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by Kevin Liebkemann
People who receive Social Security Disability (SSDI) and Supplemental Security Income (SSI) are entitled to certain work incentive benefits. In some situations, these programs can protect their cash and medical benefits while they test their ability to return to work. However, these programs are complicated, and people can incur large benefit overpayment claims if they do not follow the rules. This presentation will provide information on how to use the work incentive programs while minimizing the chance of a benefit overpayment claim.
1. SSDI and SSI Basics
Social Security Disability Insurance (SSDI)
SSDI is an insurance program administered by the Social Security Administration (SSA). SSDI provides cash payments and Medicare health care benefits (after a waiting period) to workers who become disabled. The worker must have a sufficient work history to qualify. Some family members can become eligible based on an insured person’s record.
Supplemental Security Income (SSI)
The SSI program is a federal welfare program administered by the Social Security Administration. SSI provides cash and health care coverage to people who are aged (65 or older), blind or disabled who have income and resources under the program limits.
2. Introduction to the Work Incentives That Are Only For SSDI
There are several work incentive programs. Some apply only to the SSDI program, while others apply only to SSI. Some apply to both. First, we consider the three main work incentive programs that apply when a person receiving SSDI starts working, the Trial Work Period, Extended Period of Eligibility, and Expedited Reinstatement.
When a person on SSDI benefits starts working he/she should promptly report it to the local Social Security office. Pay information should be forwarded regularly. This prevents costly and inconvenient benefit overpayment claims. Do not assume that Social Security knows what you are making because you are paying Social Security taxes out of your paycheck. Once the person on SSDI starts working and reporting earnings, Social Security should keep track of how much money was earned each month.
The Trial Work Period (TWP) program allows the SSDI beneficiary to work and earn as much as he or she wants for 9 months without any effect on the SSDI cash or the resulting Medicare benefits. Social Security has a peculiar way of counting those 9 months though:
-A month only counts as a “Trial Work Period” if the person worked and earned over the “Trial Work Period” amount, which is currently $700 per month, and which changes each year.
-The TWP only ends when the SSDI beneficiary accumulates 9 TWP months in a moving 60 month (5 year) period. Those months need not be consecutive. Keeping track of those months can be tricky.
One the TWP is over, the person receiving SSDI enters the Extended Period of Eligibility (EPE). For the next 3 years, the person is entitled to continue receiving cash SSDI benefits and Medicare for each month in which he or she does not engage in “substantial gainful activity.” Each year, Social Security publishes an earnings amount which it presumes equals substantial gainful activity. In 2009, that amount is $980 per month ($1,640 if blind). Social Security then examines if the SSDI beneficiary’s countable income exceeds that amount.
When the EPE ends, the SSDI beneficiary enters into the period of Expedited Reinstatement (EXR) for the next 5 years. Basically, a person in the Expedited Reinstatement period is cut off of SSDI the first month he/she has countable work earnings over the substantial gainful activity amount. However, the person can sometimes use an expedited application process and easier claims standard to get back on benefits. Up to six months of temporary benefits might also be paid while the EXR claim is pending. (This might also be used for SSI recipients if cash payments ended because of work and earnings and work is stopped within 5 years of when benefits ended.)
If a person goes off of SSDI due to work earnings (as opposed to medical improvement) then he or she can sometimes maintain Medicare coverage for up to 93 months after the end of the Trial Work Period.
Considering how complicated these work incentives are, careful tracking and reporting of work-related income is important to avoid overpayments. To help prevent overpayment claims get written acknowledgments or receipts of the documents that you provide to SSA. It is also wise to save copies in case SSA loses them. If an overpayment claim happens, that may be the only proof that you were not at fault in causing it.
When dealing with SSDI benefits, note how it is usually an “all or nothing” approach. Either you are entitled to your full benefit, or you are not.
3. Introduction to SSI Work Incentives
SSI has its own work incentive rules that differ from SSDI. Unlike the SSDI benefit, SSI is very sensitive to income. Income can cause a “sliding scale” type reduction in SSI benefits, whereas the SSDI benefit is usually paid in full or not at all. To understand the SSI system, you need to know how income affects the benefit. There are two types of income: unearned and earned.
Unearned income is that which did not result from work activity. Gifts, lottery winnings, and inheritances would be examples. Unearned income reduces SSI dollar for dollar, after a $20 general monthly disregard. To give you an example, a $120 gift would reduce the SSI by $100:
$120 - $20 (general monthly disregard) = $100.
Earned income is that which results from work activity. To give people incentives to work, SSA gives a bigger monthly disregard ($65), and only reduces SSI by $1 for every $2 earned after that. Also, if you did not use the $20 general income disregard (see above) you can use it for the earned income. To give you an example, $185 in earned income could result in just a $50 reduction of SSI.
$185 - $85 ($65 +20 monthly disregards) = $100
$100 divided by 2 = $50
As long as a New Jersey SSI beneficiary is entitled to any SSI, he or she gets Medicaid. If a SSI beneficiary goes off of Medicaid because of work-related earnings (as opposed to medical improvement), there are several programs that can extend the Medicaid in certain circumstances.
Plans for Achieving Self Support (PASS). These plans allow people to set aside income or resources into special accounts that are not counted for purposes of determining SSI eligibility. It has to be approved by SSA and for the purposes of achieving self support. In some situations this can allow a person to keep a reasonable SSI cash benefit and Medicaid while saving up for an approved education, training or business development expense.
The Student Earned Income Exclusion allows some young students (under age 22) who are regularly attending school to exclude a limited amount of earned income for purposes of calculating SSI benefits.
Regular reporting of income is critically important in SSI cases to avoid overpayments. SSI beneficiaries with varying income should meet with SSA representatives to agree on how and when to report income to avoid problems.
4. Other Work Incentives
Impairment Related Work Expenses (IRWES). If a person collecting SSI or SSDI pays out of pocket for something related to an impairment that is needed to work, it may count as an impairment related work expense (IRWE). This is helpful because the IRWE can reduce countable income for purposes of determining whether your work income exceeds the “substantial gainful activity” level. Also, IRWEs can be deducted when determining your SSI payment amount. Examples of IRWEs might include some out of pocket medication or physician costs, orthopedic devices, wheelchair expenses, and others.
Unsuccessful Work Attempt (UWA) rules. Sometimes a beneficiary tries a job, but fails in the attempt because of his or her impairments. In some cases, it can be counted as an unsuccessful work attempt (UWA). The benefit here is that the work is not counted as “substantial gainful activity” even if the person earned over the presumed monthly substantial gainful activity amounts.
Subsidy and Special Condition. In some situations, a person is paid more than the reasonable value of the work produced. Examples may include sheltered workshops and other special programs. If this can be shown, then for purposes of determining whether work is “substantial gainful activity,” SSA will only credit the actual value of the work, as opposed to the amount the worker was paid. The following example helps to explain:
A person who was injured and could only do half of the work he did before. However, because he was well liked and worked there many years, the employer continued paying full wages. In this case, SSA would only count half of the person’s income for purposes of determining whether it was substantial gainful activity. (Note that this deduction cannot be used in calculating SSI payment amounts)
Self-Employed people have other rules for counting income. “Unincurred business expense” rules are akin to the impairment related work expenses and subsidies. Deductions are sometimes allowed for situations like people providing free help to the business.
Ticket to Work provides improved access to vocational and rehabilitation training, while sometimes protecting beneficiaries from continuing medical reviews.
There are other programs that may apply in special circumstances. SSDI and SSI beneficiaries can increase their options by learning about available work incentive programs. However, because they are often complex, beneficiaries are wise to seek advice to determine the best course of action. Social Security has funded some New Jersey not-for-profit organizations to provide free information on work incentives to beneficiaries, including:
New Jersey Wins
Toll free: 866-946-7465
Disability Rights New Jersey
Toll free: (800) 922-7233
Consulting with these sources can help prevent overpayment claims. Also, overpayment claims can sometimes be waived if you were not at fault in causing the overpayment. If you can document that you timely reported income and work, and that you did everything you could to follow the rules, then you have a much better chance of having SSA waive any overpayment that occurs.
Additional helpful information can be obtained as follows:
Social Security “Redbook” describing work incentives
Access to other Social Security Forms
On preventing and dealing with overpayment claims:
“Dealing With Post Entitlement Issues” by James Sheldon. Available for free download at: http://digitalcommons.ilr.cornell.edu/edicollect/1198/
“Seeking Waiver of a Social Security SSI Overpayment” The Benefits Planner Vol. 5, Issue 4, pp. 165-171 (Winter 2005-6). Available for free download at: http://www.nls.org/planner/winter-05-06.pdf
None of the information included in this paper is intended as legal advice, and no attorney-client relationship is established by these materials and/or the associated presentation. These materials state basic rules but there are additional rules and exceptions. You should consult an attorney for any legal advice on the particular facts of any case.