Overcoming Misperceptions About Hiring People with Disabilities

Philip M. Gaunt
Professor of Communication
Director, Interdisciplinary Communication Research Institute

Wichita State University
1845 Fairmount
Wichita, KS 67260-0031

Mark L. Lengnick-Hall
Professor of Management
Department of Management
College of Business
University of Texas at San Antonio
6900 North Loop 1604 West
San Antonio, TX 78249-0634

Table of Contents

Introduction

Benefits of employing persons with disabilities

Simple steps to improve the employment of persons with disabilities

Common misperceptions about employing persons with disabilities

Appendix: Overview of Federal Tax Incentives for Hiring People with Disabilities
Work Opportunity Tax Credit (WOTC)
Welfare-to-Work Tax Credit (WtW)
Veterans Job Training Program.
Disabled Access Credit (DAC)
Architectural/Transportation Tax Deduction (ATTD)
Mentor-Protégé Program (MPP)
SSA Employment Network Cash Provisions (SSAENCP)

Introduction

The purpose of this document is to discuss some of the common misperceptions regarding PWDs, the tax incentives available for employing PWDs, and the advantages of employing PWDs. The disabilities referred to are mainly physical rather than cognitive, although certain types of mild cognitive disorders may be included depending on the level of function to be performed by the employee.

While there are numerous common misperceptions about the cost or other disadvantages of employing PWDs, there are in fact many positive benefits.

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Benefits of employing persons with disabilities

  1. Cost recovery: the average cost of turnover in a company is $55,977. PWDs typically have a longer retention rate, which can substantially reduce overall employee recruitment and training expenses.
    PWDs exhibit traits that are increasingly more difficult to find in the emerging labor markets, e.g. loyalty and hard work.
  2. PWDs are an untapped pool of talent. Organizations who take advantage of this labor pool may gain advantage over their competitors.
  3. PWDs represent a huge consumer market. Organizations that hire PWDs will make themselves more attractive to this market segment.
  4. The public tends to look favorably on those companies that do employ PWDs. A reputation for social responsibility can be beneficial.
  5. It may be easier to obtain government contracts if a company’s workforce more closely resembles the demographic make-up of the United States.
  6. When PWDs are working, they are no longer drawing Social Security benefits, and they pay taxes. This is a double benefit for society.
  7. Federal tax incentives for the employment of PWDs can increase the cost/benefit ratio of a company.
    (Note: Appendix provides a list of the federal tax incentives and how to qualify for them.)

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Simple steps to improve the employment of persons with disabilities

While making a large organization more receptive to the employment of PWD can be complicated, involving some kind of detailed organizational development plan, there are a few simple steps that can make a big difference in smaller businesses.

Articulate a company wide commitment to the employment of PWDs, and

Executives and HR departments should strive to become better educated about PWDs. This includes gaining an understanding of the variety of disabilities, and how to integrate PWDs into organizations.

Actively recruit PWDs. This can be done by coordinating with local organizations that serve PWDs or vocational training centers that are focused on the education of PWDs.

Seek to make the workplace more friendly towards PWDs, by making the environment more accessible, e.g. wheelchair ramps, automatic doors, elevators, Braille control buttons, etc.

Initiate disability sensitivity training that all employees must attend at regular intervals.

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Common misperceptions about employing persons with disabilities

Misperception 1 – The cost of accommodating persons with disabilities is high and not worth the investment

Misperception 2 – If a company fires a person with disabilities, it runs the risk of being sued.

Misperception 3 – Hiring persons with Persons with disabilities will raise the healthcare costs.

Misperception 4 – Many customers do not like to interact with persons with disabilities.

Misperception 5 – Co-workers are sometimes reluctant to interact with persons with disabilities, partly because they are sometimes viewed as less productive.

Misperception 6 – Applying for federal tax incentives involves a lot of hassle and extra paperwork.

Misperception 7 – Developing and implementing new personnel policies and/or specialized treatment plans to accommodate persons with disabilities will incur extra expenses.

Misperception 8 – There are safety issues surrounding the employment of PWDs in a manufacturing environment.

Misperception 1 – The cost of accommodating persons with disabilities is high and not worth the investment

In actual fact:
· Sixty-nine percent of PWDs do not need special equipment to do their jobs effectively (N.O.D. Harris Survey of Americans with Disabilities, 1994).
· 20 percent of PWDs need no accommodations.
· Only 29 percent of PWDs need more than $500 worth of accommodation.
· Numerous studies show that providing reasonable access to PWDs is extremely cost effective, especially when contrasted with the benefits.

There are government incentives that cover the cost of accommodation. (See Appendix A.)

The following are a few examples of different kinds of accommodations from the Job Accommodation Network, with associated costs:

Situation: A person had an eye disorder. Glare on the computer screen caused fatigue.
Solution: An antiglare screen was purchased ($39.00).

Situation: A person with a learning disability worked in the mailroom and had difficulty remembering which streets belonged to which zip codes.
Solution: A Rolodex card system was filed by street name alphabetically with the zip code. This helped him to increase his output ($150.00).

Situation: A plant worker had difficulty using the telephone due to a hearing impairment that required the use of hearing aids. It was suggested that he take a lower paying job that did not require telephone use.
Solution: A telephone amplifier that worked in conjunction with his hearing aids was purchased. He was able to keep the same job ($48.00).

Situation: A seamstress could not use ordinary scissors due to pain in her wrist.
Solution: The business purchased a pair of spring-loaded ergonomically designed scissors ($18.00).

Situation: An insurance salesperson with cerebral palsy had difficulty taking notes while talking on the telephone.
Solution: Her employer purchased a headset for a phone ($49.95).

Situation: A person applied for a job as a cook and was able to do everything required except opening cans, due to the loss of a hand.
Solution: The employer called the Job Accommodation Network, was given a list of one-handed can openers, and bought one ($35.00).

Situation: A medical technician who was deaf could not hear the buzz of a timer, which was necessary for specific laboratory tests.
Solution: An indicator light was attached ($26.95).

Situation: A person who used a wheelchair could not use a desk because it was too low and his knees would not go under it.
Solution: The desk was raised with wood blocks (scrap wood the individual brought in from home), allowing a proper amount of space for the wheelchair to fit under it (zero cost).

Note: Information relating to accommodation for 39 distinct disabilities is available on the Job Accommodation Network website. (http://www.jan.wvu.edu/media/index.htm)

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Misperception 2 – If a company fires a person with disabilities, it runs the risk of being sued.

In actual fact:
· Despite fear of ADA lawsuits, a recent study found that 96% of cases were found in favor of the employer.
· If an employer’s workforce profile shows similar diversity ratios as the general population, then the risk of litigation is lessened.
· Firing any employee, whether disabled or not, brings with it the risk of potential litigation.

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Misperception 3 – Hiring persons with Persons with disabilities will raise the healthcare costs.

In actual fact:
· While this may be true in certain cases, many other factors such as high cholesterol, high blood pressure, smoking or obesity can also increase healthcare costs.

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Misperception 4 – Many customers do not like to interact with persons with disabilities.

In actual fact:
· The disability community, like other niche markets, responds positively to companies whose marketing approaches are sensitive to the needs and interests of PWDs.
· The disability community, comprising nearly one fifth of the American population, is a largely untapped market worth over $220 billion in collective spending power. This potential market is further strengthened by families, friends, communities, employers and service providers of PWDs.
· The National Organization on Disability (N.O.D) offers businesses and marketers a variety of resources for tapping into this increasingly powerful consumer sector.

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Misperception 5 – Co-workers are sometimes reluctant to interact with persons with disabilities, partly because they are sometimes viewed as less productive.

In actual fact:
· While there may be initial reservations, co-worker reactions usually dissipate after more contact and interaction.

· PWDs are as productive if not more productive than the non-disabled. In fact, according to research conducted in 2000 by Harris Interactive on behalf of the N.O.D. and Aetna U.S. Healthcare, four out of ten PWDs who work on line spend twice the time logged on than their non-disabled counterparts.

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Misperception 6 – Applying for federal tax incentives involves a lot of hassle and extra paperwork.

In actual fact:
· In large companies, a Net Present Value model may show that the time used to do paperwork more than pays for itself.
· In small businesses, with relatively low income, the size of some of the incentives could be very attractive.
· In some franchise companies with high employee turnover, individual franchisees can qualify for repeat tax incentives, which can increase local profits considerably.

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Misperception 7 – Developing and implementing new personnel policies and/or specialized treatment plans to accommodate persons with disabilities will incur extra expenses.

In actual fact:
· Such expenses, if incurred, are similar to those incurred for other diverse populations, such as women or ethnic and linguistic minorities. Compliance with federal diversity guidelines can qualify certain employers for profitable government contracts.

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Misperception 8 – There are safety issues surrounding the employment of PWDs in a manufacturing environment.

In actual fact:
· Even in a manufacturing environment, there are plenty of jobs that can be performed by PWDs, e.g. IT, accounting, sales, shipping, etc.
· There are multiple workplace accommodations that can reduce hazards, both for PWDs and non-disabled.

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Appendix: Overview of Federal Tax Incentives for Hiring People with Disabilities

Work Opportunity Tax Credit (WOTC) – All for-profit firms eligible. Employees must be from one of nine groups, including persons with disabilities and veterans with service-connected disabilities completing a state vocational rehabilitation or Veterans Administration vocational rehabilitation program. Tax credit of up to $2,400.
View form

Welfare-to-Work Tax Credit (WtW) – All for-profit firms eligible. Employees must be part of a family that has received Temporary Assistance to Needy Families (TANF) or Aid to Families with Dependent Children (AFDC). Tax credit of up to $8,500.
View form

Veterans Job Training Program. Employers (for-profit and non-profit) can receive reimbursement up to 50% of veteran’s salary and VA can supplement a training wage. Employers then pay payroll taxes based only on their pay to veteran. Needed tools and equipment are supplied by VA. Veterans with service-connected disabilities who face employment barriers are eligible.
View form

Disabled Access Credit (DAC) – Small (for-profit) businesses that in the previous year earned a maximum of $1 million in revenue or had 30 or fewer full-time employees. Small businesses can receive a tax credit to provide ADA accommodations to employees with disabilities. The credit is 50 percent of expenditures over $250, not to exceed $10,250, for a maximum benefit of $5,000.
View form

Architectural/Transportation Tax Deduction (ATTD) – All (for-profit) businesses eligible. Businesses may take an annual deduction of up to $15,000 a year for expenses incurred to remove barriers for persons with disabilities for amounts in excess of the $15,000 maximum. Amounts in excess of $15,000 annual deduction may be depreciated.
View form

Mentor-Protégé Program (MPP) – For-profit businesses that employ the severely disabled (as defined by Section 8064A of Public Law 102-172) and sub-contract work from a prime contactor to the U.S. Dept of Defense. This program provides dollar for dollar reimbursement of costs up to 10% of total contract value for protégé, or Credit, whereby the mentor receives from two to four times the cost of assistance provided to the protégé in credits toward the mentor’s Small Disadvantaged Business sub-contracting goals.
View form

SSA Employment Network Cash Provisions (SSAENCP) – All businesses (except 501(c)4 lobbying organizations) are eligible. Employees who are receiving social security benefits must obtain or advance in employment to the extent that they no longer receive SSA benefits. The employer receives a monthly cash reimbursement of 40% of the average national monthly SSDI or SSI benefit payments. So long as the individual is employed at this salary or wage level, the EN receives the cash payment. This may continue for up to 60 months.
View form

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WOTC

Program Legislation Eligible Users Deadlines Forms
Work Opportunity Tax Credit Small Business Job Protection Act of 1996 (P.L. 104-188) Not-for-profit firms ineligible. All for-profit firms, regardless of size, are eligible. IRS Form 8850
ETA Form 9061 or Form 9062

Eligible Employees

Disabled people who completed or are completing rehabilitative services from a State or the U.S. Department of Veterans Affairs.

Incentives

Tax credit of up to $2,400 for each new hire: 40% of qualified first-year wages for those who are employed 400 or more hours, 25% of those who are employed 120 hours.

Restrictions

1. Qualified capped at $6,000 per employee. WOTC applies only to new employees hired after September 30, 1996, and before January 1, 2004. (Note: Employers have a maximum combined period of two years to claim WOTC or WtW. Employers cannot claim both on the same individual in the same taxable year.)
2. Credits cannot be claimed for wages paid to relatives.
3. No tax credit can be claimed for federally subsidized on-the-job training. However, wages paid after the subsidy expires can qualify for tax credit.
4. Any individual who previously worked for the employer and does not meet the definition of “qualifying re-hire” is ineligible.

Procedures

1. Complete the one page IRS Form 8850 by the day the job offer is made.
2. Complete either the one page ETA Form 9061 or Form 9062:
If the new employee has already been conditionally certified as belonging to a WOTC target group, complete the bottom part of ETA Form 9062 (and sign and date it), that he or she has been given by a State Employment Security Agency or participating agency, e.g., a Job Corps center.
b. If the new employee has not been conditionally certified, the employer and/or the new employee must fill out and complete, sign and date ETA Form 9061
3. Mail the signed IRS and ETA forms to the employer’s State Employment Security Agency. The IRS form must be mailed within 21 days of the employee’s employment start date.

Website

http://www.dol.gov/odep/pubs/ek97/tax.htm

WWTC

Program Legislation Eligible Users Deadlines Forms
Welfare-to-Work Tax Credit Taxpayer Relief Act of 1997 Not-for-profit firms ineligible. All for-profit firms, regardless of size, are eligible. IRS Form 8850

ETA Form 9061 or Form 9062

Elegible Employee Incentives

Individuals who have been certified by the “designated local agency” as a member of a family that received Temporary Assistance to Needy Families (TANF) or Aid to Families with Dependent Children (AFDC).

Tax credit of up to $8,500 for each new hire: 35% of qualified first-year wages, 50% of qualified second-year wages. Employees must be employed at least 400 hours or 180 days.

Restrictions

1. Qualified wages (which include tax-exempt amounts received under accident and health plans as well as educational and dependent assistance programs) capped at $10,000 per employee. WtW applies only to new employees hired after December 31, 1997, and before January 1, 2004. (Note: Employers have a maximum combined period of two years to claim WOTC credit or WtW. Employers cannot claim both on the same individual in the same taxable year. )
2. Credits cannot be claimed for wages paid to relatives.
3. No tax credit can be claimed for federally subsidized on-the-job training. However, wages paid after the subsidy expires can qualify for tax credit.
4. Any individual who previously worked for the employer and does not meet the definition of “qualifying re-hire” is ineligible.

Procedures

1. Complete the one page IRS Form 8850 by the day the job offer is made.
2. Complete either the one page ETA Form 9061 or Form 9062:
If the new employee has already been conditionally certified as belonging to a WOTC target group, complete the bottom part of ETA Form 9062 (and sign and date it), that he or she has been given by a State Employment Security Agency or participating agency, e.g., a Job Corps center.
b. If the new employee has not been conditionally certified, the employer and/or the new employee must fill out and complete, sign and date ETA Form 9061
3. Mail the signed IRS and ETA forms to the employer’s State Employment Security Agency. The IRS form must be mailed within 21 days of the employee’s employment start date.

Website

http://ows.doleta.gov/employ/wtw.asp

VJTP

Program Legislation Eligible Users Deadlines Forms
Veterans Job Training Program 38 U.S.C.501(a), 3100-3121 (1944) Any Non-Governmental Employer None for employers Minimal paperwork provided by VR counselor

Eligible Employees

Veterans who have service-connected disabilities and are determined (by the Department of Veterans Affairs) to have an employment handicap or serious employment handicap.

On-the-job Training Program

Reduction in salary costs. VA can supplement a training wage, paying the veteran directly. VA pays a portion of the difference between actual and journeyman pay to the veteran. Tax costs for Social Security, unemployment compensation and workman’s compensation are based only on the salary paid by the employer.
Needed tools and equipment supplied by VA.
Employer pays a salary not less than that paid to other trainees in similar positions.
VA assists in payment of cost of additional training needed.
VA can assist in cost of necessary job accommodation.
VA professionals are available for consultation during the training program.

Incentives for Direct Hire

Training can be up to 24 months, or longer, if approved as an apprenticeship program.

Up to 50% of veteran’s salary paid to employer for indirect expenses related to program costs (e.g. operation losses because of time spent training new employee).
Needed tools and equipment supplied by VA.
Low risk trial period.
Reduced labor and training costs.
Opportunity for employer to view veteran’s skills and abilities.
Up to six months reimbursement to employers (nine months with special approval).
Minimal paperwork and employer involvement.

Procedures

Interested employers need to contact their local or regional Department of Veterans Affairs office and ask to speak to the Vocational and Rehabilitation & Employment counselor, who will provide all information, forms, and processes needed.

Website

http://www.vba.va.gov/bln/vre/employer_incentives

Point of Contact for more information: Veterans Administration Employment Specialist Liaison, Washington, D.C. 1-202-273-7049

DAC

Program Legislation Eligible Users Deadlines Forms
Disabled Access Credit IRS Code Section 144 Small businesses that in the previous year earned a max. of $1 million in revenue or had 30 or fewer full-time employees None
(can be used every year)
IRS Form 8826

Description

Eligible small businesses can receive a tax credit for paying or incurring expenses to provide access to person with disabilities (these expenses must be for compliance with the Americans with Disabilities Act of 1990).

Incentives

The credit is 50 percent of expenditures over $250, not to exceed $10,250, for a maximum benefit of $5,000. The credit amount is subtracted from the total tax liability after calculating taxes.

Covered Expenses

Examples include:
1. sign language interpreters for employees or customers who have hearing impairments;
2. readers for employees or customers who have visual impairments;
3. the purchase of adaptive equipment or the modification of equipment;
4. the production of print materials in alternate formats (e.g., braille, audio tape, large print);
5. the removal of architectural barriers in buildings or vehicles.

Expenses Not Covered

The tax credit does not apply to the costs of new construction, and a building being modified must have been placed in service before November 5, 1990.

Procedures

1. Complete the one page IRS Form 8826 along with regular business tax forms, to be filed for the calendar year in which expenditures were incurred.

Website

http://www.dol.gov/odep/pubs/ek97/tax.htm

ATTD

Program Legislation Eligible Users Deadlines Forms
Architectural/
Transportation Tax Deduction
IRS Code Section 190, Barrier Removal All businesses None
(can be used every year)
None

Description

Businesses may take an annual deduction for expenses incurred to remove physical, structural, and transportation barriers for persons with disabilities (or the elderly) at the workplace.

Incentives

Businesses may take a tax deduction of up to $15,000 a year for expenses incurred to remove barriers for persons with disabilities. Amounts in excess of the $15,000 maximum annual deduction may be depreciated.

Covered Expenses

This can be used for a variety of costs to make a facility or public transportation vehicle, owned or leased for use in the business, more accessible to and usable by persons with disabilities. Examples include the cost of:

§ providing accessible parking spaces, ramps, and curb cuts;
§ providing telephones, water fountains, and restrooms which are accessible to persons using wheelchairs;
§ making walkways at least 48 inches wide.

Expenses Not Covered

The deduction may not be used for expenses incurred for new construction, or for a complete renovation of a facility or public transportation vehicle, or for the normal replacement of depreciable property.

Procedures

The amount spent is subtracted from the total income of a business to establish its taxable income. In order for expenses to be deductible, accessibility standards established under the Section 190 regulations must be met.

Website

http://www.dol.gov/odep/pubs/ek97/tax.htm

MPP

Program Legislation Eligible Users Deadlines Forms
Mentor- Protégé Program Public Law 101-510, enacted 1990 Mentor — must have at least one active subcontracting plan and be eligible for federal contracts
Protégé — A qualified organization employing the severely disabled as defined in Section 8064A of Public Law 102-172
None
(program is ongoing; however, different types of contracts can require internal deadlines)
Mentor Agreement Template,
Protégé Agreement Template, Semi-Annual Report

Description

Businesses which employ the severely disabled (as defined above) and sub-contract work from a prime contactor to the U.S. Dept. of Defense may receive technical assistance in areas such as production, management, financing, etc. The prime contractor (the mentor) is reimbursed by the federal agency for the costs of the technical assistance provided to the protégé.

Incentives

Reimbursement of Costs, dollar for dollar, both direct and indirect for mentor, and up to 10% of total contract value for protégé, or Credit, whereby the mentor receives from two to four times the cost of assistance provided to the protégé in credits toward the mentor’s SDB sub-contracting goals (as required for contracts over $500K, or $1 million for construction).

Reimbursable Costs

(for the mentor) Direct Costs: providing developmental assistance with the mentor’s personnel. Indirect Costs: Travel and subsistence, incidental supplies and materials. (for the protégé) Costs not specifically addressed in the legislation, which are otherwise considered allowable, allocable and reasonable. These primarily include travel and subsistence, and incidental supplies and materials.

Types of Credit Available

1. Credit for any reasonable and allowable costs incurred by the mentor which were not reimbursed under the mentor’s cooperative agreement or as a separately priced contract line item 2. Credit for developmental assistance costs that have been reimbursed via inclusion in indirect expense pools 3. Credit for developmental assistance costs not eligible for reimbursement (to the degree that such costs were identified in the original M-P agreement) 4. Credit for all developmental costs where the M-P agreement is for credit only

Procedures

1. The first act of participation for either party, Mentor or Protégé, is to find a counterpart.
2. Once a suitable partner is located the requirements of the Program must be met (see above in Eligible Users).
3. When these requirements have been met the mentor must complete the Mentor Application (see above in Forms), that is if they are not already a mentor, and submit it prior to the agreement.
4. Upon submitting the Mentor Application the two parties should commence talks discerning what both hope to accomplish through the agreement, setting goals for themselves.
5. Next, both parties submit the Mentor-Protégé Agreement Application (see above in Forms).
6. In addition, in accordance with DFARS Appendix I-111, both a mentor and protégé firm must report on the progress made under active mentor-protégé agreements semiannually and the protégé firm must report on the progress made under the Mentor-Protégé Agreement annually. The protégé firm is also required to provide data on the firm for 2 fiscal years after the expiration of the Program participation term (see above in Forms).

Website

http://www.acq.osd.mil/sadbu/mentor_protege

SSAENCP

Program Legislation Eligible Users Deadlines Forms
SSA Employment Network Cash ProvisionsTicket to Work and Work Incentives Improvement Act, Public Law 106-170, enacted 1999All business entities, for-profit and not-for-profit (other than 501(c)4 lobbying organizations) that are not disbarred from federal grants and contracts.None
(program is ongoing; however, different types of contracts can require internal deadlines)Approved application as an Employment Network (EN); Individual Work Plans for Ticket Users; Annual Reports

Description

An Employment Network (EN) can consist of individual business entities or consortia of business entities or organizations. Business entities or organizations may participate in more than one EN. The EN provides services to individuals with disabilities who receive Social Security benefits to enable them to obtain or advance in employment to the extent that they no longer receive SSA benefits (SSDI or SSI; Medicaid/Medicare may continue).

Incentives

Once the Ticket-holder (beneficiary) achieves “substantial gainful activity” ($800/mo. In 2003), the EN receives a monthly cash reimbursement of 40% of the average national monthly SSDI or SSI benefit payments. So long as the individual is employed at this salary or wage level the EN receives the cash payment. This may continue up to 60 months.

Current Payments

Monthly cash reimbursements to an Employment Network (for a former SSDI beneficiary) can total $19,680 over the 60 months of Ticket eligibility. Monthly cash reimbursements to an Employment Network (for a former SSI beneficiary) can total $11,760 over the 60 months of Ticket eligibility. Monthly cash reimbursements for dual beneficiaries (former recipients of both SSDI and SSI) will be paid at the SSDI rate.

Procedures

1. Tickets-to-Work are being mailed to SSA beneficiaries on a phased schedule over three years (2001-2004). Once a beneficiary’s state of residence begins participation in the program, he or she can request or will eventually receive a Ticket.
2. The Ticket holder then selects an approved Employment Network and “assigns” his/her ticket to that EN.
3. The beneficiary and the EN then agree upon an Individual Work Plan, which details the services that the EN will provide to that beneficiary in return for assignment of the Ticket.
4. The Individual Work Plan must be approved by Maximus, Inc., the Program Manager for the Social Security Administration.
5. The beneficiary receives services such as training and employment preparation, and then obtains employment. The EN continues to provide employment support for the 60 months of the Ticket eligibility.
6. When the beneficiary’s Social Security benefits cease due to his or her earned income, the Employment Network files for the monthly cash reimbursement.
7. If the EN is a consortium, and more than one business entity or organization has provided services, the monthly cash reimbursement may be divided between them as they agree.

Website

http://www.ssa.gov/work

General information:
Maximus, Inc. is the contracted Program Manager for the Social Security Administration
http://www.yourtickettowork.com
or toll-free telephone number: 1-866-968-7842 (Voice)
or toll-free telephone number: 1-866-833-2967 (TDD)

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