SGA Determination Process

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1 Understanding SGA Determinations Lucy Axton Miller & Terri Uttermohlen VCU BARC What are SGA Determinations? SSA defines disability in terms of ability to work at a substantial level - first step of the sequential evaluation process! Continuing Disability Reviews (CDRs) are conducted to assess the value of work performed. Work CDRs are different from Medical CDRs What are SGA Determinations? The point of work CDRs is to determine if work represents SGA Performing SGA means the person is no longer disabled per SSA s definition. The Disability Dichotomy When benefits are terminated or suspended due to work, the notices often confuse beneficiaries because they state the beneficiary is no longer disabled. Individuals must still have disabling conditions, regardless of performance of SGA, to access work incentives and retain health insurance When are SGA determinations made? SGA determinations are made during Work CDRs. These CDRs may be triggered by the following events: TWP diary voluntary earnings report earnings posted to SS record or found in IRS or Unemployment Insurance interface VR notices or vocational diaries 1

2 When are SGA determinations made? SGA determinations are made during Work CDRs. These CDRs may be triggered by the following events: Third party reports SSI re-determination lead Diaried medical CDR indicates employment SGA Determination Process Local Field Offices (FOs) are primarily responsible for conducting work CDRs and making SGA decisions. PSC/ODO may assist with tracking TWPs and are supposed to notify FOs of TWP diaries. Some FOs track their own TWP/EPE months. SGA Determination Process When SSA is aware of work activity, a Work Activity Report (SSA-821) is sent to beneficiary. A separate Work Activity Report (SSA-820) is used for folks in self employment. Evaluating Employment Gross wage information may be obtained from the IRS files, State WC, or UI records, etc. To get a monthly breakdown, CRs generally needs to verify wages by looking at pay stubs, or by contacting the employer Evaluating Employment Verbal reports by beneficiaries are generally NOT sufficient to evaluate employment SGA decisions are based on verified wage information and any other available evidence, including proof of work incentives such as IRWE. Evaluating Employment Determining the exact monthly countable earnings is generally not necessary when: The beneficiary alleges working at levels that are clearly above the SGA level and there is no reason to question the accuracy of the allegation, and there is no evidence of special work incentives; or 2

3 Evaluating Employment Determining the exact monthly countable earning Is generally not necessary when: The evidence is clear that the individual s monthly earnings are below the SGA threshold level, and there is no evidence indicating that the individual may actually be engaging in SGA, or that the individual is in the position to defer or suppress earnings. Definition of SGA Substantial gainful activity means the performance of significant physical and/or mental activities in work for pay or profit, or in work of a type generally performed for pay or profit, regardless of the legality of the work. Significant activities are useful in the accomplishment of a job or the operation of a business, and have economic value. More on the definition of SGA Work may be substantial even if it is performed on a part-time basis, or if the individual does less, is paid less, or has less responsibility than in previous work. Work activity is gainful if it is the kind of work usually done for pay, whether in cash or in kind, or for profit, whether or not a profit is realized. What is NOT SGA? Activities involving self-care, household tasks, unpaid training, hobbies, therapy, school attendance, clubs, social programs, etc., are not generally considered to be SGA. Income that is not wages or NESE would not be considered in SGA determination (POMS DI ) SGA Determinations SGA Determinations A process that does not necessarily focus just on the payment an individual receives for services, but may also consider the individual s work activity itself. Consider the gross amount of an employee s earnings as a starting point for determining if that person is performing substantial work. When evaluating work activity for SGA purposes, we are concerned with only those earnings that represent the individual s own productivity. 3

4 Factors Considered in SGA Determinations Pay (earned income, wages) Nature of job duties Hours worked Productivity Any other factors related to the VALUE of the work performed What are Wages? Anything received in exchange for work performed may count may be cash or inkind SSA only counts wages or NESE which represent work effort ( i.e. not expense reimbursement, sick leave, vacation pay) What are Wages? Wage Considerations Wages are generally subject to FICA deductions in some cases, income not subject to deductions may count as wages. Be careful! Only SSA can decide what counts as wages Title II counts wages when EARNED, not when PAID. Do NOT apply SSI earned income rules to Title II they are not always the same! Some income such as bonuses, incentive payments, commissions, and royalties can be difficult to deal with in SGA determinations. When in doubt, refer to SSA for determination. What is Countable Income? SGA Earnings Guidelines The SSA begins process by looking at gross (before tax) wages, or Net Earnings from Self-Employment (NESE) Once the SSA determines what a person has earned in a month, deductions are made for available work incentives. The result is countable income SGA for non-blind persons $810 (2004) $830 (2005) and $1,350 (2004) $1,380 (2005) for blind beneficiaries SGA amounts annually indexed (since 1/2001) 4

5 SGA Earnings Guidelines Earnings that Demonstrate SGA Work evaluated using SGA level in effect when wages or self-employment income is earned SGA test is applied to gross earnings for employment and net earnings for selfemployment (NESE). Countable earnings averaging over the SGA guideline are considered to demonstrate the ability to engage in SGA, in the absence of evidence to the contrary. Earnings that Don t Demonstrate SGA As of January 1, 2001, someone with average countable earned income under SGA guidelines is NOT engaging in SGA (the secondary SGA guidelines are no longer applicable) SSA will look more closely when beneficiary is in a position to defer/suppress earnings. Earnings that Don t Demonstrate SGA SSA evaluates the worth/value of the work and its comparability to work performed by non-disabled persons using work incentive tools in the decision process. Tools Used to Make SGA Determinations Unsuccessful Work Attempt (UWA) Income Averaging Impairment Related Work Expenses (IRWE) Subsidy Un-incurred business expenses and unpaid help for self employed individuals Retrospective not Prospective These work incentives only exist during the SGA determination none may be officially granted in the future. Though informal discussions with Claims Representatives may be helpful, there is no guarantee that work incentives will be approved until work is complete, and SGA decision is made. 5

6 When are the SGA Tools Applied? The SSA CR will only apply the work incentives in the toolbox if the beneficiary s gross earnings, or NESE exceed the SGA guideline in effect when work was performed. When countable income is under the current SGA guideline, the tools are not needed. Unsuccessful Work Attempt (UWA) UWA is an effort to do substantial work in employment or self-employment which is discontinued or reduced to the non-sga level after a short time (no more than 6 months). because of the individual's impairment or the removal of special conditions related to the impairment that are essential to the further performance of work. Use of UWA Provisions To assist with SGA determinations in order to identify cessation month Applied during initial application and in CDR cases in determining whether, because of work activity, disability continues or ceases Use of UWA Provisions Criteria do not apply during TWP, or in determining whether payment should be made for a particular month during the EPE after the cessation month UWA Criteria UWA Criteria A significant break in continuity of work either not working or work is under SGA Break caused by the disability or removal of special conditions SGA level work lasting more than 6 months is not UWA. Work from 1-3 months and work from 4-6 months are viewed differently in UWA determinations 6

7 UWA for Work from 1-3 Months UWA for Work from 1-3 Months Work must have ended or have been reduced to the non-sga level within 3 months due to the impairment or to the removal of special conditions related to the impairment that are essential to the further performance of work. If the work effort does not exceed 3 months and the alleged reason work ended or was reduced has a reasonable relationship to the impairment, then verification of the reason work ended or was reduced is not required. UWA for Work from 4-6 Months Work must have ended or reduced to the non-sga level due to the impairment or to the removal of special conditions AND: a. There must have been frequent absences due to the impairment; or b. The work must have been unsatisfactory due to the impairment; or UWA for Work from 4-6 Months Work must have ended or have been reduced to the non-sga level due to the impairment or to the removal of special conditions AND: c. The work must have been done during a period of temporary remission of the impairment; or d. The work must have been done under special conditions. Special Conditions Under UWA Special conditions are situations especially arranged to accommodate the worker s disability, or an unusual job Opportunity. For example, the person: 1. Required and received special assistance from other employees in performing the job; or 2. Was allowed to work irregular hours or take frequent rest periods; or Special Conditions Under UWA 3. Was provided with special equipment or was assigned work especially suited to the impairment; or 4. Was able to work only within a framework of especially arranged circumstances, such as where other persons helped him or her prepare for or get to and from work; or 7

8 Special Conditions Under UWA 5. Was permitted to perform at a lower standard of productivity or efficiency than other employees; or 6. Was granted the opportunity to work, despite his or her disability, because of family relationship, past association with the firm, or other altruistic reason. Averaging Applied when earnings after TWP fluctuate above and below the SGA guideline and UWA criteria do not apply Is unnecessary and should NOT be applied when work is consistently above or below SGA or when work is determined to meet UWA criteria NOT used when counting TWP months or during EPE after cessation month Time Periods for Averaging Income not averaged across time periods when SGA levels changed Do not average together periods of work activity that are significantly different in terms of earnings or work activity (2 or more periods of averaging may be considered separately) Time Periods for Averaging Averaging is not performed on annual basis, but from point work effort begins to where it ends or changes Work performed in TWP may be averaged with work after the TWP if part of the same work effort. Averaging NOT used to determine TWP months. Averaging and other work incentives If gross wages may be reduced by the value of IRWE, or Subsidy, the earnings are averaged after these deductions are applied. Averaging is performed on countable earnings, not gross earnings. IRWE The purpose of IRWE is to enable recipients of SSI benefits to recover some of the costs of expenses incurred as a result of their disability to support their work. Deducting the cost of impairment-related items and services from monthly gross wages increases SSI cash payments. 8

9 IRWE IRWE Criteria The cost of IRWE expenses can also be deducted from gross earnings during initial SSI application processes enabling individuals to meet the SGA requirement Expenses must be directly related to enabling the individuals to work; Individuals, because of a severe physical or mental impairments, must need the items or services to work; IRWE Criteria Subsidy Costs must be paid by the individuals and not be reimbursable from other sources; Expenses must be paid in a month in which the individuals are or were working; and Expenses must be reasonable. Support a person receives on the job that could result in more pay being received than the actual value of services performed. Social Security considers the value of subsidies when determining whether or not a person is engaging in SGA. Types: Employer subsidies Special conditions Dealing with SGA Decisions Provide accurate & timely info to SSA during work CDRs help the CR use the SGA tools! Prepare beneficiaries to provide accurate and relevant information to SSA, including necessary documentation Dealing with SGA Decisions Help people complete the Work Activity Report properly Inform beneficiaries of SSA Appeals process Request that prior SGA decision be reopened if necessary after the appeals deadline has passed. 9

10 Appeals Appeals SGA determinations are subject to regular SSA appeal rules. SSA unlikely to award appeal if reason for request is that person didn t understand reporting responsibilities Note that continued payments during the appeal are only provided for medical terminations and only if request is made within 10 days of termination notice. Helping Beneficiaries Understand SGA Don t focus solely on the SGA earnings guideline SGA is NOT just a number! Educate beneficiaries on the SGA tools and how to report use of work incentives to SSA Invest time counseling self-employed persons in advance about SGA rules Helping Beneficiaries Understand SGA Don t make premature assurances help clients assess risks and make choices accordingly. Help beneficiaries understand reporting requirements and how to report employment data. Final Thoughts Final Thoughts SGA exists in the mind of the CR SGA determinations may be highly subjective since they are an assessment of work value Incorrect SGA determinations are made when CRs lack all relevant information SGA determinations are always made in arrears. It is impossible to make SGA determinations in real-time Teach beneficiaries to push for timely work CDRs 10