COST ESTIMATE

The modification of the Trial Work Period for purposes of removing disincentives to employment can be accomplished without additional cost:

1. Approximately 3 percent of the current beneficiary population are earning more than $180.00 per month in gross wages. The average gross monthly earnings of this group is estimated to be no lower than $300.00. It is important to note that many of these individuals are participating in the current Trial Work Period. Under the sliding scale contained in this proposal, the benefits of each of these 87,750 individuals would be cut by an average of $90.00 per month. This should yield an annual savings of approximately $95 million which can be used to finance the remaining costs of the proposal.

2. Under this proposal, benefits would be extended to the 17,750 beneficiaries who currently leave the benefit rolls each year solely because of earnings in excess of the SGA earnings test. It is estimated that the average gross monthly earnings of this group is no lower than $500.00 (equivalent to full-time, minimum wage employment). Since the average monthly SSDI benefit is $425.00 (including expenditures for Medicare), the average beneficiary in this group would now be eligible for $185.00 in monthly benefits. The cost of this extension of benefits would be approximately $25 million by the end of the first year.

3. The disregard for impairment-related work expenses is estimated to cost approximately $5 million per year. This estimate is based on the assumption that 5 percent of the individuals whose earnings exceed $180.00 per month would be permitted to deduct an average of $100.00 per month for attendant care and other impairment-related expenses.

4. Increased administrative costs will be needed in order to implement the sliding scale. It is estimated that these costs would be approximately $2 million per year.

Larry Johnson is a 34 year old laborer who was hired on November 13 for a job as an Assembler in the electronics industry. This is the first time in over 51⁄2 years that he has been able to find competitive employment. In 1973, Larry was disabled in an automobile accident. His spinal cord was bruised-an injury which still confines him to a wheelchair. At the time of this accident, Larry was employed as a Stockman by the Container Division of the Menasha Corporation in Neenah, Wisconsin. As a Stockman, he was responsible for stocking paper into a corrugating machine operated by eleven men. Larry says that as a Stockman, he was the No. 2 man on the team of eleven men.

Following his accident, Larry was hospitalized for over one year at Theda Clark Hospital in Neenah. In 1975, he was enrolled in the Fox Valley Sheltered Workshop in Appleton, Wisconsin where he was being considered for training in office machine repair until he was hospitalized a second time at Theda Clark Hospital. During this second hospitalization, he was transferred to the University of Wisconsin Hospitals Neurological and Rehabilitation Center in Madison, Wisconsin. In 1976, he was discharged to a new residence in Madison where he now resides with his ten year old daughter, Eloise. Larry and his wife were divorced after his automobile accident, but he won legal custody of his daughter.

In April, 1978, Larry entered the Sheltered Employment Program of the Madison Opportunity Center. The center was successful in locating employment for him assembling computer boards for Acme Electronics in Madison, Wisconsin. After one month on the job, his employer reports that he is learning his job rapidly, is getting along well with his fellow employees, and "we wish he could work full time". Larry works about 19 hours each week. Acme Electronics would also like to give Larry a raise in pay to $2.85 an hour instead of the $2.65 an hour they pay him now. However, if Larry were to accept Acme Electronic's offer of full time employment at $2.85 an hour, he and his daughter would experience a $484 decrease in their total net monthly income!

Larry has been a recipient of Social Security Disability Insurance (SSDI) since 1973. He and his daugher receive $705 each month in SSDI payments. Larry's monthly wages at Acme Electronics are currently $215. After Social Security taxes

of 6.12% are deducted, he takes home about $202. Their total cash income each month, therefore, is $907. In addition, Larry is covered by Medicare.

If Larry were to work full time at $2.85 per hour, his gross monthly wages would be $490. After FICA, federal and state withholding taxes, his take home pay would be $423. However, Larry and his daughter would no longer be eligible for SSDI payments. The Social Security Administration (SSA) utilizes an earnings test as one of the many criteria required to establish eligibility for SSDI. If a SSDI recipient's earnings exceed $240 per month, the recipient is considered to be no longer disabled. In some cases, when earnings exceed $240, the recipient may be eligible for a trial work period of up to nine months. Unfortunately, Larry has already exhausted his trial work period. According to SSA regulations, any month in which a recipient earned $50 or more in a month which may be counted as one of the nine work trial months. During his employment at the Madison Opportunity Center and at the Fox Valley Sheltered Workshop, the number of months in which Larry earned more than $50 exceeded nine. His trial work period has vanished.

By accepting full time employment at $2.85 per hour, Larry's net monthly income would drop from $907 down to $423. At the same time, his eligibility for Medicare would also be lost. In order to maintain his current cash income alone, Larry would need to locate a full time job paying $7.15 an hour. Such a job would yield $1,230 in gross monthly wages, and $907 in take home pay. For a general laborer returning to the labor market after five years of convalescence, still confined to a wheelchair, $7.15 per hour is a wage which Larry may eventually be able to earn, if he doesn't encounter too many disincentives along the way.

REHABILITATION FACILITIES OF WISCONSIN GOODWILL INDUSTRIES OF MILWAUKEE

(Case Study, February 1979)

Millie Smith, age 51, won the Milwaukee Goodwill Worker of the Year Award in 1978. Disabled by a left arm amputation, the loss of right-hand fingers in an industrial accident, alcoholism (since she was a teenager), and depressive reactions to her physical deformities, Millie was noted for her progress in improving her productivity in sheltered employment, achieving a more appropriate social adjustment, maintaining sobreity from alcohol for the last three years, and establishing an independent living arrangement for herself in the community.

Millie's hourly wage at Goodwill Industries is $2.47. Goodwill is permitted, under state and federal sub-minimum wage licenses, to pay Millie less than the current federal minimum hourly wage of $2.90, but she must be paid according to her level of productivity. The vocational rehabilitation staff at Goodwill has assessed her level of productivity to be 86% of the level which could be expected of the average nondisabled worker. Millie is employed to sort textiles and clothing items donated to Goodwill by the citizens of Milwaukee.

Millie works 21 hours each week at Goodwill. She could be employed 31 hours each week, but she has to be a little bit careful about how much money she earns. Millie is a recipient of Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), Medicaid and Medicare. The Social Security Administration (SSA) utilized an "earnings test" as one of the many criteria Millie must meet in order to be eligible for the cash and medical benefits she receives. If a disabled recipient's gross earnings exceed $240 per month, the recipient is no longer considered to be disabled and all SSA benefits are discontinued.

In some cases, when earnings exceed $240 per month, the recipient may be eligible for benefits during a trial work period of up to nine months. Unfortunately, Millie has already exhausted her trial work period. According to SSA regulations, any month in which a recipient earned $50 or more is a month whch may be counted as one of the nine trial work months. During her employment at Goodwill Industries, the number of months in which Millie has earned more than $50 exceeds nine by a wide margin. Her trial work period has vanished.

The following chart illustrates the impact which alternative employment situations would have upon Millie's financial situation:

The vocational rehabilitation staff assigned to Millie's case at Goodwill has indicated that, financial considerations aside, Millie's most appropriate job alternative would be to work the regular Goodwill work schedule of 31 hours a week. First of all, they say, it is undesirable for Millie to work less than 31 hours a week because the full work schedule is a better test of Millie's work stamina in preparation for eventual competitive employment. Also, too much leisure time is something of a risk to recovering alcoholics: it increases the probability of losing sobreity. It is important for Millie's continued improvement that she maintain a full schedule of daily activities and social contacts.

Secondly, the rehabilitation staff is not prepared to recommend competitive employment for Millie at this time. She still requires a supportive emotional environment which is unlikely to be available in the average competitive employment setting. Unsure of herself and her abilities, subject to periods of depression and loneliness, and self-conscious about her physical appearance, Millie frequently calls upon the Goodwill staff for supportive counseling. Having never married, she has little family life to sustain her outside of a workplace. The possible severity of these emotional difficulties is reflected in the fact that she once attempted to take her own life a few years ago. Millie does not yet possess the level of personal adjustment required to successfully establish herself in competitive employment.

If this assessment of Millie's vocational capacity is correct, the most appropriate employment alternative for her rehabilitation also turns out to be the most disasterous one for her financially. If she works 31 hours a week at Goodwill, her net monthly cash income will drop from $432 down to $297 and she will lose Medicare and Medicaid. Millie's medical benefits are important because she has high blood pressure which requires medications and periodic office visits. Medicaid would also cover psycho-therapy which she has required in the past and may require again in the future. A premium for private health insurance would reduce her disposable income even further. Financially, a work week of 31 hours would be worse than no job at all.

(Case Study, February 1979)

Under Chapter 359 of the Wisconsin State Statutes, four Wisconsin sheltered workshops were each awarded $30,000 grants in 1979 to develop prime manufacturing projects which would employ at least five handicapped workers full-time, at the federal minimum hourly wage. The purpose of these projects is to develop long-term jobs for disabled individuals in extended sheltered employment programs.

Goodwill Industries of Milwaukee was one of the sheltered workshops selected for this pilot program. Goodwill has subsequently developed a woodworking project constructing hobby horses for small children. Handicapped workers are employed in this project, at the current minimum wage rate, to cut, assemble, and paint the wood components of the finished product.

Joe Smith, age 36, is a developmentally disabled individual who has been employed at Goodwill since November, 1974. He has been earning approximately $145 per month in Goodwill's subcontract department on sub-assembly bench-work tasks. Joe is paid wages on a piece-rate basis. He is scheduled to work 31 hours each week. In December, 1978, Joe was offered a full-time, minimum-wage job in Goodwill's woodworking department, to work on the Chapter 359 hobby horse project, because of his excellent performance in the subcontract department. Because Joe is confined to a wheelcair by spina bifida, the woodworking department was planning to make modifications in their woodworking equipment to enable Joe to perform his required tasks. Also, because Joe lacks experience in woodworking, the department was planning to provide all of the training necessary to enable him to do the job. Unfortunately, Joe was unable to accept this offer to improve his vocational potential. Joe is a recipient of Supplemental Security Income (SSI) and Medicaid. The Social Security Administration (SSA) utilized an "earnings test" as one of the many criteria Joe must meet in order to be eligible for the cash and medical benefits he receives. If a disabled recipient's gross earnings exceed $240 per month,

the recipient is no longer considered to be disabled and all SSA benefits are discontinued, including SSI and Medicaid.

In some cases, when earnings exceed $240 per month, the recipient may be eligible for benefits during a Trial Work Period of up to nine months. Unfortunately, Joe has already exhausted his Trial Work Period. According to SSA regulations, any month in which a recipient earned $50 or more is a month which may be counted as one of the nine trial work months. During his four years of employment at Goodwill, the number of months in which Joe has earned more than $50 exceeds nine by a wide margin. His Trial Work Period has vanished.

If Joe had accepted the job in the Chapter 359 project, his increased wages would have replaced his need for SSI cash payments. Joe's Medicaid benefits, however, would be exceedingly difficult to replace with take-home pay. The woodworking project is unable to provide health insurance as a fringe benefit. Joe's medical needs are substantial:

1. Because of his confinement to a wheelchair, Joe has had recurring difficulties with urinary tract infections. He has been hospitalized three times during the last year because of this problem. As of this date, he is still having difficulties with these infections. If shots are going to become a required, routine treatment, he will have to leave the group home where he now resides, and re-enter a nursing home. Medicaid would cover his expenses in a nursing home as well as medical tests and treatment for this problem.

2. Joe has an appointment to see an ophthalmologist in the near future. He may soon require eyeglasses because his ability to read is being impaired.

3. Joe can expect to have some expenses in connection with the maintenance and eventual replacement of his wheelchair.

4. Joe requires the services of a podiatrist to deal with three inch infections on his feet.

5. Joe has had two operations for gall stones in the recent past. He may have to undergo additional operations for gall stones in the future.

6. Joe requires prescribed medications to treat persistent problems with diarrhea. 7. Joe also has a scalp condition which requires a prescribed medication for treatment.

As a developmentally disabled person in a state-licensed group home with less than nine residents, Joe is entitled to a basic monthly SSI allowance of $360. This allowance is reduced by $30 due to his average monthly earnings of $145, leaving a monthly SSI cash payment of $330. His net monthly income, therefore, is approximately $475, plus Medicaid. As a group home resident, Joe is asked to contribute some of his income to the group home to help defray the costs of his care.

If Joe were to accept full-time, minimum-wage employment, his take home pay would be $421. His SSI payments and his Medicaid eligibility would be discontinued. His net monthly cash income, therefore, would drop from $475 down to $421. In addition, the loss of Medicaid coverage would be most undersirable in view of his anticipated medical expenses.

Joe is still working in the subcontract department instead of the Chapter 359 project. One of the purposes of Chapter 359 is to improve wages for handicapped workers in sheltered employment programs. In Joe's case, this purpose has been effectively thwarted by disincentives to employment arising in Social Security programs for the disabled.

(Case Study, March 1979)

John Smith, age 43, is a developmentally disabled individual who lives in a skilled nursing home and works at Goodwill Industries. His average monthly earnings_at Goodwill are approximately $135. John is employed in Goodwill's Subcontract Department on subassembly, bench-work tasks. He works about thirty hours each week and receives wages on a piece-rate basis.

The vocational rehabilitation staff at Goodwill is interested in helping John locate full-time competitive employment with an employer in Milwaukee. While his work speed is slower than normal, John displays other attributes which would make him a productive employee. The quality of his work is excellent, he is dependable, he is able to relate to his supervisors and co-workers in a cooperative and friendly manner, and requires very little supervisory attention once he has learned the tasks required of him. Entry-level work on a sub-assembly job paying a wage of about $3.25 an hour is seen by the Goodwill staff as a feasible vocational objective, despite his handicap and lack of previous employment experience. John's vocational rehabilitation counselor believes that John could be placed directly into competitive employment without any additional skill training at this time.

At this time, however, it would be unwise for John to seek competitive employment. John is a recipient of Social Security Disability Insurance (SSDI), Medicare, and Medicaid. The Social Security Administration (SSA) utilizes an "earnings test" as one of the many criteria John must meet in order to be eligible for the cash and medical benefits he receives. If a disabled recipient's gross earnings exceed $240 per month, the recipient is no longer considered to be disabled and all SSA benefits are discontinued, including SSDI, Medicare, and Medicaid.

In some cases, when earnings exceed $240 per month, the recipient may be eligible for benefits during a Trial Work Period of up to nine months. Unfortunately, John has already exhausted this Trial Work Period. According to SSA regulations, any month in which a recipient earned $50 or more is a month which may be counted as one of the nine trial work months. During his three years of employment at Goodwill, the number of months in which John has earned more than $50 exceeds nine by a wide margin. His Trial Work Period has vanished.

If John were to accept full-time employment at an hourly wage of $3.25, his gross monthly wages would be approximately $560. After deductions for FICA and state and federal withholding taxes, his take-home pay would be approximately $460. This amount would easily replace his monthly SSDI checks of $121 and his monthly wages at Goodwill. His Medicaid benefit, however, would be difficult to replace with wages.

John was placed in Northern Center, a large state institution for the mentally retarded, in 1940 when he was five years old. In addition to mental retardation, John is also disabled by a curvature of the spine, spastic parapelgia, a marked difference in the length of his legs, a hearing loss, and a speech problem. John's IQ score of 69, is probably partially due to cultural and social deprivation arising from his thirty-year confinement in an institution and his hearing loss. In 1970, John was discharged from Northern Center to a skilled nursing home in Milwaukee. He started working at Goodwill Industries in 1975.

While John may eventually be able to leave the nursing home to live in a group home, he will still require Medicaid coverage of his expenses in the nursing home for the immediate future. This is a major medical expense which most probably would not be covered by group health insurance provided by a community employer. Additional medical expenses arise for John for a wheelchair, special orthopedic shoes, a hearing aid, and speech therapy. These additional expenses are also covered by Medicaid. John is also absent from work for short periods of time, usually two or three times each year, because of medical problems requiring treatment. The most recent example of such absenteeism was the result of a problem with a boil on one of his legs.

If John were to obtain full-time competitive employment, he would be able to contribute more toward the cost of his medical needs than he contributes now. At the present time, John contributes approximately $120 each month toward the cost of his care in the nursing home. Under the same formula used to set his present contribution of $120, he would contribute approximately $235 if his gross monthly wages increased to $560. This would allow him to shoulder a larger share of his medical expenses as his earnings increase. The "Catch 22", however, is the termination of his Medicare and Medicaid when his earnings exceed $240 per month. When earnings exceed $240 per month, John is suddenly required to carry the entire burden of his medical expenses. Because this financial burden is too great for him to handle on his own, he will remain in sheltered employment and forego any opportunities for competitive employment.

[From the Wisconsin State Journal, Mar. 21, 1976]

REDTAPE SHACKLES ARTHRITIS VICTIM

(By Robert Pfefferkorn)

Arthritis keeps LeRoy Freidel from running full clip in the daily rate race, but he's convinced he could walk faster if he wasn't shackled by bureaucratic red tape. Freidel is the first to credit the welfare system with giving him a chance to get off the sidelines.

Still, his voice becomes angry and bitter when he tries to describe the federal restrictions that, from his point of view, have harnessed him into a plodding life of dependency and fear.

"I need you. I need the system, and I'm grateful," he says, adding, "But they've never let me really try to live on my own."