at a subsistence level under the programs than risk the loss of vital services and benefits by attempting anything but merely marginal employment. You might say that life in the frying pan is a little more attractive than life in the fire.

What is needed, I feel, is not so much to restrict benefits under the SSI and SSDI programs, as to provide much needed incentives for disabled persons who wish to move off the rolls and seek employment.

Mr. Zukas, I believe, will address those issues right now.

STATEMENT OF HALE ZUKAS, THE CENTER FOR INDEPENDENT LIVING OF BERKELEY, PRESENTED BY INTERPRETER KAREN PARKER

Mr. ZUKAS. I have a reputation around the San Francisco Bay area for being fearless. However, I work for a pittance at the Center for Independent Living because I am afraid of either taking a decent paying job, or an increase in salary because if I did I would be declared not disabled, which is a laugh and a half, isn't it?

In the interest of time, I will ask Ms. Parker to read the rest of my remarks.

Senator MOYNIHAN. Thank you, Mr. Zukas.
Ms. Parker?

MS. PARKER. There are good reasons for accepting other employment or allowing CIL to give me a raise. My current SSI, medicaid and attendant care benefits total more than $900 a month. My net income after payroll deductions and work related expenses would, therefore, have to be at least this much, or I would be losing money on the deal.

Obtaining a job that met these financial needs is not out of the question. What really scares me, though, is that once I have been determined to be performing SGA and no longer disabled I will not be able to get my benefits back if I lose my job, unless I get an additional disability or my condition worsens. Cerebral palsy, incidentally, is generally a stable condition. Thank God for small favors, right?

Therefore, if I would lose my job, I would be in a very precarious position, indeed, for without the means to meet my needs, I would probably end up vegetating in an institution at a very much higher cost to the taxpayer.

S. 591 and S. 603 will go a long way toward eliminating both my dilemmas. First, they provide for continuation of vital benefits after my earnings have passed the SGA level until they reach a level sufficient to meet my needs. Second, if I were to lose my job, I would be considered presumptively disabled, and thus immediately eligible for benefits. This provision would be in effect for 4 years after my trial work period had expired.

I assume that under the provision for presumptive disability in section 1 of S. 591 the original disability will reestablish disability provided there has not been a medical recovery.

Although we have submitted detail analyses of the legislation before you, we would like to discuss a few issues which merit special emphasis.

While S. 591 provides for the exclusion of certain impairment related expenses in determining disability status, these expenses are not considered in determining the benefit amount. The intent of the SSI program is directed at assuring aged, blind, and disabled individuals that they will be able to meet subsistence needs. Accordingly, the process of determining the benefit amount must be based on earnings which are actually available to meet the recipient's needs.

Under current law, the blind recipient may disregard from earnings any amount reasonably attributable to the earnings of that income. The disabled recipient has no similar disregard for reasonable work expenses.

To accomplish this objective, we support the process specified in H.R. 3464. In general, the existing disregard from earnings of $65 per month would be applied, then the cost of employment related services, care or items specified in section 4 of S. 591 would be disregarded if they were purchased by the recipient.

Rather than performing the administratively awkward tax of itemizing common work expenses, 20 percent of gross earnings would be disregarded for such expenses as mandatory payroll deductions, uniforms, union dues, and so forth.

Finally, the existing disregard of 50 percent of the remaining earnings would be maintained, and 50 percent would be reduced from the recipient's benefit.

May I add an additional comment here. Yesterday, Commissioner Ross said that the $65 income disregard was intended as a work expense deduction. In fact, it is intended as an incentive, which is why it is an income disregard.

The process we are recommending is more restrictive than the work expense exclusion currently provided for the blind.

There appears to be some feeling that S. 603, introduced by Senator Javits, is redundant in light of provisions for continued medicaid coverage in S. 591. S. 591 provides for coverage up to the point where earnings equal the value of the former benefits under titles 16, 19, and 20. Once a disabled person earns even a dollar more than this level, however, he must bear the entire cost. S. 603 would allow the disabled person to continue medicaid coverage at a share of cost as in the current MNO program available to nondisabled low-income persons.

There are several States which now provide medicaid coverage to individuals who cease to be legally disabled because they have performed SGA, despite the fact that no Federal participation is presently available for such coverage. S. 603 would remove this financial disincentive, and encourage other states to choose to provide the same coverage.

It goes without saying that section 2 and 3 of H.R. 3236 are philosophically opposed to anything the Center for Independent Living could possibly support. The provisions in question are section 2, which establishes a cap on family benefits, and section 3, which adjusts the dropout year formula.

If these provisions are maintained in H.R. 3236, the Center for Independent Living will be forced to vigorously oppose the bill in its entirety. It is illogical and punitive to provide incentives for those who might be able to work by reducing benefits for those who

cannot. No SSDI beneficiary in their right mind would consider going back to work if their future benefit would be lower than they had if they had to get back on the SSDI roll.

We also strongly encourage including the deeming provisions in the H.R. 3464 and S. 591, and we want to call particular attention to the language for the sheltered workshop earned income provision in S. 591. We feel such declaratory language is long overdue, and properly recognizes the contributions of individuals employed in such settings.

Senator MOYNIHAN. Thank you, Ms. Parker.

Senator DURENBERGER. I don't have any questions, Mr. Chairman, but I want to compliment you and the staff, or whoever arranged this part of the testimony today. I think that both Mr. Fiedler and Mr. Zukas have pointed out to us the heart of the problem facing persons with disabilities. The first is the mind-set of America, and Mr. Fiedler, you did a beautiful job. I have never heard anyone do it as well as you did, drawing the distinction between disability and handicap.

Mr. Zukas, of course, I don't want to brag about your friends in Minnesota, but literally hundreds of people with disabilities like yours in Minnesota came to me throughout my campaign with the very simple message which you have stated so eloquently here today.

It is not very complicated. It does not require lots of bureaucracies, and expenditures of billions of dollars to recognize the disincentives that the mind-set that you spoke about, Mr. Fiedler, has placed in our system of responding to the basic needs that all of these people have, which is to work.

I appreciate having been able to be here today.

Senator MOYNIHAN. Mr. Zukas has been a guest of this committee before, and was very helpful last year. We almost got the legislation last year. It is precisely because the circumstances are not satisfactory to anyone that we have sudden flurry of legislative proposals.

I would like to ask both Mr. Fiedler and Mr. Zukas: Do I take it that you would generally share the thrust of Secretary Cohen's testimony on H.R. 3236? Were you able to hear it?

Mr. ZUKAS. Yes.

Senator MOYNIHAN. You do, Mr. Zukas.

Mr. Fiedler?

Mr. FIEDLER. Yes.

Senator MOYNIHAN. I need not say that you are in formidable company, if you do.

It is important for this committee to know, as we are going to be proceeding with legislation, and we are very grateful to both of you for coming, and to Ms. Parker for coming.

Ms. Parker, you are a great asset to these purposes.

MS. PARKER. I have good words to translate.

Senator MOYNIHAN. Indeed, you do.

Associating myself with Senator Durenberger, I thank you all. [The prepared statements of the preceding panel follow:]

STATEMENT OF ELMER C. Bartels, CommiSSIONER, MASSACHUSETTS REHABILITATION COMMISSION

This statement represents the position of the Massachusetts Rehabilitation Commission with regard to four bills now before the Senate Finance Committee-H.R. 3236, H.R. 3464, S. 591 and S. 603. These bills would, among other things, remove certain work disincentives for disabled persons participating in the Supplemental Security Income (SSI) program and the Social Security Disability Insurance (SSDI)

program.

The goal of the Massachusetts Rehabilitation Commission is to help disabled persons become engaged in productive, self-supporting, work activity. The Commission's ability to achieve its goal is greatly compromised by the provisions of the SSI and SSDI programs which deter disabled persons from seeking gainful employment. Based on the Commission's experience, we believe that the proposed legislation would remove major barriers to disabled persons seeking employment. Below is the Commission's position with respect to each of the four bills.

1. The Commission supports S. 591 in its entirety. This bill would:

Make persons who once received SSI or SSDI benefits, but were later denied benefits because of substantial gainful activity (SGA), presumptively disabled for a period of five years when reapplying for Title XVI benefits.

Deem income earned in sheltered workshops as earned rather than unearned income.

Allow persons who meet or equal the medical listings to continue receiving cash benefits when earned income exceeds the SGA level up to the "breakeven point" (the point at which countable earnings equal the SSI benefit level).

Continue Title XIX (Medicaid) benefits to handicapped persons who meet or equal the medical listings whose earnings surpass the breakeven point, who continue to meet all other nondisability related requirements (except for earnings), and for whom the termination of Title XIX and Title XX benefits would make it extremely difficult, if not impossible, for a person to continue working.

Disregard earned income needed for impairment-related work expenses (e.g., attendant care, medical devices, equipment, prosthesis, etc.) in determining whether a person's earnings exceed the SGA level.

2. The Commission supports S. 603 in its entirety. This bill would:

Extend Medicaid benefits to individuals who reside in states which have medically needy spend down provisions and who become ineligible for Medicaid because of excessive earnings and/or resources but who continue to be medically disabled. They retain health coverage by contributing a portion of this income for such

coverage.

3. The Commission supports H.R. 3464 in its entirety. This bill would: Provide for a standard work expense disregard equal to 20 percent of gross earnings in determining payment level under Title XVI.

Provide for a disregard of impairment-related work expenses in determining payment level under Title XVI.

Limit deeming of parents' income to disabled children under age 18 regardless of student status.

4. The Commission supports H.R. 3236 in part. The Commission supports those provisions that would:

Deduct extraordinary impairment-related work expenses, etc. from earnings for purposes of determining SGA.

Extend the present 9-month trial work period to 24-months (during last 15 months of which, individual would not receive benefits if earnings exceed SGA level). Extend Medicare for an additional 36 months to disabled beneficiaries who return to gainful employment.

Eliminate second 24-month Medicare waiting period where a person again becomes disabled and entitled to benefits.

The Commission does not support those provisions that would:

Limit the maximum amount of total benefits paid to future disabled workers and their dependents.

Reduce the number of years of low or no earnings that can be dropped in computing a younger disabled worker's benefits.

The Commission is pleased to make its views known to the Committee. For too long the federally sponsored income assistance programs have worked at crosspurposes with the federal-state vocational rehabilitation program. The work disincentives problem is a national one and can only be rectified by amending federal law.

Thank you for your consideration of this important issue.

STATEMENT OF GREG SANDERS, HALE ZUKAS, AND KAREN PARKER REPRESENTING THE CENTER FOR INDEPENDent Living, BERKELEY, CALIF.

THE SUPPLEMENTAL SECURITY INCOME DISABILITY AMENDMENTS OF 1979

Late in the 95th Congress the Finance Committee studied the issue of work disincentives which prevent the disabled Supplemental Security Income (SSI) recipient from maintaining employment. After the Subcommittee on Public Assistance held a hearing on the issue the Finance Committee reported out a bill to reduce the impact of the disincentives present in the SSI, Medicaid and Title XX programs. However, the Congress adjourned before the bill reached the Senate floor.

Recognizing the significance and urgency of this issue, two bills targeted at SSI recipients with severe impairments were introduced in the Senate earlier this year. The House of Representatives responded to the issue in June by passing H.R. 3464, the Supplemental Security Income Disability Amendments of 1979. Similar to the vote in H.R. 12972 last year (399-4), H.R. 3464 passed the House 374-3.

This statement outlines the key issues which, in combination, create the work disincentives. It is important to emphasize that the discussion addresses only three areas of the Social Security Act: Title XVI (Supplemental Security Income), Title XIX (Medicaid) and Title XX (Social Services).

Supplemental Security Income, Medicaid and Title XX Social Services serve a very fundamental purpose-they provide for essential maintenance and health needs. SSI provides for necessary food, clothing and housing. Medicaid provides for health care as well as health-related items or care like prosthetic devices and personal care attendant services. Title XX provides a range of supportive services which may include job supervision for mentally retarded persons, mobility instruction for the visually impaired, homemaker services, etc. (Since Medicaid and Title XX are substantially affected by state-established standards, some services of major importance such as attendant care may be provided through Medicaid in some states and Title XX in others.)

For a particular individual the scope of services available through Titles XVI, XIX and XX may include:

SSI: $207 a month maximum federal grant with a state supplemental payment available in 24 states;

Medicaid: covering medical examinations, acute health care, physical therapy, wheelchair purchase and maintenance, medications, etc.;

Title XX: Providing attendant care or other specialized supportive services.

The significance of these programs is, certainly, not limited to maintaining recipients in a healthy living arrangement. The combination of income maintenance, health coverage and social services support an environment where an individual with a severe physical or mental impairment can pursue vocational rehabilitation or habilitation and, ultimately, employment. The current quality of services and technology create the very real opportunity for the great majority of citizens with severe impairments to seek meaningful work activity.

The dilemma of the work disincentives becomes clear when the opportunities created by the scope of current programs are blocked by concepts of disability which were dominant in the 1950's and remain in federal law. The term "disabled" became a viable part of the Social Security Act in 1954. When the Supplemental Security Income Program was implemented in 1974 it based the definition of "disabled" on the assumptions derived two decades earlier.

Section 1614 of the Social Security Act establishes that a disability can exist only if the individual is unable to engage in "substantial gainful activity" (SGA). The level of work activity which indicates SGA is prescribed in regulation by the Secretary of Health, Education and Welfare. Currently, SGA is indicated by services performed which represent the ability to achieve gross earnings of $280 per month, or by earnings derived from employment which exceed $280 per month. The ability to perform work activities is the basis for determining SGA. It is not necessary for an individual to receive payment or to actually perform any activities to be judged able to engage in SGA. Also, disability status will cease due to performance of SGA regardless of a severe impairment which is demonstrated by medically acceptable clinical and laboratory diagnostic techniques.

The SSI and Medicaid programs do have a mechanism to gradually reduce the level of benefits and services as income available to the recipient increases. Yet, the termination of disability status when earnings reach the SGA level causes an abrupt end to the gradual reduction process. The complete loss of SSI, Medicaid and linked social services due to a cessation of disability statue required the disabled individual to limit attempted work activity to services which do not indicate SGA, or to obtain employment which provides sufficient net income to replace all of these necessary services.