First, we will briefly recap the financial eligibility criteria. In order to meet the Social Security definition of “having a disability,” the SSA must agree that you are incapable at the time of application of performing Substantial Gainful Activity. For 2020, this means that you cannot earn more than $1,260/month. In addition, SSI recipients must not have more than $2,000 of assets held directly in their own names.
To make beginning or returning to work an attractive, rather than a frightening possibility, Social Security has created a host of what they call Work Incentives. The work incentives enhance the benefit recipient’s financial eligibility. Some of them pertain to Supplemental Security Income, the means-tested disability benefit available to people without much of a work history. Some pertain to Social Security Disability Insurance, SSDI, the disability benefit available to people with sufficient work credits. Some pertain to both. This article will take you through how these incentives can support your start or return to work.
SSI Work Incentives
Since SSI is a means-tested benefit, it is reduced for income you receive from other sources. While unearned income reduces SSI dollar for dollar, earned income receives preferential treatment.
The Earned Income Exclusion. The first $65/month of unearned income is excluded from any reduction calculation. If you have no unearned income, then the first $85/month is excluded. Then, the earned income that remains only reduces SSI by fifty cents on the dollar.
The Student Earned Income Exclusion. If you are a student worker under the age of 22, the earned income exclusion is even more generous. For 2020, a student worker can earn $1,900/month up to $7,670 in the calendar year before the student’s SSI benefit will be reduced.
Section 1619a. If you do the math using the (non-student) earned income exclusion and the subsequent 50 cents on the dollar reduction, you will see that a worker could reach the Substantial Gainful Activity threshold of $1,260/month without having the SSI benefit reduced to zero. Generally, income over SGA would result in SSI ineligibility, but a worker is allowed to receive an ongoing residual benefit under this section of the Social Security regulations.
SSDI Work Incentives
SSDI is an all or nothing benefit. As long as your work keeps you below the SGA threshold, you continue to receive your entire benefit. However, you do not lose your benefit the first month that your income exceeds SGA. There are several steps.
Trial Work Period. As the first step, Social Security counts how often you reach a lower threshold, called the Trial Work level. For 2020, this figure is $910/month. Once you have accumulated nine Trial Work Months in which you have earnings above $910/month, in a rolling 60-month period you have completed Phase I. During that period, you continue to receive your entire SSDI benefit.
Extended Period of Eligibility. Subsequently, you enter a 36-month period in which you do receive your SSDI for any month where your earnings are less than $1,260 and DO NOT receive your SSDI for any month when your earnings exceed that SGA threshold.
SSI and SSDI Work Incentives
Impairment Related Work Expenses (IRWE). As a person with a disability, you may have additional expenses. Any good or service, including doctors’ or therapists’ visits, medication, assistive technology, service animals, special transportation or clothing or similar, may be considered an IRWE if: 1) it is necessary because of your disability, 2) it is necessary for you to work and 3) no insurance or other third party pays for it. Once your IRWE have been approved by Social Security, the Administration will deduct them before counting your earned income.
Employer Subsidy. If your employer makes accommodations for you and can quantify them, their value may be excluded from your countable monthly earnings. If you require more breaks than co-workers without disabilities, or if you are expected to complete a lower volume of work, or are able to opt out of certain tasks generally expected of your role, you can petition the SSA to consider these employer subsidies.
Unsuccessful Work Attempt. If you are able to work at a level where you lose either your SSI or SSDI but then find yourself unable to sustain that level of work for more than six months, your work will not count when Social Security continues your ongoing disability eligibility.
Expedited Reinstatement. If you are successful in going off your SSI or SSDI benefits, but within the subsequent five-year period, are again unable to work above the SGA threshold because your disability has worsened or special accommodations have been removed, your benefits can be reinstated without a new application.
The Ticket to Work. The Ticket to Work is a suite of services available to anyone who receives SSI due to disability or SSDI. Services include vocational counseling, resume and interview preparation assistance, help locating and applying for jobs, and help understanding and managing the impact of work on cash and medical benefits and services and supports.
Plan to Achieve Self Support (PASS). A person who has a work-related goal may create a plan to realize the goal and accumulate funds in excess of the typical SSI/Medicaid threshold of $2,000. The plan must have specific steps and a timeline, and must be approved by the SSA. Income allocated to a PASS is not counted for SSI calculation purposes.
Medicaid Continuation. People with disabilities whose Medicaid eligibility is linked to their SSI recipient status, who then lose SSI due to work earnings, remain eligible for Medicaid under section 1619(b) of the Social Security Regulations. People who never receive SSI who lose their Medicaid due to work earnings may buy in to Medicaid for a modest premium under the eligibility category of Workers with Disabilities.
Medicare Continuation. People who work enough that they lose their SSDI may still retain their Medicare Part A without additional charge for 93 months. Subsequently, they may buy in to Medicare for a modest premium.
Social Security knows that many people with disabilities have a strong motivation to work, but also face addition hurdles to obtain and maintain employment. Work Incentives help you to maintain critical safety nets while exploring and developing your capacity to work.
ABOUT THE AUTHOR:
Alexandra Baig, MBA, CFP® is a fee-only financial planner and an employment network service provider who helps people with disabilities make the most of government benefits and personal resources to support their work and life goals. Alexandra has previous experience running L’Arche Chicago, an innovative residential community for people with and without disabilities.•
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