would authorize payment to employment networks for outcomes and 
long-term results by providing one of two payment systems, both 
of which are designed to ensure that as many providers as 
possible would be available to serve beneficiaries with 
disabilities.
    The outcome payment system would provide payment to 
employment networks up to 40 percent of the average monthly 
benefit for all disabled beneficiaries in the preceding year, 
for each month benefits were not payable to the beneficiary due 
to work, but not for more than 60 months.
    The outcome-milestone payment system is similar to the 
outcome payment system, except it would provide for early 
payment(s) based on the achievement of one or more milestones 
directed towards the goal of permanent employment. To ensure 
cost-effectiveness of the Program, the total amount payable 
under the outcome-milestone payment system would be required to 
be less than the total amount payable to a provider than would 
have been payable for an individual under the outcome payment 
system.
    The Commissioner would periodically review both payment 
systems, and if necessary, alter the percentages, milestones, 
or payment periods to ensure that employment networks have 
adequate incentives to assist beneficiaries into the workforce.
    The Commissioner would not initiate a continuing disability 
review for beneficiaries who are using a ticket under the 
Program.
    The bill would authorize transfers from the Social Security 
Trust Funds to carry out these provisions for Social Security 
beneficiaries, and authorize amounts to be appropriated to the 
Social Security Administration to carry out these provisions 
for SSI recipients.
    For purposes of Program participation, the bill would 
define disabled beneficiary to include SSI disabled recipients 
and Social Security beneficiaries receiving disability 
insurance, disabled widow's, and childhood disability benefits.
    The Commissioner would prescribe regulations necessary to 
carry out the Program. The Program would be implemented on a 
graduated basis at phase-in sites selected by the Commissioner 
beginning no later than 1 year after enactment. The 
Commissioner would design and conduct a series of evaluations 
to assess the cost-effectiveness and effects of the Program. 
The Commissioner would periodically provide to the Congress a 
detailed evaluation of the Program's progress, success, and any 
modifications needed.
    An Advisory Panel would be created consisting of experts 
representing consumers, providers of services, employers, and 
employees. The Panel would advise the Commissioner and report 
to the Congress on Program implementation including such issues 
as establishing pilot sites, refining the Program, and 
designing Program evaluations. The Advisory Panel would be 
appointed within 90 days of enactment. The Advisory Panel would 
be composed of six members appointed as follows:
          One member would be appointed by the Chairman of the 
        Committee on Ways and Means of the House of 
        Representatives;
          One member would be appointed by the ranking minority 
        member of the Committee on Ways and Means of the House 
        of Representatives;
          One member would be appointed by the Chairman on 
        Finance of the Senate;
          One member would be appointed by the ranking minority 
        member of the Committee on Finance of the Senate; and
          Two members would be appointed by the President, who 
        may not be of the same political party.
    The Commissioner would prescribe regulations to address 
implementation issues such as the way in which tickets would be 
distributed to beneficiaries, the way in which State agencies 
would elect participation in the Program, the terms of 
agreements to be entered into with program managers and with 
employment networks, and procedures for effective oversight of 
the Program by the Commissioner.
    The Commissioner would establish a corps of trained, 
accessible, and responsive work incentive specialists to 
specialize in disseminating accurate information to 
beneficiaries with disabilities.
    SSA would be required to conduct a demonstration project on 
the effects of gradually reducing SSDI benefits $1 for every $2 
in earnings over a level determined by the Commissioner.
    GAO would conduct two studies to: (1) assess existing tax 
credits and other disability-related employment incentives 
under the Americans with Disabilities Act and other Federal 
laws and to address the extent to which these credits and 
incentives encourage employers to hire individuals with 
disabilities under the Program; and (2) evaluate the 
coordination of OASDI and SSI programs as they relate to 
individuals who become or who no longer are concurrently 
entitled to both programs, and the effectiveness of work 
incentives and medical coverage for these individuals.

Reason for change

    The proposal builds on the principles of consumer choice 
and empowerment, encouraging competition among providers of 
services, rewarding providers for results, and encouraging 
providers to have a continuing interest in beneficiaries' long-
term success in maintaining employment. The proposal is 
designed to increase choices available to beneficiaries and 
increase the supply of providers that would be available to 
help beneficiaries into the workforce.
    Recognizing that State VR agencies are able to provide 
consumers with a wide range of specialized services, the 
proposal would provide the State VR agencies the option of 
electing to participate in the Program or remaining under the 
current law reimbursement system.
    Given SSA's limited resources and experience in 
administering employment and vocational rehabilitation 
services, the bill establishes program managers to help SSA 
administer the Program on a national basis. The Committee 
intends that program managers attempt to maximize beneficiary 
access to needed services by recommending an adequate number of 
providers to the Commissioner for selection.
    The Commissioner of Social Security is the authorizing 
agent in certifying payments from the Trust Funds and the 
general fund of the Treasury and is, therefore, responsible for 
overall administration of the Program.
    With respect to the issuance of tickets, the Committee 
intends that the Commissioner would determine the method by 
which SSA would notify beneficiaries of the availability of 
tickets, the duration for which the tickets may be assigned to 
an employment network, as well as the allowable renewal 
periods, if any, of the ticket.
    The Committee also intends that the Commissioner would 
prescribe the times at which payments would be made to 
employment networks. In addition, the Commissioner would 
determine the phase-in schedule for State participation in the 
Program.
    The Committee recognizes that individuals with disabilities 
can benefit from early assistance from groups providing dispute 
resolution services and believes that the Commissioner should 
take this into account when establishing a mechanism to resolve 
disputes between beneficiaries and providers.
    Because State VR agencies have a limited ability to 
accommodate a significant number of beneficiaries with 
disabilities, the proposal creates a level playing field which 
allows private and public entities to provide services along 
with the State VR agencies. Expanding the pool of providers 
from which a beneficiary may obtain employment and 
rehabilitation services will increase the number of 
beneficiaries who receive timely, high quality employment, 
rehabilitation, and other support services from providers. The 
proposal creates employment networks to provide services to 
disabled beneficiaries. The Committee intends that services 
provided would enhance beneficiaries' employment skills by 
making them more marketable in the workforce andultimately help 
them secure long-term employment. Employment networks would be 
established so that providers could pool their resources together 
giving beneficiaries access to a wide array of services to meet their 
individualized needs.
    The Committee encourages the Commissioner to ensure that 
services are available within a geographic location so that 
individuals would not be unduly restricted by State borders.
    The Committee intends that the ``other support services'' 
which are offered by providers may include, but are not limited 
to, assistive technology services and devices, supported 
employment services, personal assistance services, and 
auxiliary aids and services.
    The proposal requires that employment networks ensure that 
employment, vocational rehabilitation, and other support 
services are provided under individual work plans as defined by 
the Commissioner. The employment network and the beneficiary 
would work together to develop an individual work plan. The 
work plan will provide beneficiaries with ownership and 
meaningful participation in their work attempt. Such a plan may 
include a statement of:
          The vocational goal selected by the beneficiary;
          The services and supports and coordination that have 
        been deemed necessary for the beneficiary to accomplish 
        that goal along with information on the expected 
        duration and estimated costs of such services and 
        supports;
          Any terms and conditions related to the provision of 
        such services and supports; and
          Understanding regarding the rights and 
        responsibilities available to the beneficiary, 
        including information as to where the beneficiary can 
        obtain assistance in resolving disputes.
    The Committee believes that a work plan should:
          Be signed by both the beneficiary and a 
        representative of the employment network in receipt of 
        the beneficiary's ticket;
          Provide the beneficiary with the opportunity to amend 
        the plan if a change in circumstances necessitates a 
        change in the plan; and
          be made available to the beneficiary and, as 
        appropriate, in an accessible format chosen by the 
        individual.
    The proposal requires employment networks to undertake a 
vocational evaluation with each beneficiary in conjunction with 
the work plan. Recognizing that many beneficiaries are self-
directed and may not need a vocational evaluation, the proposal 
provides for beneficiary waiver of the vocational evaluation. 
To the extent possible, state-of-the-art technology, evaluation 
tools, and work capacity testing should be utilized to generate 
as wide a variety of realistic vocational opportunities as 
possible. However, the Committee does not intend the vocational 
evaluation to be used as a screening device, but rather as a 
vehicle to assist individuals with respect to his or her 
abilities, capacities, interests, or desires.
    The bill would authorize the Commissioner to pay employment 
networks under one of two payment systems: an outcome payment 
system; or an outcome-milestone payment system. Generally, 
providers bear a financial risk by providing services first, 
and being paid later according to their results, i.e, assisting 
beneficiaries to work, remaining at work and off the benefit 
rolls. To help small providers participate in the Program, the 
proposal would provide for one or more milestone payments to 
providers when an employment-related result has been achieved. 
Without the outcome-milestone payment system, provider 
participation in the Program might be limited to only a few 
large providers who have the necessary cash flow to serve a 
substantial number of disabled individuals. However, to ensure 
the cost-effectiveness of the Program, the total of the 
outcome-milestone payment would be required to be less than the 
total amount payable to a provider that would have been payable 
for each individual under the outcome payment system. Because 
the provider would be paid for results in both payment systems, 
the provider has an incentive to work with the beneficiary to 
find the most effective means of helping that beneficiary 
remain employed.
    Witnesses at the Subcommittee on Social Security hearings 
have indicated that many beneficiaries do not attempt work 
because of fears that a work attempt will trigger a continuing 
disability review that will result in benefit termination. 
Current law, however, provides that benefits may not be 
suspended or terminated for beneficiaries who are receiving 
rehabilitation services that are likely to help individuals to 
leave the disability rolls. For these reasons, the Committee 
provided that SSA would not initiate a continuing disability 
review for those beneficiaries using a ticket under the 
Program.
    The Committee recognizes that implementing a Ticket to Work 
and Self-Sufficiency Program would require SSA to make system 
changes related to administering the Program, promulgate 
regulations, prepare field office instructions, design a 
Program evaluation methodology, award a contract to program 
manager(s), etc. Therefore, the proposal provides SSA with 1 
year to prepare for Program implementation. The Committee 
intends that no later than 1 year of enactment, SSA will 
promulgate regulations as are necessary to carry out the 
provisions of the Program.
    The proposal also provides for a phase-in of the Program to 
ensure that it is implemented in a feasible, cost-effective 
manner that provides expanded opportunities for beneficiaries 
to work and to ultimately assist them in leaving the disability 
program.
    The proposal directs the Commissioner to design and conduct 
a series of evaluations of the Ticket to Work and Self-
Sufficiency Program. The Commissioner would consult with the 
Comptroller General of the United States, private organizations 
with appropriate expertise, as well as design and evaluation 
experts within SSA, such as the Office of Research, Evaluation, 
and Statistics. These consultations would be expected to occur 
early in the process to ensure that a sound, reliable framework 
for evaluation is established at the beginning of the Program. 
In conducting the evaluations, the Commissioner would be 
required to consult with individuals who have participated in 
the Program.
     Since SSA has no particular expertise in employment, 
vocational rehabilitation, or other support services, the 
proposal creates a Ticket to Work and Self-Sufficiency Advisory 
Panel to advise the Commissioner in implementing the Program. 
The Advisory Panel would be an active body consisting of 
diverse experts representing disability consumers, providers of 
services, employers, and employees. The bill stipulates that at 
least one member would be a current or former recipient of 
disability benefits, however, the Committee intends that to the 
degree possible, all individuals appointed as Panel members 
should possess distinct knowledge and experience regarding 
return-to-work issues.
    The Advisory Panel would provide guidance to the 
Commissioner on implementing the Program in an efficient, cost-
effective manner that provides the maximum amount of incentive 
to disabled beneficiaries. The Advisory Panel would also 
provide advice on the design and evaluation of the Program as 
well as advice on the design of the demonstration project 
providing for reductions in SSDI benefits based on earnings. 
The Committee expects the Commissioner to take full advantage 
of the Advisory Panel's expertise.
    The bill would repeal the current law provision that 
specifies that refusal to accept VR services without good cause 
will lead to the loss of benefits. Although current law, SSA 
has not enforced this provision. Because the Program is a 
voluntary one, a benefit withholding sanction is not feasible. 
In addition, research indicates that disabled beneficiaries who 
are most successful at work attempts are those who are self-
motivated, therefore, the Committee views the imposition of 
penalties against disabled beneficiaries who choose not to work 
as counter-productive.
    A recurring complaint among disabled beneficiaries and 
advocates for disabled individuals is that SSA's work 
incentives are complex, difficult to understand, and poorly 
implemented. The proposal requires SSA to establish a corps of 
work incentive specialists, similar to the cadres of Plan to 
Achieve Self-Support (PASS) specialists recently implemented in 
SSA. The work incentive specialist would be responsible for 
disseminating accurate and accessible information to disabled 
beneficiaries on all facets of SSA's SSDI and SSI work 
incentives, including demonstration projects designed to assist 
beneficiaries to work. Since some beneficiaries attempt work 
without receiving rehabilitation services, work incentive 
information would be available to all beneficiaries not just 
those participating in the Ticket Program. In addition, the 
Committee encourages SSA to provide available decision support 
software to these work incentive specialists to ensure accuracy 
and consistency of information provided.
    At various disability-related hearings, the Subcommittee on 
Social Security learned about the problems unique to 
beneficiaries who have mental disabilities or chronic 
conditions, many of whom would like to work but have conditions 
that only let them work part time. SSDI beneficiaries lose cash 
benefits when they work and earn over $500 a month after 
participating in the 9-month trial work period. Because of the 
$500 earnings cliff, many SSDI beneficiaries view remaining on 
the rolls as financially more attractive than risking the 
uncertainties of competitive employment, especially when low-
wage jobs are the likely outcome.
    To help beneficiaries overcome this earnings-cliff hurdle, 
the proposal would require SSA to test a gradual offset of SSDI 
cash benefits by reducing benefits $1 for every $2 in earnings 
over a determined level. A reduction in benefits based on 
earnings will help soften the total loss of benefits to 
beneficiaries who attempt work. In addition, some experts 
assert that the results of a permanent provision allowing a 
SSDI benefit offset of $1 for every $2 earned over a determined 
level would result in prohibitive costs to the OASDI trust fund 
because it would encourage disabled individuals who currently 
work despite their impairments to apply for benefits. The 
Committee intends that this demonstration project would test 
whether the elimination of an earnings cliff would remove the 
disincentive for disabled individuals to leave the disability 
program and yield reliable evidence regarding any induced entry 
effect. Also, the bill would require the Commissioner to 
annually report to the Congress on the progress of this 
demonstration project. The first report is due June 9, 2000. 
The Committee intends that SSA avoid any delay in 
implementation and would expedite the start of this project.
    The proposal would require that GAO conduct two studies. 
There is scant information available regarding whether tax 
credits and other disability-related employment incentives 
encourage employers to hire and retain individuals with 
disabilities. Therefore GAO would study whether such credits 
are incentives to employers. Also, testimony provided to the 
Subcommittee revealed that disabled beneficiaries suffer 
adverse effects when they move from SSI eligibility to OASDI 
entitlement, particularly with respect to work incentives. GAO 
would study the effectiveness of work incentives and medical 
coverage for beneficiaries whose eligibility changes from one 
program to another.

Effective date

    The proposal would be implemented on a gradual basis at 
phase-in sites selected by the Commissioner beginning no later 
than 1 year after enactment. The Program will be fully 
implemented as soon as practicable, but not later than 6 years 
after the Program begins.

C. Section 3. Extending Medicare Coverage for OASDI Disability Benefit 
     Recipients Who Are Using Tickets to Work and Self-Sufficiency

Present law

    SSDI beneficiaries are allowed to test their ability to 
work for at least 9 months without affecting their disability 
or Medicare benefits.
    Disability benefit payments stop when a beneficiary has 
monthly earnings at or above the substantial gainful work level 
($500) after the 9-month period. If the beneficiary remains 
disabled but continues working, Medicare continues up to an 
additional 39 months.

Explanation of provision

    Medicare coverage would be extended for an additional 2-
year period beyond current law for SSDI beneficiaries during 
the 6-year implementation period of the Ticket to Work andSelf-
Sufficiency Program. The Medicare extension would be implemented on a 
phased-in basis, paralleling the phase-in of the Ticket.
    The Secretary of Health and Human Services and the 
Commissioner of Social Security would report their 
recommendations for further legislative action regarding the 2-
year Medicare expansion no later than 6 years and 6 months 
after the date of enactment.

Reason for change

    According to beneficiaries, their advocates, and 
rehabilitation providers fear of losing medical benefits is the 
primary reason beneficiaries are reluctant to attempt work. 
This provision would eliminate beneficiaries' fear of losing 
medical coverage for those participating in the Program by 
extending medical coverage 2 additional years beyond current 
law provisions.

Effective date

    The Medicare extension would be implemented on the same 
graduated basis as the Ticket to Work and Self-Sufficiency 
Program and at the same phase-in sites selected by the 
Commissioner no later than 1 year after enactment.

    D. Section 4. Technical Amendments Relating to Drug Addicts and 
                               Alcoholics

Present law

    Public Law 104-121 included amendments to the Social 
Security and Supplemental Security Income (SSI) disability 
programs providing that no individual could be considered to be 
disabled if alcoholism or drug addiction would otherwise be a 
contributing factor material to the determination of 
disability. The effective date for all new and pending 
applications was the date of enactment. For those whose claim 
had been finally adjudicated before the date of enactment, the 
amendments would apply commencing with benefits for months 
beginning on or after January 1, 1997. Individuals receiving 
benefits due to drug addiction or alcoholism can reapply for 
benefits based on another impairment. If the individual applied 
within 120 days after the date of enactment, the Commissioner 
is required to complete the entitlement redetermination by 
January 1, 1997.
    Public Law 104-121 provided for the appointment of 
representative payees for recipients allowed benefits due to 
another impairment who also have drug addiction or alcoholism 
conditions, and the referral of those individuals for 
treatment.

Explanation of provision

    The provision clarifies that the meaning of the term 
``final adjudication'' includes a pending request for 
administrative or judicial review or a pending readjudication 
pursuant to class action or court remand. Also clarifies that 
if the Commissioner does not perform the entitlement 
redetermination before January 1, 1997, that entitlement 
redetermination must be performed in lieu of a continuing 
disability review.
    Corrects an anomaly that currently excludes all those 
allowed benefits (due to another impairment) before March 29, 
1996, and redetermined before July 1, 1996, from the 
requirement that a representative payee be appointed and that 
the recipient be referred for treatment.

Reason for change

    The provision clearly defines ``final adjudication'' to 
avoid any misinterpretation by the courts. One court has 
concluded that it can award benefits through January 1, l997, 
because the Commissioner's decision denying benefits was issued 
before March 29, 1996.
    As written, current law creates an anomaly, whereby all 
those allowed benefits (due to another impairment) before March 
29, 1996, and redetermined before July 1, 1996, are excluded 
from the requirement that a representative payee be appointed 
and that they be referred for treatment. The provision corrects 
this anomaly.

Effective date

    The amendments would be effective as though they had been 
included in the enactment of Section 105 of Public Law 104-121 
(March 29, 1996).

 E. Section 5. Extension of Disability Insurance Program Demonstration 
                           Project Authority

Present law

    Under authority that expired on June 9, 1996, the 
Commissioner may initiate experiments and demonstration 
projects to test ways to encourage Social Security Disability 
Insurance (SSDI) beneficiaries to return to work, and may waive 
compliance with certain benefit requirements in connection with 
these projects.

Explanation of provision

    This provision would extend demonstration authority to June 
10, 2001, and would include authority for demonstration 
projects involving applicants as well as beneficiaries.

Effective date

    Date of enactment.

F. Section 6. Perfecting Amendments Related to Withholding from Social 
                           Security Benefits

Present law

    The Uruguay Round Agreements Act includes revenue 
provisions requiring that U.S. taxpayers who receive specified 
Federal payments (including Social Security benefits) be given 
the option of requesting that the Department of Treasury 
withhold Federal income taxes from payments made after December 
31, 1996.
    Section 207 of the Social Security Act prohibits 
withholding or assignment of Social Security benefits to any 
party or entity other than the beneficiary.

Explanation of provision

    Due to a drafting oversight, the Uruguay Round Agreements 
Act failed to override the Social Security Act provision that 
prohibits the assignment of benefits. The provision would amend 
the Social Security Act anti-assignment section to allow 
provisions in the tax code to be implemented. It also allocates 
funding for SSA to administer the tax-withholding provision.

Reason for change

    These provisions amend the Social Security Act so that the 
provisions in the tax code may be implemented, as originally 
intended, and funding may be allocated for SSA to administer 
the tax-withholding provision.

Effective date

    Applies to benefits paid on or after the first day of the 
second month beginning after the month of enactment.

                  G. Section 7. Treatment of Prisoners

 1. Implementation of Prohibition Against Payment of Title II Benefits 
                              to Prisoners

Present law

    Current law prohibits prisoners from receiving Old Age, 
Survivors and Disability (OASDI) benefits while incarcerated if 
they are convicted of any crime punishable by imprisonment of 
more than one year. Federal, State, county or local prisons are 
required to make available, upon written request, the name and 
Social Security number (SSN) of any individual so convicted who 
is confined in a penal institution or correctional facility.
    The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996, requires the Commissioner to make 
agreements with any interested State or local institution to 
provide monthly the names, SSNs, confinement dates, dates of 
birth, and other identifying information of residents who are 
Supplemental Security Income (SSI) recipients. The Commissioner 
is required to pay the institution $400 for each SSI recipient 
who becomes ineligible as a result, if the information is 
provided within 30 days of incarceration, and $200 if the 
information is furnished after 30 days but within 90 days. P.L. 
104-193 requires the Commissioner to study the desirability, 
feasibility, and cost of establishing a system for courts to 
directly furnish SSA with information regarding court orders 
affecting SSI recipients, and requiring that State and local 
jails, prisons, and other institutions that enter into 
contracts with the Commissioner furnish the information by 
means of an electronic or similar data exchange system.
    The Commissioner is authorized to provide, on a 
reimbursable basis, information obtained pursuant to these 
agreements to any Federal or federally-assisted cash, food or 
medical assistance program, for the purpose of determining 
program eligibility.

Explanation of provision

    The provision amends prisoner provisions in P.L. 104-193 to 
include Old Age, Survivors, and Disability Insurance (OASDI) 
benefits.
    The Commissioner would enter into an agreement with State 
and local correctional institutions to provide monthly reports 
which list the names, SSNs, confinement dates, dates of birth, 
and other identifying information regarding prisoners who 
receive OASDI benefits. Certain requirements for computer 
matching agreements would not apply. For each eligible 
individual who becomes ineligible as a result, the Commissioner 
would pay the institution an amount up to $400 if the 
information is provided within 30 days of incarceration, and up 
to $200 if provided after 30 days but within 90 days.
    Payments to correctional institutions are reduced by 50 
percent for multiple reports on the same individual who 
receives both SSI and OASDI benefits. Payments made to the 
correctional institution are made from OASI or DI Trust Funds, 
as appropriate.
    The Commissioner is authorized to provide, on a 
reimbursable basis, information obtained pursuant to these 
agreements to any Federal or Federally-assisted cash, food, or 
medical assistance program for the purpose of determining 
program eligibility.

Reason for change

    The provision applies the prohibitions against payment of 
benefits to OASDI benefits in the same manner that they apply 
to SSI benefits. Both SSI and OASDI prisoner provisions were 
included in the House-passed version of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996. 
OASDI provisions were deleted in the Senate because of Senate 
procedural rules. This language restores the OASDI provisions.
    These provisions provide new financial incentives for State 
and local correctional institutions to report information on 
inmates to the Social Security Administration (SSA) so that 
payment of OASDI benefits to prisoners being supported at 
taxpayer expense are stopped promptly.
    Privacy Act procedural requirements for computer matching 
agreements between the Commissioner and correctional 
institutions impose an excessively costly administrative burden 
that could hamper the administration of the prisoner payment 
provisions. Therefore, the Computer Matching and Privacy 
Protection Act would not apply to the information exchanged 
under these provisions.
    The provision allows SSA to share, and be reimbursed for, 
any information obtained through these agreements that would 
assist other Federal agencies in administering their programs.
    Payments would be restricted to $400, even if the prisoner 
is entitled to both SSI and OASDI benefits.

Effective date

    These amendments would be effective for confinements 
beginning at least three full months after the date of 
enactment.

2. Elimination of Title II Requirement That Confinement Stem From Crime 
            Punishable by Imprisonment for More Than 1 Year

Present law

    The Social Security Act bars payment of OASDI benefits to 
prisoners convicted, or who are institutionalized because they 
are found guilty but insane, of any crime punishable by 
imprisonment of more than a year.

Explanation of provision

    This provision would broaden the prohibition of OASDI 
payment benefits to prisoners to be identical to those that 
apply to SSI benefits. In addition, it would replace ``an 
offense punishable by imprisonment for more than 1 year'' with 
``a criminal offense,'' delete other language, and include 
benefits payable to persons confined, throughout a month, to: 
(1) a penal institution; or (2) other institution if found 
guilty but insane, regardless of the total duration of the 
confinement.

Reason for change

    An audit conducted by the SSA Office of Inspector General 
determined that the language in existing law required that for 
each prisoner eligible for benefits, the duration of 
incarceration be determined on a case-by-case basis, based on 
data that can only be obtained from the courts. This is a 
costly, labor-intensive process that impedes timely suspension 
of benefits. As a matter of fairness, benefits would also be 
barred to persons who commit serious crimes but are found 
guilty by reason of insanity, regardless of the total duration 
of the institutionalization.

Effective date

    Effective for those prisoners whose confinement begins on 
or after the first day of the fourth month after the month of 
enactment.

                   3. Conforming Title XVI Amendments

Present law

    The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 required the Commissioner of Social 
Security to enter into an agreement with any interested State 
or local institution (defined as a jail, prison, other 
correctional facility, or institution where the individual is 
confined due to a court order) under which the institution 
shall provide monthly the names, Social Security numbers, dates 
of birth, confinement dates, and other identifying information. 
The Commissioner must pay to the institution for each eligible 
individual who becomes ineligible for SSI $400 if the 
information is provided within 30 days of the individual's 
becoming an inmate. The payment is $200 if the information is 
furnished after 30 days but within 90 days.

Explanation of provision

    The amendment would clarify that, in cases in which an 
inmate receives benefits under both the SSI and Social Security 
programs, payments to correctional facilities would be 
restricted to $400 or $200, depending on when the report is 
furnished. The amendment also expands the categories of 
institutions eligible to report incarceration of prisoners.

Reason for change

    Applies payment restriction to correctional facilities for 
OASDI benefits in the same manner that they apply to SSI 
payments.

Effective date

    August 22, 1996.

4. Continued Denial of Benefits to Sex Offenders Remaining Confined to 
           Public Institutions Upon Completion of Prison Term

Present law

    No provision.

Explanation of provision

    The amendment would prohibit OASDI payments to sex 
offenders who, on completion of a prison term, remain confined 
in a public institution pursuant to a court finding that they 
continue to be sexually dangerous to others.

Reason for change

    The denial of benefits is extended in the case of sex 
offenders who remain confined after completing their prison 
terms.

Effective date

    The amendment would apply to benefits for months ending 
after the date of enactment.

  H. Section 8. Revocation by Members of the Clergy of Exemption From 
                        Social Security Coverage

Present law

    Practicing members of the clergy are automatically covered 
by Social Security as self-employed workers unless they file 
for an exemption from Social Security coverage within a period 
ending with the due date of the tax return for the second 
taxable year (not necessarily consecutive) in which they 
receive reimbursement for their ministerial services. Members 
of the clergy seeking the exemption must file statements with 
their church, order, or licensing or ordaining body stating 
their opposition to the acceptance of Social Security benefits 
on religious principles. If elected, this exemption is 
irrevocable.

Explanation of provision

    The proposal would provide a 2-year ``open season,'' 
beginning January 1, 1999, for members of the clergy who want 
to revoke their exemption from Social Security. This decision 
to join Social Security would be irrevocable. A member of the 
clergy choosing such coverage would become subject to self 
employment taxes and his or her subsequent earnings would be 
credited for Social Security (and Medicare) benefit purposes.

Reason for change

    Some members of the clergy elected not to participate in 
Social Security (and Medicare) early in their careers, before 
they fully understood the ramifications of doing so. Because 
the election is irrevocable, there is no way for them to gain 
access to the program under current law. Clergy typically have 
modest earnings throughout their working life times and would 
be among those most likely to rely on Social Security (and 
Medicare) for much of their basic health care and living 
expenses in retirement. This proposal gives them a limited 
opportunity to enroll in the system, similar to those provided 
by Congress in 1977 and 1986.

Effective date

    The proposal would be effective with respect to service 
performed in taxable years beginning after December 31, 1998, 
for a period of 2 years, and with respect to monthly benefits 
in or after the calendar year the individual's application for 
revocation is effective.

 I. Section 9. Additional Technical Amendment Relating to Cooperative 
    Research or Demonstration Projects Under Titles II and Title XVI

Present law

    Current law authorizes funding for making grants to States 
and public and other organizations for paying part of the cost 
of cooperative research or demonstration projects.

Explanation of provision

    Clarifies current law to include agreements or grants 
concerning title II of the Social Security Act.

Reason for change

    Corrects an omission of intended title II authority.

Effective date

    August 4, 1994.

                       III. VOTE OF THE COMMITTEE

    In compliance with change 2(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the following statement 
is made:
    The bill, H.R. 3433 was ordered favorably reported to the 
House of Representatives May 6, 1998 by voice vote, with a 
quorum present.

                     IV. BUDGET EFFECTS OF THE BILL

               A. Committee Estimate of Budgetary Effects

    In compliance with clause 7(a) of rule XIII of the Rules of 
the House of Representatives, the following statement is made:
    The Committee agrees with the estimate prepared by the 
Congressional Budget Office (CBO) which is included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee states the 
Committee bill results in net decreased budget authority for 
direct spending programs relative to current law, and no new or 
increased tax expenditures. Revenues are increased due to the 
revocation by members of the clergy of exemption from Social 
Security coverage.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 2(l)(3)(C) of rule XI of the 
House of Representatives requiring a cost estimate prepared by 
the Congressional Budget Office, the following report prepared 
by CBO is provided:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 8, 1998.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3433, the Ticket 
to Work and Self-Sufficiency Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathy 
Ruffing.
            Sincerely,
                                          Paul Van de Water
                                   (for June E. O'Neill, Director).
    Enclosure.

H.R. 3433--Ticket to Work and Self-Sufficiency Act of 1998

    Summary: H.R. 3433, the Ticket to Work and Self-Sufficiency 
Act of 1998, would revamp the system under which people 
collecting disability benefits from the Social Security and 
Supplemental Security Income programs receive vocational 
rehabilitation services. The bill would also require several 
demonstration projects, give certain members of the clergy 
another opportunity to enroll in the Social Security system, 
and tighten restrictions on the payment of Social Security 
benefits to certain prisoners. CBO estimates that the bill 
would add to the federal surplus by $38 million over the 1999-
2003 period; of that amount, $11 million is in Social Security 
(which is legally off-budget) and the rest in other programs 
(which are on-budget).
    H.R. 3433 contains no intergovernmental mandates, as 
defined in the Unfunded Mandates Reform Act (UMRA) and would 
impose no costs on state, local, or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3433 is summarized in the following 
table. The costs of this legislation fall within budget 
functions 570 (Medicare), 600 (Income Security), and 650 
(Social Security).

                          TABLE 1. SUMMARY OF ESTIMATED BUDGETARY EFFECTS OF H.R. 3433                          
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                        1998      1999      2000      2001      2002      2003  
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING                                                
                                                                                                                
Spending under current law:                                                                                     
    Old-Age, Survivors, and Disability Insurance....   375,785   391,477   408,764   427,736   448,711   471,221
    Supplemental Security Income....................    27,301    28,563    29,985    31,595    33,371    35,302
    Medicare \1\....................................   196,941   208,178   218,505   239,668   246,198   270,931
    Medicaid........................................   100,506   108,418   115,014   122,594   130,891   140,742
                                                     -----------------------------------------------------------
      Total.........................................   700.533   736,636   772,268   821,593   859,171   918,196
Proposed changes:                                                                                               
    Old-Age, Survivors, and Disability Insurance....         0         2         1         7        10         7
    Supplemental Security Income....................         0        -1        -5        -6        -6        -8
    Medicare \1\....................................         0         0         0     (\2\)     (\2\)         2
    Medicaid........................................         0     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)
                                                     -----------------------------------------------------------
      Total.........................................         0         1        -4         1         5         1
    Off-budget (OASDI)..............................         0         2         1         7        10         7
    On-Budget.......................................         0        -1        -5        -6        -6        -6
Proposed spending under H.R. 3433:                                                                              
    Old-Age, Survivors, and Disability Insurance....   375,785   391,479   408,765   427,743   448,721   471,228
    Supplemental Security Income....................    27,301    28,562    29,980    31,589    33,365    35,294
    Medicare \1\....................................   196,941   208,178   218,505   239,668   246,198   270,933
    Medicaid........................................   100,506   108,418   115,014   122,594   130,891   140,742
                                                     -----------------------------------------------------------
      Total.........................................   700,533   736,637   772,264   821,594   859,176   918,197
                                                                                                                
                                                    REVENUES                                                    
                                                                                                                
Proposed Changes:                                                                                               
    Off-budget (OSADI)..............................         0         3         7         9         9        10
    On-budget.......................................         0     (\2\)         1         1         1         1
                                                     -----------------------------------------------------------
      Total.........................................         0         3         8        10        10        11
                                                                                                                
                                             DEFICIT (-) OR SURPLUS                                             
                                                                                                                
Proposed changes:                                                                                               
    Off-budget (OASDI)..............................         0     (\2\)         7         2        -1         2
    On-budget.......................................         0         1         6         7         7         7
                                                     -----------------------------------------------------------
      Total.........................................         0         2        12         9         6         9
----------------------------------------------------------------------------------------------------------------
\1\ Medicare consists of outlays of the Hospital Insurance and Supplementary Medical Insurance trust funds, less
  premiums.                                                                                                     
\2\ Less than $500,000.                                                                                         
                                                                                                                
Note.--Components may not sum to totals due to rounding. OASDI=Old-Age, Survivors, and Disability Insurance.    

    Basis of estimate: For purposes of estimating the budgetary 
effects of H.R. 3433, CBO assumes enactment in September 1998. 
CBO's estimate of the bill's effects, by provision, are 
detailed in the following table and explained below.
    Ticket to Work and Self-Sufficiency Program (Section 2): 
Section 2 of H.R. 3433 would change the way that vocational 
rehabilitation (VR) services are provided to recipients of 
Social Security Disability Insurance (DI) and Supplemental 
Security Income (SSI) benefits. It would also require that SSA 
test the savings (or costs) of some alternative methods of 
treating earnings in the DI program.
    Current Law. DI and SSI recipients currently receive VR 
services chiefly through state VR agencies. Data on their 
experience under those programs are sketchy. The Social 
Security Administration (SSA) attempts to spot good candidates 
for VR and refer them for services when it awards benefits, but 
it does not monitor what happens to them next. VR agencies 
accept only a fraction of the candidates referred. SSA 
reimburses the VR agencies for the cost of services rendered if 
the beneficiary has performed 9 consecutive months of 
substantial gainful activity (SGA, currently defined by 
regulation as earnings of more than $500 a month). In 1996, SSA 
began recruiting alternate providers under the Referral System 
for Vocational Rehabilitation Providers (RSVP) program. 
Candidates must first be referred to and rejected by the state 
VR agencies, and the alternate providers face the same 
reimbursement system (that is, a single payment after 9 months 
of substantial work). Thus, VR for DI and SSI recipients 
remains fundamentally a state program.
    Scattered clues suggest that approximately 10 percent to 15 
percent of new DI and SSI recipients are referred to state VR 
agencies and that about 10 percent of those referred are 
accepted. Recently, SSA has made approximately 650,000 DI 
awards a year; thus, it is likely that about 60,000 to 90,000 a 
year were referred to VR and perhaps 6,000 received services. 
SSA has consistently paid for about 4,000 claims per year for 
VR services provided to DI recipients. SSA has also steadily 
paid about 4,000 claims for VR services to SSI recipients. 
Since about 2,000 claims are for people who collect benefits 
under both programs, total claims reimbursed are about 6,000 a 
year.

                         TABLE 2. ESTIMATED BUDGETARY EFFECTS OF PROVISIONS OF H.R. 3433                        
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                  1999   2000    2001    2002    2003    2004    2005    2006     2007     2008 
----------------------------------------------------------------------------------------------------------------
                                                    SECTION 2                                                   
                                                                                                                
Ticket program for vocational                                                                                   
 rehabilitation clients-DI:                                                                                     
    Payments to program manager      1       2       1       1       2       3       3       4        4        4
    Milestone payments to                                                                                       
     providers.................      0   (\1\)       1       5      11      17      21      24       28       33
    Incentive payments to                                                                                       
     providers.................      0   (\1\)   (\1\)       3      12      27      48      66       87      109
    Gradual phase-out of                                                                                        
     current VR system.........      0   (\1\)   (\1\)      -3      -8     -14     -21     -32      -44      -58
    Benefits avoided...........      0   (\1\)   (\1\)      -4     -20     -48     -84     -98     -112     -126
    Extra benefits paid........      0   (\1\)       1       2       3       5       7      10       13       16
                                --------------------------------------------------------------------------------
      Subtotal, DI.............      1       2       3       5       1     -10     -26     -27      -24      -22
    Resulting Medicare savings                                                                                  
     \2\.......................      0       0   (\1\)   (\1\)       1       1       1      -2       -9      -20
----------------------------------------------------------------------------------------------------------------
      Total, provision.........      1       2       3       5       1      -9     -25     -29      -33      -41
Tickets program for vocational                                                                                  
 rehabilitation clients-SSI:                                                                                    
    Payments to program manager  (\1\)       1   (\1\)       1       1       1       2       2        2        2
    Milestone payments to                                                                                       
     providers.................      0   (\1\)       1       3       6       9      10      12       14       16
    Incentive payments to                                                                                       
     providers.................      0   (\1\)   (\1\)       1       3       7      12      17       22       28
    Gradual phase-out of                                                                                        
     current VR system.........      0   (\1\)   (\1\)      -1      -4      -7     -11     -16      -22      -29
    Benefits avoided...........      0   (\1\)   (\1\)      -1      -5     -12     -22     -25      -29      -32
    Extra Benefits paid........      0       0       0       0       0       0       0       0        0        0
                                --------------------------------------------------------------------------------
      Subtotal, SSI............  (\1\)       1       1       2   (\1\)      -3      -8     -11      -13      -15
    Resulting Medicaid savings.  (\3\)   (\3\)   (\3\)   (\3\)   (\3\)   (\3\)   (\3\)   (\3\)    (\3\)    (\3\)
                                --------------------------------------------------------------------------------
      Total, Provision.........  (\1\)       1       1       2   (\1\)      -3      -8     -11      -13      -15
``$1-for-$2'' Demonstration                                                                                     
 Projects: \5\                                                                                                  
    Contractor Costs...........      0   (\1\)       4       5       6       6       4       4        4        4
    DI Benefit Costs...........      0       0       3       8      13      18      19      18       18       18
    Medicare Costs.............      0       0       0       0       2       4       7       9        9        9
                                --------------------------------------------------------------------------------
      Total, Provision.........      0       0       7      13      20      28      29      31       31       31
                                                                                                                
                                                    SECTION 3                                                   
                                                                                                                
Extension of Medicare from 3                                                                                    
 years to 5 years for clients                                                                                   
 suspended from DI who have                                                                                     
 used a ticket \4\.............      0       0       0       0   (\1\)   (\1\)       1       0        0        0
                                                                                                                
                                                    SECTION 5                                                   
                                                                                                                
Extension of DI demonstration                                                                                   
 project authority until June                                                                                   
 10, 2001......................      3       5       5       3   (\1\)       0       0       0        0        0
                                                                                                                
                                                    SECTION 7                                                   
                                                                                                                
Prisoner-related provisions:                                                                                    
    Payments to prison                                                                                          
     officials--OASDI..........      2       7       7       8       9      10      10      10       10       10
    Payments to prison                                                                                          
     officials--SSI............      0       1       1       1       1       1       1       1        1        1
    Savings in benefits--OASDI.     -3     -13     -15     -18     -20     -20     -20     -20      -20      -20
    Savings in benefits--SSI...     -1      -6      -7      -8      -9     -10     -10     -10      -10      -10
                                --------------------------------------------------------------------------------
      Total, provision.........     -3     -13     -15     -17     -20     -20     -20     -20      -20      -20
                                                                                                                
                                                    SECTION 8                                                   
                                                                                                                
Two-year open season for                                                                                        
 enrollment by clergy:                                                                                          
    Off-budget (OASDI) revenues      3       7       9       9      10      10      10      11       11       11
    On-budget (HI) revenues....      1       2       2       2       2       2       2       2        3        3
    Other On-budget revenues...  (\1\)      -1      -1      -1      -1      -1      -1      -1       -1       -1
    OASDI benefits.............  (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)    (\1\)    (\1\)
                                --------------------------------------------------------------------------------
      Total, provision (effect                                                                                  
       on deficit).............     -3      -8     -10     -10     -11     -11     -11     -12      -12      -13
                                                                                                                
                                                      TOTAL                                                     
                                                                                                                
Outlays:                                                                                                        
    On-budget..................     -1      -5      -6      -6      -6      -7      -9     -14      -22      -35
    Off-budget.................      2       1       7      10       7       4     -14     -15      -13      -11
                                --------------------------------------------------------------------------------
      Total....................      1      -4       1       5       1      -2     -23     -29      -35      -46
Revenues                                                                                                        
    On-budget..................  (\1\)       1       1       1       1       1       1       1        1        1
    Off-budget.................      3       7       9       9      10      10      10      11       11       11
                                --------------------------------------------------------------------------------
      Total....................      3       8      10      10      11      11      11      12       12       13
Deficit (-) or surplus (+)                                                                                      
    On-budget..................      1       6       7       7       7       8      10      15       23       36
    Off-budget.................  (\1\)       7       2      -1       2       6      24      26       24       22
                                --------------------------------------------------------------------------------
      Total....................      2      12       9       6       9      14      35      41       47      58 
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         
\2\ These savings would occur under current Medicare law. Section 3 of the bill would also extend Medicare      
  coverage for certain suspended recipients.                                                                    
\3\ CBO expects that the vast majority of rehabilitated SSI recipients would continue to get Medicaid coverage  
  through the 1619(b) program.                                                                                  
\4\ Under the proposal, the Medicare extension would cover only those recipients who returned to work and used a
  ``ticket'' under the new program. The provision would expire 7 years after enactment.                         
\5\ The bill would require SSA to test graduated reductions in benefits (such as ``$1-for-$2'' above $85 or     
  above SGA, currently $500) on a sufficient scale and for a long enough period to permit valid statistical     
  analysis.                                                                                                     
                                                                                                                
Note.--Components may not sum to totals due to rounding.                                                        

    Clearly, some DI and SSI recipients also return to work 
without the help of VR agencies. Research suggests that only 10 
percent to 20 percent of DI recipients ever work after they 
start collecting benefits, and only 2 percent to 3 percent 
eventually have benefits withheld. In contrast, SSA reimburses 
claims for VR services for fewer than 1 percent of recipients. 
Thus, for each VR success, one or two other DI recipients go 
back to work and are suspended from the rolls without VR.
    The DI program has several features that are meant to 
smooth beneficiaries' return to work. Applicants must show that 
they are incapable of substantial work in order to be awarded 
benefits. If they do work, the law permits them to earn 
unlimited amounts for a 9-month period (known as trial work) 
and a subsequent 3-month grace period before suspending 
benefits. During the next 3 years--a period known as the 
extended period of eligibility, or EPE--those beneficiaries may 
automatically return to the DI rolls if their earnings sink 
below $500. Furthermore, Medicare benefits (for which DI 
beneficiaries qualify after two years on the rolls) also 
continue during the 3 years of extended eligibility.
    The SSI disability program is restricted to people with low 
income and few resources. Although applicants for SSI benefits 
must meet the same disability criteria as in the DI program, 
the SSI program's subsequent treatment of earnings differs 
somewhat. SSI recipients who work get a reduced benefit 
(essentially, losing $1 of benefits for each $2 of earnings 
over $85 a month) but do not give up their benefit entirely. If 
their earnings top $500 but they are still medically disabled, 
they move into section 1619(a) status (and still collect a 
small cash benefit). If their earnings rise further, they enter 
1619(b) status (where they collect no cash benefit but still 
qualify for Medicaid).
    H.R. 3433. The bill would revamp the VR system by 
permitting nearly any recipient who desires VR to receive it, 
by permitting clients to choose from a variety of providers in 
addition to state VR agencies, and by stretching out 
reimbursements to providers for up to 5 years, contingent on 
their clients' sustained absence from the rolls.
    Under H.R. 3433, SSA would issue tickets to DI and SSI 
beneficiaries that they could assign to approved VR providers, 
whether state, private for-profit, or nonprofit. The bill would 
grant wide latitude to SSA in deciding the terms and conditions 
of the tickets; SSA tentatively plans to issue tickets to new 
beneficiaries at the time of award, unless they are deemed 
likely to recover medically, and to current beneficiaries 
following a continuing disability review. By accepting a 
ticket, providers--labled ``networks'' in the bill--would agree 
to supply services, such as training, assistive technology, 
physical therapy, or placement. A program manager, selected by 
SSA, would aid in recruiting providers and handling the nuts-
and-bolts administration of the program.
    Providers could choose between two forms of reimbursement 
from SSA. One system would be based solely on outcomes; the 
provider would receive 40 percent of the advantage DI or SSI 
benefit for up to 5 years, so long as the client stayed off the 
rolls. Some providers fear, through, that they would experience 
acute cash-flow problems under such a system. To address that 
concern, the bill also offers a blended system, bubbled the 
``milestone-outcome'' system. Under that system, SSA would make 
some payments earlier, but would trim subsequent payments to 
ensure that the overall cost (calculated on a net present value 
basis) did not exceed the cost of a pure outcomes system.
    The new program would be phased in gradually. H.R. 3433 
calls for it to start in selected areas a year after enactment, 
and to operate nationwide six years later. Because new 
providers would continue to come on board even after the 
program starts operation in an area, CBO assumes that it would 
take nearly 10 years for the new program to run at its full 
potential.
    CBO assumes that about 7 percent of newly-awarded 
beneficiaries would seek VR services if they were readily 
available, versus only about 1 percent who receive them under 
current law. Both the Transitional Employment Demonstration 
(TED, a demonstration conducted in the mid-1980s and confined 
to mentally retarded recipients) and Project Network (a 
demonstration begun in 1992 and open to both DI and SSI 
beneficiaries) suggested that about 5 percent of beneficiaries 
would enroll in VR if given the chance. CBO judged that the 
level of interest ultimately would slightly exceed 5 percent 
for two reasons. First, intake under Project Network developed 
bottlenecks, which may have discouraged some potential 
participants. Second, Project Network barred any recipients who 
were employed or self-employed from enrolling; no such bar 
would be in place under H.R. 3433, however, and those 
recipients would probably be interested in receiving services 
and would be attractive to providers.
    Researh suggests that giving VR raises the propensity to 
work, and only work can lead to an earnings-related suspension. 
Based on several econometric studies and on the results to the 
TED demonstration, CBO assumes that slightly over half of the 
extra recipients would work. That raw figure, however, can 
easily exaggerate the effectiveness of VR. The handful of 
beneficiaries who would sign up for VR are probably the most 
motivated, and many would have worked anyway. In fact, CBO 
assumes that one effect of H.R. 3433 would be to enable 
providers to be reimbursed for providing services for many 
people who would have worked anyway.
    These expected effects can be illustrated by following the 
experiences of one hypothetical cohort of 650,000 disabled 
workers--the approximate volume of annual awards in 
1992.through 1997. Under current law, about 6,000 would be served under 
the state VR programs; 4,000 of them would eventually generate a 
reimbursement to the state program, and would be suspended for at least 
a month. Another 9,000 would be suspended due to earnings, for at least 
one month, without any reimbursement to VR. Thus, total suspensions 
would be about 13,000, or about 2 percent of the cohort, under current 
law. CBO assumes that, if those beneficiaries could freely enroll in VR 
using a ``ticket,'' about 7 percent or 47,000 would get VR services. 
Most of those VR clients would work, and many (about 12,000) would be 
suspended for at least one month, an increase of 8,000 in VR-reimbursed 
cases. However, CBO assumes that about 6,000 of these workers would 
have gone back to work unaided. Thus, for this cohort, net VR-related 
suspensions would be 2,000 higher.
    In estimating H.R. 3433, CBO adjusted those hypothetical 
figures for its caseload projections and timing factors. First, 
CBO assumes that the volume of disabled-worker awards gradually 
climbs from 625,000 in 1998 to about 810,000 in 2005. Second, 
CBO also assumed that some extra rehabilitations would occur 
among the nearly 5 million current DI beneficiaries, not just 
among new awards, although current beneficiaries are generally 
poorer candidates for VR than new applicants with more recent 
work experience. Third, CBO adjusted the numbers for the 
gradual phase-in of the new system. Under the bill's schedule, 
assuming enactment by September 1998, the first services would 
be rendered at a handful of sites in fiscal year 2000. If those 
clients engaged in trial work in 2001, the first extra 
suspensions would occur in 2002. Each year, more areas would be 
brought into the new system.
    Specifically, CBO assumed that the number of net additional 
suspensions--that is, suspensions that would not occur in the 
absence of the new program--would equal only 400 in 2002, 1,800 
in 2003, and between 3,000 and 4,000 a year in 2004 through 
2008. Gross suspensions that involve reimbursement to a VR 
provider would range between 4,000 and 5,000 a year under 
current law, but would be markedly higher--about 700 more in 
2002 and about 9,000 more in 2008--under the proposal. And the 
number of suspensions involving no reimbursement to VR would 
drop from about 9,000 in 2002 to about 5,500 in 2008.
    CBO also had to make assumptions about recidivism. Many 
studies have documented that DI recipients who leave the rolls 
often return. It is not clear whether recipients of VR services 
are more or less likely to return to the rolls than others; 
some evidence suggests that the extra boost provided by VR 
fades over time. Because H.R. 3433 proposes to pay providers 
for up to 5 years, but only if the recipient stays off the 
rolls, assumptions about recidivism are critical. Based on a 
variety of sources, CBO assumes that recipients suspended from 
the rolls have about a two-thirds chance of still being 
suspended one year later, about a one-half chance 3 years later 
(when, technically, their DI entitlement is terminated), and a 
40 percent chance after 5 years.
    Effects of the Tickets Program in DI. The budgetary 
consequences of H.R. 3433, from the standpoint of the DI 
program, would consist of seven effects:
    Payments to the program manager.--SSA would hire a program 
manager to coordinate issuance of tickets, the recruitment of 
providers, and other asks. Based on a similar arrangement in 
the RSVP program, CBO assumes that payments to the program 
manager would amount to just a few million dollars a year.
    Milestone payments to providers.--As explained earlier, the 
bill would give providers a choice between a pure outcome-based 
system (in which providers would get only periodic payments 
during the period of suspension) and a blended outcome-
milestone system (in which they could get some money earlier). 
CBO assumes that most providers would opt for the blended 
system, which CBO assumes to consist of $500 after several 
months of work and a $1,000 bonus on the date of suspension. 
Placements would be considerably easier for providers to 
achieve than suspensions. In 2002, milestone payments would be 
$1 million for the first batch of 1,000 gross suspensions 
(mostly people enrolled in 2000, the first year of services) 
and another $4 million for about 8,000 working clients (mostly 
people served in 2001) for a total of $5 million. In 2008, 
these payments would be about $14 million for 14,000 gross 
suspensions and another $19 million for about 38,000 work 
efforts, or $33 million total.
    Incentive payments to providers.--The incentive payments 
would occur over a period of up to 5 years if the beneficiary 
remains off the rolls. In the pure outcomes system, they would 
be 40 percent of average benefits. CBO assumes that most 
providers would opt for the blended payment system, under 
which--in return for getting some earlier milestone payments--
they would accept incentive payments of 30 percent. In 2002, 
1,000 suspended beneficiaries would each generate an incentive 
payment of 30 percent times about $800 a month, or about $3 
million for the year. In fiscal year 2008, gross suspensions of 
rehabilitation clients over the 2004-2008 period are assumed to 
be about 50,000. Some of those would have returned to the 
rolls, and a few would have died; CBO assumes that 33,000 of 
the 50,000 would remain suspended. At an average benefit of 
about $900 a month, incentive payments would total $109 
million.
    Gradual phase-out of current VR system.--CBO assumes that, 
under current law, the DI trust fund would reimburse claims for 
VR services (principally claims from state agencies) of about 
4,000 at present (at an average cost of about $11,000), growing 
to about 5,300 in 2008 (at an average cost of about $14,000). 
The new program wouldgradually replace the current-law system. 
Even by 2008, a few vestiges of the old system would remain; roughly 20 
percent of services rendered in 2006, for example, might still lie 
outside ticket areas and therefore would generate reimbursements in 
2008 (allowing one year for services and one year for trial work) under 
the old system. Thus, in 2008, the current-law VR program is expected 
to cost about $70 million, and about 80 percent of that would have been 
superseded by the new system.
    H.R. 3433 would grant state VR agencies the option of 
remaining in the current reimbursement system--that is, 
charging reimbursement for the full amount of costs incurred 
after 9 months of work. Whether or not those agencies would 
choose to remain, though, is largely immaterial to CBO's 
estimate; most clients would be served by other providers.
    Benefits avoided.--The various payments to providers 
discussed above all depend on the number of gross 
rehabilitations. The savings in DI benefits, in contrast, 
depend on the number of net or extra rehabilitations. That 
distinction is important: when providers serve clients who 
would have worked and eventually been suspended anyway, they do 
not generate savings in DI benefits.
    In 2002, of the total 1,000 suspensions of ticket holders, 
only 400 would constitute extra rehabilitations. At an average 
benefit of about $800 a month, savings would be $4 million. By 
2008, CBO assumes that there would have been a total of 53,000 
gross rehabilitations over the 2002-2008 period of which 20,000 
would represent extra rehabilitations. Under CBO's assumptions 
about recidivism, about 12,000 of those 20,000 would still be 
off the rolls; at an average benefit of about $900, benefit 
savings would be about $126 million.
    Extra benefits paid.--Some people might file for DI 
benefits in order to get VR services, or may even be encouraged 
to do so by prospective providers (for example, by an insurance 
company that helps to run their employer's private disability 
or workers' compensation coverage). For those filers, the 
entire benefit cost (for any time they spend on the rolls) and 
the VR cost (if they do eventually get suspended) would be a 
net cost to the DI program.
    To some extent, SSA could minimize this problem by setting 
the terms and conditions under which it would issue tickets--
for example, by denying them to beneficiaries who are expected 
to experience a medical recovery quite soon. But some such 
filers might still seep through. CBO assumes that, when fully 
phased in, about 500 such filers would be induced to apply each 
year, and half would in fact be rehabilitated after a year or 
two on the rolls. By 2008, under the phase-in assumptions used 
by CBO, there would have been a total of 2,400 awards to 
induced filers; 1,400 would still be on the rolls; and benefits 
to them, assuming an average monthly check of $900, would cost 
about $16 million.
    Resulting Medicare savings.--DI recipients who return to 
work automatically continue to receive Medicare coverage for 3 
years after their suspension from DI. By leading to the 
rehabilitation and suspension of more DI recipients, H.R. 3433 
would be expected to generate some savings in Medicare. DI 
beneficiaries who are capable of working are probably healthier 
than other beneficiaries, and their per-capita Medicare cost 
therefore less than average.
    Under CBO's assumption that the first services would be 
rendered in 2000 and the first resulting suspensions in 2002, 
Medicare savings would begin in 2005. Of the 400 extra 
suspensions in 2002, only 200 are still suspended when they 
complete their EPE in 2005, and Medicare savings would be a 
scant $1 million. By 2008, 10,000 extra suspensions are assumed 
to have occurred over the 2002-2005 period; 5,000 would still 
be off the rolls; and $20 million in Medicare savings would 
result.
    On balance, over the 1999-2003 period, CBO posits a small 
net cost in the DI program from the proposed tickets, mainly 
because there would be very few extra rehabilitations but there 
would be some startup costs and a few dollars paid to induced 
filers. Later, CBO posits small net savings, chiefly because 
the DI benefit savings from the extra suspensions outweigh, by 
a slim margin, the costs of paying for those beneficiaries who 
are skimmed by the providers. Obviously, different assumptions 
about the relative sizes of these groups would change the 
conclusions.
    Effects of the Tickets Program in SSI.--H.R. 3433 would 
also bring SSI participants into the new tickets to work 
program. CBO estimated effects in the SSI program in a manner 
similar to its estimates for DI. There are a few notable 
differences.
    The number of SSI recipients affected by the bill is 
generally assumed to be only half as many as in DI. Under 
current law, SSA generally pays for about 6,000 rehabilitations 
a year--4,000 in DI and 4,000 in SSI, of which 2,000 are 
concurrent. Under the bill, services rendered by providers to 
concurrent beneficiaries would essentially be compensated under 
the DI rules. Thus, to avoid double-counting concurrent 
beneficiaries, CBO generally assumed only half as many cases in 
its SSI estimates as in the analogous DI estimates.Average 
benefits for disabled SSI beneficiaries are also only about half as 
large as in the DI program--in 2002, for example, about $400 in SSI 
versus $800 in DI. Therefore, all payments under the proposed system 
that are pegged to the average benefit, such as the incentive payments 
to providers, would be smaller in SSI. In fact, that provision has 
aroused concern that providers would be less willing to provide 
services to the SSI population. CBO implicitly assumes that providers 
would serve this group, perhaps emphasizing cheaper services with 
repeated interventions if necessary.
    Because SSI is limited to beneficiaries with low income and 
few resources, CBO assumed that there would be few induced 
filers. CBO also assumed that most SSI beneficiaries affected 
by the bill would retain Medicaid coverage through section 
1619(b).
    The upshot of H.R. 3433 in the SSI program is a pattern 
that resembles that for DI: small early costs, giving way to 
small savings after 2003.
    Demonstration Projects. Under current law, after completing 
the trial work period and the 3-month grace period (during 
which earnings are disregarded), a disabled worker gives up his 
or her entire benefit in any month that earnings exceed SGA 
($500). Both anecdotal and statistical evidence suggest that 
many beneficiaries balk at that, instead quitting work or 
holding their earnings just below the threshold. Some advocates 
favor instead, cutting benefits by $1 for every $2 of earnings 
over $500 a month. More modestly, some favor a treatment of 
earnings more like the SSI program--a cut of $1 in benefits for 
every $2 of earnings over $85 a month.
    It is very likely that such proposals would encourage more 
people who are already on the DI rolls to work. Although fewer 
beneficiaries would be suspended (i.e., have their benefit 
reduced to zero,) many might have their benefit substantially 
reduced. A major concern about such proposals is that they 
would encourage an unknown number of people to file for 
benefits. Survey data suggest that there are millions of 
severely impaired people who are nevertheless working and not 
collecting DI. Filing for benefits, and working part-time, 
might improve their standards of living. That incentive would 
be much stronger if the DI program liberalized its treatment of 
earnings. The SSA Actuary's office in 1994 estimated that 
applying a $1-for-$2 policy for earnings above $500 would cost 
$5 billion in extra DI benefits over a 5-year period and that 
setting the threshold at $85 would cost $2 billion.
    H.R. 3433 would require SSA to conduct demonstrations to 
test the effects of a $1 reduction in benefits for each $2 of 
earnings. It would require that SSA conduct the demonstrations 
on a wide enough scale, and for a long enough period, to permit 
valid analysis of the results. CBO assumed that, to comply with 
those criteria, the demonstrations would have to include 
perhaps half a dozen small states, that the intake phase of the 
project would have to last three or four years to permit 
observation of the expected induced filers and that the 
incentives themselves would have to be promised to the 
beneficiaries for an indefinite period. Because the 
demonstrations would pose formidable issues of design and 
administration, CBO assumes they would not get under way until 
2001. CBO also assumes that the demonstration would be 
conducted in areas with and without the tickets to work and 
self-sufficiency, to enable the effect of the incentives to be 
isolated from the effects of the new VR program. Even a 
relatively small-scale demonstration might thereby apply to 
approximately 2 percent to 3 percent of the nation. Multiplying 
that percentage times the DI benefit costs contained in the 
Actuaries' 1994 memo suggests that the demonstration would, 
after intake is complete, cost almost $20 million in extra DI 
benefits a year. If would also lead to slightly higher Medicare 
costs, since the induced filers would qualify for Medicare 
after two years on the DI rolls. Finally, CBO assumes that 
running the demonstrations and collecting and analyzing data 
would be handled by an expert contractor, at a cost of several 
million dollars a year. In sum, the $1-for-$2 demonstration 
projects mandated by the bill are estimated to cost $190 
million over the 2001-2008 period.
    Extended Medicare Coverage (Section 3). As noted before, DI 
recipients who give up their cash benefits because of earnings 
can continue to get Medicare for 3 years. H.R. 3433 proposes to 
lengthen that period to 5 years. The extended coverage would 
only be available to beneficiaries who had registered a ticket 
with a VR provider. Furthermore, the coverage would expire 7 
years after enactment (that is, in September 2005, under CBO's 
assumption).
    Since CBO assumes that the first batch of VR clients under 
the new tickets program would be suspended in 2002, their 3-
year period of extended Medicare eligibility under current law 
would expire in 2005. Therefore, the proposed extension would 
expire before it would have significant costs. CBO assumes 
costs of just $1 million in 2005.
    Other Provisions. The other provisions of H.R. 3433 are 
mostly technical corrections and clarifications to the Social 
Security Act. Those technical corrections have passed the House 
twice previously, in September 1996 (H.R. 4039) and April 1997 
(H.R. 1048). As pointed out in previous CBO estimates, most do 
not have budgetary implications. Three sections do have 
budgetary effects.
    Demonstration Project Authority (Section 5). SSA has the 
authority to conduct certain research and demonstration 
projects that occasionally require waivers of provisions of 
Title II of the Social Security Act. That waiver authority 
expired on June 10, 1996. This bill would extend it until June 
10, 2001. This extension would be the fifth since the waiver 
authority was enacted in 1980. This general waiver authority 
should not be confused with the so-called $1-for-$2 
demonstrations that would be required by Section 2 of this 
bill; those demonstrations are costlier and longer-lasting than 
the modest projects that SSA would likely conduct on its own.
    When the waiver authority has been in effect, SSA has 
generally spent between $2 million and $4 million annually on 
the affected projects. Because the proposed extension would be 
for 3 years, CBO judges that it would lead to outlays of $15 
million, chiefly in fiscal years 2000 and 2001.
    Provisions Affecting Prisoners (Section 7). H.R. 3433 would 
also strengthen restrictions on the payment of Social Security 
benefits to prisoners. Current law sets strict limits on the 
payment of SSI benefits to incarcerated people and somewhat 
milder limits on payments of OASDI. SSI recipients who are in 
prison for a full month--regardless of whether they are 
convicted--are to have their benefits suspended while they are 
incarcerated. OASDI recipients who have been convicted of an 
offense carrying a maximum sentence of 1 year or more are to 
have their benefits suspended. Those who are convicted of 
lesser crimes, and those who are in jail awaiting trial, may 
still collect OASDI benefits. Those provisions are enforced 
chiefly by an exchange of computerized data between the Social 
Security Administration and the Federal Bureau of Prisons, 
state prisons, and some county jails. Those agreements are 
voluntarily and, until recently, involved no payments to the 
institutions.
    The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 changed that arrangement by 
directing SSA to pay institutions for reporting information 
that led to the identification of ineligible SSI recipients. 
The payment is $400 if the institution reports information 
within 30 days of confinement and $200 if the report is made 30 
to 90 days after confinement. The law also exempts matching 
agreements between SSA and correctional institutions from 
certain provisions of the Privacy Act.
    This bill would establish analogous arrangements for the 
OASDI Program. It would also drop the requirement that OASDI 
benefits be suspended only if the maximum sentence for the 
offense is 1 year or more. (A conviction would still be 
required; inmates who are in jail while they await trial could 
continue to collect benefits.) CBO estimated the effects of 
this provision, like its predecessor in the welfare reform law, 
by analyzing data from several sources that suggest about 4 
percent to 5 percent of prisoners were receiving Social 
Security, SSI benefits, or both before incarceration. Reports 
from SSA's Inspector General showed that some of those 
prisoners were overlooked under matching arrangements either 
because their institution had not signed an agreement, had not 
renewed it promptly, or did not submit data on schedule.
    CBO estimates that, over the 1999-2003 period, the 
provision in H.R. 3433 would lead to payments of $32 million to 
correctional institutions out of the OASDI trust funds and 
benefit savings of $69 million, for a net saving of $37 
million. CBO also expects that the broader arrangement, by 
doubling the pool of potential payments, would encourage more 
correctional institutions to submit information accurately and 
promptly and would therefore lead to spillover savings in the 
SSI program amounting to nearly $30 million over the 1999-2003 
period.
    Open Season for Clergy to Enroll in Social Security 
(Section 8). Under current law, ministers of a church are 
generally treated as self-employed individuals for the purpose 
of the Social Security payroll tax. However, ministers who are 
opposed to participating in the program on religious principles 
may reject coverage by filing with the Internal Revenue Service 
before the tax filing date for their second year of work in the 
ministry. H.R. 3433 would give those ministers a chance to 
revoke their exemptions. It would give them a two-year window--
ending on the tax filing deadline for the second taxable year 
beginning after December 31, 1998--to exercise that option.
    In 1977 and 1986, the clergy were offered a similar 
opportunity to opt back into Social Security. Based on that 
experience, CBO estimates that about 3,500 ministers would take 
advantage of the opportunity. CBO estimates that the clergy who 
elect coverage would pay about $3 million in Social Security 
(OASDI) taxes, which are off-budget, in 1999 and $10 million a 
year thereafter. They would also pay Hospital Insurance (HI) 
taxes, which are on-budget, of about $2 million a year. 
Finally, income tax revenues would drop slightly because, as 
self-employed individuals, ministers paying Social Security 
could deduct a portion of that tax when computing income tax.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act of 1985 establishes pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts. The projected changes in direct spending are shown in 
the table below for fiscal years 1999-2008. Only changes 
affecting on-budget outlays and receipts (that is, those in 
non-Social Security programs) affect the pay-as-you-go 
scorecard. For purposes of enforcing pay-as-you-go 
procedures,only the effects in the current year, budget year, and the 
succeeding four years are counted.

                             TABLE 3.--SUMMARY OF PAY-AS-YOU-GA EFFECTS OF H.R. 3433                            
----------------------------------------------------------------------------------------------------------------
                                                     By fiscal years, in millions of dollars--                  
                                 -------------------------------------------------------------------------------
                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008 
----------------------------------------------------------------------------------------------------------------
Change in outlays...............      -1      -5      -6      -6      -6      -7      -9     -14     -22     -35
Change in receipts..............   (\1\)       1       1       1       1       1       1       1       1       1
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         
Note.--components may not sum to totals due to rounding.                                                        


    Social Security outlays and receipts do not appear on the 
pay-as-you-go scorecard, but the House of Representatives 
tracks them separately. That tally includes effects only for 
the year in which the legislation takes effect and the four 
subsequent years; for H.R. 3433, the relevant years are 1998 
through 2002. It also includes balances carried over from laws 
enacted in previous years, such as the Contract with America 
Advancement Act (Public Law 104-121) enacted in 1996. Under the 
rules of the House, the Social Security scorecard includes only 
tax receipts and benefit outlays of the Social Security trust 
funds. Therefore, outlays for purposes other than benefits--
such as the payments to VR providers and to prison officials 
that would occur under H.R. 3433--do not appear on the 
scorecard.

     TABLE 4.--CBO ESTIMATE OF CURRENT STATUS OF THE SOCIAL SECURITY    
                SCORECARD IN THE HOUSE OF REPRESENTATIVES               
------------------------------------------------------------------------
                                     By fiscal years, in millions of    
                                                dollars--               
                                ----------------------------------------
                                  1998     1999    2000    2001    2002 
------------------------------------------------------------------------
Scorecard at state of 1998:                                             
    OASDI taxes................     146       80  ......  ......  ......
    OASDI benefits.............     -77     -114      75  ......  ......
                                ----------------------------------------
      Net effect...............     223      194     -75  ......  ......
Ticket to Work and Self-                                                
 Sufficiency Act of 1998 (H.R.                                          
 3433):                                                                 
    OASDI taxes................  ......        8       9       9       9
    OASDI benefits.............       0       -3     -13     -11     -12
                                ----------------------------------------
      Net effect...............       0       11      22      20      21
Scorecard assuming enactment of                                         
 H.R. 3433:                                                             
    OASDI taxes................     146       88       9       9       9
    OASDI benefits.............     -77     -117      62     -11     -12
                                ----------------------------------------
      Net effect...............     223      205     -53      20      21
------------------------------------------------------------------------
Note.--Components may not sum to totals due to rounding.                

    Estimated impact on State, local, and tribal governments: 
H.R. 3433 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments. Although state VR agencies would lose their 
monopoly--or, technically, their ``right of first refusal''--to 
serve SSA clients, the budgetary impact of this change would be 
minimal. In addition, state and local prisons would collect 
additional payments for providing certain computerized data to 
SSA that CBO estimates would total $35 million over the 1999-
2003 period.
    Estimated impact on the private sector: H.R. 3433 contains 
no private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal cost: Kathy Ruffing. Impact 
on State, Local, and Tribal Governments: Marc Nicole. Impact on 
the Private Sector: Ralph Smith.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

 V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the need for legislation was confirmed through its ongoing 
oversight of the Social Security Administration and the Social 
Security programs.

B. Summary of Findings and Recommendations of the Government Reform and 
                          Oversight Committee

    In compliance with clause 2(l)(3)(D) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that no oversight findings and recommendations have been 
submitted to this Committee by the Committee on Government 
Reform and Oversight with respect to the provisions contained 
in this bill.

                 C. Constitutional Authority Statement

    With respect to clause 2(l)(4) of rule XI of the Rules of 
the House of Representatives, relating to Constitutional 
Authority, the Committee states that the Committee's action in 
reporting the bill is derived from Article I of the 
Constitution, Section 8 (``The Congress shall have power to lay 
and collect taxes, duties, imposts and excises, to pay the 
debts and to provide for * * * the general Welfare of the 
United States * * *'').

          VI. APPLICABILITY OF FEDERAL ADVISORY COMMITTEE ACT

    Pursuant to the Federal Advisory Committee Act (5 U.S.C., 
App., section 5(b)), the Committee states that any advisory 
bodies created by the bill, such as the Ticket to Work and 
Self-Sufficiency Advisory Panel are consciously created, and 
are deemed appropriate and necessary to carry out the purposes 
of the bill. It is the view of the Committee that the functions 
of any such advisory bodies are not being and could be 
performed by one or more agencies or by an advisory committee 
already in existence, or by enlarging the mandate of an 
existing advisory committee.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL AS REPORTED

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

 SOCIAL SECURITY ACT

           *       *       *       *       *       *       *


TITLE II--FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE BENEFITS

    federal old-age and survivors insurance trust fund and federal 
                    disability insurance trust fund

  Sec. 201. (a) * * *

           *       *       *       *       *       *       *


                Mother's and Father's Insurance Benefits

  (g)(1)(A) The Managing Trustee of the Trust Funds (which for 
purposes of this paragraph shall include also the Federal 
Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund established by title XVIII) is 
directed to pay from the Trust Funds into the Treasury--
          (i) * * *
          (ii) the amounts estimated (pursuant to the 
        applicable method prescribed under paragraph (4) of 
        this subsection) by the Commissioner of Social Security 
        which will be expended, out of moneys made available 
        for expenditures from the Trust Funds, during such 
        three-month period to cover the cost of carrying out 
        the functions of the Social Security Administration, 
        specified in section 232, which relate to the 
        administration of provisions of the Internal Revenue 
        Code of 1986 other than those referred to in clause (i) 
        and the functions of the Social Security Administration 
        in connection with the withholding of taxes from 
        benefits, as described in section 207(c), pursuant to 
        requests by persons entitled to such benefits or such 
        persons' representative payee.
Such payments shall be carried into the Treasury as the net 
amount of repayments due the general fund account for 
reimbursement of expenses incurred in connection with the 
administration of titles II and XVIII of this Act and chapters 
2 and 21 of the Internal Revenue Code of 1986. A final 
accounting of such payments for any fiscal year shall be made 
at the earliest practicable date after the close thereof. There 
are hereby authorized to be made available for expenditure, out 
of any or all of the Trust Funds, such amounts as the Congress 
may deem appropriate to pay the costs of the part of the 
administration of this title, title XVI, and title XVIII for 
which the Commissioner of Social Security is responsible, the 
costs of title XVIII for which the Secretary of Health and 
Human Services is responsible, and the costs of carrying out 
the functions of the Social Security Administration, specified 
in section 232, which relate to the administration of 
provisions of the Internal Revenue Code of 1986 other than 
those referred to in clause (i) of the first sentence of this 
subparagraph. Of the amounts authorized to be made available 
out of the Federal Old Age and Survivors Insurance Trust Fund 
and the Federal Disability Insurance Trust Fund under the 
preceding sentence, there are hereby authorized to be made 
available from either or both of such Trust Funds for 
continuing disability reviews--
          (i) for fiscal year 1996, $260,000,000;
          (ii) for fiscal year 1997, $360,000,000;
          (iii) for fiscal year 1998, $570,000,000;
          (iv) for fiscal year 1999, $720,000,000;
          (v) for fiscal year 2000, $720,000,000;
          (vi) for fiscal year 2001, $720,000,000; and
          (vii) for fiscal year 2002, $720,000,000.
For purposes of this subparagraph, the term ``continuing 
disability review'' means a review conducted pursuant to 
section 221(i) and a review or disability eligibility 
redetermination conducted to determine the continuing 
disability and eligibility of a recipient of benefits under the 
supplemental security income program under title XVI, including 
any review or redetermination conducted pursuant to section 207 
or 208 of the Social Security Independence and Program 
Improvements Act of 1994 (Public Law 103-296) and the functions 
of the Social Security Administration in connection with the 
withholding of taxes from benefits, as described in section 
207(c), pursuant to requests by persons entitled to such 
benefits or such persons' representative payee.
  (B) After the close of each fiscal year--
          (i) the Commissioner of Social Security shall 
        determine--
                  (I) the portion of the costs, incurred during 
                such fiscal year, of administration of this 
                title, title XVI, and title XVIII for which the 
                Commissioner is responsible and of carrying out 
                the functions of the Social Security 
                Administration, specified in section 232, which 
                relate to the administration of provisions of 
                the Internal Revenue Code of 1986 (other than 
                those referred to in clause (i) of the first 
                sentence of [subparagraph (A)),] subparagraph 
                (A)) and the functions of the Social Security 
                Administration in connection with the 
                withholding of taxes from benefits, as 
                described in section 207(c), pursuant to 
                requests by persons entitled to such benefits 
                or such persons' representative payee, which 
                should have been borne by the general fund of 
                the Treasury,

           *       *       *       *       *       *       *

  (C) After the determinations under subparagraph (B) have been 
made for any fiscal year, the Commissioner of Social Security 
and the Secretary shall each certify to the Managing Trustee 
the amounts, if any, which should be transferred from one to 
any of the other such Trust Funds and the amounts, if any, 
which should be transferred between the Trust Funds (or one of 
the Trust Funds) and the general fund of the Treasury, in order 
to ensure that each of the Trust Funds and the general fund of 
the Treasury haveborne their proper share of the costs, 
incurred during such fiscal year, for--
          (i) * * *

           *       *       *       *       *       *       *

          (iii) carrying out the functions of the Social 
        Security Administration, specified in section 232, 
        which relate to the administration of provisions of the 
        Internal Revenue Code of 1986 (other than those 
        referred to in clause (i) of the first sentence of 
        subparagraph (A)) and the functions of the Social 
        Security Administration in connection with the 
        withholding of taxes from benefits, as described in 
        section 207(c), pursuant to requests by persons 
        entitled to such benefits or such persons' 
        representative payee.
The Managing Trustee shall transfer any such amounts in 
accordance with any certification so made.
  (D) The determinations required under subclauses (IV) and (V) 
of subparagraph (B)(i) shall be made in accordance with the 
cost allocation methodology in existence on the date of the 
enactment of the Social Security Independence and Program 
Improvements Act of 1994, until such time as the methodology 
for making the determinations required under such subclauses is 
revised by agreement of the Commissioner and the Secretary, 
except that the determination of the amounts to be borne by the 
general fund of the Treasury with respect to expenditures 
incurred in carrying out the functions of the Social Security 
Administration specified in section 232 and the functions of 
the Social Security Administration in connection with the 
withholding of taxes from benefits as described in section 
207(c) shall be made pursuant to the applicable method 
prescribed under paragraph (4).

           *       *       *       *       *       *       *

  (4) The Commissioner of Social Security shall utilize the 
method prescribed pursuant to this paragraph, as in effect 
immediately before the date of the enactment of the Social 
Security Independence and Program Improvements Act of 1994, for 
determining the costs which should be borne by the general fund 
of the Treasury of carrying out the functions of the 
Commissioner, specified in section 232, which relate to the 
administration of provisions of the Internal Revenue Code of 
1986 (other than those referred to in clause (i) of the first 
sentence of paragraph (1)(A)). The Board of Trustees of such 
Trust Funds shall prescribe the method of determining the costs 
which should be borne by the general fund in the Treasury of 
carrying out the functions of the Social Security 
Administration in connection with the withholding of taxes from 
benefits, as described in section 207(c), pursuant to requests 
by persons entitled to such benefits or such persons' 
representative payee. If at any time or times thereafter the 
Boards of Trustees of such Trust Funds consider such action 
advisable, they may modify the method of determining such 
costs.

           *       *       *       *       *       *       *


              age and survivors insurance benefit payments

                       Old Age Insurance Benefits

Sec. 202. (a) * * *

           *       *       *       *       *       *       *


   Limitation on Payments to Prisoners and Certain Other Inmates of 
                      Publicly Funded Institutions

  (x)(1)(A) Notwithstanding any other provision of this title, 
no monthly benefits shall be paid under this section or under 
section 223 to any individual for any month [during] throughout 
which such individual--
          (i) is confined in a jail, prison, or other penal 
        institution or correctional facility pursuant to his 
        conviction of [an offense punishable by imprisonment 
        for more than 1 year (regardless of the actual sentence 
        imposed) a criminal offense, [or]
          (ii) is confined by court order in an institution at 
        public expense in connection with--
                  (I) a verdict or finding that the individual 
                is guilty but insane, with respect to [an 
                offense punishable by imprisonment for more 
                than 1 year] a criminal offense,
                  (II) a verdict or finding that the individual 
                is not guilty of such an offense by reason of 
                insanity,
                  (III) a finding that such individual is 
                incompetent to stand trial under an allegation 
                of such an offense, or
                  (IV) a similar verdict or finding with 
                respect to such an offense based on similar 
                factors (such as a mental disease, a mental 
                defect, or mental incompetence)[.], or
          (iii) immediately upon completion of confinement as 
        described in clause (i) pursuant to conviction of a 
        criminal offense an element of which is sexual 
        activity, is confined by court order in an institution 
        at public expense pursuant to a finding that the 
        individual is a sexually dangerous person or a sexual 
        predator or a similar finding.
  (B)(i) * * *
          (ii) For purposes of [clause (ii)] clauses (ii) and 
        (iii) of subparagraph (A), an individual confined in an 
        institution as described in such clause (ii) shall be 
        treated as remaining so confined until--
                  (I) he or she is released from the care and 
                supervision of such institution, and
                  (II) such institution ceases to meet the 
                individual's basic living needs.

           *       *       *       *       *       *       *

  (3)(A) Notwithstanding the provisions of section 552a of 
title 5, United States Code, or any other provision of Federal 
or State law, any agency of the United States Government or of 
any State (or political subdivision thereof) shall make 
available to the Commissioner of Social Security, upon written 
request, the name and social security account number of any 
individual who is confined as described in paragraph (1) if the 
confinement is under the jurisdictionof such agency and the 
Commissioner of Social Security requires such information to carry out 
the provisions of this section.
  (B)(i) The Commissioner shall enter into an agreement under 
this subparagraph with any interested State or local 
institution comprising a jail, prison, penal institution, or 
correctional facility, or comprising any other institution a 
purpose of which is to confine individuals as described in 
paragraph (1)(A)(ii). Under such agreement--
          (I) the institution shall provide to the 
        Commissioner, on a monthly basis and in a manner 
        specified by the Commissioner, the names, social 
        security account numbers, dates of birth, confinement 
        commencement dates, and, to the extent available to the 
        institution, such other identifying information 
        concerning the individuals confined in the institution 
        as the Commissioner may require for the purpose of 
        carrying out paragraph (1); and
          (II) the Commissioner shall pay to the institution, 
        with respect to information described in subclause (I) 
        concerning each individual who is confined therein as 
        described in paragraph (1)(A), who receives a benefit 
        under this title for the month preceding the first 
        month of such confinement, and whose benefit under this 
        title is determined by the Commissioner to be not 
        payable by reason of confinement based on the 
        information provided by the institution, $400 (subject 
        to reduction under clause (ii)) if the institution 
        furnishes the information to the Commissioner within 30 
        days after the date such individual's confinement in 
        such institution begins, or $200 (subject to reduction 
        under clause (ii)) if the institution furnishes the 
        information after 30 days after such date but within 90 
        days after such date.
  (ii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to 
make a payment to the institution with respect to the same 
individual under an agreement entered into under section 
1611(e)(1)(I).
  (iii) The provisions of section 552a of title 5, United 
States Code, shall not apply to any agreement entered into 
under clause (i) or to information exchanged pursuant to such 
agreement.
  (iv) There is authorized to be transferred from the Federal 
Old-Age and Survivors Insurance Trust Fund and the Federal 
Disability Insurance Trust Fund, as appropriate, such sums as 
may be necessary to enable the Commissioner to make payments to 
institutions required by clause (i)(II). Sums so transferred 
shall be treated as direct spending for purposes of the 
Balanced Budget and Emergency Deficit Control Act of 1985 and 
excluded from budget totals in accordance with section 13301 of 
the Budget Enforcement Act of 1990.
  (v) The Commissioner is authorized to provide, on a 
reimbursable basis, information obtained pursuant to agreements 
entered into under clause (i) to any agency administering a 
Federal or federally-assisted cash, food, or medical assistance 
program for eligibility purposes.

           *       *       *       *       *       *       *


                               assignment

  Sec. 207. (a) * * *

           *       *       *       *       *       *       *

  (c) Nothing in this section shall be construed to prohibit 
withholding taxes from any benefit under this title, if such 
withholding is done pursuant to a request made in accordance 
with section 3402(p)(1) of the Internal Revenue Code of 1986 by 
the person entitled to such benefit or such person's 
representative payee.

           *       *       *       *       *       *       *


                       disability determinations

  Sec. 221. (a) * * *

           *       *       *       *       *       *       *

  (c)(1) * * *

           *       *       *       *       *       *       *

  (4) For suspension of reviews under this subsection in the 
case of an individual using a ticket to work and self-
sufficiency, see section 1147(i).

                        rehabilitation services

                 [Referral for Rehabilitation Services

  Sec. 222. [(a) It is hereby declared to be the policy of the 
Congress that disabled individuals applying for a determination 
of disability, and disabled individuals who are entitled to 
child's insurance benefits, widow's insurance benefits, or 
widower's insurance benefits, shall be promptly referred to the 
State agency or agencies administering or supervising the 
administration of the State plan approved under title I of the 
Rehabilitation Act of 1973 for necessary vocational 
rehabilitation services, to the end that the maximum number of 
such individuals may be rehabilitated into productive activity.

  [Deductions on Account of Refusal To Accept Rehabilitation Services

  [(b)(1) Deductions, in such amounts and at such time or times 
as the Commissioner of Social Security shall determine, shall 
be made from any payment or payments under this title to which 
an individual is entitled, until the total of such deductions 
equals such individual's benefit or benefits under sections 202 
and 223 for any month in which such individual, if a child who 
has attained the age of eighteen and is entitled to child's 
insurance benefits, a widow, widower, surviving divorced wife, 
or surviving divorced husband who has not attained age 60, or 
an individual entitled to disability insurance benefits, 
refuses without good cause to accept rehabilitation services 
available to him under a State plan approved under title I of 
the Rehabilitation Act of 1973. Any individual who is a member 
or adherent of any recognized church or religious sect which 
teaches its members or adherents to rely solely, in the 
treatment and cure of any physical or mental impairment, upon 
prayer or spiritual means through the application and use of 
the tenets orteachings of such church or sect, and who, solely 
because of his adherence to the teachings or tenets of such church, or 
sect, refuses to accept rehabilitation services available to him under 
a State plan approved under title I of the Rehabilitation Act of l973, 
shall, for the purposes of the first sentence of this subsection, be 
deemed to have done so with good cause.
  [(2) Deductions shall be made from any child's insurance 
benefit to which a child who has attained the age of eighteen 
is entitled or from any mother's or father's insurance benefit 
to which a person is entitled, until the total of such 
deductions equals such child's insurance benefit or benefits or 
such mother's or father's insurance benefit or benefits under 
section 202 for any month in which such child or person 
entitled to mother's or father's insurance benefits is married 
to an individual who is entitled to disability insurance 
benefits and in which such individual refuses to accept 
rehabilitation services and a deduction, on account of such 
refusal, is imposed under paragraph (1). If both this paragraph 
and paragraph (3) are applicable to a child's insurance benefit 
for any month, only an amount equal to such benefit shall be 
deducted.
  [(3) Deductions shall be made from any wife's, husband's, or 
child's insurance benefit, based on the wages and self-
employment income of an individual entitled to disability 
insurance benefits, to which a wife, divorced wife, husband, 
divorced husband, or child is entitled, until the total of such 
deductions equals such wife's, husband's, or child's insurance 
benefit or benefits under section 202 for any month in which 
the individual, on the basis of whose wages and self-employment 
income such benefit was payable, refuses to accept 
rehabilitation services and deductions, on account of such 
refusal, are imposed under paragraph (1).
  [(4) The provisions of paragraph (1) shall not apply to any 
child entitled to benefits under section 202(d), if he has 
attained the age of 18 but has not attained the age of 22, for 
any month during which he is a full-time elementary or 
secondary school student (as defined and determined under 
section 202(d)).]

           *       *       *       *       *       *       *


       additional rules relating to benefits based on disability

                         Suspension of Benefits

  Sec. 225. (a) * * *

            Continued Payments During Rehabilitation Program

  (b) Notwithstanding any other provision of this title, 
payment to an individual of benefits based on disability (as 
described in the first sentence of subsection (a)) shall not be 
terminated or suspended because the physical or mental 
impairment, on which the individual's entitlement to such 
benefits is based, has or may have ceased, if--
          (1) such individual is participating in [a program of 
        vocational rehabilitation services] a program 
        consisting of the Ticket to Work and Self-Sufficiency 
        Program under section 1147 or another program of 
        vocational rehabilitation services, employment 
        services, or other support services approved by the 
        Commissioner of Social Security, and

           *       *       *       *       *       *       *


               entitlement to hospital insurance benefits

  Sec. 226. (a) * * *
  (b) Every individual who--
          (1) * * *

           *       *       *       *       *       *       *

shall be entitled to hospital insurance benefits under part A 
of title XVIII for each month beginning with the later of (I) 
July 1973 or (II) the twenty-fifth month of his entitlement or 
status as a qualified railroad retirement beneficiary described 
in paragraph (2), and ending (subject to the last sentence of 
this subsection) with the month following the month in which 
notice of termination of such entitlement to benefits or status 
as a qualified railroad retirement beneficiary described in 
paragraph (2) is mailed to him, or if earlier, with the month 
before the month in which he attains age 65. In applying the 
previous sentence in the case of an individual described in 
paragraph (2)(C), the ``twenty-fifth month of his entitlement'' 
refers to the first month after the twenty-fourth month of 
entitlement to specified benefits referred to in paragraph 
(2)(C) and ``notice of termination of such entitlement'' refers 
to a notice that the individual would no longer be determined 
to be entitled to such specified benefits under the conditions 
described in that paragraph. For purposes of this subsection, 
an individual who has had a period of trial work which ended as 
provided in section 222(c)(4)(A), and whose entitlement to 
benefits or status as a qualified railroad retirement 
beneficiary as described in paragraph (2) has subsequently 
terminated, shall be deemed to be entitled to such benefits or 
to occupy such status (notwithstanding the termination of such 
entitlement or status) for the period of consecutive months 
[throughout all of which] throughout the first 24 months of 
which the physical or mental impairment, on which such 
entitlement or status was based, continues, and throughout all 
of which such individual would have been entitled to monthly 
insurance benefits under title II or as a qualified railroad 
retirement beneficiary had such individual been unable to 
engage in substantial gainful activity, but not in excess of 24 
such months (plus 24 additional such months in the case of an 
individual who the Commissioner determines is using a ticket to 
work and self-sufficiency issued under section 1147, but only 
for additional months that occur in the 7-year period beginning 
on the date of the enactment of the Ticket to Work and Self-
Sufficiency Act of 1998). In determining when an individual's 
entitlement or status terminates for purposes of the preceding 
sentence, the term ``36 months'' in the second sentence of 
section 223(a)(1), in section 202(d)(1)(G)(i), in the last 
sentence of section 202(e)(1), and in the last sentence of 
section 202(f)(1) shall be applied as though it read ``15 
months''.

           *       *       *       *       *       *       *


     TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
SIMPLIFICATION

           *       *       *       *       *       *       *


Part A--General Provisions

           *       *       *       *       *       *       *


             cooperative research or demonstration projects

  Sec. 1110. (a)(1) * * *

           *       *       *       *       *       *       *

  (3) Grants and payments under contracts or cooperative 
arrangements under paragraph (1) may be made either in advance 
or by way of reimbursement, as may be determined by the 
Secretary (or the Commissioner, with respect to any jointly 
financed cooperative agreement or grant concerning title II or 
XVI); and shall be made in such installments and on such 
conditions as the Secretary (or the Commissioner, as 
applicable) finds necessary to carry out the purposes of this 
subsection.

           *       *       *       *       *       *       *



            the ticket to work and self-sufficiency program


  Sec. 1147. (a) In General.--The Commissioner of Social 
Security shall establish a Ticket to Work and Self-Sufficiency 
Program, under which a disabled beneficiary may use a ticket to 
work and self-sufficiency issued by the Commissioner in 
accordance with this section to obtain employment services, 
vocational rehabilitation services, or other support services 
from an employment network which is of the beneficiary's choice 
and which is willing to provide such services to such 
beneficiary.
  (b) Ticket System.--
          (1) Distribution of tickets.--The Commissioner of 
        Social Security may issue a ticket to work and self-
        sufficiency to disabled beneficiaries for participation 
        in the Program.
          (2) Assignment of tickets.--A disabled beneficiary 
        holding a ticket to work and self-sufficiency may 
        assign the ticket to any employment network of the 
        beneficiary's choice which is serving under the Program 
        and is willing to accept the assignment.
          (3) Ticket terms.--A ticket issued under paragraph 
        (1) shall consist of a document which evidences the 
        Commissioner's agreement to pay (as provided in 
        paragraph (4)) an employment network, which is serving 
        under the Program and to which such ticket is assigned 
        by the beneficiary, for such employment services, 
        vocational rehabilitation services, and other support 
        services as the employment network may provide to the 
        beneficiary.
          (4) Payments to employment networks.--The 
        Commissioner shall pay an employment network under the 
        Program in accordance with the outcome payment system 
        under subsection (h)(2) or under the outcome-milestone 
        payment system under subsection (h)(3) (whichever is 
        elected pursuant to subsection (h)(1)). An employment 
        network may not request or receive compensation for 
        such services from the beneficiary.
  (c) State Participation.--
          (1) Periodic elections.--Each State agency 
        administering or supervising the administration of the 
        State plan approved under title I of the Rehabilitation 
        Act of 1973 may elect to participate in the Program (or 
        to revoke any such election) as an employment network. 
        The Commissioner shall provide for periodic 
        opportunities for exercising such elections (and 
        revocations).
          (2) Treatment of state agencies.--Any such election 
        (or revocation) by a State agency described in 
        paragraph (1) taking effect during any period for which 
        an individual residing in the State is a disabled 
        beneficiary and a client of the State agency shall not 
        be effective with respect to such individual to the 
        extent that such election (or revocation) would result 
        in any change in the method of payment to the State 
        agency with respect to the individual from the method 
        of payment to the State agency with respect to the 
        individual in effect immediately before such election 
        (or revocation).
          (3) Effect of participation by state agency.--
                  (A) State agencies participating.--In any 
                case in which a State agency described in 
                paragraph (1) elects under paragraph (1) to 
                participate in the Program--
                          (i) the employment services, 
                        vocational rehabilitation services, and 
                        other support services which, upon 
                        assignment of tickets to work and self-
                        sufficiency, are provided to disabled 
                        beneficiaries by the State agency 
                        acting as an employment network shall 
                        be governed by plans for vocational 
                        rehabilitation services approved under 
                        title I of the Rehabilitation Act of 
                        1973, and
                          (ii) the provisions of section 222(d) 
                        and the provisions of subsections (d) 
                        and (e) of section 1615 shall not apply 
                        with respect to such State.
                  (B) State agencies administering maternal and 
                child health services programs.--Subparagraph 
                (A) shall not apply with respect to any State 
                agency administering a program under title V of 
                this Act.
          (4) Special requirements applicable to cross-referral 
        to certain state agencies.--
                  (A) In general.--In any case in which an 
                employment network has been assigned a ticket 
                to work and self-sufficiency by a disabled 
                beneficiary, no State agency shall be deemed 
                required, under this section, title I of the 
                Rehabilitation Act of 1973, or a State plan 
                approved under such title, to accept any 
                referral of such disabled beneficiary from such 
                employment network unless such employment 
                network and such State agency have entered into 
                a written agreement that meets the requirements 
                of subparagraph (B).
                  (B) Terms of agreement.--An agreement 
                required by subparagraph (A) shall specify, in 
                accordance with regulations prescribed pursuant 
                to subparagraph (C)--
                          (i) the extent (if any) to which the 
                        employment network holding the ticket 
                        will provide to the State agency--
                                  (I) reimbursement for costs 
                                incurred in providing services 
                                described in subparagraph (A) 
                                to the disabled beneficiary, 
                                and
                                  (II) other amounts from 
                                payments made by the 
                                Commissioner to the employment 
                                network pursuant to subsection 
                                (h), and
                          (ii) any other conditions that may be 
                        required by such regulations.
                  (C) Regulations.--The Commissioner of Social 
                Security and the Secretary of Education shall 
                jointly prescribe regulations specifying the 
                terms of agreements required by subparagraph 
                (A) and otherwise necessary to carry out the 
                provisions of this paragraph.
                  (D) Penalty.--No payment may be made to an 
                employment network pursuant to subsection (h) 
                in connection with services provided to any 
                disabled beneficiary if such employment network 
                makes referrals described in subparagraph (A) 
                in violation of the terms of the contract 
                required under subparagraph (A) or without 
                having entered into such a contract.
  (d) Responsibilities of the Commissioner of Social 
Security.--
          (1) Selection and qualifications of program 
        managers.--The Commissioner of Social Security shall 
        enter into agreements with one or more organizations in 
        the private or public sector for service as a program 
        manager to assist the Commissioner in administering the 
        Program. Any such program manager shall be selected by 
        means of a competitive bidding process, from among 
        organizations in the private or public sector with 
        available expertise and experience in the field of 
        vocational rehabilitation or employment services.
          (2) Tenure, renewal, and early termination.--Each 
        agreement entered into under paragraph (1) shall 
        provide for early termination upon failure to meet 
        performance standards which shall be specified in the 
        agreement and which shall be weighted to take into 
        account any performance in prior terms. Such 
        performance standards shall include (but are not 
        limited to)--
                  (A) measures for ease of access by 
                beneficiaries to services, and
                  (B) measures for determining the extent to 
                which failures in obtaining services for 
                beneficiaries fall within acceptable 
                parameters, as determined by the Commissioner.
          (3) Preclusion from direct participation in delivery 
        of services in own service area.--Agreements under 
        paragraph (1) shall preclude--
                  (A) direct participation by a program manager 
                in the delivery of employment services, 
                vocational rehabilitation services, or other 
                support services to beneficiaries in the 
                service area covered by the program manager's 
                agreement, and
                  (B) the holding by a program manager of a 
                financial interest in an employment network or 
                service provider which provides services in a 
                geographic area covered under the program 
                manager's agreement.
          (4) Selection of employment networks.--The 
        Commissioner shall select and enter into agreements 
        with employment networks for service under the Program. 
        Such employment networks shall be in addition to State 
        agencies serving as employment networks pursuant to 
        elections under subsection (c).
          (5) Termination of agreements with employment 
        networks.--The Commissioner shall terminate agreements 
        with employment networks for inadequate performance, as 
        determined by the Commissioner.
          (6) Quality assurance.--The Commissioner shall 
        provide for such periodic reviews as are necessary to 
        provide for effective quality assurance in the 
        provision of services by employment networks. The 
        Commissioner shall take into account the views of 
        consumers and the program manager under which the 
        employment networks serve and shall consult with 
        providers of services to develop performance 
        measurements. The Commissioner shall ensure that the 
        results of the periodic reviews are made available to 
        beneficiaries who are prospective service recipients as 
        they select employment networks. The Commissioner shall 
        ensure the performance of periodic surveys of 
        beneficiaries receiving services under the Program 
        designed to measure customer service satisfaction.
          (7) Dispute resolution.--The Commissioner shall 
        provide for a mechanism for resolving disputes between 
        beneficiaries and employment networks and between 
        program managers and employment networks. The 
        Commissioner shall afford a party to such a dispute a 
        reasonable opportunity for a full and fair review of 
        the matter in dispute.
  (e) Program Managers.--
          (1) In general.--A program manager shall conduct 
        tasks appropriate to assist the Commissioner in 
        carrying out the Commissioner's duties in administering 
        the Program.
          (2) Recruitment of employment networks.--A program 
        manager shall recruit, and recommend for selection by 
        the Commissioner, employment networks for service under 
        the Program. The program manager shall carry out such 
        recruitment and provide such recommendations, and shall 
        monitor all employment networks serving in the Program 
        in the geographic area covered under the program 
        manager's agreement, to the extent necessary and 
        appropriate to ensure that adequate choices of services 
        are made available to beneficiaries. Employment 
        networks may serve under the Program only pursuant to 
        an agreement entered into with the Commissioner under 
        the Program incorporating the applicable provisions of 
        this section and regulations thereunder, and the 
        program manager shall provide and maintain assurances 
        to the Commissioner that payment by the Commissioner to 
        employment networks pursuant to this section is 
        warranted based on compliance by such employment 
        networks with the terms of such agreement and this 
        section. The program manager shall not impose numerical 
        limits on thenumber of employment networks to be 
recommended pursuant to this paragraph.
          (3) Facilitation of access by beneficiaries to 
        employment networks.--A program manager shall 
        facilitate access by beneficiaries to employment 
        networks. The program manager shall ensure that each 
        beneficiary is allowed changes in employment networks 
        for good cause, as determined by the Commissioner, 
        without being deemed to have rejected services under 
        the Program. The program manager shall establish and 
        maintain lists of employment networks available to 
        beneficiaries and shall make such lists generally 
        available to the public. The program manager shall 
        ensure that all information provided to disabled 
        beneficiaries pursuant to this paragraph is provided in 
        accessible format.
          (4) Ensuring availability of adequate services.--The 
        program manager shall ensure that employment services, 
        vocational rehabilitation services, and other support 
        services are provided to beneficiaries throughout the 
        geographic area covered under the program manager's 
        agreement, including rural areas.
          (5) Reasonable access to services.--The program 
        manager shall take such measures as are necessary to 
        ensure that sufficient employment networks are 
        available and that each beneficiary receiving services 
        under the Program has reasonable access to employment 
        services, vocational rehabilitation services, and other 
        support services. Such services may include case 
        management, benefits counseling, supported employment, 
        career planning, career plan development, vocational 
        assessment, job training, placement, follow-up 
        services, and such other services as may be specified 
        by the Commissioner under the Program. The program 
        manager shall ensure that such services are 
        coordinated.
  (f) Employment Networks.--
          (1) Qualifications for employment networks.--Each 
        employment network serving under the Program shall 
        consist of an agency or instrumentality of a State (or 
        a political subdivision thereof) or a private entity, 
        which assumes responsibility for the coordination and 
        delivery of services under the Program to individuals 
        assigning to the employment network tickets to work and 
        self-sufficiency issued under subsection (b). No 
        employment network may serve under the Program unless 
        it demonstrates to the Commissioner substantial 
        expertise and experience in the field of employment 
        services, vocational rehabilitation services, or other 
        support services for individuals with disabilities and 
        provides an array of such services. An employment 
        network shall consist of either a single provider of 
        such services or of an association of such providers 
        organized so as to combine their resources into a 
        single entity. An employment network may meet the 
        requirements of subsection (e)(4) by providing services 
        directly, or by entering into agreements with other 
        individuals or entities providing appropriate 
        employment services, vocational rehabilitation 
        services, or other support services.
          (2) Requirements relating to provision of services.--
        Each employment network serving under the Program shall 
        be required under the terms of its agreement with the 
        Commissioner to--
                  (A) serve prescribed service areas,
                  (B) meet, and maintain compliance with, both 
                general selection criteria (such as 
                professional and governmental certification and 
                educational credentials) and specific selection 
                criteria (such as the extent of work experience 
                by the provider with specific populations), and
                  (C) take such measures as are necessary to 
                ensure that employment services, vocational 
                rehabilitation services, and other support 
                services provided under the Program by, or 
                under agreements entered into with, the 
                employment network are provided under 
                appropriate individual work plans meeting the 
                requirements of subsection (g).
          (3) Annual financial reporting.--Each employment 
        network shall meet financial reporting requirements as 
        prescribed by the Commissioner.
          (4) Periodic outcomes reporting.--Each employment 
        network shall prepare periodic reports, on at least an 
        annual basis, itemizing for the covered period specific 
        outcomes achieved with respect to specific services 
        provided by the employment network. Such reports shall 
        conform to a national model prescribed under this 
        section. Each employment network shall provide a copy 
        of the latest report issued by the employment network 
        pursuant to this paragraph to each beneficiary upon 
        enrollment under the Program for services to be 
        received through such employment network. Upon issuance 
        of each report to each beneficiary, a copy of the 
        report shall be maintained in the files of the 
        employment network pertaining to the beneficiary. The 
        program manager shall ensure that copies of all such 
        reports issued under this paragraph are made available 
        to the public under reasonable terms.
  (g) Individual Work Plans.--
          (1) In general.--Each employment network shall--
                  (A) take such measures as are necessary to 
                ensure that employment services, vocational 
                rehabilitation services, and other support 
                services provided under the Program by, or 
                under agreements entered into with, the 
                employment network are provided under 
                appropriate individual work plans as defined by 
                the Commissioner, and
                  (B) develop and implement each such 
                individual work plan, in the case of each 
                beneficiary receiving such services, in a 
                manner that affords such beneficiary the 
                opportunity to exercise informed choice in 
                selecting an employment goal and specific 
                services needed to achieve that employment 
                goal.
        A beneficiary's individual work plan shall take effect 
        upon approval by the beneficiary.
          (2) Vocational evaluation.--In devising the work 
        plan, the employment network shall undertake a 
        vocational evaluation with respect to the beneficiary. 
        Each vocational evaluation shall set forth in writing 
        such elements and shall be in such format as the 
        Commissioner shall prescribe. The Commissioner may 
        provide for waiver by the beneficiary of such a 
        vocationalevaluation, subject to regulations which 
shall be prescribed by the Commissioner providing for the permissible 
timing of, and the circumstances permitting, such a waiver.
  (h) Employment Network Payment Systems.--
          (1) Election of payment system by employment 
        networks.--
                  (A) In general.--The Program shall provide 
                for payment authorized by the Commissioner to 
                employment networks under either an outcome 
                payment system or an outcome-milestone payment 
                system. Each employment network shall elect 
                which payment system will be utilized by the 
                employment network, and, for such period of 
                time as such election remains in effect, the 
                payment system so elected shall be utilized 
                exclusively in connection with such employment 
                network (except as provided in subparagraph 
                (B)).
                  (B) Method of payment to employment 
                networks.--Any such election by an employment 
                network taking effect during any period for 
                which a disabled beneficiary is receiving 
                services from such employment network shall not 
                be effective with respect to such beneficiary 
                to the extent that such election would result 
                in any change in the method of payment to the 
                employment network with respect to services 
                provided to such beneficiary from the method of 
                payment to the employment network with respect 
                to services provided to such beneficiary as of 
                immediately before such election.
          (2) Outcome payment system.--
                  (A) In general.--The outcome payment system 
                shall consist of a payment structure governing 
                employment networks electing such system under 
                paragraph (1)(A) which meets the requirements 
                of this paragraph.
                  (B) Payments made during outcome payment 
                period.--The outcome payment system shall 
                provide for a schedule of payments to an 
                employment network, in connection with each 
                individual who is a beneficiary, for each 
                month, during the individual's outcome payment 
                period, for which benefits (described in 
                paragraphs (2) and (3) of subsection (k)) are 
                not payable to such individual.
                  (C) Computation of payments to employment 
                network.--The payment schedule of the outcome 
                payment system shall be designed so that--
                          (i) the payment for each of the 60 
                        months during the outcome payment 
                        period for which benefits (described in 
                        paragraphs (2) and (3) of subsection 
                        (k)) are not payable is equal to a 
                        fixed percentage of the payment 
                        calculation base for the calendar year 
                        in which such month occurs, and
                          (ii) such fixed percentage is set at 
                        a percentage which does not exceed 40 
                        percent.
          (3) Outcome-milestone payment system.--
                  (A) In general.--The outcome-milestone 
                payment system shall consist of a payment 
                structure governing employment networks 
                electing such system under paragraph (1)(A) 
                which meets the requirements of this paragraph.
                  (B) Early payments upon attainment of 
                milestones in advance of outcome payment 
                periods.--The outcome-milestone payment system 
                shall provide for one or more milestones, with 
                respect to beneficiaries receiving services 
                from an employment network under the Program, 
                which are directed toward the goal of permanent 
                employment. Such milestones shall form a part 
                of a payment structure which provides, in 
                addition to payments made during outcome 
                payment periods, payments made prior to outcome 
                payment periods in amounts based on the 
                attainment of such milestones.
                  (C) Limitation on total payments to 
                employment network.--The payment schedule of 
                the outcome milestone payment system shall be 
                designed so that the total of the payments to 
                the employment network with respect to each 
                beneficiary is less than, on a net present 
                value basis (using an interest rate determined 
                by the Commissioner that appropriately reflects 
                the cost of funds faced by providers), the 
                total amount to which payments to the 
                employment network with respect to the 
                beneficiary would be limited if the employment 
                network were paid under the outcome payment 
                system.
          (4) Definitions.--For purposes of this subsection--
                  (A) Payment calculation base.--The term 
                ``payment calculation base'' means, for any 
                calendar year--
                          (i) in connection with a title II 
                        disability beneficiary, the average 
                        disability insurance benefit payable 
                        under section 223 for all beneficiaries 
                        for months during the preceding 
                        calendar year, and
                          (ii) in connection with a title XVI 
                        disability beneficiary (who is not 
                        concurrently a title II disability 
                        beneficiary), the average payment of 
                        supplemental security income benefits 
                        based on disability payable under title 
                        XVI (excluding State supplementation) 
                        for months during the preceding 
                        calendar year to all beneficiaries who 
                        have attained at least 18 years of age.
                  (B) Outcome payment period.--The term 
                ``outcome payment period'' means, in connection 
                with any individual who had assigned a ticket 
                to work and self-sufficiency to an employment 
                network under the Program, a period--
                          (i) beginning with the first month, 
                        ending after the date on which such 
                        ticket was assigned to the employment 
                        network, for which benefits (described 
                        in paragraphs (2) and (3) of subsection 
                        (k)) are not payable to such individual 
                        by reason of engagement in work 
                        activity, and
                          (ii) ending with the 60th month 
                        (consecutive or otherwise), ending 
                        after such date, for which such 
                        benefits are not payable to such 
                        individual by reason of engagement in 
                        work activity.
          (5) Periodic review and alterations of prescribed 
        schedules.--
                  (A) Percentages and periods.--The 
                Commissioner of Social Security shall 
                periodically review the percentagespecified in 
paragraph (2)(C), the total payments permissible under paragraph 
(3)(C), and the period of time specified in paragraph (4)(B) to 
determine whether such percentages, such permissible payments, and such 
period provide an adequate incentive for employment networks to assist 
beneficiaries to enter the workforce, while providing for appropriate 
economies. The Commissioner may alter such percentage, such total 
permissible payments, or such period of time to the extent that the 
Commissioner determines, on the basis of the Commissioner's review 
under this paragraph, that such an alteration would better provide the 
incentive and economies described in the preceding sentence.
                  (B) Number and amount of milestone 
                payments.--The Commissioner shall periodically 
                review the number and amounts of milestone 
                payments established by the Commissioner 
                pursuant to this section to determine whether 
                they provide an adequate incentive for 
                employment networks to assist beneficiaries to 
                enter the workforce, taking into account 
                information provided to the Commissioner by 
                program managers, the Ticket to Work and Self-
                Sufficiency Advisory Panel, and other reliable 
                sources. The Commissioner may from time to time 
                alter the number and amounts of milestone 
                payments initially established by the 
                Commissioner pursuant to this section to the 
                extent that the Commissioner determines that 
                such an alteration would allow an adequate 
                incentive for employment networks to assist 
                beneficiaries to enter the workforce. Such 
                alteration shall be based on information 
                provided to the Commissioner by program 
                managers, the Ticket to Work and Self-
                Sufficiency Advisory Panel, or other reliable 
                sources.
  (i) Suspension of Disability Reviews.--During any period for 
which an individual is using a ticket to work and self-
sufficiency issued under this section, the Commissioner (and 
any applicable State agency) may not initiate a continuing 
disability review or other review under section 221 of whether 
the individual is or is not under a disability or a review 
under title XVI similar to any such review under section 221.
  (j) Authorizations.--
          (1) Title ii disability beneficiaries.--There are 
        authorized to be transferred from the Federal Old-Age 
        and Survivors Insurance Trust Fund and the Federal 
        Disability Insurance Trust Fund each fiscal year such 
        sums as may be necessary to carry out the provisions of 
        this section with respect to title II disability 
        beneficiaries. Money paid from the Trust Funds under 
        this section with respect to title II disability 
        beneficiaries who are entitled to benefits under 
        section 223 or who are entitled to benefits under 
        section 202(d) on the basis of the wages and self-
        employment income of such beneficiaries, shall be 
        charged to the Federal Disability Insurance Trust Fund, 
        and all other money paid from the Trust Funds under 
        this section shall be charged to the Federal Old-Age 
        and Survivors Insurance Trust Fund. The Commissioner of 
        Social Security shall determine according to such 
        methods and procedures as shall be prescribed under 
        this section--
                  (A) the total amount to be paid to program 
                managers and employment networks under this 
                section, and
                  (B) subject to the provisions of the 
                preceding sentence, the amount which should be 
                charged to each of the Trust Funds.
          (2) Title xvi disability beneficiaries.--Amounts 
        authorized to be appropriated to the Social Security 
        Administration under section 1601 (as in effect 
        pursuant to the amendments made by section 301 of the 
        Social Security Amendments of 1972) shall include 
        amounts necessary to carry out the provisions of this 
        section with respect to title XVI disability 
        beneficiaries.
  (k) Definitions.--For purposes of this section--
          (1) Disabled beneficiary.--The term ``disabled 
        beneficiary'' means a title II disability beneficiary 
        or a title XVI disability beneficiary.
          (2) Title ii disability beneficiary.--The term 
        ``title II disability beneficiary'' means an individual 
        entitled to disability insurance benefits under section 
        223 or to monthly insurance benefits under section 202 
        based on such individual's disability (as defined in 
        section 223(d)). An individual is a title II disability 
        beneficiary for each month for which such individual is 
        entitled to such benefits.
          (3) Title xvi disability beneficiary.--The term 
        ``title XVI disability beneficiary'' means an 
        individual eligible for supplemental security income 
        benefits under title XVI on the basis of blindness 
        (within the meaning of section 1614(a)(2)) or 
        disability (within the meaning of section 1614(a)(3)). 
        An individual is a title XVI disability beneficiary for 
        each month for which such individual is eligible for 
        such benefits.
          (4) Supplemental security income benefit.--The term 
        ``supplemental security income benefit under title 
        XVI'' means a cash benefit under section 1611 or 
        1619(a), and does not include a State supplementary 
        payment, administered federally or otherwise.
  (l) Regulations.--The Commissioner of Social Security shall 
prescribe such regulations as are necessary to carry out the 
provisions of this section.

           *       *       *       *       *       *       *


   TITLE XVI--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND 
DISABLED

           *       *       *       *       *       *       *


                   Part A--Determination of Benefits

                 eligibility for and amount of benefits

                   Definition of Eligible Individual

  Sec. 1611. (a) * * *

           *       *       *       *       *       *       *

  (e)(1)(A) Except as provided in subparagraphs (B), (C), (D), 
(E), and (G), no person shall be an eligible individual or 
eligible spousefor purposes of this title with respect to any 
month if throughout such month he is an inmate of a public institution.

           *       *       *       *       *       *       *

  (I)(i) The Commissioner shall enter into an agreement, with 
any interested State or local [institution described in clause 
(i) or (ii) of section 202(x)(1)(A) the primary purpose of 
which is to confine individuals as described in section 
202(x)(1)(A),] institution comprising a jail, prison, penal 
institution, or correctional facility, or with any other 
interested State or local institution a purpose of which is to 
confine individuals as described in section 202(x)(1)(A)(ii), 
under which--
          (I) the institution shall provide to the 
        Commissioner, on a monthly basis and in a manner 
        specified by the Commissioner, the names, social 
        security account numbers, dates of birth, confinement 
        commencement dates, and, to the extent available to the 
        institution, such other identifying information 
        concerning the inmates of the institution as the 
        Commissioner may require for the purpose of carrying 
        out this paragraph; and
          (II) the Commissioner shall pay to any such 
        institution, with respect to each individual who 
        receives in the month preceding the first month 
        throughout which such individual is an inmate of the 
        jail, prison, penal institution, or correctional 
        facility that furnishes information respecting such 
        individual pursuant to subclause (I), or is confined in 
        the institution (that so furnishes such information) as 
        described in section 202(x)(1)(A)(ii), a benefit under 
        this title for such preceding month, and who is 
        determined by the Commissioner to be ineligible for 
        benefits under this title by reason of confinement 
        based on the information provided by such institution, 
        $400 (subject to reduction under clause (ii)) if the 
        institution furnishes the information described in 
        subclause (I) to the Commissioner within 30 days after 
        the date such individual becomes an inmate of such 
        institution, or $200 (subject to reduction under clause 
        (ii)) if the institution furnishes such information 
        after 30 days after such date but within 90 days after 
        such date.
  (ii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to 
make a payment to the institution with respect to the same 
individual under an agreement entered into under section 
202(x)(3)(B).
  [(ii)] (iii)(I) The provisions of section 552a of title 5, 
United States Code, shall not apply to any agreement entered 
into under clause (i) or to information exchanged pursuant to 
such agreement.
  (II) The Commissioner is authorized to provide, on a 
reimbursable basis, information obtained pursuant to agreements 
entered into under clause (i) to any Federal or federally-
assisted cash, food, or medical assistance program for 
eligibility purposes.
  [(iii)] (iv) Payments to institutions required by clause 
(i)(II) shall be made from funds otherwise available for the 
payment of benefits under this title and shall be treated as 
direct spending forpurposes of the Balanced Budget and 
Emergency Deficit Control Act of 1985.

           *       *       *       *       *       *       *


       REHABILITATION SERVICES FOR BLIND AND DISABLED INDIVIDUALS

  [Sec. 1615. (a) In the case of any blind or disabled 
individual who--
          [(1) has not attained age 65, and
          [(2) is receiving benefits (or with respect to whom 
        benefits are paid) under this title,
the Commissioner of Social Security shall make provision for 
referral of such individual to the appropriate State agency 
administering the State plan for vocational rehabilitation 
services approved under title I of the Rehabilitation Act of 
1973, or, in the case of any such individual who has not 
attained age 16, to the State agency administering the State 
program under title V, and (except for individuals who have not 
attained age 16 and except in such other cases as the 
Commissioner may determine) for a review not less often than 
quarterly of such individual's blindness or disability and his 
need for and utilization of the services made available to him 
under such plan.]
  Sec. 1615. (a) In the case of any blind or disabled 
individual who--
          (1) has not attained age 16, and
          (2) with respect to whom benefits are paid under this 
        title,
the Commissioner of Social Security shall make provision for 
referral of such individual to the appropriate State agency 
administering the State program under title V.

           *       *       *       *       *       *       *

  [(c) Every individual age 16 or over with respect to whom the 
Commissioner of Social Security is required to make provision 
for referral under subsection (a) shall accept such services as 
are made available to him under the State plan for vocational 
and rehabilitation services approved under title I of the 
Rehabilitation Act of 1973; and no such individual shall be an 
eligible individual or eligible spouse for purposes of this 
title if he refuses without good cause to accept services for 
which the Commissioner is referred under subsection (a).]

           *       *       *       *       *       *       *


               Part B--Procedural and General Provisions

                        PAYMENTS AND PROCEDURES

                          Payment of Benefits

  Sec. 1631. (a)(1) * * *

           *       *       *       *       *       *       *

  (6) Notwithstanding any other provision of this title, 
payment of the benefit of any individual who is an aged, blind, 
or disabled individual solely by reason of blindness (as 
determined under section 1614(a)(2)) or disability (as 
determined under section 1614(a)(3)) shall not be terminated or 
suspended because the blindness or other physical or mental 
impairment, on which the individual's eligibility for such 
benefit is based, has or may have ceased, if--
          (A) such individual is participating in [a program of 
        vocational rehabilitation services] a program 
        consisting of the Ticket to Work and Self-Sufficiency 
        Program under section 1147 or another program of 
        vocational rehabilitation services, employment 
        services, or other support services approved by the 
        Commissioner of Social Security, and,

           *       *       *       *       *       *       *


                             administration

  Sec. 1633. (a) * * *

           *       *       *       *       *       *       *

  (c)(1) In any case in which the Commissioner of Social 
Security initiates a review under this title, similar to the 
continuing disability reviews authorized for purposes of title 
II under section 221(i), the Commissioner of Social Security 
shall notify the individual whose case is to be reviewed in the 
same manner as required under section 221(i)(4).
  (2) For suspension of continuing disability reviews and other 
reviews under this title similar to reviews under section 221 
in the case of an individual using a ticket to work and self-
sufficiency, see section 1147(i).

           *       *       *       *       *       *       *

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    SECTION 105 OF THE CONTRACT WITH AMERICA ADVANCEMENT ACT OF 1996

SEC. 105. DENIAL OF DISABILITY BENEFITS TO DRUG ADDICTS AND ALCOHOLICS.

  (a) Amendments Relating to Title II Disability Benefits.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Effective dates.--
                  (A) The amendments made by paragraphs (1) and 
                (4) shall apply to any individual who applies 
                for, or whose claim is finally adjudicated [by 
                the Commissioner of Social Security] with 
                respect to, benefits under title II of the 
                Social Security Act based on disability on or 
                after the date of the enactment of this Act, 
                and, in the case of any individual who has 
                applied for, and whose claim has been finally 
                adjudicated [by the Commissioner] with respect 
                to, such benefits before such date of 
                enactment, such amendments shall apply only 
                with respect to such benefits for months 
                beginning on or after January 1, 1997.
                  [(B) The amendments made by paragraphs (2) 
                and (3) shall apply with respect to benefits 
                for which applications are filed after the 
                third month following the month in which this 
                Act is enacted.]
                  (B) The amendments made by paragraphs (2) and 
                (3) shall take effect on July 1, 1996, with 
                respect to any individual--
                          (i) whose claim for benefits is 
                        finally adjudicated on or after the 
                        date of the enactment of this Act, or
                          (ii) whose entitlement to benefits is 
                        based upon an entitlement 
                        redetermination made pursuant to 
                        subparagraph (C).

           *       *       *       *       *       *       *

                  (D) For purposes of this paragraph, an 
                individual's claim, with respect to benefits 
                under title II of the Social Security Act based 
                on disability, which has been denied in whole 
                before the date of the enactment of this Act, 
                may not be considered to be finally adjudicated 
                before such date if, on or after such date--
                          (i) there is pending a request for 
                        either administrative or judicial 
                        review with respect to such claim, or
                          (ii) there is pending, with respect 
                        to such claim, a readjudication by the 
                        Commissioner of Social Security 
                        pursuant to relief in a class action or 
                        implementation by the Commissioner of a 
                        court remand order.
                  (E) Notwithstanding the provisions of this 
                paragraph, with respect to any individual for 
                whom the Commissioner of Social Security does 
                not perform the entitlement redetermination 
                before the date prescribed in subparagraph (C), 
                the Commissioner shall perform such entitlement 
                redetermination in lieu of a continuing 
                disability review whenever the Commissioner 
                determines that the individual's entitlement is 
                subject to redetermination based on the 
                preceding provisions of this paragraph, and the 
                provisions of section 223(f) of the Social 
                Security Act shall not apply to such 
                redetermination.

           *       *       *       *       *       *       *

                              ----------                              


    SECTION 505 OF THE SOCIAL SECURITY DISABILITY AMENDMENTS OF 1980

                  authority for demonstration projects

  Sec. 505. (a)(1) The Commissioner of Social Security shall 
develop and carry out experiments and demonstration projects 
designed to determine the relative advantages and disadvantages 
of (A) various alternative methods of treating the work 
activity of disabled beneficiaries under the old-age, 
survivors, and disability insurance program, including such 
methods as a reduction in benefits based on earnings, designed 
to encourage the return to work of disabled beneficiaries and 
(B) altering other limitations and conditions applicable to 
such disabled beneficiaries (including, but not limited to, 
lengthening the trial work period, altering the 24-month 
waiting period for medicare benefits, altering the manner in 
which such program is administered, earlier referral of 
beneficiaries for rehabilitation, and greater use of employers 
and others to develop, perform, and otherwise stimulate new 
forms of rehabilitation), to the end that savings will accrue 
to the Trust Funds, or to otherwise promote the objectives or 
facilitate the administration of title II of the Social 
Security Act. The Commissioner may expand the scope of any such 
demonstration project to include any group of applicants for 
benefits under such program with impairments which may 
reasonably be presumed to be disabling for purposes of such 
demonstration project, and may limit any such demonstration 
project to any such group of applicants, subject to the terms 
of such demonstration project which shall define the extent of 
any such presumption.

           *       *       *       *       *       *       *

  (3) In the case of any experiment or demonstration project 
under paragraph (1) which is initiated before June 10, [1996] 
2001, the Commissioner may waive compliance with the benefit 
requirements of title II of the Social Security Act, and the 
Secretary of Health and Human Services may (upon the request of 
the Commissioner) waive compliance with the benefits 
requirements of title XVIII of such Act, insofar as is 
necessary for a thorough evaluation of the alternative methods 
under consideration. No such experiment or project shall be 
actually placed in operation unless at least ninety days prior 
thereto a written report, prepared for purposes of notification 
and information only and containing a full and complete 
description thereof, has been transmitted by the Commissioner 
to the Committee on Ways and Means of the House of 
Representatives and to the Committee on Finance of the Senate. 
Periodic reports on the progress of such experiments and 
demonstration projects shall be submitted by the Commissioner 
to such committees. When appropriate, such reports shall 
include detailed recommendations for changes in administration 
or law, or both, to carry out the objectives stated in 
paragraph (1).
  (4) On or before June 9 in 1986 and each of the succeeding 
years through 1995, and on or before October 1, 2000, the 
Commissioner shall submit to the Congress an interim report on 
the progress of the experiments and demonstration projects 
carried out under this subsection together with any related 
data and materials which the Commissioner may consider 
appropriate.

           *       *       *       *       *       *       *

  (c) The Secretary shall submit to the Congress a final report 
with respect to all experiments and demonstration projects 
carried out under this section (other than demonstration 
projects conducted under section 5120 of the Omnibus Budget 
Reconciliation of 1990) no later than October 1, [1996] 2001.

           *       *       *       *       *       *       *