[Federal Register: December 28, 2001 (Volume 66, Number 249)]
[Rules and Regulations]
[Page 67369-67442]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de01-23]

[[Page 67369]]

-----------------------------------------------------------------------

Part II

Social Security Administration

-----------------------------------------------------------------------

20 CFR Part 411

The Ticket to Work and Self-Sufficiency Program; Final Rule

Request for Public Suggestions on Ways to Support Youth With Disability
in Transition to Adulthood; Notice

[[Page 67370]]

-----------------------------------------------------------------------

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 411

RIN 0960-AF11


The Ticket to Work and Self-Sufficiency Program

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

-----------------------------------------------------------------------

SUMMARY: We are publishing final regulations implementing the Ticket to
Work and Self-Sufficiency Program (Ticket to Work program) authorized
by the Ticket to Work and Work Incentives Improvement Act of 1999. The
Ticket to Work program provides beneficiaries with disabilities with
expanded options for access to employment services, vocational
rehabilitation services, or other support services. We will pay the
providers of those services after the beneficiaries achieve certain
levels of work.

DATES: These regulations are effective January 28, 2002.

FOR FURTHER INFORMATION CONTACT: Georgia E. Myers, Regulations Officer,
Social Security Administration, 6401 Security Boulevard, Baltimore, MD
21235, E-mail to regulations@ssa.gov, or telephone (410) 965-3632 or
TTY (410) 966-5609 for information about these regulations. For
information on eligibility or filing for benefits, call our national
toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our
Internet Web site, SSA Online, at www.ssa.gov.

SUPPLEMENTARY INFORMATION:

Background

    The National Organization on Disability/Harris Survey of 1998 found
that only 29 percent of individuals with disabilities were working
full- or part-time. From calendar year 1986 to calendar year 1999, the
number of individuals receiving disability benefits rose 80 percent,
with about half receiving Social Security disability benefits and half
Supplemental Security Income (SSI) benefits. Among the factors
contributing to this increase were outreach efforts of the Social
Security Administration (SSA) and the aging of the work force. The
Federal government spent $51.3 billion on Social Security disability
benefits in calendar year 1999, and $22.9 billion on SSI. Many States
use State funds to supplement the benefits of SSI beneficiaries.
    According to the U.S. General Accounting Office, less than one
percent of Social Security disability and SSI beneficiaries leave the
Social Security and SSI rolls each year as a result of paid employment.
Of those who leave, about one-third return within three years. If just
one-half of one percent of the current Social Security disability and
SSI beneficiaries were to cease receiving benefits as a result of
engaging in self-supporting employment, savings in cash benefits would
total $3.5 billion over the work-life of those individuals.
    These final regulations are intended to expand the options
available for Social Security disability beneficiaries and disabled or
blind SSI beneficiaries to access vocational rehabilitation (VR)
services, employment services, and other support services that are
necessary for such beneficiaries to obtain, regain or maintain
employment that reduces their dependency on cash benefits. We expect
that the expansion of these options and the creation of new work
incentives in the Ticket to Work and Work Incentives Improvement Act of
1999 (Public Law 106-170) will remove some of the disincentives that
many beneficiaries with disabilities face when they attempt to work or,
if already working, continue working or increase their work effort. If
more beneficiaries with disabilities engage in self-supporting
employment, the net result will be a reduction in the Social Security
and SSI disability rolls and savings to the Social Security Trust Fund
and general revenues.

Ticket to Work and Work Incentives Improvement Act of 1999

    On December 17, 1999, the Ticket to Work and Work Incentives
Improvement Act of 1999 (Public Law 106-170) became law.
    In section 2(b) of Public Law 106-170, the Congress states that
this legislation has the following four basic purposes:

--To provide health care and employment preparation and placement
services to individuals with disabilities that will enable those
individuals to reduce their dependence on cash benefit programs.
--To encourage States to adopt the option of allowing individuals with
disabilities to purchase Medicaid coverage that is necessary to enable
such individuals to maintain employment.
--To provide individuals with disabilities the option of maintaining
Medicare coverage while working.
--To establish a ``Ticket to Work and Self-Sufficiency Program'' that
allows Social Security disability and disabled or blind SSI
beneficiaries to seek the employment services, vocational
rehabilitation services, and other support services needed to obtain,
regain, or maintain employment and reduce their dependence on cash
benefit programs.

    Section 101(a) of Public Law 106-170 amended Part A of title XI of
the Social Security Act (the Act) by adding a new section 1148, The
Ticket to Work and Self-Sufficiency Program (Ticket to Work program).
The purpose of the Ticket to Work program is to expand the universe of
service providers available to beneficiaries with disabilities who are
seeking employment services, vocational rehabilitation services, and
other support services to assist them in obtaining, regaining and
maintaining self-supporting employment.
    The Social Security Administration is required to develop the
regulations necessary to implement section 1148 of the Act, as well as
certain other amendments to the Act made by Public Law 106-170, and to
provide details regarding the Ticket to Work program. Section 101(e) of
Public Law 106-170 requires the Commissioner of Social Security (the
Commissioner) to prescribe such regulations as are necessary to
implement the amendments made by section 101. We are prescribing these
regulations to address a number of areas where specific policy
decisions were left to the discretion of the Commissioner.
    Under the Ticket to Work program, the Commissioner may issue
tickets to Social Security disability beneficiaries and disabled and
blind SSI beneficiaries. Each beneficiary will have the option of using
his or her ticket to obtain services from a provider known as an
employment network (EN). The beneficiary will choose the EN, and the EN
will provide employment services, vocational rehabilitation services,
and other support services to assist the beneficiary in obtaining,
regaining and maintaining self-supporting employment. ENs will also be
able to choose whom they serve. Beneficiaries issued a ticket also will
have the option of taking the ticket to their State vocational
rehabilitation agency for services.
    The Commissioner's intent in publishing these final regulations for
the Ticket to Work program is to allow service providers that have
traditionally provided employment services, vocational rehabilitation
services and other support services, as well as other types of
entities, to qualify as ENs and serve beneficiaries with disabilities
under the program. The expansion of options available to obtain these
services will provide beneficiaries with real choices in getting the
services they

[[Page 67371]]

need to obtain, regain, or maintain employment.

Public Education Forums and Conferences

    Immediately following passage of Public Law 106-170, we began
working with the U.S. Departments of Health and Human Services,
Education, and Labor, as well as the Presidential Task Force on the
Employment of Adults with Disabilities, the President's Committee on
Employment of People with Disabilities, and the National Council on
Disability. These Federal partners joined together to plan and conduct
a series of public education forums. The purpose of the forums was to
increase the awareness of public disability programs and programs
designed to help individuals with disabilities start or return to work
among individuals with disabilities, their families and
representatives, service providers, advocates and State agencies. The
forums focused on Federal and State employment-related policies and
programs for people with disabilities.
    Forums were held in eleven major cities across the country. Those
cities were Baltimore, Maryland (December 12, 1999); Kansas City,
Missouri (February 2, 2000); Durham, North Carolina (March 9, 2000);
Phoenix, Arizona (March 30, 2000); New York, New York (April 6, 2000);
Austin, Texas (May 17, 2000); Seattle, Washington (June 13, 2000);
Worcester, Massachusetts (June 26, 2000); Chicago, Illinois (August 1,
2000); Harrisburg, Pennsylvania (August 15, 2000); and Denver, Colorado
(September 13-14, 2000).
    Representatives from many national and community-based
organizations participated in these forums, including the SSI
Coalition, Virginia Commonwealth University, Disability Rights
Education and Defense Fund, the National Brain Injury Association,
Consortium for Citizens with Disabilities, Robert Wood Johnson
Foundation, National Council on Independent Living, Capstone Group, as
well as State representatives from the Developmental Disabilities
Councils, the State Independent Living Councils, and the Governors'
Committees on Employment of People with Disabilities.
    The forums provided participants with both information and an
opportunity for discussion. Topics included: SSA customer services and
work incentives; State health care systems and models; and employment
initiatives of the Departments of Education, Labor, and Health and
Human Services.
    The forums were also used as an opportunity to share information
about Public Law 106-170 and conduct exploratory discussions about
policy issues relating to the implementation of the provisions in the
legislation that were left to the Commissioner to interpret. New models
where State and local systems are working together to serve their
common customers with disabilities were highlighted.
    SSA representatives were also involved in meetings and conferences
on the national, regional, State, and local levels. These included SSA-
sponsored forums in Chicago, San Francisco, Dallas, Denver, and
Philadelphia conducted in January and February 2000, which focused on
the Ticket to Work program. At these meetings and conferences, SSA
representatives made presentations on Public Law 106-170, facilitating
discussion and obtaining recommendations that were considered in
developing the provisions of the Ticket to Work program that were
addressed in our proposed rules.

SSA's Programs for Rehabilitation Services Prior to Implementation
of the Ticket to Work Program

    In titles II and XVI of the Social Security Act, Congress provided
that we promptly refer individuals applying for or determined eligible
for Social Security disability benefits or SSI benefits based on
disability or blindness to State vocational rehabilitation (VR)
agencies for necessary rehabilitation services. Under the statute and
by regulations, if a State VR agency does not serve a beneficiary whom
we referred, we may use other public or private agencies,
organizations, institutions or individuals to provide services. Under
our regulations, these other providers of services are known as
alternate participants. We are authorized under the Act to pay State VR
agencies and alternate participants for the reasonable and necessary
costs of services provided to Social Security disability beneficiaries
and disabled and blind SSI beneficiaries under specific circumstances.
The most frequent circumstance permitting payment under the Act is when
the services provided result in the beneficiary performing substantial
gainful activity (SGA) for a period of at least nine continuous months.
These programs for referral and reimbursement for VR services are
provided for in sections 222(a) and (d) and sections 1615(a), (d), and
(e) of the Act.
    Section 101(b) of Public Law 106-170 makes a number of conforming
amendments to the Act, which require amendments to existing regulations
that implement these statutory provisions. As we gradually implement
the Ticket to Work program in States selected by the Commissioner, the
provisions of the Act for referring beneficiaries to State VR agencies
will cease to be in effect in those States as provided in sections
101(b), (c) and (d) of Public Law 106-170. Additionally, the use of
alternate participants under the title II and title XVI vocational
rehabilitation reimbursement programs will be phased out in the States
as the Ticket to Work program is implemented, as authorized under
section 101(d)(5) of Public Law 106-170.
    Section 101(b) of Public Law 106-170 also repealed sections 222(b)
and 1615(c) of the Act, under which the Commissioner was authorized to
impose sanctions (i.e. make deductions from Social Security disability
benefits or suspend SSI benefits) with respect to any beneficiary who
refused, without good cause, to accept rehabilitation services made
available by a State VR agency or an alternate participant.
    The proposed rules to implement these statutory changes will be
published in the Federal Register at a later date.
    Section 101(b) of Public Law 106-170 also amends sections 225(b)
and 1631(a)(6) of the Act under which SSA is authorized to continue
disability or blindness benefit payments to individuals who recover
medically while participating in a program of vocational rehabilitation
services approved by the Commissioner if the Commissioner determines
that continuation in or completion of the program will increase the
likelihood that the individual will be permanently removed from the
disability or blindness benefit rolls. Section 101(b) of Public Law
106-170 amends these sections of the Act by striking ``a program of
vocational rehabilitation services'' and inserting ``a program
consisting of the Ticket to Work and Self-Sufficiency Program under
section 1148 or another program of vocational rehabilitation services,
employment services, or other support services''. The proposed rules to
implement this expanded definition will be published in the Federal
Register at a later date.
    We will also publish at a later date in the Federal Register the
rules for implementing section 112 of Public Law 106-170, Expedited
Reinstatement of Disability Benefits.

General Goals of the Ticket to Work Program

    The Ticket to Work program will enhance the range of choices
available

[[Page 67372]]

to Social Security disability and disabled and blind SSI beneficiaries
when they are seeking employment services, VR services and other
support services to obtain, regain or maintain self-supporting
employment. The coordinated and interrelated public policy embodied in
various provisions of Public Law 106-170 will remove several
disincentives to employment faced by beneficiaries with disabilities.
The Ticket to Work program will increase beneficiaries' access to
public and private providers to obtain employment services, VR
services, and other support services. As a result, the Ticket to Work
program, together with other provisions of Public Law 106-170, should
increase the number of beneficiaries who increase their work effort and
leave the Social Security or SSI disability rolls due to income from
employment.
    In addition to providing the increased opportunity for these
beneficiaries to obtain services when they seek employment, Public Law
106-170 may result in substantial savings for the Federal government
and State governments. Not only should there be an increase in the
number of beneficiaries leaving the Social Security and SSI disability
rolls due to work or earnings, some individuals will secure work with
employers who offer group health coverage, thereby reducing Medicaid
and Medicare expenses. Earned income should also yield tax receipts
while reducing expenses in Social Security disability and disabled and
blind SSI benefits, food stamps, HUD housing rent subsidies, and
certain veterans benefits. Improved employment rates of individuals
with disabilities should increase the independence of such individuals
and strengthen our communities and workforce.

Ticket to Work Program

    Section 1148 of the Act, which was added by section 101(a) of
Public Law 106-170, directs the Commissioner of Social Security to
establish a Ticket to Work and Self-Sufficiency Program. Section
1148(b) of the Act authorizes the Commissioner to issue a ticket to
disabled beneficiaries. Beneficiaries may choose among public or
private service providers that have been approved by SSA to function as
ENs under the program to obtain employment services, vocational
rehabilitation services, or other support services to assist them in
obtaining, regaining or maintaining employment that will reduce their
dependence on cash benefits. Beneficiaries will also have the option of
choosing to obtain services from their State VR agency. The overall
purpose of the Ticket to Work program is to expand the universe of
options available to beneficiaries with disabilities for obtaining such
services.
    Section 101(d) of Public Law 106-170 requires the Commissioner to
implement the Ticket to Work program in graduated phases at phase-in
sites selected by the Commissioner. This is to permit a thorough
evaluation of the program and ensure that the most effective methods
are in place for full implementation of the program. This section also
provides that the Ticket to Work program should be available in every
State not later than 2004.
    SSA has decided that the Ticket to Work program will be implemented
in the following manner:
    During Phase I of the Ticket to Work program, we will distribute
tickets to eligible beneficiaries in the following States: Arizona,
Colorado, Delaware, Florida, Illinois, Iowa, Massachusetts, New York,
Oklahoma, Oregon, South Carolina, Vermont and Wisconsin. We intend to
implement this phase upon the effective date of these regulations.
    During Phase II of the Ticket to Work program, we will distribute
tickets to eligible beneficiaries in the following States: Alaska,
Arkansas, Connecticut, Georgia, Indiana, Kansas, Kentucky, Louisiana,
Michigan, Mississippi, Missouri, Montana, Nevada, New Hampshire, New
Jersey, New Mexico, North Dakota, South Dakota, Tennessee, Virginia and
in the District of Columbia. We intend to implement this phase in
calendar year 2002.
    During Phase III of the Ticket to Work program, we will distribute
tickets to eligible beneficiaries in the following States: Alabama,
California, Hawaii, Idaho, Maine, Maryland, Minnesota, Nebraska, North
Carolina, Ohio, Pennsylvania, Rhode Island, Texas, Utah, Washington,
West Virginia, Wyoming, as well as in American Samoa, Guam, the
Northern Mariana Islands, Puerto Rico and the Virgin Islands. We intend
to implement this phase in calendar year 2003.
    Section 1148(d)(1) of the Act authorizes the Commissioner to
conduct a competitive bidding process and enter into an agreement with
one or more organizations to serve as a Program Manager (PM) to assist
SSA in administering the Ticket to Work program.
    The PM will recruit and recommend for selection by the Commissioner
ENs for service under the program; monitor all ENs serving in the
geographic areas covered under the PM's agreement to ensure that
adequate choices of services are made available to beneficiaries;
assure that payment by the Commissioner to ENs is warranted; facilitate
access by beneficiaries to ENs; ensure the availability of adequate
services; and ensure that sufficient ENs are available and that each
beneficiary under the program has reasonable access to employment
services, vocational rehabilitation services, and other support
services.
    Section 1148(d)(4) of the Act directs the Commissioner to select
and enter into agreements with service providers that are willing to
function as ENs and assume responsibility for the coordination and
delivery of employment services, vocational rehabilitation services,
and other support services to beneficiaries with disabilities under the
Ticket to Work program. A beneficiary with a ticket may assign his or
her ticket to any provider that is serving as an EN under the Ticket to
Work program and is willing to accept the assignment. Beneficiaries who
are issued a ticket also will have the option of taking the ticket to
their State VR agency for services.
    Section 101(e) of Public Law 106-170 requires the Commissioner to
prescribe such regulations as are necessary to implement the amendments
made by section 101 of this legislation. These final regulations
address those areas which must be regulated in order to implement the
Ticket to Work program. Additional regulations necessary for the
ongoing implementation of the program will be published as proposed
rules in the Federal Register at a later date. For example, proposed
performance measures to be used in conducting periodic reviews as
necessary to provide for effective quality assurance in the provision
of services by ENs will need to be developed and published in the
Federal Register for comment.

Notice of Proposed Rulemaking

    We published a Notice of Proposed Rulemaking (NPRM) in the Federal
Register on December 28, 2000 (65 FR 82844) proposing rules to
implement the Ticket to Work program. We provided the public 60 days to
submit comments. The comment period closed February 26, 2001. We
received comments from over 400 commenters. We discuss the comments we
received on the NPRM and provide our responses to the comments later in
this preamble under ``Public Comments on the Notice of Proposed
Rulemaking.'' A summary of the public comments is available on the
Internet at the SSA Office of Employment Support Programs' Work Site at
http://www.ssa.gov/work.

[[Page 67373]]

    As we explain below, in these final regulations, we are making a
number of changes from the proposed rules in response to public
comments. As suggested in a number of these comments, we are also
making other changes in the interest of improved clarity, consistency,
and improved organization.

Final Regulations

    We are adding a new part 411 to chapter III of title 20 of the Code
of Federal Regulations to provide the regulations for the Ticket to
Work program. The new part 411 is divided into the following subparts.

Subpart A--Introduction

    Subpart A of these regulations provides an introduction to the
regulations in the new part 411. Section 411.100 provides an overview
of the regulations in part 411. Section 411.105 describes the purpose
of the Ticket to Work program. Section 411.110 explains that the Ticket
to Work program will be implemented in graduated phases in sites around
the country as required by section 101(d) of Public Law 106-170.
Section 411.115 provides definitions of terms used in part 411. In the
final rules, we have reorganized the definitions of terms in
Sec. 411.115 to place the terms in alphabetical order. In final
Sec. 411.115(m) (proposed Sec. 411.115(i)), we have clarified the
definition of State vocational rehabilitation agency to indicate that
in those States that have one agency that provides VR services to non-
blind individuals and another agency that provides services to blind
individuals, the term ``state vocational rehabilitation agency'' or
``state VR agency'' refers to either State agency. In addition, we have
expanded Sec. 411.115 in the final rules to provide definitions of the
terms ``employment network'' or ``EN,'' ``individual work plan'' or
``IWP,'' ``individualized plan for employment'' or ``IPE,'' ``program
manager'' or ``PM,'' and ``ticket.''

Subpart B--Tickets Under the Ticket to Work Program

    Subpart B of these regulations describes what a ticket is and
explains who is eligible to receive a ticket.
    Section 411.120 explains that a ticket is a document that provides
evidence of the Commissioner's agreement to pay an EN or State VR
agency to which a beneficiary's ticket is assigned for providing
services to the beneficiary under the Ticket to Work program if certain
conditions are met. As required by section 101(e)(2)(B) of Public Law
No. 106-170, we have added a complete description of the format and the
wording of the ticket to this section.
    Section 411.125 states the following requirements, among others,
for eligibility to receive a ticket: a title II beneficiary must be age
18 to 64, and a title XVI beneficiary must be age 18 to 64 and be
eligible for disability payments under the disability standard for
adults; a beneficiary must be in current pay status for monthly cash
benefits based on disability under title II of the Act or monthly
Federal cash benefits based on disability or blindness under title XVI
of the Act; and a beneficiary's case must either (1) have a permanent
impairment or a nonpermanent impairment (i.e. an impairment for which
medical improvement is possible but cannot be predicted), or (2) have
an impairment that is expected to improve and have undergone at least
one continuing disability review (CDR).
    In developing requirements for ticket eligibility under these
regulations, we considered, but decided not to extend eligibility for a
ticket to three additional groups of individuals.
    The first group consists of beneficiaries who have impairments that
are expected to improve and for whom we have not yet conducted at least
one continuing disability review. Because these beneficiaries have
conditions that are expected to medically improve in a relatively short
period of time, they could be expected to return to work without the
need for services under the Ticket to Work program. Continuing
disability reviews for this category of beneficiaries are scheduled for
6-18 months after the initial disability determination. Under these
rules, if we determine in the first continuing disability review that
the beneficiary remains disabled, we would then issue a ticket,
provided that the beneficiary met the other ticket eligibility
criteria. This approach would ensure that beneficiaries whose
conditions do not improve as anticipated have the opportunity to
benefit from services under the Ticket to Work program within a
relatively short period of time after the initial determination.
    The second group consists of individuals who have not attained age
18. Beneficiaries in this group generally are in school, still pursuing
completion of their formal elementary and secondary education. For this
group, participation in an employment plan under the Ticket to Work
program could interfere with their pursuit of an education, completion
of which many believe should be the primary focus and goal for school-
age youth.
    The third group consists of those who received title XVI payments
prior to attaining age 18 (i.e. under the disability standard for
children) and have since attained age 18, but for whom we have not yet
conducted a redetermination of their eligibility under the disability
standard for adults. Because ongoing eligibility has not yet been
determined for these beneficiaries, we believe that it is premature to
issue a ticket to them immediately. Under the final rules, if we
establish in the redetermination that a beneficiary in this group is
eligible for disability payments under the disability standard for
adults, we would then issue a ticket, provided that the beneficiary met
the other ticket eligibility criteria.
    We plan to review periodically our policy regarding ticket
eligibility, including whether it would be prudent to extend
eligibility to the groups discussed above. In addition, we are
interested in exploring various approaches to assist youth under age 18
to transition to independence, further education, and careers in the
workforce. Therefore, we are publishing a Notice elsewhere in today's
Federal Register in which we are seeking suggestions from the public to
assist us in designing for beneficiaries in the second and third groups
an approach that could complement the Ticket to Work program.
    In response to public comments, in these final rules we have added
Sec. 411.125(c) to explicitly state that individuals whose entitlement
to title II benefits based on disability is reinstated under section
223(i) of the Act, or whose eligibility for title XVI benefits based on
disability or blindness is reinstated under section 1631(p) of the Act,
will be eligible to receive another ticket in the first month he or she
is entitled to reinstated benefits, as long as the beneficiary meets
certain other requirements for eligibility for a ticket. Sections
223(i) and 1631(p) of the Act were added by section 112 of Public Law
106-170.
    Section 411.130 explains that SSA will distribute tickets in
graduated phases.
    Section 411.135 explains that participation in the Ticket to Work
program is voluntary. This section explains that if beneficiaries want
to participate in the program, they may take their tickets to any
entity serving under the program.
    Section 411.140 explains that a beneficiary may assign his or her
ticket to any EN or State VR agency that is willing to provide
services, and that the

[[Page 67374]]

beneficiary may discuss his or her rehabilitation and employment plans
with as many entities as he or she wishes. This section explains that
the beneficiary can obtain a list of the approved ENs in his or her
area. This section also explains certain requirements that must be met
in order for a beneficiary to assign a ticket. Section 411.140 provides
that an individual will be eligible to assign a ticket to an EN or
State VR agency only during a month in which the individual meets the
requirements of Sec. 411.125(a)(1) and (a)(2). In general, this means
the individual must be age 18-64 and must be either a title II
disability beneficiary in current pay status who is not receiving
benefit payments under 20 CFR 404.316(c), 404.337(c), 404.352(d) or
404.1597a, or a title XVI disability beneficiary whose Federal SSI cash
benefits are not suspended and who is not receiving disability or
blindness benefit payments under 20 CFR 416.996 or 416.1338.
    Section 411.140 also provides that beneficiaries and ENs must agree
to and sign an individual work plan (IWP) (or, in the case of a State
VR agency, an individualized plan for employment (IPE)) before a ticket
can be assigned. In response to public comments, in these final rules
we are revising Sec. 411.140(a) to indicate that individuals may assign
their ticket to a State VR agency if they are eligible to receive VR
services according to 34 CFR 361.42. We are making a similar change to
Sec. 411.150 regarding reassignment of a ticket to a State VR agency.
Also in response to comments, we are revising Secs. 411.140 and 411.150
to indicate that a representative of the State VR agency must agree to
and sign the IPE. We also have modified Secs. 411.140 and 411.150 of
the final rules to provide that in order for a ticket to be assigned or
reassigned to a State VR agency, the beneficiary and a representative
of the State VR agency must agree to and sign both an IPE and a form
that provides the information described in Sec. 411.385(a)(1), (2) and
(3) of these final regulations.
    We are also making changes to Sec. 411.140(d) and (e) and
Sec. 411.150(b) and (c) in these final rules to clarify that a copy of
the signed IWP developed by the beneficiary and the EN, or the
completed and signed form required for assignment or reassignment of a
ticket to a State VR agency under Sec. 411.385(a) and (b), must be
submitted to and received by the PM in order for a ticket to be
assigned or reassigned to the EN or State VR agency. If the IWP or
required form has been submitted to and received by the PM, and if the
other requirements for assignment or reassignment of a ticket are met,
we will consider the ticket assigned or reassigned to the EN or State
VR agency, effective as of the first day on which such other
requirements are satisfied.
    Section 411.145 describes the conditions under which a beneficiary
may take a ticket back after it has been assigned to an EN or State VR
agency. It also describes other conditions under which a ticket that is
assigned can be taken out of assignment. In response to public
comments, we are revising Sec. 411.145(b) to state that a State VR
agency may ask the PM to take a ticket out of assignment if the State
VR agency stops providing services because the individual has been
determined to be ineligible for VR services under 34 CFR 361.42, and to
provide a cross-reference to the reassignment rules in Sec. 411.150.
    Section 411.150 explains the beneficiary's right to reassign a
ticket, if the beneficiary chooses. In response to public comments, we
have revised Sec. 411.150(b) to state that the beneficiary and a
representative of the State VR agency must agree to and sign an
Individualized Plan for Employment if the beneficiary wishes to
reassign his or her ticket to a State VR agency. Also, as discussed
above, we have modified this provision in the final rules to provide
that in order for a ticket to be reassigned to a State VR agency, the
beneficiary and a representative of the State VR agency must agree to
and sign both an IPE and a form that provides the information described
in Sec. 411.385(a)(1), (2) and (3). We also are modifying
Sec. 411.150(b) to clarify that one of the conditions for reassigning a
ticket is that the ticket must be unassigned. We explain that if the
ticket currently is assigned to an EN or State VR agency, the
beneficiary must first tell the PM in writing that he or she wants to
take the ticket out of assignment as provided under Sec. 411.145. In
addition, as written, proposed Sec. 411.150(b)(2) potentially could
have prevented certain individuals who were working with ENs or State
VR agencies from reassigning their ticket, thus unnecessarily limiting
their ability to take full advantage of the provisions of the Ticket to
Work program.
    Accordingly, we have modified the requirements in Sec. 411.150(b)
to provide exceptions to the general rule that in order to reassign a
ticket, an individual must be age 18-64 and either a title II
disability beneficiary in current pay status or a title XVI disability
beneficiary whose Federal SSI cash benefits are not suspended. Final
Sec. 411.150(b)(3) provides that an individual does not have to satisfy
these requirements if the individual and a representative of the new EN
sign an IWP, or if the individual and a representative of the State VR
agency sign both an IPE and the required form, within certain time
periods. The time periods begin from the effective date on which the
ticket was no longer assigned to the previous EN or State VR agency.
The applicable time period depends on whether the individual's ticket
is or is not in use under the rules in Sec. 411.170 et seq. For an
individual whose ticket is not in use, the specified time period is 30
days from the effective date the ticket no longer was assigned to the
previous EN or State VR agency. For an individual whose ticket is in
use, the specified time period is the three-month period that begins
with the first month the ticket no longer was assigned to the previous
EN or State VR agency. This three-month period is the extension period
described in Sec. 411.220.
    The requirements that an individual be age 18-64 and be either a
title II disability beneficiary in current pay status or a title XVI
disability beneficiary whose Federal SSI cash benefits are not
suspended are two of the basic requirements specified in
Sec. 411.125(a)(1) and (2) which an individual must meet in order to be
eligible to receive a ticket under that section. In these final rules,
an individual must meet these same requirements in order to be eligible
to reassign a ticket under Sec. 411.150, unless one of the conditions
specified in Sec. 411.150(b)(3) is met.
    In addition, final Sec. 411.150(a) provides that an individual will
not be eligible to reassign a ticket if he or she is receiving title II
disability benefits under 20 CFR 404.316(c), 404.337(c), 404.352(d) or
404.1597a, or is receiving title XVI disability or blindness benefit
payments under 20 CFR 416.996 or 416.1338. This rule was reflected in
proposed Sec. 411.150(b)(2). We are retaining this rule in final
Sec. 411.150(a). This rule applies regardless of whether one of the
conditions specified in Sec. 411.150(b)(3) is met.
    Other changes which we are making in final Sec. 411.150(b) and (c)
are explained above in our discussion of the revisions to Sec. 411.140.
Because of these changes, proposed Sec. 411.150(d) is deleted in these
final rules.
    Section 411.155 explains when a beneficiary's ticket terminates and
eligibility for participation in the Ticket to Work program ends. Once
a ticket terminates, a beneficiary may not assign or reassign it to an
EN or State VR agency. Under these regulations, a ticket will terminate
when: (1) entitlement to Social Security disability benefits ends for
reasons other than the individual's

[[Page 67375]]

work activity or earnings, or when eligibility for SSI benefits based
on disability or blindness terminates for reasons other than the
individual's work activity or earnings, whichever is later; (2) a
Social Security disabled widow(er) beneficiary attains age 65; or (3) a
disabled or blind SSI beneficiary reaches age 65 and may qualify for
SSI benefits based on age.
    In order to provide clarity regarding all of the circumstances
under which a ticket will terminate and an individual's eligibility for
participation in the Ticket to Work program ends, we also are expanding
Sec. 411.155 to add a description of the events that terminate the
ticket after the beneficiary's entitlement to title II benefits based
on disability or eligibility for title XVI benefits based on disability
or blindness terminated because of work or earnings. After such
termination of entitlement or eligibility (and, in the case of a
concurrent title II/title XVI disability beneficiary, the termination
of entitlement/eligibility under the other program), a ticket will
terminate in any of the following months: (1) the month we make a final
determination or decision that an individual is not entitled to have
title II benefits based on disability reinstated under section 223(i)
of the Act or not eligible to have title XVI benefits based on
disability or blindness reinstated under section 1631(p) of the Act;
(2) the month in which we make a final determination or decision that
an individual is not entitled to title II benefits based on disability
or eligible for title XVI benefits based on disability or blindness
based on the filing of an application for benefits; (3) the month in
which a beneficiary reaches retirement age (as defined in section
216(l) of the Act); (4) the month in which the beneficiary dies; (5)
the month in which a beneficiary becomes entitled to a title II benefit
that is not based on disability or eligible for a title XVI benefit
that is not based on disability or blindness; and (6) the month in
which the beneficiary again becomes entitled to title II benefits based
on disability, or eligible for title XVI benefits based on disability
or blindness, based on filing a new application.
    In addition, consistent with the modification to Sec. 411.125, we
are modifying Sec. 411.155 to indicate that when a beneficiary is
eligible to receive another ticket as a result of benefit reinstatement
under section 223(i) or 1631(p) of the Act, the ticket that the
beneficiary received in connection with the previous period of
entitlement or eligibility will terminate in the month the beneficiary
is eligible for the new ticket.
    We have deleted reference to payment of 60 outcome payments to an
EN that was described in proposed Sec. 411.155(d), since this event
properly refers to the period of using a ticket (see Sec. 411.171(d)
and (e)).

Subpart C--Suspension of Continuing Disability Reviews for
Beneficiaries Who Are Using a Ticket

    Under section 221(i) of the Act and under the authority granted by
sections 1631 and 1633 of the Act, we conduct periodic reviews to
ensure that beneficiaries continue to meet the definition of disability
under sections 223(d) and 1614(a) of the Act. These reviews are called
continuing disability reviews (CDRs). Public Law 106-170 amends the Act
to add section 1148(i), which states that SSA may not initiate a CDR
during any period in which a beneficiary is using a ticket. The statute
states:
    ``During any period for which an individual is using, as defined by
the Commissioner, a ticket to work and self-sufficiency issued under
this section, the Commissioner (and any applicable State agency) may
not initiate a continuing disability review or other review under
section 221 of whether the individual is or is not under a disability
or a review under title XVI similar to any such review under section
221.''
    The definition of using a ticket is to be determined by the
Commissioner of Social Security. Subpart C outlines our definition of
using a ticket.
    In developing our definition of using a ticket, we considered two
key factors. First, the intent of the Ticket to Work program is to
allow beneficiaries with disabilities to seek the services they need to
work and to reduce or eliminate dependence on Social Security
disability and SSI benefits. However, anecdotal evidence suggests that
some beneficiaries are afraid that working, or even receiving
vocational rehabilitation services, may increase the likelihood that
their benefits will be terminated by a CDR. Therefore, using a ticket
should be defined in a way that minimizes this employment disincentive
for beneficiaries participating in the Ticket to Work program. In order
to maintain the integrity of the disability programs, it is also
important that beneficiaries who have medically improved and who no
longer meet the definition of disability under sections 223(d) and
1614(a)(3) of the Act do not continue to receive disability benefits
for an undue length of time.
    Our definition seeks to balance these concerns by ensuring that
CDRs are suspended only during the period in which beneficiaries are
making timely progress toward reducing or eliminating dependence on
Social Security disability or SSI benefits, while at the same time
recognizing that progress toward that goal may not always be rapid or
continuous.
    Under our definition of using a ticket, a beneficiary will be
considered to be using a ticket during the period in which he or she
was making progress toward the goal of reducing or eliminating
dependence on disability benefits within reasonable time frames. Under
this approach, beneficiaries will be allowed a limited period to
prepare for work. At the end of this period, they will need to show
that they were progressing toward self-sufficiency by demonstrating
increasing levels of employment.
    An important advantage of this definition of using a ticket is that
it increases employment incentives by ``rewarding'' beneficiaries who
work and progress toward self-sufficiency with continued suspension of
CDRs. However, requiring beneficiaries to demonstrate increasing levels
of employment within a defined time frame results in a fairly complex
regulation. The complexity arises from our attempt to balance the
concerns discussed above and, to the extent possible, to accommodate
the diverse employment needs of a wide range of beneficiaries. While
some level of complexity is unavoidable, we have attempted wherever
possible to simplify the regulation and to make it straightforward to
implement.
    Based on the comments that we received regarding the complexity and
difficulty of this subpart, we are revising and reorganizing the
content to increase clarity wherever possible.
    Sections 411.160 and 411.165 introduce this subpart. In response to
a comment on proposed Sec. 411.160 noting a confusion in the use of the
term ``continuing disability review'' for both medical and work
reviews, we are clarifying the language in paragraph (b) to reference
our rules on when we may conduct a CDR to determine whether an
individual remains eligible for disability-based benefits. In response
to recommendations that we clarify proposed Sec. 411.165 to explain
when the period of using a ticket begins and ends, we are expanding
Sec. 411.165 to include cross-references to Secs. 411.170 and 411.171.
    We are adding Sec. 411.166 in response to comments on our proposed
rules regarding the use of new terms. This

[[Page 67376]]

section provides a glossary of the following terms: ``active
participation in your employment plan,'' ``extension period,''
``inactive status,'' ``initial 24-month period,'' ``progress review,''
``timely progress guidelines,'' ``12-month progress review period,''
and ``using a ticket.''
    In our proposed rules, we used the terms ``work review'' or ``work
review period'' when referring to the requirements for making timely
progress toward self-supporting employment. In response to comments
that these terms caused confusion with existing terms used to describe
``work CDR,'' we are now referring to ``progress review'' or ``progress
review period,'' which are included in the glossary of terms in
Sec. 411.166.
    Sections 411.170 and 411.171 describe when the period of using a
ticket begins and ends. The period of using a ticket begins when the
ticket is first assigned to an EN or State VR agency. The primary
purpose of the suspension of CDRs is to ensure that Ticket to Work
program participants are not inhibited in their attempts to work or
pursue an employment plan by the fear that such activities will
increase the likelihood that their benefits will be terminated in a
medical review. Prior to the assignment of the ticket, a beneficiary is
not participating in these activities under the Ticket to Work program.
    We are revising Sec. 411.171 to clarify that the period of using a
ticket ends with the earliest of the following (1) the occurrence of
one of the events listed in Sec. 411.155, which describes the events
that will result in termination of the ticket; (2) when the beneficiary
is determined to be no longer making timely progress toward self-
supporting employment according to our guidelines (see Secs. 411.180
through 411.200); (3) when the extension period expires if the
beneficiary has not reassigned the ticket within the period; or (4)
when we have made 60 outcome payments to an EN, including a State VR
agency functioning as an EN, under subpart H. In instances where the
beneficiary assigned a ticket to a State VR agency which selected the
cost reimbursement payment system, the period of using a ticket also
will end with the 60th month for which an outcome payment would have
been made had the State VR agency chosen to function as an EN with
respect to the beneficiary.
    Section 411.175 describes our rules when a beneficiary assigns a
ticket after a CDR has begun. A beneficiary may assign the ticket and
receive services under the Ticket to Work program. We will, however,
complete the CDR.
    Sections 411.180, 411.185, 411.190 and 411.191 describe our
guidelines for timely progress toward self-supporting employment.
    After assigning a ticket, beneficiaries will be allowed up to two
years to prepare for employment. This two-year period is referred to in
the final rules as the initial 24-month period. After two years, we
will consider that beneficiaries are continuing to use a ticket, and
are therefore eligible to receive the protection in Section 1148(i) of
the Act regarding non-initiation of CDRs, if they work at progressively
higher levels of employment. Such a progression would allow
beneficiaries time to improve their employment capacities.
    We are reordering certain paragraphs in Sec. 411.180 to provide a
more appropriate placement for the definitions of terms we use to
describe the guidelines we use to determine if an individual is making
timely progress toward self-supporting employment. We are also
clarifying that, for purposes of counting the 24 months comprising the
initial 24-month period, we will not count any month in which the
ticket is not assigned or not in use.
    Under our timely progress guidelines, in the 24-month progress
review conducted by the PM, beneficiaries must demonstrate that their
employment plan has a goal of at least three months of work, as defined
in Sec. 411.185, by the time of the first 12-month progress review. The
PM also must find that beneficiaries can reasonably be expected to
reach this goal. In response to public comments, we are revising
Sec. 411.180(c)(1) to allow beneficiaries to use months worked during
the initial 24-month period to meet these requirements of the 24-month
progress review, as long as the work was at the level applicable to the
work requirements for the first 12-month progress review period under
Sec. 411.185. In the third year of participation in the Ticket to Work
program (referred to in the final rules as the first 12-month progress
review period), beneficiaries would be required to work at least three
months at a specified level. In response to public comment, we are
revising Sec. 411.180(c)(2) to allow beneficiaries to use months worked
during the initial 24-month period to meet this requirement as well, as
long as the work was at the required level as described in
Sec. 411.185. We are revising Sec. 411.185(a)(1), (b)(1) and (c)(1) to
reference the rules in Sec. 411.180(c)(1) and (c)(2) on when months of
work performed during the initial 24-month period may be used to meet
certain requirements of the 24-month progress review and the work
requirements of the first 12-month progress review period.
    In the fourth year of participation in the program, beneficiaries
will be required to work at least six months at the SGA level. In the
fifth and succeeding years, in order to be considered to be using a
ticket, they will be required to work at least six months in each year
and have earnings in each such month that are sufficient to eliminate
the payment of Social Security disability benefits and Federal SSI
benefits.
    In developing these guidelines, we recognized that progress toward
self-sufficiency is not always continuous, and some beneficiaries may
not attain full self-sufficiency. Many beneficiaries have disabilities
with cycles of relapse and remission. In addition, some beneficiaries
may need to try more than one job before finding a situation that suits
their abilities and needs. The requirement that beneficiaries need only
work three months out of 12 in the third year and six months out of 12
in succeeding years recognizes that some beneficiaries may not be able
to work on a continuous basis.
    Section 411.185 provides levels of earnings that an individual must
have in order to be considered to be using a ticket. It defines when an
individual will be considered to be working for purposes of meeting the
timely progress guidelines. Under this definition, the required
earnings level will increase over time. In the third and fourth years
of participation in the Ticket to Work program (i.e. the first and
second 12-month progress review periods), both Social Security
disability beneficiaries and concurrent Social Security and SSI
beneficiaries will be required to work at the SGA level applicable to
non-blind beneficiaries for the specified number of months. This means
that the beneficiary must have monthly earnings from employment or
self-employment, after any applicable deductions under 20 CFR 404.1572
through 404.1576, that are more than the SGA threshold amount for non-
blind beneficiaries.
    The SGA threshold amount is set by regulation under 20 CFR
404.1574(b)(2), and is currently $740 a month for non-blind
beneficiaries. Social Security disability beneficiaries, including
concurrent Social Security and SSI beneficiaries, who are in a trial
work period or who are statutorily blind will be deemed to have met the
requirement to work at the SGA level applicable to non-blind
beneficiaries if their gross earnings from employment, before any
exclusions, are more than the SGA threshold amount for non-blind

[[Page 67377]]

beneficiaries, or if their net earnings from self-employment, before
any exclusions, are more than the SGA threshold amount for non-blind
beneficiaries.
    Under the definition of work for purposes of the first and second
12-month progress review periods, SSI disability and blindness
beneficiaries will be considered to be working in a month in which the
beneficiary has gross earnings from employment, before any exclusions,
that are more than the SGA threshold amount for non-blind
beneficiaries, or has net earnings from self-employment, before any
exclusions, that are more than the SGA threshold amount for non-blind
beneficiaries.
    Earnings at the levels established in Sec. 411.185 for the third
and fourth years of participation in the program may not be sufficient
to eliminate the payment of all disability benefits. The amount of
earnings needed to eliminate the payment of disability benefits depends
on a variety of factors, including whether the beneficiary receives
Social Security or SSI benefits, or both, whether the beneficiary is
blind, and whether the beneficiary has impairment-related work expenses
or is eligible for other income exclusions. The earnings requirement
for the third and fourth years are set at levels that allow
beneficiaries time to work toward the higher levels of earnings that
may be required to eliminate the payment of disability benefits for the
required months in subsequent years of program participation.
    In the fifth and subsequent years of participation in the program,
both Social Security and SSI beneficiaries will be required to work for
at least six months with earnings in each such month that are
sufficient to eliminate payment of Social Security disability and
Federal SSI cash benefits in a month. The requirement that individuals
using a ticket eventually attain this level of earnings is consistent
with the payment structure of the Ticket to Work program, in which ENs
receive outcome payments only when Federal disability benefit payments
are eliminated. It also reflects that one of the purposes of the Ticket
to Work program is to produce savings in benefit payments. Since the
suspension of CDRs for individuals using a ticket means that it is
possible that some beneficiaries who no longer meet the definition of
disability will continue to be eligible for benefits, it is important
that the suspension of CDRs not continue for an undue length of time
without a significant reduction in benefit payments due to earnings.
    In Sec. 411.190, we discuss how it will be determined if a
beneficiary is meeting the timely progress guidelines. To place the
rules in a more logical order according to the sequence of events and
actions they discuss, we are expanding Sec. 411.190 to incorporate the
rules for placing a ticket in inactive status, as well as other rules
relating to the initial 24-month period, that were previously set out
in proposed Secs. 411.192 and 411.220. (In the final rules,
Sec. 411.192 has been deleted, and proposed Sec. 411.225 has been
redesignated Sec. 411.220.) During the initial 24-month period
following assignment of a ticket, the PM will give beneficiaries the
option of placing the ticket in inactive status if they are unable to
participate in their employment plan for a significant period of time
for any reason. Beneficiaries may decide to exercise this option
because any months during which the ticket is in inactive status will
not count toward the time limitations (i.e. the initial 24-month
period) under the timely progress guidelines. The PM will explain,
however, that since the ticket will not be in use during the period in
which it is in inactive status, the beneficiary will be subject to a
CDR, should one become due.
    A beneficiary will be subject to initiation of a CDR during any
period for which the beneficiary's ticket is considered to be not in
use. A ticket is considered to be not in use during any month during
which the ticket is in inactive status as described in Sec. 411.190 or
during which the ticket is unassigned following the close of the three-
month extension period described in Sec. 411.220. A ticket also is
considered to be not in use after the period of using a ticket ends as
described in Sec. 411.171.
    We are modifying the summary table in Sec. 411.191 to reflect the
rule we are adding to Sec. 411.180(c)(2) which will allow beneficiaries
to use months worked during the initial 24-month period to meet the
work requirements of the first 12-month progress review if the work was
at the requisite level. We also are making changes to the table in
these final rules to clarify certain entries in the table, to reflect
changes we are making to other sections of the final rules in subpart
C, and to provide a more accurate description of the level of earnings
required for SSI-only beneficiaries during the first and second 12-
month progress review periods.
    In Secs. 411.195, 411.200 and 411.205, we discuss how the PM will
conduct periodic progress reviews to ensure that beneficiaries are
meeting the timely progress guidelines. The first review will be a 24-
month progress review occurring at the end of the initial 24-month
period. This will be followed by 12-month progress reviews. After
successfully completing a progress review, the beneficiary will be
considered to be meeting the timely progress guidelines until the next
review is completed. If a beneficiary disagrees with the PM's decision
in any review, the beneficiary will have the right to ask SSA to review
the PM's decision. The Commissioner or the Commissioner's designee will
review the decision. The criteria for the 24-month progress review and
the 12-month progress reviews are designed to be as clear-cut as
possible. This feature, combined with the PM's responsibility for
conducting the reviews should allow for rapid processing of reviews and
decrease the administrative burden on both the beneficiary and SSA.
    In response to public comments, we are adding a sentence to
Sec. 411.195(a)(1) to indicate that the activities outlined in the
employment plan during the initial 24-month period may include
employment.
    In Sec. 411.210, we explain that a determination that a beneficiary
is not making timely progress toward self-supporting employment will
result in our finding that the beneficiary no longer is using a ticket.
The beneficiary would be allowed to continue in the Ticket to Work
program, and the beneficiary's EN or State VR agency would be eligible
for any payments that became due. In response to public comments, we
are modifying Sec. 411.210(a) to indicate that these payments would
include not just outcome payments, but also milestone payments (or, for
a State VR agency electing payment under the cost reimbursement payment
system, payments under the cost reimbursement payment system) for which
the ENs or State VR agencies are eligible. These beneficiaries,
however, would once again be subject to CDRs.
    This section also provides that a beneficiary who fails to meet the
timely progress guidelines will have the opportunity to be considered
to be using a ticket later if the beneficiary actively participates in
the employment plan or works for a specified number of months. The
requirements which a beneficiary must meet in order to re-enter in-use
status (including the number of months, type of participation, and
earnings level required) vary depending on how far the beneficiary had
progressed when he or she failed to meet the timely progress
guidelines.
    We are providing this method of allowing a beneficiary to be
considered

[[Page 67378]]

again to be using a ticket because, as previously stated, we recognize
that due to the nature of disability, progress toward increased self-
sufficiency is not always direct. Beneficiaries may make unsuccessful
attempts before reaching their employment goals, and these unsuccessful
attempts should not deprive them of the supports that they need to make
renewed efforts.
    In response to a public comment, we are adding a new
Sec. 411.210(b)(1) to provide that a beneficiary who fails to meet the
timely progress guidelines during the initial 24-month period may re-
enter in-use status by demonstrating three consecutive months of active
participation in the employment plan. This new provision is more
consistent with the requirements of active participation during this
period under the timely progress guidelines under Sec. 411.190(a). In
new Sec. 411.210(b)(1)(iii) we explain that for a beneficiary who is
reinstated to in-use status after having failed to meet the timely
progress guidelines during the initial 24-month period, the next review
will be the 24-month progress review. We also have added a new
Sec. 411.210(b)(2) to provide a separate provision on re-entering in-
use status for a beneficiary who failed to meet the timely progress
guidelines in the 24-month progress review. In new
Sec. 411.210(b)(2)(i), we explain that, consistent with the proposed
rules, a beneficiary who fails to meet the timely progress guidelines
in the 24-month progress review may re-enter in-use status by
completing three months of work (as defined in Sec. 411.185(a)(1),
(b)(1) or (c)(1)) within a rolling 12-month period. We have modified
this provision (which was formerly a part of proposed
Sec. 411.210(b)(1)) to provide that the beneficiary also must satisfy
the test of Sec. 411.200(a)(2) regarding the anticipated level of the
beneficiary's work during the ensuing 12-month progress review period
that would begin if the beneficiary were reinstated to in-use status.
We also clarify in new Sec. 411.210(b)(2)(i) and (iii) that the work
requirements for this 12-month progress review period will be the work
requirements that are applicable during the second 12-month progress
review period.
    To accommodate new Sec. 411.210(b)(1) and (b)(2), we have
renumbered the remaining numbered paragraphs that were included under
proposed Sec. 411.210(b). In Sec. 411.210(b)(3), (b)(4) and (b)(5) of
the final rules, we have added provisions to the rules on re-entering
in-use status to provide that, in addition to completing the work
requirements, the beneficiary also must satisfy the test of
Sec. 411.200(a)(2) regarding the anticipated level of the beneficiary's
work during the ensuing 12-month progress review period that would
begin if the beneficiary were reinstated to in-use status. This change
is consistent with the two-step process for the 12-month progress
reviews under Sec. 411.200(a).
    For further clarification of the process of re-entering in-use
status, we are adding Sec. 411.210(c), and revising Sec. 411.210(b), to
describe the process for requesting reinstatement to in-use status, to
explain that the PM will decide whether the beneficiary has satisfied
the requirements for re-entering in-use status, and to provide that a
beneficiary may ask us to review the PM's decision that the beneficiary
has not satisfied the requirements for re-entering in-use status. These
sections explain that a beneficiary must submit a written request to
the PM asking that he or she be reinstated to in-use status. If the PM
decides that the beneficiary has not satisfied the requirements for re-
entering in-use status, the beneficiary may request that we review the
decision.
    Final Sec. 411.220 was Sec. 411.225 in the proposed rules. Final
Sec. 411.220 explains that beneficiaries who are using a ticket are
eligible for an extension period of up to three months to reassign a
ticket that previously was assigned to an EN or State VR agency and no
longer is assigned. We have revised this section to indicate that the
ticket must be in use for the beneficiary to be eligible for the
extension period. During this period, we will consider that the ticket
still is in use, and the beneficiary will not be subject to CDRs. In
response to public comments, we are modifying this section to show the
beneficiary's moving to an area not served by the previous EN or State
VR agency as a reason the ticket may no longer be assigned. We also
have explained in Sec. 411.220(e) of the final rules that a beneficiary
whose extension period began during the initial 24-month period will
have a new initial 24-month period when the beneficiary reassigns a
ticket during the extension period to an EN or State VR agency, other
than the one to which the ticket previously was assigned.
    We are adding a new Sec. 411.225 to describe the circumstance of a
beneficiary reassigning a ticket after the end of the extension period.
This section concerns a situation that was not discussed in the
proposed rules. This section explains that a beneficiary may reassign a
ticket after the end of the extension period under the conditions
described in Sec. 411.150. Section 411.225(c) explains that if the
extension period began during the initial 24-month period, a
beneficiary will have a new initial 24-month period when the
beneficiary reassigns a ticket to an EN or State VR agency, other than
the one to which the ticket previously was assigned. The reason for
providing a new initial 24-month period at this time is because the
beneficiary may have to reassign his or her ticket due to no fault of
his or her own. For example, the EN may have gone out of business or be
no longer approved to participate in the Ticket to Work program, or the
beneficiary may have to relocate or may have a relapse in his or her
medical condition. Section 411.225(d) explains that if the extension
period began during any 12-month progress review period, the period
comprising the remaining months in that review period will begin with
the first month beginning after the day on which reassignment of the
ticket is effective.

Subpart D--Use of One or More Program Managers To Assist in
Administration of the Ticket To Work Program

    Section 1148(d)(1) of the Act requires the Commissioner to enter
into an agreement with one or more organizations to serve as a PM to
assist the Commissioner in administering the Ticket to Work program.
Section 101(e)(2)(E) of Public Law 106-170 identified specific
regulations that SSA must promulgate regarding the terms of the
agreements to be entered into with a PM. Three items are specifically
required:
    (1) the terms by which a PM would be precluded from direct
participation in the delivery of services;
    (2) standards which must be met by quality assurance measures and
methods of recruitment of ENs; and
    (3) the format under which dispute resolution will operate under
section 1148(d)(7) of the Act.
    Among other things, section 1148(d)(7) requires the Commissioner to
provide a mechanism for resolving disputes between PMs and ENs, and
between PMs and providers of services.
    Subpart D of these regulations explains that SSA will contract with
one or more organizations to serve as a PM and assist SSA in
administering the Ticket to Work program.
    Section 411.230 explains that SSA will conduct a competitive
bidding process to select one or more private organizations to perform
the PM's functions.
    Section 411.235 describes the minimum qualifications required of a
PM.

[[Page 67379]]

    Section 411.240 describes certain limitations that are placed on a
PM regarding the direct provision of services under the Ticket to Work
program.
    Section 411.245 identifies key responsibilities that a PM must
assume to assist SSA in administering the program, including ensuring
that information provided to beneficiaries is in alternate formats,
meaning media appropriate to beneficiaries' impairments. We are
revising paragraph (b)(2) of Sec. 411.245 to remove the word
``medical'' from the term ``medical impairment'' used in defining
``accessible format,'' as recommended by one commenter, because not all
impairments are medical. We are also revising paragraph (c)(2) of
Sec. 411.245, as recommended by a number of commenters, to make it
clear that the PM will be responsible for making determinations
regarding the allocation of outcome or milestone payments when the
beneficiary has been served by more than one EN.
    Section 411.250 explains how SSA will evaluate a PM.

Subpart E--Employment Networks

    Section 1148(d)(4)(A) of the Act requires the Commissioner to
select and enter into agreements with ENs to provide services under the
Ticket to Work program. Section 1148(f)(1)(A) states that each EN
serving under the Ticket to Work program shall consist of an agency or
instrumentality of a State (or a political subdivision thereof) or a
private entity that assumes responsibility for the coordination and
delivery of services under the program to beneficiaries assigning
tickets to it.
    These ENs are in addition to State agencies administering or
supervising the administration of the State plan approved under title I
of the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.),
known as State VR agencies, that will also be serving beneficiaries
with disabilities under the Ticket to Work program. State VR agencies
will have the option of serving beneficiaries with tickets either as an
EN (that is, to be paid under one of the EN payment systems described
in subpart H of these regulations) or under the existing cost
reimbursement payment system authorized in sections 222(d) and 1615(d)
of the Act. The Commissioner is also directed to enter into an
agreement with any alternate participant operating under the authority
of section 222(d)(2) of the Act in any State where the Ticket to Work
program is being implemented if the alternate participant chooses to
serve as an EN. An EN may consist of a one-stop delivery system
established under subtitle B of title I of the Workforce Investment Act
of 1998 (29 U.S.C. 2811 et seq.).
    Section 1148(f) of the Act requires that entities seeking to
participate in the Ticket to Work program as ENs meet certain
qualifications. The Commissioner has discretion in determining the
qualifications that an entity must meet to be approved to serve as an
EN. We are providing requirements for ENs that are not unduly
burdensome and that are intended to permit both traditional as well as
other types of entities to qualify. The Commissioner's intent is to
ensure that non-traditional service providers are not prohibited from
being approved as ENs, while still requiring evidence that all ENs meet
certain minimum qualifications such as licensure, accreditation,
academic qualifications, or experience. This inclusive approach is
critically important to ensure that beneficiaries with disabilities
have a real choice in services necessary to obtain, regain and maintain
employment.
    Section 1148(f) of the Act also addresses requirements for ENs
under the Ticket to Work program. It requires each EN to serve a
prescribed service area and ensure that employment services, VR
services, and other support services are provided under appropriate
IWPs.
    Sections 411.300 and 411.305 of these regulations explain what an
EN is and what entities are eligible to apply to serve as ENs.
    Section 411.310 explains how public or private entities will apply
to us to be approved as ENs and how we will determine whether an entity
qualifies to be an EN. We are changing the heading of Sec. 411.310 to
make it clear that this section is not applicable to State VR agencies
and that State VR agencies do not apply to be ENs.
    We are revising the first sentence of Sec. 411.310(a) to make it
clear that a State VR agency does not have to respond to our request
for proposals (RFP) to function as an EN.
    We are adding paragraph (c) to this section to Sec. 411.310 to
provide a cross-reference to Sec. 411.360 on how a State VR agency
begins to participate as an EN in the Ticket to Work program.
    Section 411.315 describes the minimum qualifications for an EN
under the Ticket to Work program. In response to public comments, we
are adding language to paragraph (a)(2) of Sec. 411.315 to provide
examples of what we mean by programmatically accessible.
    We are revising section 411.315(b)(2) to make it clear that ENs are
not required to provide medical or related health services or be
licensed to provide such services, but that the EN should take
reasonable steps to assure that if any medical and related health
services are provided, such medical and health related services are
provided under the formal supervision of persons licensed to prescribe
or supervise the provision of these services.
    Section 411.315 provides that an EN must have applicable
certificates, licenses, or other credentials if State law in the
entity's State requires such documentation to provide VR services,
employment services or other support services in the State.
    Section 411.320 describes the major responsibilities of an entity
serving as an EN.
    Section 411.321 explains the conditions under which we will
terminate an agreement with an EN for inadequate performance. We have
clarified that we will terminate an agreement with an EN for non-
compliance in any of the three areas cited in this section.
    Section 411.325 lists the reporting requirements placed on an
entity serving as an EN. We are adding a new paragraph (e) to require
that ENs submit information to assist the PM conducting the reviews
necessary to determine whether a beneficiary is making timely progress
towards self-supporting employment. This requirement is necessary to
obtain information for determining whether a beneficiary will continue
to receive CDR protection. It will make the EN reporting requirement
consistent with the reporting requirement of State VR agencies
regarding timely progress reviews. As a result of adding a new
paragraph (e), we are redesignating the proposed paragraphs (e) through
(i) as paragraphs (f) through (j) in the final rules. We are deleting
the requirement from paragraph (g) in the proposed rules (redesignated
as paragraph (h) in the final rules) to submit a financial report that
shows the percentage of the EN's budget that was spent on serving
beneficiaries with tickets, including the amount spent on beneficiaries
who return to work and those who do not return to work. We are making
this change because of many public comments indicating that this would
be a burdensome reporting requirement.
    Section 411.330 explains how we will evaluate an EN's performance.

[[Page 67380]]

Subpart F--State Vocational Rehabilitation Agencies' Participation

    Section 1148(c) of the Act addresses participation by State VR
agencies in the Ticket to Work program. In general, this section gives
each State VR agency the opportunity to determine, on a case-by-case
basis, whether it will participate in the Ticket to Work program as an
EN or under the cost reimbursement payment system authorized under
sections 222(d) and 1615(d) of the Act (see 20 CFR Secs. 404.2101 et
seq. and 416.2201 et seq.). The State VR agency must elect either the
outcome payment system or the outcome-milestone payment system to be
used when it functions as an EN when serving a beneficiary with a
ticket. The Commissioner is directed to provide for periodic
opportunities to exercise this election.
    Generally, under the Ticket to Work program, State VR agencies will
continue to operate as they do today. For example, when a State VR
agency functions as an EN, it will provide services in accordance with
the requirements of the State plan approved under title I of the
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), and a
client will complete an individualized plan for employment with the
State VR agency. If a State VR agency has a dispute over a payment
under the cost reimbursement payment system, the State VR agency will
use the dispute resolution procedures already in place under 20 CFR
404.2127 and 416.2227. The new functions and responsibilities for State
VR agencies under the Ticket to Work program include checking with the
PM if the State VR agency wants to see if a disabled beneficiary who is
seeking services from the State VR agency has a ticket that is
available for assignment or reassignment, submitting information to the
PM required to assign or reassign a beneficiary's ticket to the State
VR agency, routing EN payment dispute questions through the PM,
submitting preliminary and post-employment data to the PM, and
providing reports regarding the outcomes achieved by beneficiaries
assigning tickets to the State VR agency in those cases where the State
VR agency functioned as an EN.
    Subpart F of these regulations establishes that the cost
reimbursement payment system is a payment option under the Ticket to
Work program for State VR agencies, subject to certain limitations
described in Sec. 411.585(a) and (b) of subpart H of these final rules.
    Section 411.350 explains that a State VR agency must participate in
the Ticket to Work program if it wishes to receive payment from SSA for
serving disabled beneficiaries who are issued a ticket. We have
clarified this section by adding the words ``who are issued a ticket''.
    Section 411.355 describes the different payment options available
to the State VR agencies. Section 411.355 explains that, subject to the
limitations in Sec. 411.585 of subpart H, State VR agencies, on a case-
by-case basis, may participate in the Ticket to Work program either as
an EN or under the cost reimbursement payment system. This section also
explains that the State VR agency must use the EN payment system it
elected when serving a beneficiary as an EN. We have modified the
language and structure of this section for added clarity.
    Section 411.360 explains what a State VR agency must do to function
as an EN under the Ticket to Work program with respect to a beneficiary
and explains that a State VR agency may choose, on a case-by-case
basis, to seek payment from SSA under the cost reimbursement payment
system or its elected EN payment system. Paragraph (a) of Sec. 411.360
describes the method SSA will use to communicate with State VR agencies
about implementation of the Ticket to Work program in States. Paragraph
(b) includes a reference to the limitations on payment in Sec. 411.585.
We have made these changes to this section to add clarity.
    Section 411.365 describes how a State VR agency will select an EN
payment system for use when functioning as an EN. In these final rules,
we are modifying Sec. 411.365 to eliminate the requirement that the
Governor or Governor's designated representative must sign the letter
advising SSA of which EN payment system the State VR agency will use
when it functions as an EN with respect to a beneficiary who has a
ticket. We are revising this section to provide that the director of
the State agency administering or supervising the administration of the
State plan approved under title I of the Rehabilitation Act of 1973, as
amended (29 U.S.C. 720 et seq.), or the director's designee must sign
the letter advising SSA of the State VR agency's election of an EN
payment system. We are making this change to the final rules to respond
to comments that the director or his or her designee is in a better
position to make the payment election decision.
    Section 411.370 explains that a State VR agency generally may
choose to be paid under the cost reimbursement payment system when
serving beneficiaries with tickets, subject to the limitation in
Sec. 411.585(b) of subpart H of these final rules.
    Section 411.375 explains that State VR agencies must continue to
provide services to beneficiaries with tickets under the requirements
of the State plan approved under title I of the Rehabilitation Act of
1973, as amended (29 U.S.C. 720 et seq.).
    Section 411.380 describes how a State VR agency can determine if a
disabled beneficiary seeking services has been issued a ticket and, if
so, the status of the ticket. We have made changes to this section in
the final rules to provide a more accurate description of the
information the State VR agency can obtain from the PM regarding a
beneficiary's ticket status.
    Section 411.385 explains that once the State VR agency determines
that a beneficiary is eligible for vocational rehabilitation services,
the beneficiary and a representative of the State VR agency must agree
to and sign an IPE. In these final rules, we are revising the
provisions of Sec. 411.385(a) to conform to the changes we are making
to Secs. 411.140 and 411.150 regarding the requirements that must be
met in order for a beneficiary to assign or reassign a ticket. We
explain that the parties must agree to and sign an IPE in order for the
beneficiary to assign or reassign his or her ticket to the State VR
agency. We explain that Secs. 411.140(d) and 411.150(a) and (b)
describe the other requirements which must be met for a ticket to be
assigned or reassigned, respectively. Final Sec. 411.385(a) explains
that in order for a beneficiary's ticket to be assigned or reassigned
to the State VR agency, the State VR agency must submit the information
described in Sec. 411.385(a)(1)-(a)(3) to the PM. This information
includes the method of payment which the State VR agency is selecting
for a particular beneficiary.
    We are revising Sec. 411.385(b) to change the designation of the
person in the State VR agency who is required to sign the completed
form which the State VR agency must submit to the PM in order for a
ticket to be assigned or reassigned to the State VR agency. We are
revising this section to permit ``a representative of the State VR
agency'' to sign the form as this provides greater flexibility to the
State VR agency than our proposed requirement that the form be signed
by ``the State VR agency representative working with the beneficiary.''
    Section 411.390 describes what a State VR agency should do when a
beneficiary already receiving services under an approved IPE becomes
eligible for a ticket that is available for assignment and decides to
assign the ticket to the State VR agency. We are modifying this section
in the final rules to provide a more accurate description

[[Page 67381]]

of the circumstances in which an individual who is already receiving
services from the State VR agency under an IPE may become eligible for
a ticket. We also are adding a provision to clarify that the State VR
agency must submit the completed and signed form described in
Sec. 411.385(a) and (b) to the PM in order for the beneficiary's ticket
to be assigned to the State VR agency. In addition, we explain that
Sec. 411.140(d) describes the other requirements which must be met in
order for the beneficiary to assign a ticket.
    Section 411.395 explains that each State VR agency will be required
to provide periodic reports to the PM on the specific outcomes achieved
with respect to the services provided to beneficiaries under the Ticket
to Work program in cases where the State VR agency functioned as an EN.
    Section 1148(c)(3) of the Act requires State VR agencies and ENs to
enter into agreements regarding the conditions under which services
will be provided when an EN that has been assigned the beneficiary's
ticket refers the beneficiary to a State VR agency for services.
    Sections 411.400 and 411.405 explain that an EN may refer a
beneficiary that it is serving under the Ticket to Work program to a
State VR agency for services only if such an agreement is in place
prior to the EN making the referral.
    Section 411.410 explains that these agreements should be broad-
based and apply to all beneficiaries who may be referred by an EN to a
particular State VR agency. In the final rules, we are modifying
Sec. 411.410 to indicate that the general guideline that the agreements
should be broad-based and apply to all beneficiaries who may be
referred by an EN to a State VR agency is not intended to preclude an
EN and a State VR agency from entering into an individualized agreement
to meet the needs of a single beneficiary if both the EN and State VR
agency wish to do so.
    Section 411.415 explains that the PM will verify the establishment
of such agreements based on the EN's submission of a copy of the
agreement to the PM.
    Section 411.420 provides guidance and examples of what could be
included in these agreements.
    Section 411.425 explains what a State VR agency should do if an EN
attempts to refer a beneficiary being served under the Ticket to Work
program to the State VR agency without having established such an
agreement.
    Section 411.430 explains what the PM should do when notified that a
referral has been attempted in the absence of an agreement.
    Section 411.435 establishes procedures for resolving disputes
arising under these agreements between ENs and State VR agencies. We
are revising this section by replacing the word ``should'' in
Sec. 411.435(a) and (b) with ``must,'' to establish the regulatory
policy as a requirement to be followed in the dispute resolution
process.

Subpart G--Requirements for Individual Work Plans

    Section 1148(g) of the Act requires each EN to ensure that
employment services, vocational rehabilitation services, and other
support services provided under the Ticket to Work program are provided
under IWPs. The minimum requirements for an IWP are spelled out in this
section.
    Subpart G of these regulations establishes the requirements for the
IWP that must be developed when an EN and a beneficiary with a ticket
agree to work together under the Ticket to Work program. Beneficiaries
who are clients of the State VR agencies will continue to use the IPE
rather than an IWP.
    Section 411.450 explains what an IWP is. In response to comments on
the proposed rule, we are revising this section to spell out
``individual work plan'' for clarity, and to add the words ``(other
than a State VR agency)'' to clarify that IWPs would not be a
requirement for State VR agencies.
    Section 411.455 explains the purpose of the IWP and explains that
the EN must develop and implement the plan in a manner that gives the
beneficiary the opportunity to exercise informed choice in selecting an
employment goal.
    Section 411.460 explains that the beneficiary and the EN share the
responsibility for determining the content of the IWP.
    Section 411.465 describes the specific information that must be
included in each IWP.
    Section 411.470 describes when an IWP becomes effective. In the
final rules, we are revising Sec. 411.470 to conform to the changes we
are making to Secs. 411.140 and 411.150 concerning the requirements
which must be met in order for a beneficiary to assign or reassign his
or her ticket. We are also revising Sec. 411.470(b) to make the
effective date of an IWP consistent with the effective date of the
assignment or reassignment of the beneficiary's ticket.

Subpart H--Employment Network Payment Systems

    Section 1148(h) of the Act provides that the Ticket to Work program
shall provide for payment authorized by the Commissioner to ENs under
either an outcome payment system or an outcome-milestone payment
system. Each EN must elect which payment system it will use.
    The outcome payment system and the outcome-milestone payment system
are defined in Sec. 411.500. This section also defines certain other
terms we use in this subpart relating to the EN payment systems.
    The first term we define in Sec. 411.500 is the ``payment
calculation base.'' This term relates to the amount we will pay an EN
(including a State VR agency choosing to be paid as an EN) under either
EN payment system. We will pay an EN for specific milestones or
outcomes that a beneficiary who assigns the ticket to the EN achieves,
not for the costs of specific services that the EN provides. We base
milestone and outcome payments upon the prior calendar year's national
average disability benefit payable under title II or title XVI, not
upon the specific benefit payment payable to a beneficiary with a
ticket. We call the national average benefit payment the payment
calculation base. In Sec. 411.500(a)(1), we define the payment
calculation base applicable in connection with a title II or concurrent
title II/title XVI disability beneficiary. In Sec. 411.500(a)(2), we
define the payment calculation base applicable in connection with a
title XVI disability beneficiary, who is not concurrently a title II
disability beneficiary.
    In Sec. 411.500(b), we define the term ``outcome payment period.''
Both EN payment systems provide for a payment to an EN for each month,
during an individual's outcome payment period, for which Social
Security disability benefits and Federal SSI cash benefits are not
payable to the individual because of the performance of substantial
gainful activity (SGA) or by reason of earnings from work activity.
Each beneficiary who is issued a ticket has one outcome payment period
in connection with that ticket. In Sec. 411.500(b), we explain that an
individual's outcome payment period begins with the first month, ending
after the date on which the ticket was first assigned, for which Social
Security disability benefits and Federal SSI cash benefits are not
payable to the individual due to SGA or earnings. We also explain that
the outcome payment period ends with the 60th month, consecutive or
otherwise, ending after such date, for which such benefits are not
payable due to SGA or earnings.
    In these final rules, we are modifying the definition of the
``outcome payment system'' in Sec. 411.500(c) to clarify that this
payment system provides for a schedule of payments to an EN for each

[[Page 67382]]

month, during an individual's outcome payment period, for which Social
Security disability benefits and Federal SSI cash benefits are not
payable to the individual because of work or earnings. We are also
expanding Sec. 411.500 in these final rules to include definitions of
``outcome payment'' and ``outcome payment month.'' In final
Sec. 411.500(d), we explain that ``outcome payment'' means a payment
for an outcome payment month. In final Sec. 411.500(e), we explain that
``outcome payment month'' means a month, during an individual's outcome
payment period, for which Social Security disability benefits and
Federal SSI cash benefits are not payable to the individual because of
work or earnings. Final Sec. 411.500(e) also explains that the maximum
number of outcome payment months for each ticket is 60. This provision
appeared in Sec. 411.500(c) of the proposed rules. We are moving the
provision to Sec. 411.500(e) of the final rules where we explain what
we mean by an outcome payment month.
    Final Sec. 411.500(f), which we proposed as Sec. 411.500(d),
provides a general description of the term ``outcome-milestone payment
system.'' This payment system provides a schedule of payments to an EN
that includes, in addition to payments during the outcome payment
period, payment for completion by a beneficiary of up to four
milestones directed toward the goal of permanent employment. In these
final rules, we are increasing the number of milestones for which
payment may be made under the outcome-milestone payment system from the
two milestones we proposed in the NPRM to four milestones. This is one
of four major changes we are making to the outcome-milestone payment
system in response to public comments, all of which we discuss more
fully below.
    In addition, in these final rules we are modifying final
Sec. 411.500(f) to clarify that the milestones for which payment may be
made must occur prior to the beginning of an individual's outcome
payment period. We are also clarifying that the payments which may be
made to an EN under the outcome-milestone payment system consist of
milestone payments which may be made for any milestones occurring prior
to the individual's outcome payment period, as well as any outcome
payments which may be made for months during the individual's outcome
payment period. We deleted the last sentence in proposed section
411.500(d) that compared the total payments under the outcome-milestone
payment system, because this is stated in section 411.525(a).
    Section 1148(c) of the Act permits each State VR agency to
participate in the program as an EN with respect to a disabled
beneficiary. When the State VR agency elects to participate in the
Ticket to Work program as an EN with respect to a disabled beneficiary,
we will pay the State VR agency in accordance with its elected EN
payment system. If the State VR agency chooses not to participate as an
EN with respect to a disabled beneficiary, we will pay the State VR
agency for services provided to that beneficiary in accordance with the
cost reimbursement payment system under sections 222(d) and 1615(d) and
(e) of the Act. Our regulations concerning this cost reimbursement
payment system are at 20 CFR 404.2101 through 404.2127 and 416.2201
through 416.2227. Payments to State VR agencies under the Ticket to
Work program are discussed in Secs. 411.510 and 411.585.
    Each provider will elect, in writing, the EN payment system which
it will be paid under when it agrees to become an EN. Similarly, each
State VR agency will notify us in writing regarding which EN payment
system it will use when it chooses to function as an EN for a
beneficiary with a ticket. We will periodically offer each EN
(including each State VR agency) the opportunity to change its elected
payment system. If the EN (or State VR agency) does change its elected
payment system, the change will apply only to tickets assigned to the
EN (or State VR agency) after SSA is notified about the change in the
elected payment system. These provisions, including the frequency of
opportunity for an EN to change its payment system, are discussed in
Secs. 411.505 through 411.520.
    In the final rule, we are making a number of changes to
Secs. 411.505 through 411.520. These changes correct grammatical errors
and clarify our intentions, but do not change the intent of the
proposed sections.
     In final Sec. 411.505 we are combining the first two
sentences concerning an EN's choice of payment systems into one
sentence.
     In final Sec. 411.510(b) we are placing a new
parenthetical sentence between the two sentences we proposed. The first
sentence of this paragraph explains that a State VR agency must
communicate its decision to serve a beneficiary to the PM. The new
second sentence provides a reference to that portion of the final rule
where we discuss the PM and its role in the Ticket to Work program.
     In final Sec. 411.515(a) we are making some editorial
changes to the second sentence and clarifying the third sentence to
note what day in the month an EN's payment system election becomes
effective. Also, we are adding a new sentence to the end of this
paragraph which clarifies that a State VR agency may also change its
elected EN payment system.
     In final Sec. 411.515(b) we are making some editorial
changes and expanding the explanation of when the 12-month period for
making a change in an EN payment system for any reason ends. We had
proposed that the period would end with the 12th month following the
month in which the EN first elects an EN payment system. The final rule
adds an alternative month, the 12th month after the month we implement
the Ticket to Work program in the State in which the EN (or State VR
agency) operates, if it is later.
     In final Sec. 411.515(c) we are correcting grammatical
errors and deleting the date in the last sentence because it is
unnecessary. This sentence notes that we will offer ENs the opportunity
to make a change in their elected payment systems at least every 18
months.
     In final Sec. 411.520 we are correcting grammatical errors
in the title and text and clarifying that the rule applies to State VR
agencies as well as to ENs.
    Sections 411.525 through 411.565 provide our rules for computing
payments to ENs under the two EN payment systems. They also describe
what payments may be made and when, and discuss allocating payments to
multiple ENs to whom the ticket was assigned at different times.
    Sections 1148(h)(2) and (h)(3) of the Act provide that the outcome
payment system and the outcome-milestone payment system shall provide
for a schedule of payments to an EN, in connection with a beneficiary
who assigns a ticket to the EN, for each month, during the individual's
outcome payment period, for which Social Security disability benefits
and Federal SSI cash benefits based on disability or blindness are not
payable to the individual because of work or earnings. There can be a
maximum of 60 outcome payment months and, therefore, a maximum of 60
monthly outcome payments. In Sec. 411.525(a), we explain that we will
calculate payments for outcome payment months under both EN payment
systems using the payment calculation base as defined in
Sec. 411.500(a)(1) or (a)(2). We deleted the second sentence in
proposed Sec. 411.525(a). The proposed sentence referred to the fact
that the payment

[[Page 67383]]

calculation base we use to compute the value of payments for outcome
months attained in one calendar year is based on the preceding calendar
year's national average disability benefit payment information. This is
simply a restatement of the definition of the payment calculation base
that is found in the references cited in the first sentence of
Sec. 411.525(a), which we did not change.
    Section 411.525(a)(1)(i) discusses payments under the outcome
payment system, explaining that an EN is eligible for a monthly outcome
payment for each month for which Social Security disability benefits
and Federal SSI cash benefits are not payable to the individual because
of work or earnings. This section also provides that monthly payments
under the outcome payment system will be 40 percent of the payment
calculation base. This percentage is the maximum the law allows at the
beginning of the program. Under the outcome payment system, each
monthly outcome payment is the same during a calendar year. At the end
of each calendar year, we will refigure the payment calculation base
for the next year. For clarity, we combined the last two sentences of
proposed Sec. 411.525(a)(1)(i) and added a reference to Sec. 411.550.
We also noted that we will round our computation of the outcome payment
to the nearest whole dollar.
    Section 411.525(a)(1)(ii) provides criteria for determining whether
a month occurring after the month in which a beneficiary's entitlement
to Social Security disability benefits ends or eligibility for SSI
benefits based on disability or blindness terminates due to work
activity or earnings will be considered to be an outcome payment month.
We are making two changes to the rules we proposed. First, in final
Sec. 411.525(a)(1)(ii), we are substituting the word ``with'' for the
word ``in'' to clarify that the months we are talking about are those
after the month ``with'' which such entitlement ends or eligibility
terminates. Second, in Sec. 411.525(a)(1)(ii)(A), we are clarifying
that the level of earnings required must be more than the SGA threshold
amount specified in 20 CFR 404.1574(b)(2) (or 20 CFR 404.1584(d) for
individuals who are statutorily blind). We had proposed that earnings
could be at or above the SGA dollar amount, but this is ambiguous in
that earnings at the dollar amount specified in 20 CFR 404.1574(b)(2)
and 404.1584(d) are not indicative of SGA, while earnings above the SGA
threshold amounts in the referenced rules are. It was our intent in
this section, as well as in proposed Sec. 411.535, to require that
earnings exceed the monthly SGA threshold amount.
    As a result of these changes, final Sec. 411.525(a)(1)(ii) provides
two criteria for us to use when determining whether we will consider
any month after the month with which disability entitlement ends or
eligibility terminates because of work or earnings to be an outcome
payment month. First, the individual must have gross earnings from
employment (or net earnings from self-employment) in that month that
are more than the SGA threshold dollar amount in 20 CFR 404.1574(b)(2)
(for an individual who is not statutorily blind) or in 20 CFR
404.1584(d) (for an individual who is statutorily blind). Second, the
individual cannot be entitled to any monthly benefits under title II or
eligible for any benefits under title XVI for that month.
    Section 411.525(a)(2) explains what payments we can make to an EN
under the outcome-milestone payment system. This system provides
payments to an EN when the beneficiary achieves milestones directed
toward the goal of permanent employment. Payments for the milestones
achieved come before, and are in addition to, outcome payments made
during the outcome payment period. For clarity, we inserted a new
sentence after the first one we proposed. It notes that milestones must
occur prior to the beginning of the beneficiary's outcome payment
period and meet the requirements of Sec. 411.535. Also, consistent with
changes we are making elsewhere in these final rules, we are amending
the first sentence of Sec. 411.525(a)(2) to state that we may pay an EN
for up to four milestones achieved by a beneficiary who assigned his or
her ticket to the EN.
    Section 411.525(b) explains the provision in section 1148(h)(3)(C)
of the Act concerning the limitation on total payments to an EN under
the outcome-milestone payment system. The Act requires us to design the
outcome-milestone payment system so that an EN's total payments with
respect to each beneficiary is less than, on a net present value basis,
the total amount the EN would receive if paid under the outcome payment
system. In the second sentence of Sec. 411.525(b) we explain that an
EN's total potential payments under the outcome-milestone payment
system will be about 85 percent of the total that would be payable
under the outcome payment system for the same beneficiary.
    Section 411.525(c) explains that we will pay an EN to whom a ticket
has been assigned only for milestones or outcomes that are achieved
prior to the month in which an individual's ticket terminates, as
described in Sec. 411.155. We will not pay milestone or outcome
payments based on an individual's work activity or earnings in or after
the month a ticket terminates.
    Sections 411.530 through 411.545 provide our rules for computing
payments to ENs under the outcome-milestone payment system. In response
to the public comments, we are making four major changes to this EN
payment system.
     First, we are adding two milestones. We describe them in
Sec. 411.535.
     Second, we are doubling the total value of the potential
milestone payments. We provide these payment amounts in Sec. 411.540.
     Third, we are spreading, over 60 months as opposed to 12,
the outcome payment reductions made on account of milestone payments
received. We discuss this reduction in Sec. 411.530.
     Fourth, we are substituting a flat outcome payment rate of
34 percent for the graduated monthly outcome payments we proposed. We
discuss how we calculate the payment amounts for outcome payment months
under the outcome-milestone payment system in Sec. 411.545.
    Section 411.530 describes how we will reduce outcome payments under
the outcome-milestone payment system when an EN receives milestone
payments. In the NPRM, we proposed to reduce the first 12 outcome
payments by the amount paid out as milestone payments. However, in
response to public comments, we are extending the reduction period over
the full 60 months of the outcome payment period. In addition, we are
clarifying two points in final Sec. 411.530. First, we explain that an
EN's outcome payments will be reduced due to the milestone payments
received by that EN, not due to milestone payments paid to another EN.
Second, we are broadening the language in the final rule by deleting
the word ``already'' from the language we proposed. This change allows
for adjustments should we make a retroactive payment for a milestone
that a beneficiary achieved before the outcome payment period began.
    Section 411.535 provides the milestone requirements. We are making
three changes to this section. First, we are clarifying that the
milestones occur after the date on which the ticket was first assigned
and the beneficiary starts to work. Just as the outcome payment period
cannot begin until after the date the beneficiary first assigns a
ticket, a beneficiary cannot begin to attain a milestone until after he
or she first assigns the ticket. Second, as we explained in the changes
we are making

[[Page 67384]]

to Sec. 411.525(a)(1)(ii)(A), we are clarifying that the level of a
beneficiary's monthly earnings required for a milestone must be more
than the SGA threshold amount. Third, we are including two additional
milestones. The first milestone we are adding is met when a beneficiary
works for one calendar month and has gross earnings from employment (or
net earnings from self-employment) for that month that are more than
the SGA threshold amount. The other milestone we are adding, which is
the fourth milestone, is met when a beneficiary works for 12 calendar
months within a 15-month period and has gross earnings from employment
(or net earnings from self-employment) for each of the 12 months that
are more than the SGA threshold amount. As a result of these additions,
we are renumbering proposed milestones one and two as final milestones
two and three. These milestones also require work at more than the SGA
threshold amount for three and seven months, respectively, within a 12-
month period. Additionally, in Sec. 411.535 we are providing that any
of the work months used to meet the first, second, or third milestone
may be used to meet a subsequent milestone.
    Section 411.540 provides how we will calculate the payment for each
milestone. In the proposed rules we provided for the payment of two
milestones and based their calculation on a percentage of the payment
calculation base that together represented approximately 10 percent of
the total payments possible under the outcome-milestone payment system.
In final Sec. 411.540 we are not changing our method of computing
milestone payments or revising the payment percentages for the two
milestones we proposed, but we are adding two more milestones and the
net effect is a doubling of the total value of the milestone payments.
The value of the first additional milestone payment is equal to 34
percent of the payment calculation base, and the value of the other
additional milestone payment is equal to 170 percent of the payment
calculation base. The total value of the additional milestone payments
is equal to approximately 10 percent of the potential payments possible
under the outcome-milestone payment system. When combined with the
total value of the milestone payments we originally proposed and which
we are retaining in these final rules, the total value of the four
potential milestone payments under the outcome-milestone payment system
is equal to approximately 20 percent of the total possible payments
available under the outcome-milestone payment system.
    We are also making four other changes to final Sec. 411.540. First,
we are stating that after we multiply the applicable milestone
percentage by the payment calculation base, we will round the resulting
milestone payment computation to the nearest whole dollar. Second, we
are adding two paragraphs that identify the attainment month for each
of the two additional milestones. This month is important because we
use the payment calculation base for the calendar year in which the
attainment month occurs when computing the milestone payment. Third, we
are redesignating proposed paragraphs (a) and (b) as paragraphs (b) and
(c) and proposed paragraphs (c) and (d) as paragraphs (f) and (g).
These paragraphs discuss the payment calculations and attainment months
for the two milestones we proposed. Fourth, we are deleting the second
sentence we proposed in paragraphs (a) and (b), now final paragraphs
(b) and (c). The sentence referred to the two proposed milestone
payments as being equal to two and four outcome payments, respectively.
Technically, this is an incorrect statement because outcome payments
under the outcome-milestone payment system will vary depending on how
much has been paid in milestone payments.
    Section 411.545 states how, under the outcome-milestone payment
system, we will calculate the amount of the outcome payment. We had
proposed graduated monthly outcome payments. However, in response to
public comments, we are substituting a flat outcome payment rate for
the one we proposed. This rate is 34 percent of the payment calculation
base for the calendar year in which the outcome payment month occurs,
rounded to the nearest whole dollar, and then reduced, if necessary, as
described in Sec. 411.530. This flat rate makes the total potential
payments under the outcome-milestone payment system about 85 percent of
the total potential payments that could be made under the outcome
payment system. We did not change the rate differential between the two
EN payment systems as many commenters suggested and explain our reasons
for this in the responses to the public comments below.
    Section 411.550 provides the payment amounts for outcome payment
months under the outcome payment system. An outcome payment under the
outcome payment system is equal to 40 percent of the applicable payment
calculation base. Consistent with clarifications we are making in
Secs. 411.540 and 411.545, we are modifying Sec. 411.550 to state that
we will round our computation of the outcome payment to the nearest
whole dollar.
    Section 411.555 provides that an EN may generally keep the
milestone and outcome payments it receives under its elected EN payment
system, even if the beneficiary does not sustain work for all 60
outcome payment months. The proposed rules for this section, by
reference to Sec. 411.560, indicated that retroactive adjustments to
payments already received by ENs may occur when we allocate a prior
payment with another EN. In the final rules, we expand Sec. 411.555. We
placed the general rule allowing ENs to keep the milestone and outcome
payments for which they are eligible in paragraph (a) and added
paragraphs (b) and (c). Paragraph (b) discusses the adjustments we may
have to make should we determine that we paid an EN an incorrect
amount. Paragraph (c) refers to the EN notification and dispute
resolution process we have for overpayments and underpayments.
    Sections 411.560 and 411.565 explain that it is possible to pay
more than one EN for the same milestone or outcome payment month. In
this situation, the payment will be allocated among the ENs that
qualify for payment. Section 1148(e)(3) of the Act provides that the PM
will determine the allocation based on the services provided by each
EN. It also is possible to pay more than one EN for different
milestones or outcome payment months on the same ticket. When more than
one EN is eligible for payment with respect to a ticket, we will pay
each EN in accordance with its elected payment system at the time the
ticket was assigned to each EN.
    In response to public comments, we are expanding the discussion in
the last sentence of proposed Sec. 411.560 to clarify how the PM will
make a payment allocation determination when more than one EN qualifies
for a payment. The PM will base its determination on the contribution
of services provided by each EN toward the achievement of the outcomes
or milestones. Also, outcome and milestone payments will not be
increased because the payments are shared between two ENs. In addition
to these changes, we are correcting grammatical errors in the title of
Sec. 411.565.
    Section 411.570 provides that the Act prohibits an EN from
requesting or accepting compensation from a beneficiary for the EN's
services.
    Section 411.575 describes how an EN will request payment for either
a milestone payment or an outcome payment month. The EN will make a

[[Page 67385]]

written request to the PM for payment for each milestone. The request
will be accompanied by evidence showing that the milestone was
achieved. We do not have to stop a beneficiary's monthly cash payment
in order to pay a milestone payment to an EN.
    For outcome payments under either EN payment system, an EN must
also submit a written request for payment to the PM. Since outcome
payments cannot be made unless the beneficiary has sufficient work or
earnings to reduce the Federal cash benefits to zero, we are retaining
the general requirement we proposed for an EN's payment request to be
accompanied by evidence of the beneficiary's work or earnings. However,
in response to public comments, we are making three changes to
Sec. 411.575(b). First, we are providing an exception to the general
requirement for evidence of a beneficiary's work or earnings in order
to cover those situations in which the EN requesting the payment does
not currently hold the ticket because it is unassigned or reassigned to
another EN. Second, we are allowing the EN to submit its request for
payment and evidence of work or earnings on a quarterly basis, rather
than on a monthly or bimonthly basis as we proposed. Third, we are
incorporating the rules we proposed in Secs. 411.575(b)(3) through (5)
in Sec. 411.575(b)(3), and deleting Secs. 411.575(b)(3) through (5).
    In addition to these changes, we are making other clarifying
changes to Sec. 411.575. We are adding three new paragraphs at
Sec. 411.575(a)(1)(ii), (iii) and (iv) to discuss the requirements for
an EN to receive a milestone payment. These requirements are: (1) The
milestone must occur prior to the outcome payment period as defined in
Sec. 411.500(b), (2) the provisions in Sec. 411.535 must be satisfied,
and (3) the milestone cannot occur in or after the month in which the
ticket terminates as defined in Sec. 411.155. We also are modifying the
language in final Sec. 411.575(a)(1)(i), which was proposed as
Sec. 411.575(a)(1). The revised language clarifies that we will pay an
EN for milestones only if the EN's elected payment system in effect at
the time the beneficiary assigned the ticket to the EN was the outcome-
milestone payment system. The wording we proposed had suggested that
the payment system election and ticket assignment had to occur
simultaneously and this was incorrect. Finally, we added paragraph
(b)(1)(iii) to final Sec. 411.575 to clarify that in addition to the
other requirements listed, we will pay an EN for an outcome payment
month only if the ticket has not terminated for any of the reasons
listed in Sec. 411.155.
    Section 411.580 explains that an EN must first have had the ticket
assigned to it before it can be eligible to receive milestone or
outcome payments.
    As a beneficiary is free to choose where to assign a ticket, the
opening paragraph of Sec. 411.585 explains that a State VR agency and
an EN can both be eligible for payment on a ticket if the State VR
agency elects to be paid as an EN. Each entity can be paid as an EN
under its respective EN payment system. If the State VR agency chooses
to serve a beneficiary with a ticket and to be paid under the cost
reimbursement payment system, then we will pay the State VR agency
under the cost reimbursement payment system if it meets the criteria
for reimbursement and if we have not first paid an EN under its elected
payment system with respect to the same beneficiary and ticket. For
each ticket, a payment either under the cost reimbursement payment
system or under an elected EN payment system will exclude any payment
under the other payment system. Absent this restriction, it would be
possible to pay separately under both the cost reimbursement payment
system and under the EN payment systems such amounts as, when combined,
would exceed the statutory limitation of one or both of these payment
systems for serving the same beneficiary under the same ticket.
    In response to a public comment, we are cross-referring
Sec. 411.560 in the opening paragraph of Sec. 411.585. Section 411.560
explains how the PM will make a determination of payment allocation
should more than one entity qualify for payment as an EN.
    Section 411.587 is a new section that we are adding in response to
a comment. It explains which provider we will pay if, with respect to
the same ticket, we receive two requests for payment and one request is
from a provider that elected an EN payment system and the other request
is from a State VR agency that elected payment under the cost
reimbursement payment system.
    Section 411.590 describes what an EN or State VR agency serving as
an EN can do if either disagrees with our decision on a payment request
it submits. This section also explains that an EN cannot appeal our
determination about a beneficiary's right to benefits even when that
determination affects the payment to an EN. In the final rules, we are
broadening paragraph (d) of Sec. 411.590 to clarify that any
determination we make about a beneficiary's right to disability cash
benefits, not just a determination that a beneficiary appeals, could
affect an EN's payment or result in an adjustment to payments already
made to an EN. In addition, we made some editorial changes throughout
this section.
    Section 411.595 identifies various methods we will use to monitor
the EN payment systems for financial integrity. Section 411.597 states
that we will periodically review the conditions affecting payment under
the two EN payment systems to determine if these payment systems are
providing adequate incentives and appropriate economies for ENs to
assist beneficiaries to enter the workforce.

Subpart I--Ticket to Work Program Dispute Resolution

    Section 1148(d)(7) of the Act requires us to provide for a
mechanism for resolving disputes between beneficiaries and ENs, between
ENs and PMs, and between PMs and service providers. As part of this
process, we are required to provide a party to a dispute a reasonable
opportunity for a full and fair review of the matter in dispute.
Finally, beneficiaries and State VR agencies may have disputes. The
various dispute resolution mechanisms are discussed below.

PM and EN Disputes With SSA

    Since PMs and ENs, other than State VR agencies functioning as ENs,
will operate under contracts with SSA, disputes between SSA and PMs and
between SSA and ENs that are not State VR agencies will be subject to
the dispute resolution procedures contained in the contracts with SSA.

Disputes between Beneficiaries and ENs That Are Not State VR
Agencies

    There is a three-step process for resolving disputes between
beneficiaries and ENs that are not State VR agencies. This three-step
process will ensure that both beneficiaries and ENs have the
opportunity to resolve disputes using informal means.
    As a first step in the dispute resolution process, each EN is
required to have an internal grievance procedure whereby beneficiaries
have the opportunity to work with representatives of the EN to try to
resolve any disputes arising during the implementation or amending of
an IWP. If the dispute is not resolved using the EN's internal
grievance procedures, both the beneficiary and the EN will have the
option of contacting the PM for assistance in resolving the dispute.
Upon request, the PM will conduct a full review of the matter in
dispute and

[[Page 67386]]

make a recommendation to the beneficiary and the EN as to how the
dispute might be resolved (see Sec. 411.615). This second step is
intended to provide the parties to the dispute the opportunity to
present their case before an impartial third party, the PM. The third
step involves bringing the dispute to SSA.
    Section 411.605 explains the responsibilities of an EN that is not
a State VR agency regarding this dispute resolution process, including
informing beneficiaries of the availability of assistance from the
State Protection and Advocacy (P&A) system at every step in the dispute
resolution process. Section 411.610 identifies specific points in the
rehabilitation process when an EN that is not a State VR agency must
inform beneficiaries about the procedures for resolving disputes.
    Section 411.615 describes how a disputed issue will be referred to
the PM, including what information should be submitted. Section 411.620
tells how long the PM has to provide a written recommendation on how to
resolve the dispute. Section 411.625 explains that if the parties to
the dispute do not agree with the PM's recommendation and the dispute
continues to be unresolved, either the beneficiary or the EN that is
not a State VR agency has the option of bringing the dispute to the
attention of SSA for resolution.
    Section 411.625 also describes the information that must be
submitted to SSA to facilitate our review of the dispute. Section
411.630 explains that SSA's decision is final.
    Section 411.635 explains that a beneficiary has the right to be
represented in the dispute resolution process under the Ticket to Work
program and that the State P&A system is available to provide
assistance and advocacy services to beneficiaries seeking or receiving
services from ENs operating under the Ticket to Work program.

Disputes Between ENs and PMs

    Section 411.650 explains that a dispute between an EN that is not a
State VR agency and the PM, that does not involve an EN's payment
request, will be resolved using the procedures for resolving disputes
developed by the PM. If the matter cannot be resolved using these
procedures, it will be forwarded to SSA for resolution. Section 411.655
explains how a PM will refer disputes to us. Section 411.660 explains
that SSA's decision on a dispute between an EN that is not a State VR
agency and a PM is final.
    A dispute over a payment request submitted by an EN, including a
State VR agency serving as an EN, will be resolved using the dispute
resolution procedures contained in Sec. 411.590.

Disputes Between Service Providers and PMs

    We are required to provide a mechanism for resolving disputes
between service providers and PMs. Most service providers approved to
serve beneficiaries under the Ticket to Work program will be serving as
ENs. Disputes between ENs and PMs over payments are discussed in
subpart H. Other disputes between ENs and PMs are discussed above, and
in Secs. 411.650, 411.655, and 411.660. State VR agencies that choose
not to serve beneficiaries with tickets as ENs will be the only other
service providers having a relationship with a PM under the Ticket to
Work program. Disputes between a State VR agency that is not
functioning as an EN and a PM, that involve issues related to ticket
assignment and do not involve a request for payment or other
reimbursement issue, will be handled in accordance with the PM's
dispute resolution procedures. A dispute over a payment request
submitted by a State VR agency which is serving a beneficiary with a
ticket under the vocational rehabilitation cost reimbursement system
(see sections 222(d) and 1615(d) of the Social Security Act) will be
resolved under existing regulations governing the resolution of
disputes regarding a payment request (see 20 CFR Secs. 404.2127(a) and
416.2227(a)).

Disputes Between Beneficiaries and State VR Agencies

    Section 411.640 explains that the dispute resolution procedures in
the Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.),
apply to any dispute arising between a disabled beneficiary and a State
VR agency, regardless of whether the services are being provided under
one of the EN payment systems or under the cost reimbursement payment
system authorized under sections 222(d) and 1615(d) of the Social
Security Act.
    In response to comments on the proposed rules, we are revising
rules in subpart I (Secs. 411.600, 411.605, 411.610, 411.615, 411.625,
411.630, 411.635, 411.640, and 411.650) to clarify whether they refer
to ENs that are not State VR agencies, or those that are State VR
agencies.

Subpart J--The Ticket to Work Program and Alternate Participants
Under the Programs for Payments for Vocational Rehabilitation
Services

    Section 101(d) of Public Law 106-170 provides for a graduated
implementation of the Ticket to Work Program. By January 1, 2004, the
program will be operating in all States and U.S. territories.
    Section 1148(d)(4)(B) of the Act requires the Commissioner, in any
State where the Ticket to Work program is implemented, to enter into
agreements with any alternate participant that is operating under the
authority of section 222(d)(2) of the Act in the State as of the date
of enactment of Public Law 106-170 if the alternate participant chooses
to serve as an EN under the program.
    Subpart J of these regulations describes how implementation of the
Ticket to Work program affects the current alternate participant
payment programs under 20 CFR 404.2101 et seq. and 416.2201 et seq.
Section 411.700 explains what an alternate participant is. Sections
411.705 and 411.710 explain that an approved alternate participant has
the option of becoming an EN when the Ticket to Work program is
implemented in a State and tells an alternate participant what it must
do to become an EN. Sections 411.715 through 411.730 describe how the
transition process will occur for alternate participants who choose to
become ENs. These sections explain how SSA will handle payments related
to beneficiaries who were being served by alternate participants under
existing employment plans prior to the Ticket to Work program being
implemented in the State and the alternate participant becoming an EN.
These sections also provide that SSA will not provide reimbursement for
any services provided to a beneficiary under the alternate participant
payment system after December 31, 2003.

Public Comments on the Notice of Proposed Rulemaking

    When we published the NPRM in the Federal Register on December 28,
2000 (65 FR 82844), we provided interested parties 60 days to submit
comments. We received comments from over 400 commenters, including
national, State and community-based agencies and private organizations
serving people with disabilities, beneficiaries, and other individuals.
We considered carefully the comments we received on the proposed rules
in publishing these final regulations. The comments we received and our
responses to the comments are set forth below. Although

[[Page 67387]]

we condensed, summarized, or paraphrased the comments, we believe that
we have expressed the views accurately and have responded to all of the
relevant issues raised.

Comments and Responses

Subpart B--Tickets Under the Ticket to Work Program

    Comment: Several commenters indicated that we should delay the
issuance of tickets until these final regulations were published.
    Response: After consideration of the public comments on our
proposed rules as well as other views on the best time to begin the
release of the tickets, we have decided to delay releasing tickets
until after these final regulations are effective. These regulations
are effective 30 days after the date of their publication in the
Federal Register. We believe that this will allow for the development
of an infrastructure of public and private sector employment networks
to serve beneficiaries who receive a ticket. We also believe that it is
critical to issue tickets as soon as possible after these regulations
are effective.

Section 411.120  What Is a Ticket Under the Ticket to Work Program

    Comment: One commenter suggested that, in the interest of making
these regulations user-friendly, we add a cross-reference from
Sec. 411.120, regarding what is a ticket under the Ticket to Work
Program, to Sec. 411.140, which describes when an individual can assign
the ticket.
    Response: We are not adopting this comment. However, we agree that
this section requires clarification to include a more complete
description of the format and wording of the ticket, as provided by
section 101(e)(2) of Public Law 106-170. Accordingly, we have expanded
Sec. 411.120 in the final rules to include a fuller description of the
format and wording of the ticket.

Section 411.125  Who is Eligible To Receive a Ticket Under the Ticket
to Work Program?

    Comment: We received many comments in response to proposed
Sec. 411.125(a)(1) which provided that an individual will be eligible
to receive a ticket in a month in which he or she is age 18 or older
and has not attained age 65. Some commenters agreed that it would not
be appropriate to provide transitional youth with tickets, as it might
interfere with their pursuit of an education. The majority of
commenters, though, indicated that we should allow individuals under
age 18 access to a Ticket, to try to ensure that they do not begin a
life-long dependency on public benefits.
    Response: As we indicated in the Preamble to the proposed rules, as
we gain experience with the Ticket to Work program, we plan, at a later
time, to explore the possibility of expanding the age criteria for
receiving a ticket to include those SSI beneficiaries age 16 and older
who are eligible for disability benefit payments based on the childhood
disability standard. While we are not adopting the recommendation to
provide these individuals with tickets in these final rules, we are
publishing a separate notice in this issue of the Federal Register to
request public input for our consideration in developing possible
approaches to serve the needs of transition-age youth with disabilities
who are receiving payments under programs we administer under the Act.
    Comment: Proposed Sec. 411.125(a)(3)(i) and (ii) provide that an
individual will only be eligible for a ticket in a month in which our
records show that the individual's case has not been designated as a
medical improvement expected (MIE) diary review case, or that we have
conducted at least one continuing disability review (CDR) o