This is the accessible text file for GAO report number GAO-07-332 
entitled 'Vocational Rehabilitation: Earnings Increased for Many SSA 
Beneficiaries after Completing VR Services, but Few earned Enough to 
Leave SSA's Disability Rolls' which was released on March 30, 2007. 

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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

March 2007: 

Vocational Rehabilitation: 

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

GAO-07-332: 

Contents: 

Letter: 

Background: 

Summary: 

Observations from Phase One and Next Steps: 

Appendix I: Briefing Slides: 

Appendix II: Scope and Methodology: 

Appendix III: Comments from the Department of Education: 

Appendix IV: Comments from the Social Security Administration: 

Appendix V: GAO Contacts and Staff Acknowledgments: 

Figure: 

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

Abbreviations: 

DCF: Disability Control File: 

DI: Disability Insurance: 

MEF: Master Earnings File: 

MBR: Master Beneficiary Record: 

SGA: Substantial Gainful Activity: 

SSA: Social Security Administration: 

SSI: Supplemental Security Income: 

SSR: Supplemental Security Record: 

TRF: Ticket Research File: 

VR: Vocational Rehabilitation: 

United States Government Accountability Office: 
Washington, DC 20548: 

March 30, 2007: 

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

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

The Honorable Sander M. Levin: 
House of Representatives: 

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

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

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

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

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

Background: 

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

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

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

Summary: 

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

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

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

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

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

Observations from Phase One and Next Steps: 

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

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

We received written comments on a draft of this report from Education, 
which oversees the VR program, and SSA, which manages some of the data 
we used in this report for purposes of evaluating its Ticket to Work 
efforts. In its response, Education, while acknowledging the 
limitations of the report, said our findings were consistent with its 
data regarding earnings of SSA beneficiaries upon closure from VR. See 
appendix III for Education's complete comments. 

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

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

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

Signed by: 

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

[End of section] 

Appendix I: Briefing Slides: 

Vocational Rehabilitation: 

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

Briefing to Congressional Staff* 
February 2, 2007: 

* The briefing slides were subsequently updated to reflect comments 
that SSA provided on our draft report. See appendix IV for SSA's 
comments and our response. 

Introduction: 

Significant Challenges for Disability Beneficiaries to Participating in 
the Workforce: 

In 2005, about 10 million* working-age people were receiving Social 
Security Administration (SSA) disability benefits. Some disability 
beneficiaries may never work because of the severity of their 
disability. Those who do work may still face additional challenges in 
leaving the disability rolls: 

potential loss of health insurance coverage, 

lack of access to technologies that could increase their work 
potential, 

transportation difficulties, or: 

other potential barriers, such as tight labor markets. 

According to SSA, historically, very few disability beneficiaries have 
left the rolls because they increased their earnings through work. In 
1999, the Ticket to Work Act was passed to reduce the disincentives for 
SSA beneficiaries to return to work. 

*As of December 2005. 

A Small Percentage of Disability Beneficiaries Use VR Services: 

The Department of Education funds state Vocational Rehabilitation (VR) 
agencies that provide an array of services to people with disabilities. 

Although a very small percentage of all SSA disability beneficiaries 
choose to participate in the VR program, over 25% who completed VR were 
SSA beneficiaries, according to Education's data.*  

In an earlier study, we reported that some disability beneficiaries who 
have participated in the workforce indicated that vocational 
rehabilitation played a role in their ability to return to work. 

* From 2002 through 2005, SSA disability beneficiaries increased from a 
quarter to over one-third of the population who completed VR. 

Study Objectives: 

Examine Employment Outcomes for Disability Beneficiaries Who Have 
Completed VR: 

Phase One: 

Today's briefing is on the extent to which disability beneficiaries who 
completed VR once in fiscal years 2000 through 2003 subsequently earned 
income at the substantial gainful activity (SGA) level* and ultimately 
reduced or replaced their benefits with earned income in one or more 
years after VR. 

Phase Two of our study, to be completed in May 2007, will examine: 

whether there are certain disability beneficiary characteristics 
associated with positive employment outcomes, and: 

whether some VR agencies have particular policies and approaches that 
can be associated with positive employment outcomes. 

* Individuals are considered to be engaged in substantial gainful 
activity if they have earnings above a certain amount (after the 
reduction of impairment-related work expenses). 

Scope and Methods: 

Scope and Methods for Phase One: 

Obtained disability beneficiary information from SSA on: 

those who completed the VR program from 1998 through 2004, 

their benefit amounts from 1994 through 2004, and: 

their annual posted earnings from 1990 through 2004. 

Computed for the fiscal year 2000 to 2003 exit cohorts in the calendar 
year following VR completion and over time*: 

the number of beneficiaries with earnings through 2004, 

the amounts they earned through 2004, and: 

whether their benefits were eventually reduced (through 2004) or 
discontinued due to earnings (for the 2000 and 2001 exit cohorts 
through 2005). 

We determined the data critical to our analyses were sufficiently 
reliable for our use and conducted our work in accordance with 
generally accepted government auditing standards. See appendix II for 
details on scope and methods. 

* Our cohorts included only beneficiaries who exited VR with services 
once during the timeframe of our study. 

Limitations: 

Study Limitations: 

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

Due to data limitations, we used annual instead of monthly earnings 
data for both DI and SSI beneficiaries, which restricted our ability to 
evaluate earnings one year after VR and relative to SGA. 

We may have under-or overestimated beneficiaries' annual earnings, 
earnings changes, and earnings when leaving the rolls due to work 
because our data did not include earnings from sources not covered by 
Social Security (e.g., earnings from state governments), and included 
some earnings unrelated to employment. 

DI benefit reductions are likely underestimates because they did not 
include benefit reductions for dependents. 

We were unable to estimate SSI benefit reductions due to work because, 
unlike DI benefits, SSI benefits may be affected by changes in unearned 
income and assets, and data limitations prevented us from isolating SSI 
benefit changes due solely to changes in earned income. 

See appendix II for a detailed discussion of our study limitations. 

Summary: 

Phase One Findings for the 2000 to 2003 Exit Cohorts: 

1) Beneficiaries' earnings outcomes were mixed in the 1 to 4 years 
following VR completion. 

2) 88% of beneficiaries' annual earnings remained below annualized SGA 
in the year after VR. 

3) Some earned enough income to have their benefits reduced in the year 
after VR, resulting in decreased DI and SSI program expenses: 

Disability Insurance (DI) and concurrent* beneficiaries who did not 
receive DI benefits in some months due to earnings resulted in more 
than an estimated $106 million in benefit reductions.**  

71% of Supplemental Security Income (SSI) and concurrent* beneficiaries 
who increased their earnings also had their SSI benefits reduced, but 
data limitations prevented us from determining the extent to which this 
was due to increased earnings versus some other change in their income. 

4) 2000/2001 Cohorts: By 2005, 10% of beneficiaries earned enough to 
leave the rolls, but about a quarter subsequently returned for at least 
1 month. 

* Concurrent beneficiaries receive benefits from both DI and SSI 
programs. 

** Total DI benefit reductions may be underestimated because benefit 
reductions for dependents are not included. 

Background: 

SSA Administers Two Disability Programs: 

The Social Security Administration (SSA) administers two disability 
benefit programs: Disability Insurance (DI) and Supplemental Security 
Income (SSI). 

While both use the same definition of disability, the programs serve 
somewhat different populations: 

DI - people with disabilities who generally have a qualifying work 
history*; and: 

SSI - people with disabilities who fall below certain income and 
resource thresholds and who do not have a qualifying work history. 

Some (concurrent beneficiaries) qualify for both programs: They have a 
work history, but also fall below SSI's income and resource thresholds. 

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

Each Program Has Distinct Provisions: 

Table 1: SSA Disability Program Characteristics: 

Benefit amount; 
DI: 
* Based on work history; 
* Varies by beneficiary; 
* In 2005, average federal monthly benefit was $887; 
SSI: 
* Based on low income and few resources; 
* Same federal base amount, although states may supplement; 
* In 2006, individual federal base benefit was $603 per month. 

Effect of earnings on benefits; 
DI: 
* Can earn unlimited income during a trial work period (TWP) without 
benefit reduction; 
* TWP is followed by a 36-month extended period of eligibility where 
benefits are not received (after 3-month grace period) in months with 
earnings at or above substantial gainful activity (SGA); 
* In 2006, SGA was $860 per month ($1,450 if blind); 
SSI: 
* Benefits reduced by $1 for every $2 earned over $65 per month; 
* General income exclusion of $20 first applied to unearned income. If 
no unearned income, then may be added to $65 earned income exclusion. 

When off the rolls; 
DI: 
* Earnings at or above SGA after completion of 36-month extended period 
of eligibility; 
SSI: 
* Monthly benefit suspended for 12 consecutive months. 

Source: GAO presentation of SSA information. 

Note: SSI benefits are also reduced $1 for $1 for any unearned income 
after the $20 general income exclusion. Disability beneficiaries may 
also leave the rolls when they no longer meet SSA's definition of 
disability or reach age 65 and are converted to retirement benefits. 

[End of table] 

Finding One: Earnings Outcomes Were Mixed: 

Earnings Outcomes Were Mixed 1 Year after VR: 

About 40% of the beneficiaries in our study (i.e., over 303,500 
beneficiaries who completed VR once in 2000 to 2003) increased their 
annual earnings. The percentages by beneficiary type were: 

42% of all SSI beneficiaries, 

36% of all DI beneficiaries, and: 

39% of all concurrent beneficiaries in our study. 

Of the remainder: 

32% did not have any earnings, and: 
28% had fewer earnings. 

Changes in Earnings 1 Year after VR: 

Figure 1: Changes in Disability Beneficiaries' Annual Earnings from the 
Year before VR to the Year after VR for the 2000 to 2003 Cohorts 
(N=303,529). 

[See PDF for image] 

Source: GAO analysis of SSA data. 

[A] Beneficiaries' median annual earnings in the year before VR were 
$2,830. 

[End of figure] 

The Total Percentage with Earnings Decreased 1 to 4 Years after VR 
Completion: 

Figure 2: Total Percentage of Beneficiaries with Earnings in Each Year 
after VR. 

[See PDF for image] 

Source: GAO analysis of SSA data. 

[End of figure] 

2000 Cohort: 33% Had Some Level of Earnings over a Consecutive 4-Year 
Period: 

Of the 55% (41,367) who had earnings the year after VR: 

* 42% were DI, 

* 40% were SSI, and; 

* 18% were concurrent beneficiaries. 

By 2004, the percentage of those who had earnings in each consecutive 
year was 33% - a 40% decrease. Proportionately, fewer SSI and 
concurrent beneficiaries sustained some earnings in each year. 

Figure 3: Percentage of Beneficiaries from the Fiscal Year 2000 Cohort 
Who Had Earnings for 4 Consecutive Years after VR. 

[See PDF for Image] 

Source: GAO analysis of SSA data. 

[End of figure] 

2000 Cohort: Median Earnings Fell Slightly for Those with 4 Years of 
Consecutive Earnings: 

Of the 33% (24,583) who had some level of earnings for 4 consecutive 
years after VR, their median earnings declined by 12%. 

Our data do not allow us to determine the reasons for the decrease in 
earnings (e.g., whether the beneficiaries worked fewer hours or their 
wages decreased). 

Figure 4: Median Annual Earnings for the Fiscal Year 2000 Cohort 
Beneficiaries Who Had Earnings for 4 Consecutive Years after VR 
(N=24,583). 

[See PDF for Image] 

Source: GAO analysis of SSA data. 

[End of figure] 

Finding Two: Earnings Remained Below SGA: 

88% of Beneficiaries Had Annual Earnings Below Annualized SGA 1 Year 
after VR: 

Figure 5: Percentage of Annualized SGA Earned by Beneficiaries in the 
Year after VR for the 2000 to 2003 Cohorts (N=303,528). 

[See PDF for image] 

Source: GAO analysis of SSA data. 

Note: Figure represents percentage of annualized SGA in the year after 
VR for all exit cohorts combined and includes those who did not have 
any earnings. Annualized SGA is the monthly SGA for a given year 
multiplied by 12. 

[End of figure] 

Annual Earnings after VR Do Not Provide Evidence of "Parking" 

Only a small percentage of beneficiaries from each cohort had annual 
earnings just below annualized SGA: 

In the year after VR, 5% of beneficiaries earned just below the 
annualized SGA level (see figure on previous slide).*: 

By 2004, the percentage of beneficiaries just below annualized SGA had 
decreased to 3.8% for both the 2000 and 2001 cohorts. 

However, this does not provide evidence that beneficiaries either were 
or were not "parking" - i.e., deliberately remaining just below monthly 
program income limits so as not to lose their disability benefits. 
Because monthly earnings for DI beneficiaries were not collected for 
the timeframe of our study, we used annualized earnings for both DI and 
SSI beneficiaries, thereby limiting our ability to determine the extent 
of "parking" on a monthly basis. 

* Consistent with past GAO reports, we considered annual earnings that 
were over 75% of, but less than annualized SGA, to be just below the 
annualized SGA level. 

Median Earnings Were $4,476 in the Year after VR for Those Who Had 
Earnings: 

In the year after VR, the median annual earnings for all disability 
beneficiaries from the 2000 to 2003 cohorts who had earnings (almost 
153,000 people) were $4,476 or less than half of the average annualized 
SGA of $9,618.*  

Specifically, median annual earnings by program were: 

$5,474 for DI, 

$3,757 for SSI, and: 

$3,596 for concurrent beneficiaries. 

* Median earnings and average annualized SGA are in 2004 dollars. The 
average annualized SGA is the annualized SGA averaged over the 2000 to 
2004 time period. 

2000/2001 Cohorts: Fewer Earned at or above Annualized SGA over Time: 

The percentage who had annual earnings at or above annualized SGA 
decreased slightly from 1 year after VR through 2004, as follows: 

2000 Cohort - decreased from 14.6% in 2001 to 11.8% in 2004, and: 

2001 Cohort - decreased from 12.4% in 2002 to 11.0% in 2004. 

Finding Three: Some Reduced Their Benefits: 

DI: Benefit Reductions Due to Work Totaled About $106 Million: 

Almost 9% of DI and concurrent beneficiaries in our study did not 
receive any DI benefits at some point in the year after VR due to work, 
with the majority not receiving DI benefits for over half the year. 

DI benefit reductions for DI and concurrent beneficiaries in our study 
totaled over an estimated $106 million (2004 dollars):* 

2000 cohort - over 4,700 beneficiaries had their benefits reduced by 
$30.0 million in 2001, 

2001 cohort - almost 4,600 beneficiaries had their benefits reduced by 
$29.8 million in 2002, 

2002 cohort - almost 3,700 beneficiaries had their benefits reduced by 
$22.9 million in 2003, and: 

2003 cohort - almost 3,700 beneficiaries had their benefits reduced by 
$23.8 million in 2004. 

The average annual benefit reduction across cohorts was $26.6 million. 

* This may be an underestimate as we did not include benefit reductions 
for auxiliary beneficiaries, such as a dependent child with 
disabilities. See appendix II for details. 

SSI: Benefit Reductions Due to Work Cannot Be Reliably Estimated: 

Of the 70,302 SSI and concurrent beneficiaries in our study who had 
earnings gains from the year before VR to the year after VR, almost 
50,000 (71 %) had a reduction in their SSI benefits. 

For concurrent beneficiaries (who comprised over 16,000 of the 50,000 
who had earnings gains and benefit reductions), 70% may have earned 
enough to also increase their DI benefit during the same time period. 

We were unable to reliably estimate SSI benefit reductions due to 
earnings for SSI and concurrent beneficiaries because SSI benefit 
amounts can be affected by other factors besides earnings increases 
(such as changes in unearned income, spouse's income, etc.), and, due 
to data limitations, we could not isolate the effect of beneficiaries' 
earnings increases on their benefit levels. 

Finding Four: 10% Left, but Some of These Returned: 

2000/2001 Cohorts: 10% Were Able to Leave the Rolls at Some Point 
before 2005: 

Of the beneficiaries who completed VR in 2000 or 2001 (for whom we have 
the most years of earnings data), the percentages who left the rolls by 
program were: 

16% of all SSI beneficiaries (over 9,600 people), 

9% of all DI beneficiaries (almost 5,900 people), and: 

3% of all concurrent beneficiaries (over 800 people) in our study.*  

While 3% of the concurrent beneficiaries in our study had their 
benefits from both programs discontinued, during the same time period: 

19% of concurrent beneficiaries stopped receiving only their SSI 
benefits, and: 

4% stopped receiving only their DI benefits. 

* Leaving the rolls is defined as cessation of cash disability benefits 
due to work even though the individual remains medically eligible. 
Concurrent beneficiaries were considered to have left the rolls if 
their benefits were discontinued from both programs. Those concurrent 
beneficiaries who left only DI or SSI were not included in the 
percentages who left the rolls for those specific programs. 

Differences in Program Rates of Leaving the Rolls May Be Affected by 
Several Factors: 

The fact that more SSI beneficiaries from the 2000 and 2001 cohorts 
left the rolls... 

16% of all SSI, 

9% of all DI, and: 

3% of all concurrent beneficiaries in our study left the rolls. 

...may be due to several factors, including: 

program rule differences, such as DI being afforded a much longer 
working period before cash benefits cease entirely, and: 

delays in the reporting of earnings data to SSA, with delays more 
likely for DI. 

2000/2001 Cohorts: Annual Earnings of Many Beneficiaries Who Left the 
Rolls Were Low: 

Figure 6: Annual Earnings Distribution (in 2004 dollars) for 
Beneficiaries from the 2000 and 2001 Cohorts in the Year They Left the 
Rolls through 2004 (N=15,066). 

[See PDF for image] 

Source: GAO analysis of SSA data. 

Note: Excludes those beneficiaries who left the rolls due to work, but 
did not have any earnings. See appendix II for details. 

[End of figure] 

2000/2001 Cohorts: Annual Earnings for Those Who Left the Rolls 
Differed by Program: 

Beneficiaries' median annual earnings (in 2004 dollars) in the year 
they left the rolls was $12,027. By program, median earnings were: 

$17,166 for DI, 

$14,323 for concurrent, and: 

$ 8,128 for SSI beneficiaries in our study.* 

By comparison, the average annualized SGA for 2000 to 2004 was $9,618 
and the average annualized disability benefits (in 2004 dollars) for 
the 2000 to 2003 cohorts in the year after VR were: 

$8,460 for DI, and: 

$4,452 for SSI beneficiaries in our study.**  

* Excludes those beneficiaries who left the rolls due to work, but did 
not have any earnings. Earnings for those who left the rolls are only 
through 2004, as we did not have 2005 earnings data. 

** Includes concurrents. 

2000/2001 Cohorts: About a Quarter of Those Who Left the Rolls Returned 
by 2005: 

By 2005, of the over 16,000 beneficiaries in our study who had left the 
rolls, 24% (over 3,900 people) were again receiving disability benefits 
for at least 1 month. By beneficiary type: 

25% of DI beneficiaries who left the rolls returned, 

21 % of SSI beneficiaries who left the rolls returned, and: 

48% of concurrent beneficiaries who left the rolls returned (to DI, 
SSI, or both). 

Those who returned had been off the rolls for an average of 16 months. 

2000/2001 Cohorts: Percentage Who Left the Rolls and Returned by 
Program: 

Figure 7: Percentage of Beneficiaries from the 2000 and 2001 Cohorts 
Who Left the Rolls and Returned for at Least 1 Month by 2005 
(N=157,915): 

[See PDF for image] 

Source: GAO analysis of SSA data. 

[End of figure] 

Observations and Next Steps: 

Observations from Phase One: 

A number of disability beneficiaries who completed VR in 2000 to 2003 
achieved positive earnings outcomes, and a few left the disability 
rolls; however, because we were not able to identify a comparable 
control group, we cannot attribute these outcomes to receipt of VR 
services. 

Benefit reductions were realized for our exit cohorts as a result of 
increased beneficiary earnings even for some beneficiaries who did not 
leave the rolls, although we were unable to reliably estimate SSI 
benefit reductions due to data limitations. 

The decline in earnings in the years following VR suggests that many 
complex factors are likely involved in achieving long-term employment. 

Next Steps: 

Our next report will analyze beneficiary characteristics at the agency 
level. 

We will present our findings on factors that may affect the success of 
beneficiaries in the workforce - specifically, state economies, 
individual VR agency policies, and types of disabilities. 

We will analyze their statistical significance and effect on earnings 
outcomes. 

[End of section] 

Appendix II: Scope and Methodology: 

To conduct our work, we obtained a newly available longitudinal data 
set--a subfile of the Ticket Research File (TRF)--which contains 
information from several Social Security Administration (SSA) and 
Department of Education (Education) administrative databases on all SSA 
disability beneficiaries who completed the federal-state vocational 
rehabilitation (VR) program between 1998 and 2004.[Footnote 23] SSA 
merged this data set with its Master Earnings File (MEF), which 
contains information on each beneficiary's annual earnings from 1990 
through 2004. (See figure 1 for a depiction of data sets used in our 
analysis.) The combined data provide information about each 
beneficiary's disability benefits, earnings, and VR 
participation.[Footnote 24] With these data on long-term benefits and 
earnings, we were able to study disability beneficiaries' earnings 
levels far beyond the 90-day period that Education uses to track VR 
clients, as well as the effect that earnings changes had on benefit 
levels. 

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

[See PDF for image] 

Source: GAO. 

[End of figure] 

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

* reviewed documentation regarding the planning and construction of the 
administrative databases used to construct the TRF subfile, the results 
of data reliability tests conducted by SSA's database contractor, and 
whether documented plans were implemented; 

* conducted multiple interviews with SSA and Education officials who 
work with the databases from which the TRF subfile and earnings data 
were drawn to understand the construction of the data fields; 

* conducted our own electronic data testing to assess the accuracy and 
completeness of the data used in our analyses; and: 

* consulted with GAO staff knowledgeable about these data sets. 

Study Population: 

In consultation with SSA officials and contractors as well as Education 
officials, we selected as our study population working-age individuals 
receiving DI only, SSI only, or both DI and SSI benefits concurrently, 
who exited VR after having received services.[Footnote 25] To use the 
most recent data available, we further refined this population to 
include those beneficiaries who: 

* began receiving VR services no earlier than 1995 and who completed VR 
after having received services in fiscal years 2000 through 2003; 

* had received a DI or SSI benefit payment at least once during the 3 
months before application for VR services (Beneficiaries were defined 
as concurrent if they received both DI and SSI benefits for at least 1 
month in the 3 months before VR application. We selected a 3-month 
window to account for the fact that many beneficiaries, SSI 
beneficiaries in particular, fluctuate in their receipt of benefits for 
any given month.); and: 

* exited VR once during the timeframe of our study. 

We excluded from our study population those disability beneficiaries 
who: 

* started VR prior to 1995 (Earlier disability benefit information was 
not available, therefore, including beneficiaries who started VR prior 
to 1995 would have limited our analyses of benefit changes before and 
after VR.);[Footnote 26] 

* completed VR after 2003, and for whom we lacked at least 1 year of 
long-term outcome data; 

* applied for or started VR services, but did not complete VR; 

* began receiving disability benefits after receiving VR services 
because these beneficiaries may have differed in certain important 
characteristics from those receiving benefits before VR participation; 

* reached age 65 or died at any point in their VR participation or 
during the timeframe of our study (We excluded the beneficiaries who 
died or reached age 65 because they would have left the disability 
rolls for reasons unrelated to employment. For example, beneficiaries 
who reach age 65 convert to SSA retirement benefits.); and: 

* participated in VR more than once during the timeframe of our study. 
About 17 percent of the beneficiaries in our data, who received VR 
services more than once during the timeframe of our study, were 
excluded to avoid double counting beneficiaries who may have received 
services multiple times, but who left the rolls only once. 

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

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

Analysis of Outcomes--An Overview: 

Using the TRF subfile combined with data from SSA's Master Earnings 
File, we computed for the fiscal year 2000 through 2003 exit cohorts 
the number of beneficiaries who had earnings after receiving VR 
services, the amount they earned, how their earnings compared to the 
substantial gainful activity (SGA) amount,[Footnote 27] and whether 
their benefits were eventually reduced or discontinued. We conducted 
separate analyses for DI, SSI, and concurrent beneficiaries because the 
programs differ in structure and incentives. On the advice of SSA 
officials, we used only the nonblind SGA amount in our calculations 
because the data did not indicate which beneficiaries were legally 
blind--a requirement to receive the blind SGA amount.[Footnote 28] 

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

Analysis of Earnings Outcomes: 

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

* the amount earned in the year after VR and how those earnings 
differed from the year prior to VR;[Footnote 29] and: 

* whether beneficiaries had some level of earnings over 4 consecutive 
years (for the 2000 cohort only because we had the most years of data 
for this group). 

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

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

To compare annual earnings with SGA, we created an annualized SGA 
amount. SGA, a monthly earnings amount updated each year by SSA, is 
used to determine whether an individual is engaging in substantial 
work. We used annual earnings for both DI and SSI because, at the time 
of our study, only annual earnings were collected for DI 
beneficiaries.[Footnote 30] To present comparable information between 
beneficiaries' annual earnings and SGA, we created an annualized SGA 
amount for each cohort by multiplying SGA for a given year by 12. The 
nonblind monthly SGA levels for the years of our study were: 2000-- 
$700; 2001--$740; 2002--$780; 2003--$800; and 2004--$810. 

To determine what percentage of annualized SGA each cohort earned in 
the year after VR, we compared beneficiaries' annual earnings for each 
cohort to the annualized SGA amount for that year. For example, we 
compared the 2000 cohort's 2001 earnings to the 2001 annualized SGA 
level. When we computed the median annual earnings for beneficiaries 
who had earnings--irrespective of cohort--in the year after VR and for 
those who left the rolls, we averaged the annualized SGA amount from 
2000 through 2004 and standardized it in 2004 dollars as a point of 
reference.[Footnote 31] 

To determine whether beneficiaries might have been "parking," or 
earning amounts that were close to, but never exceeding, annualized 
SGA, we analyzed the percentage of beneficiaries in our study whose 
annual earnings were just below annualized SGA. If beneficiaries were 
parking, we would expect to find their annual earnings just below the 
annualized SGA level. While there are no clear criteria for identifying 
the point at which a beneficiary can be said to be earning "just below" 
SGA, consistent with our prior work we considered parking to be earning 
over 75 percent of, but less than, annualized SGA.[Footnote 32] 

Analysis of SSI Benefit Changes and Reductions: 

We determined the number of SSI and concurrent beneficiaries who had 
SSI benefit reductions by comparing benefit levels in the year before 
VR to the year after VR. Because SSI benefit reductions can occur as a 
result of an increase in income from sources other than earnings, we 
examined benefit changes, and the resulting reductions, for only those 
beneficiaries who had an earnings gain from the year before VR to the 
year after VR.[Footnote 33] To identify whether SSI and concurrent 
beneficiaries had SSI benefit changes from the calendar year before VR 
to the calendar year after VR, we used the benefit "due" field because 
it is not affected by under-or overpayments.[Footnote 34] Of the 
concurrent beneficiaries who had an earnings gain and a benefit 
reduction, we determined how many also had a DI benefit increase during 
the same time period. 

Analysis of Reduction of DI Benefit Payments: 

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

Analysis of Departures from and Returns to the Disability Rolls: 

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

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

Limitations of our Analyses: 

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

Limitations in Analyzing Earnings: 

Our earnings data had several limitations that made it difficult to 
estimate beneficiaries' earnings and earnings changes due to 
employment. For example, while the beneficiary earnings data were 
provided to SSA by the Internal Revenue Service and are considered to 
be the most comprehensive and accurate measure of earnings available, 
they excluded several categories of workers who participated in 
alternative retirement systems and whose earnings may not have been 
reported to SSA.[Footnote 36] Such omissions could have resulted in an 
under-or overestimate of beneficiary earnings. On the other hand, some 
earnings reported to SSA may have included income derived from work 
activity in a previous year, such as commissions or bonuses. Further, 
the earnings data included some forms of nonwork income, such as sick 
leave earnings and profit sharing. These additional sources of income 
could not be identified and separated out of SSA's data and, therefore, 
could result in an overestimation of beneficiaries' earnings due to 
employment in a particular year, and either an over-or under-estimate 
of earnings changes over time. The data did not allow us to estimate 
the magnitude of the effect of these factors on our analyses. 

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

Limitations in Analyzing "Parking" 

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

Limitations in Analyzing Benefit Reductions: 

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

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

Limitations in Analyzing Beneficiaries Who Left the Rolls: 

Our finding that more SSI than DI beneficiaries ultimately left the 
rolls is likely due to several factors, including the different 
structures of the DI and SSI programs. DI beneficiaries are allowed a 
trial work period (9 months) and an extended period of eligibility (36 
months) before they are considered off the rolls.[Footnote 37] In 
contrast, SSI beneficiaries who earn enough so that they do not receive 
a benefit for 12 months are taken off the rolls. Therefore, given the 4-
year timeframe of our study, many DI beneficiaries may not yet have 
entered or completed their extended period of eligibility or reached 
the point where they would be considered off the rolls. 

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

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

[End of section] 

Appendix III: Comments from the Department of Education: 

United States Department Of Education: 
Office Of Special Education And Rehabilitative Services: 
The Assistant Secretary: 

Denise M. Fantone, Acting Director: 
Education, Workforce, and Income Security Issues: 
United States Government Accountability Office: 
441 G Street N.W. 
Washington, D.C. 20548: 

Mar 1 2007: 

Dear Ms. Fantone: 

Thank you for providing the U.S. Department of Education (Department) 
with the opportunity to review your draft report: Vocational 
Rehabilitation--Workforce Participation Increases for Many SSA 
Beneficiaries After Receiving VR Services, But Most Incomes Were Below 
"Substantial Gainful Activity" (GAO-07-332). We note you briefed 
Congressional staff on your findings and your draft report includes 
your briefing slides. 

The report does not make any recommendations to the Department, and is 
generally positive with regard to outcomes for vocational 
rehabilitation (VR) clients who are SSA beneficiaries. Up to ten 
percent were able to leave the benefit rolls compared to the historical 
unassisted departure percentage of less than one percent. These are, of 
course, the very individuals who had previously undergone stringent 
reviews demonstrating their incapacity to work. 

Findings showed that one year after receiving VR services and exiting 
the program, employment continued for about 40 percent of SSA 
beneficiaries. Supplemental Security Income beneficiaries performed 
somewhat better in this regard when compared to Social Security 
Disability Insurance beneficiaries. The report found that most (88 
percent) earnings fell below the substantial gainful activity (SGA) 
level. The general conclusion that most beneficiaries exit VR in 
employment outcomes with earnings below SGA is consistent with our own 
information regarding earnings at closure. However, this initial report 
has many limitations, as you noted, and there are a great many other 
complicating and qualifying factors related to rehabilitation success 
and client behavior. 

For example, eligibility criteria for non-cash services and benefits 
from other government assistance programs, such as housing programs, 
may have major effects on earnings behavior. Also, hours worked may 
reflect vocational capacity. opportunity or desire. The interactions of 
these factors with pay rates to produce any given level of economic 
activity are difficult to determine. Over one third of the individuals 
served by state VR agencies are individuals with developmental 
disabilities or mental disabilities. These individuals are also served 
by state developmental disability (DD) or mental health agencies that 
use Medicaid funds for the provision of residential and other supports. 
Work activity for many of these individuals may be conditioned or 
subordinated to the need to maintain the supports provided by the DD or 
mental health agencies. 

We recognize and appreciate the unique aspect of your work: the linkage 
of the Department's employment program participants with the SSA's 
record of their earnings. We are interested in discussing in detail the 
technical and methodological issues inherent in comparing large data 
files, and the extent to which results of the study could be further 
explained by characteristics such as disabling condition. 

Thank you for your interest in the operation and efficiency of the 
Department's programs for individuals with disabilities. We look 
forward to reviewing GAO's next phase of work regarding agency-level 
data for Social Security rehabilitation. 

Sincerely, 

Signed by: 

john H. Hager: 

[End of section] 

Appendix IV: Comments from the Social Security Administration: 

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

Social Security: 
The Commissioner: 

March 02, 2007: 

Ms. Denise M. Fantone: 
Acting Director, Education, Workforce, and Income Security Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, D.C. 20548: 

Dear Ms. Fantone: 

Thank you for the opportunity to review and comment on the draft 
report, "Vocational Rehabilitation: Workforce Participation Increases 
for Many SSA Beneficiaries after Receiving VR Services, But Most 
Earnings Were Below Substantial Gainful Activity" (GAO-07-332). At the 
exit conference phase, we provided informal verbal and written comments 
stating our concerns regarding GAO's methodology, and the accompanying 
analysis and findings. We continue to believe that the report, as 
written and presented, could lead policymakers to misinterpret the 
results of the study and the relative effectiveness of Vocational 
Rehabilitation services. 

While the report itself contains information about the limitations to 
the data and the analytical approach, these weaknesses are not 
adequately conveyed in the slide show that policymakers will view. The 
presentation could be misleading and result in policymakers drawing 
erroneous conclusions, which your auditors intentionally did not make 
due to the weakness of the analysis. We believe the analysis is 
inadequate for addressing the questions raised by Congressman Rangel 
and should not be overrepresented. A complete description of our 
concerns and the supporting rationale can be found in the attached 
detailed comments. 

If you have any questions, please contact Ms. Candace Skumik, Director, 
Audit Management and Liaison Staff, at (410) 965-4636. 

Sincerely, 

Signed by: 

Michael J. Astrue: 

Enclosure: 

Social Security Administration Baltimore MD 21235-0001: 

Comments On The Government Accountability Office (GAO) Draft Report, 
"Vocational Rehabilitation: Workforce Participation Increases For Many 
SSA Beneficiaries After Receiving VR Services But Most Earnings Were 
Below Substantial Gainful Activity" (GAO-07-332)  

Thank you for the opportunity to review and comment on the draft report 
and briefing slides. At the formal exit conference, we discussed a 
number of concerns with respect to the "Results Review Summary Fact 
Sheet" provided on January 22, 2007. We are disappointed to see that 
the final slide show presentation and accompanying narrative did not 
address the core of our concerns that were: 1) discussed formally on 
January 24, 2007; 2) provided in writing via e-mail on January 29, 
2007; and 3) discussed in great detail in a subsequent conference call 
held on January 31, 2007. We remain concerned that the results of this 
analysis do not address the pertinent questions and may not be relevant 
to policymakers. Specifically, we believe the report and particularly 
the slide show overstate the findings of the study and are likely to 
result in a misinterpretation of the evidence of the effectiveness of 
Vocational Rehabilitation (VR) services by policymakers. In addition, 
there are several technical mistakes and/or oversimplifications in the 
discussion of Social Security Administration (SSA) programs and 
policies that need to be corrected and/or clarified. The following 
detailed information and specific examples provide the rationale for 
our response. 

Title of the Report: 

The title of the report "Vocational Rehabilitation: Workforce 
Participation Increases for Many SSA Beneficiaries after Receiving VR 
Services, But Most Earnings Were Below Substantial Gainful Activity" is 
misleading. While the paper itself contains information about the 
limitations to the data and the analytical approach, these weaknesses 
are not adequately conveyed in the slide show. The presentation could 
be very misleading and result in policymakers drawing erroneous 
conclusions; conclusions that GAO auditors intentionally did not make 
due to the weakness of the analysis. A title that accurately reflects 
the analysis would be "Inflation Adjusted Social Security Taxable 
Earnings Increase for Some SSA Beneficiaries after Successfully 
Completing a Vocational Rehabilitation Program, But Most Annual 
Earnings Did Not Exceed Twelve Times the Monthly Substantial Gainful 
Activity Amount." 

Ticket Research File: 

On page 3, and elsewhere, the discussion on the Ticket Research File 
(TRF) is not accurate. The TRF is a file built by SSA under contract 
with Mathematica Policy Research (MPR) Inc. MPR is SSA's Ticket to Work 
evaluation contractor and supports SSA's evaluation of the TTW Program 
and other SSA employment-related disability research and evaluation 
needs. The file used by GAO is a sub-file of the TRF that had been 
matched to the 199&-2004 Rehabilitation Services Administration's (RSA) 
911 closure files. SSA did not match the TRF-RSA sub-file to the Master 
Earnings File (MEF) at the request of GAO. We matched the TRF, RSA-911, 
and earnings files for ongoing SSA and RSA research activities that 
have been in development since 2001. GAO learned of these files through 
entrance interviews with RSA and SSA. At that time, GAO requested, and 
was provided with, a copy of these matched TRF-RSA-MEF files and was 
provided extensive support in using them. 

Scope of the Review: 

There are many places (pages 4, 6, 17, 29, 30, 41, 42) that refer to a 
number or percentage of "all beneficiaries." This is misleading as the 
percentage is not calculated among all beneficiaries, but among 
beneficiaries in the very limited sample used in the analysis, as 
defined by the exclusions. The sample size suggests roughly 3 percent 
of all disabled beneficiaries are included in the sample, so as a 
percentage of all beneficiaries the percentages would be 1/33rd, as 
large as the percentage that is reported and that was calculated only 
for beneficiaries in the study sample. The term "sample cases" or 
"beneficiaries in this study" should be used in place of "all 
beneficiaries" to accurately describe the population covered by the 
study. Similarly, since these cases were limited to a very select 
group, the term "VR participants" should be changed to "successful VR 
case closures" (page 13 and 43) to more accurately describe the 
population. 

There are a number of exclusions that were made which we believe 
potentially bias the findings. Specifically, limiting the analysis to 
"receiving services once" (i.e., excluding individuals with multiple 
spells of VR services), removing individuals who died, and removing 
those who retired during their VR participation, all potentially bias 
the findings. Individuals in the excluded groups represent a 
significant portion of beneficiaries who are likely to be 
systematically different from those who were included in the study. 
Care must be taken not to present the analysis as representing VR 
effectiveness for all SSA beneficiaries receiving such services. We do 
not believe sufficient care in this regard has been exercised in this 
report, and this is likely to lead to misinterpretation of the evidence 
by policy makers. 

The last bullet on page 38 is not accurate. This bullet says "We 
excluded the beneficiaries who reached age 65 because the data may have 
indicated they left the disability rolls, when, in fact, they may have 
converted to SSA retirement benefits" [emphasis added]. The TRF data 
used by GAO, and the SSA constructed left-due-to-work (LDW) variable in 
particular (which was used by GAO extensively for this analysis), 
clearly distinguish between those who left the rolls due to work 
(LDW=2), and those who were ineligible for benefits due to death, 
converted to retirement benefits, or medical recovery (LDW=9). We do 
not understand why GAO excluded the beneficiaries who reached age 65 or 
died at any point in their VR participation. 

It is unclear as to whether disabled adult children (DACs) and disabled 
widow(er) s (DWBs) are included in this study, even though both groups 
are eligible for VR services. It was impossible to determine whether 
they were included due to some inconsistencies in the report. The 
report begins by citing the number of "working aged people with 
disabilities (who) were beneficiaries of federal income support 
programs administered by the Social Security Administration-namely the 
Disability Insurance program and the Supplemental Security Income 
program." DACs and DWBs would, in most cases, fit the definition of 
"working aged people with disabilities (who) were beneficiaries of 
federal income support programs administered by the Social Security 
Administration." However, most DACs and all DWBs (except those DWBs 
dually entitled as workers) are not technically within the Disability 
Insurance (DI) program, since their benefits are paid from the OASI 
program. Adding DI workers, DACs paid from the DI trust fund, 
Supplemental Security Income (SSI) recipients age 18-64, and not double 
counting concurrent beneficiaries, the number of working aged persons 
paid from the DI and SSI programs is slightly less than the 10 million 
figure that is cited, suggesting that all Social Security disability 
beneficiaries are included (i.e., it includes DACs and DWBs paid from 
the OASI trust funds). However, later in the report there is language 
stating that all DI beneficiaries have a qualifying work history (e.g., 
page 15). This is not generally true for DACs and DWBs, although some 
dually entitled DACs and DWBs may be insured and also receive a DI 
benefit. The report should clarify which Social Security disability 
beneficiaries are included and which are not. Whether DACs and DWBs are 
included or not, there are additional edits that need to be made to the 
report so that it is technically correct and internally consistent. 

Pages 20-21, (slides 13 and 14), are somewhat confusing. It appears 
slide 13 excludes beneficiaries who started working after 2001, and 
slide 14 excludes beneficiaries who started or stopped working after 
2001. The population included should be made clearer. 

Program Savings: 

The DI finding in the first bullet on page 6 is misleading in that it 
reports "savings" to SSA, when the figures reported are for non- 
payments of SSA benefits (the text is correctly phrased for SSI). Also, 
in numerous places (e.g., pages 6, 13, 14, 28, 35, 41, 42, 43) there 
are references to "program savings." However, the report contains no 
analysis on program savings; instead GAO simply assessed benefit 
reductions that may or may not relate to or coincide with the 
participation in, and successful completion of, VR services. In order 
to assess actual program savings costs, as well as the savings 
associated with benefit reductions, would have to be evaluated. Among 
those costs are: 

1) actual VR costs (from SSA's perspective, the costs of reimbursing VR 
for services or making Ticket outcome and milestone payments), 

2) any costs associated with higher DI benefits paid after 
recomputations made due to work while on the rolls that did not lead to 
termination, and: 

3) costs associated with continued benefit payments to those who 
medically recover, but continue to receive benefits under section 301 
provisions, amount of social security taxes paid, etc. 

In addition to the misnomer of program savings, as described above, the 
total estimates of "savings" does not reflect a specific time period. 
The slides break this out to give some context to this estimate; 
however, it is difficult to understand what the total estimate means. 
The text needs to clarify that these figures include four annual (one- 
year) savings figures for the four cohorts studied (not totals over all 
post-VR years), summed to a total estimate that represents 4 years 
worth of savings. We believe providing the average for all of the 
cohorts would be more meaningful as a yearly savings concept (i.e., 
divide the total estimated savings by 4). 

Footnote 20 on page 6 seems to be incorrect. GAO's estimates of 
beneficiary earnings when leaving the rolls could be either 
underestimates or overestimates depending on the average earnings of 
those not included in the MEF earnings (i.e., those not covered by 
Social Security). For example, if those in State government (and thus 
not included in the MEF earnings data) on average earned less than 
those in the MEF data, then the GAO estimates would overestimate 
earnings by the population who left the rolls. 

Finally, and most importantly, the methodology used does not permit an 
assessment of the possible outcome in the absence of VR. Therefore, it 
is unknown whether any of the benefit reductions are even related to 
the VR services that were received. At a minimum, the term "benefit 
reductions" or similar specific wording should be used instead of 
"program savings." However, that terminology could also be misleading 
due to the lack of a proper methodology. 

Numerical Estimates: 

The finding in the second bullet on page 5 and elsewhere, (i.e., slide 
16, page 23), that "the majority of disability beneficiaries were not 
"parking" is misleading. What GAO found is "no evidence of parking," 
but the data used is poorly suited for examining this question. Not 
finding evidence of "parking" is not the same thing as fording that 
"parking" did not occur. The earnings data used by GAO is annual data 
and "parking" can only be analyzed as a monthly event. GAO could say 
that the majority of disability beneficiaries were not "parked" in all 
months in each year for which GAO had earnings data, but this is not 
very meaningful because we know most beneficiaries do not work in all 
months of any given year. What is more likely happening in these data 
is that non-work in some months of a given year is pulling down the 
monthly average earnings for the year. How this relates to monthly 
"parking" is thus masked by the annual nature of the earnings data and 
the tendency of SSA beneficiaries with disabilities to work 
inconsistently throughout the year. As a result, a finding that the 
majority of disability beneficiaries were not "parking" is inaccurate. 

In addition, the problems of using annual earnings data to assess 
monthly earnings should be thoroughly explained under the limitations 
section and in the summary text as well. It is well known that SSA 
beneficiaries with disabilities have irregular work patterns that are 
masked by annual data. This is important because it makes it impossible 
to match monthly earnings with monthly benefit status. Further, any 
adjustments to annualize the monthly status or to create monthly 
averages of annual earnings can lead to misleading results in the data. 
The issues with assessing "parking," as noted above, is one example of 
the problems created by this mismatch in the data. This mismatch 
creates problems in other areas of analysis as well. Low annual 
earnings would result, for example, for beneficiaries who have exited 
the program for less than all of the months included in the annual 
calendar earnings figure. Beneficiaries who exit VR mid-year could have 
earnings above SGA in the I2 months following exit, but if that work is 
not sustained, the 12 months of earnings will be split between the 
calendar year of exit and the calendar year after exit, with both 
values substantially below the annualized SGA value. Appropriate 
caution needs to be exercised in using and interpreting this data. 

On page 6, the dollar increases in earnings among SSI recipients does 
not seem to translate into the fairly large benefit reductions for this 
group. It seems likely that this estimate captures more than benefit 
reductions due to earnings, perhaps even including reductions in SSI 
benefits for concurrent's whose DI benefits increase due to post- 
entitlement earnings (or whose work results in insured status and 
entitlement to a DI benefit). Earning among SSI recipients (and their 
benefit reductions) can be more accurately tracked and calculated using 
the Social Security Record rather than the MEF. 

The measure of changes in benefits on slide 19 seems illogical, and 
possibly misleading. If the point is to measure benefit changes, those 
whose earnings fell should be included as well. By including only those 
whose earnings increased, benefits are surely going to fall due to the 
mechanics of the SSI program and the result becomes fairly meaningless. 

In the discussion of program savings (pages 41-42), it is not clear 
whether GAO used the amount that was due to the beneficiary or the 
amount that was paid. Generally for such calculations, the amount due 
would be used because this amount is not affected by overpayments or 
underpayments. In footnote 10 (page 42), however, GAO notes that SSI 
benefits may "decrease because of an overpayment." This suggests that 
GAO may have used the amount paid for their calculations and this would 
introduce many problems into the benefit analysis. GAO should clarify 
which amount was used. If the amount paid was used for these 
calculations, then GAO should consider redoing the analysis using the 
amount due instead since this will give a more accurate indication of 
benefit changes. 

Ticket to Work Initiatives: 

We do not believe the report adequately discusses Ticket to Work (TTW) 
and the changes associated with the roll-out of TTW over the time 
period under this study. Although TTW legislation is mentioned and 
cited, the timeframes of the study do not allow for measurement of the 
effects of the TTW program. The study covers 2000-2003 VR usage with 
employment results from 2000 through 2004, a period marked by the 
phased rollout of the Ticket in the States. This was a period of flux 
and is neither representative of the older VR reimbursement scheme nor 
of the TTW program. Any benefits from TTW would not be fully evident 
during this time period. This phased program change could have had an 
impact on VR outcomes. Specifically, there is the possibility that 
creaming, (i.e., selecting those who are most likely to succeed), by 
Employment Networks has contributed to reductions in successful State 
VR outcomes over this period (pages 25, 27, 28). Additional information 
on the TTW program and its relationship to VR should be more thoroughly 
discussed on page 2 and on the slides. 

Page 5, first paragraph continuing from page 4, the TTW implementation 
date of "beginning in 2001" is not correct. Ticket to Work was phased 
in gradually beginning in February 2002. 

Employment and Earnings Data: 

There are a number of references to "employment" of beneficiaries. 
However, there is no data about employment. Instead, the analysis is 
based on an assumption that posted earnings are earnings derived from 
"employment." However, posted earnings do not necessarily relate to 
current employment. In addition, GAO notes that earnings not covered by 
Social Security are not included and that non-covered employment is 
unknown. More importantly, there are earnings that are posted to the 
earnings record that have no connection to current employment, 
including commissions from prior employment, sick pay, vacation pay, 
and certain profit sharing arrangements. The end result may be an 
overstatement of employment and earnings, rather than the 
understatement that is asserted on page 13 and the footnote on page 32. 
At a minimum, this needs to be clarified as this group represents 
"persons with posted earnings," not necessarily "employment." 

In several places there are references to "duration" and "sustained 
work" (pages 20, 21, and 40). This language is misleading. Having 
positive earnings in more than one consecutive year does not 
necessarily imply sustained work or an extended duration of work. 
Positive earnings in more than one year may be, at best an indicator of 
intermittent work. An individual may have worked a few scattered weeks 
over a multi-year period and meet the definition of "sustained work." 
Additionally, as presented in the comment above, posted earnings are 
not a definitive indicator of work or employment. In summary, the word 
"sustained" is suggestive of working month after month for several 
years. The term "posted earnings in consecutive years" rather than 
"sustained" should be used to more accurately describe this group and 
to avoid misinterpretation. 

Description of SSA Programs: 

The discussion of SSI benefits is inaccurate. For example, on pages 3 
and 4, it is stated that SSI benefits are generally the same for all 
beneficiaries. This is only true of the base benefit rate; benefits can 
vary from individual to individual based on a number of factors 
including earnings, unearned income, marital status, living 
arrangements, institutionalization, in-kind support and maintenance, 
and a number of other factors. Nowhere in the report is there 
information that SSI benefits are reduced $1 for $1, after a $20 
disregard, for unearned income. At a minimum, this should be added to 
the slide shown on page 16. This variation in SSI benefit amount is 
most obvious in the case of concurrent beneficiaries, who are 
specifically discussed in the report. Moreover, the discussion of the 
reduction in SSI for earnings is erroneous. Earnings are reduced $1 for 
$2 above $65 per month, not $85 per month. If the individual has no 
unearned income, the $20 disregard can be added to the $65 disregard. 
Concurrent beneficiaries would never have an $85 disregard. 

The most important factor likely to be driving the result on slides 22 
and 23 is not included at the bottom of slide 23, (see pages 29 and 
30). Lower program exits are likely to be affected by the length of the 
nine-month Trial Work Period (TWP), but the 36 month Extended Period of 
Eligibility (EPE) is a much more important factor. For SSI, program 
exit would occur after 12 months in suspense. For DI, however, there is 
both the 9 month TWP and 36 month EPE, for a total of 45 months (33 
months longer than the SSI measure). Given this, and the fact that the 
GAO follow up period is at most 4 years, it would be expected that few 
DI beneficiaries left the rolls after VR during this follow-up period. 
Most likely, the only beneficiaries who did leave the rolls were those 
already working for significant periods before they left VR. 

The report and the slides note program differences between SSI and 
Social Security. On page 30 it is stated that the length of the TWP is 
different. This is technically inaccurate as there is no TWP for SSI. 
On page 4, the TWP is mentioned for DI beneficiaries, though it is not 
limited to DI workers or DI beneficiaries (e.g., a DAC paid from the 
OASI trust fund is eligible for a TWP). A more important difference is 
that SGA no longer has any meaning for SSI exit from the rolls due to 
1619A provisions. We do not believe that either difference in the 
treatment of work and earnings is adequately discussed in the report. 

On page 4, the discussion of the EPE has a minor error. Benefits do not 
stop at the beginning of the EPE. The cessation month is the first 
month of SGA level earnings after the completion of the TWP and the 
individual is paid benefits (regardless of the level of earnings) for 
the 3 months after cessation of benefits (which would be the first 3 
months of the EPE if earnings are above SGA). Also, benefits are not 
automatically paid in months the individual earns less than SGA. The 
individual or representative must report that earnings are below SGA 
and request reinstatement of benefits (i.e., SSA does not routinely 
monitor earnings of persons in the EPE and automatically make benefit 
payments when earnings fall below SGA). 

On pages 6 and 7, the report refers to "benefit reductions" for the 
Social Security disability program. Benefits are not reduced for 
earnings in the case of Social Security benefits for the disabled. The 
monthly benefit is either paid or not paid. Reductions in benefits 
generally occur in the case of overpayments. This language should be 
changed to reflect the non-payment of benefits, rather than reductions 
in benefits. 

Description of Health Insurance: 

The report and slides mention the potential loss of health insurance 
coverage, presumably Medicare and/or Medicaid, as a challenge in 
leaving the disability rolls (e.g., pages 4, 7, and 9). The report, 
particularly the slides, does not fully address the extended Medicare 
and Medicaid benefits. Medicare continues at least 93 months after the 
end of the TWP, and Medicaid can continue indefinitely (1619B) for 
those on SSI who work their way off the rolls. There is a Medicare buy- 
in and a Medicaid buy-in (in some States) for the disabled who work and 
eventually lose their coverage under Medicare and Medicaid. Many 
legislative changes have been enacted that offer access to continued 
health care coverage making this a considerably less important factor. 

Left the Rolls: 

The report repeatedly uses various forms of the term "left the rolls" 
(e.g., pages 28, 29, 30, and 33). Leaving the rolls usually suggests 
termination of benefits, yet the figures shown seem to reflect "leaving 
the rolls" is related more to suspension of benefits, particularly for 
the disabled receiving Social Security. The 36 month EPE would seem to 
preclude the observation of many DI terminations in these cohorts. We 
believe the report should use alternative language that clearly 
specifies whether the figures reflect suspension of benefits or 
termination of benefits. These two concepts are quite different. Prior 
research shows significant numbers of DI beneficiaries who enter the 
EPE yet do not terminate benefits (Muller, L. Scott "Disability 
Beneficiaries Who Work and Their Experience under Program Work 
Incentives" Social Security Bulletin, Vol. 55, No 2. Summer 1992). 

Finally, on page 6, clarification is needed in the second bullet, and 
elsewhere (especially slide 26, shown on page 33), regarding how return 
to SSA benefits was measured, among those who left the DI program. Such 
beneficiaries may have returned to the program briefly, permanently, or 
somewhere in between. One could assume "returned to benefits" was 
defined as one or more months, but the definition should be made 
explicit. 

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

GAO's Comments: 

1. We agree that there is some potential for readers to misinterpret 
the title. Therefore, we adjusted it to indicate that we analyzed 
beneficiaries' earnings after completing VR services, rather than 
workforce participation. Additionally, we removed the reference to SGA 
because we acknowledge the limitations of using annual earnings data in 
determining whether beneficiaries were earning SGA. 

2. We clarified our description of the Ticket Research File. 

3. Regarding the scope of our review, we disagree that our study 
population biases our findings or that we have characterized our 
findings as representing VR effectiveness for all beneficiaries 
completing VR. We indicate that our findings are based on the outcomes 
of the individuals included in our study population, are not intended 
to represent potential outcomes for groups outside this population, and 
cannot be attributed to VR. In accordance with our objective to 
determine whether beneficiaries eventually replace their benefits with 
earned income, we focused on those beneficiaries who could have 
potentially left the rolls due to work following completion of VR 
services; therefore, we excluded people who retired or died during the 
timeframe of our study because they would have left the disability 
rolls for reasons unrelated to an increase in earnings. We clarified 
why these groups were excluded in our discussion of scope and methods 
in appendix II. We also stated in this appendix that our findings 
cannot be attributed to VR because we were unable to identify a control 
group. 

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

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

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

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

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

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

In a 2002 report, where we examined the effect of SGA on earnings for 
DI beneficiaries, we recommended, and SSA agreed, that it needed to 
improve its earnings data collection methods.[Footnote 38] According to 
SSA officials, since the timeframe of our study, SSA has begun 
collecting earnings information for DI beneficiaries through EWORK. To 
the extent that the data in this system are reliable, they may, in the 
future, provide an opportunity for a more precise analysis of 
"parking." 

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

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

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

7. We disagree that the report does not adequately discuss Ticket to 
Work because our study objectives did not include measuring the effects 
of the Ticket to Work program. Therefore, we did not include the 
additional language suggested by SSA, as it might detract from the 
report's focus. However, we corrected the language in the letter to 
indicate that the Ticket to Work program was phased in gradually 
starting in 2002. 

8. We agree that our analysis of whether beneficiaries were employed 
was based on posted earnings in SSA's Master Earnings File (MEF). 
Because SSA's data does not allow us to distinguish earnings due to 
current employment from other earnings (such as commissions from 
previous employment or vacation pay), we replaced references to 
employment with earnings throughout the report. 

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

9. We agree with most of SSA's comments regarding our description of 
SSI benefits and DI work incentives and have made the suggested 
changes. 

10. We disagree that a fuller discussion of extended Medicaid and 
Medicare benefits is needed for this report. However, we added language 
to the letter indicating that it is unclear the extent to which loss of 
health care coverage remains a disincentive for SSA beneficiaries 
returning to work. 

11. Regarding the clarity of the term "left the rolls" and how return 
to the rolls was measured, we added language to our report clarifying 
that leaving the rolls is defined as cessation of disability cash 
benefits and that beneficiaries who left the rolls were counted as 
returning if they returned for 1 month or more. 

[End of section] 

Appendix V: GAO Contacts and Staff Acknowledgments: 

GAO Contact: 

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

Acknowledgments: 

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

FOOTNOTES 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[36] Workers who may have been excluded include federal civilian 
employees hired before 1984 and certain state and local government 
employees. 

[37] The 9-month trial work period must occur within a 60-month period. 

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

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