How Working Affects SSA Benefits Presented by MRS
What will I learn today? A better understanding of how working affects Social Security disability benefits. Insight into the variety of disability programs run by Social Security, including programs for children as well as adults. Learn about special provisions (also called work incentives and employment supports ) that can protect cash benefits and health insurance during periods of work activity.
Consider that But What If I ve already heard about this stuff? 1. A little knowledge is a dangerous thing. 2. The big picture is made up of a lot of little pieces, and you may be missing a few. 3. You may have heard about this stuff but not yet thought it through or tried to apply it. 4. This subject can be complicated; revisiting its content can help you make better sense of it.
What does Social Security mean by disabled? For adults, a disability is a medical condition that prevents a person from being gainfully employed (this means a person must be unable to earn more than $1010 gross/month.) and that has lasted or is expected to last at least one year or result in death. A child must have a disabling condition that results in marked and severe functional limitations. This means the condition must very seriously limit the child s activities. Also, the condition must have lasted, or be expected to last, at least one year or result in death.
What does Social Security mean by disabled? - more Social Security does not pay benefits for partial or temporary disabilities (by Social Security s standards, a person is either disabled or not disabled). Also, Social Security considers a person s total medical picture and does not limit itself to a single medical problem. The same definitions apply to all of Social Security s disability programs (a person has to be just as disabled to receive SSDI or SSI).
Two Main Disability Programs Run by Social Security The two programs have entirely different rules SSDI (Social Security Disability Insurance) 1. Entitlement based upon being disabled and earning enough work credit (not based on need). 2. Benefits can be paid to auxiliaries, such as wives and children, and also to Disabled Adult Children. 3. Benefit amount is based on level of earnings during working lifetime. 4. Medicare begins 24 months after cash benefit entitlement. SSI (Supplemental Security Income) 1. Entitlement based upon being disabled and being in financial need (funded from general taxes, not from Social Security taxes). 2. Benefits are paid only to the disabled individual, but this can be an adult or a child. 3. Payment rate is fixed nationally, but can vary due to income, living arrangements, and individual state supplements. 4. Medicaid begins immediately.
COMPARISON OF SSDI AND SSI PROGRAMS A person has to be just as disabled to draw either SSDI or SSI, but that s where the similarity between these two very different Social Security disability programs ends. SSDI Funded by Social Security (FICA) taxes. People build up Social Security credit by working or being self-employed and paying taxes on their earnings. Amount of benefit is based on level of earnings during a person s working lifetime (the higher the earnings, the higher the benefit will be). Not based on financial need. These benefits are considered to be earned based on the payment of taxes. Benefit amounts are not affected by a person s wealth or poverty. A person can be a millionaire and still draw SSDI benefits. SSDI benefits can be paid to adult workers who earned them and to their dependents (spouses and children).
SSDI Continued A special category of SSDI pays benefits on a parent s work record to an adult child who was disabled before age 22, as long as a parent who worked under jobs covered by Social Security is retired or disabled and drawing Social Security benefits, or is deceased. SSDI provides Medicare coverage, but not until a beneficiary has been entitled to SSDI for 24 months. An SSDI beneficiary who works is entitled to a 9 month Trial Work Period, during which benefits can be paid in full despite the earnings from work. This is followed by an Extended Period of Eligibility, which allows full benefits to be paid in months when earnings are not considered to be substantial and no benefit payments in months when earnings are considered substantial.
Comparison - SSI Funded by general tax revenues. People do not have to have worked under jobs covered by Social Security taxes to qualify for SSI. Amount of benefit is set at fixed rates nationally. Individual states can opt to supplement the national rates. Michigan pays a small quarterly supplement. Based on financial need. Social Security looks closely at each applicant s income and resources to determine SSI eligibility and payment amount. Living arrangements are also considered. Individuals are limited to $2000 of liquid resources but can also own property they live in and a car and, within limits, other assets.
SSI Continued SSI pays benefits only to the disabled individual (not to any dependents). However, SSI disability benefits can be paid to disabled children (parents income and resources are considered until each child reaches age 18). Any monthly amount of SSI payment provides automatic Medicaid coverage. SSI does not have a Trial Work Period or an Extended Period of Eligibility. If an SSI recipient works, SSI payments are reduced by the following formula: monthly gross wages paid minus $85 (or $65 if the person has other income besides just SSI) and divided by ½ equals amount by which a monthly SSI payment must be reduced.
What Kind of Benefits? If you are not sure which kind of disability benefit(s) you receive, contact Social Security and ask for a benefit verification - Call 1/800/772-1213 or create a Social Security My Account Social Security
Why Work? For someone receiving Social Security disability benefits, there are clearly risks to returning to work, such as the loss and possible termination of benefits, the loss of health insurance coverage, and benefit overpayments that have to be repaid. Despite these obstacles, people on disability benefits often do accept the risks because they prefer the independence that comes with trying to work rather than receiving benefits.
Some Very Big Questions If I go to work, what will happen to my Social Security disability benefits? And what about my Medicare? If I go to work, what will happen to my Supplemental Security Income (SSI) disability checks? And what about my Medicaid?
Did you know? Social Security actually encourages people who receive disability benefits to return to work, and Social Security disability programs have special provisions that allow cash and medical benefits to continue even while they are working!
Some of the Work Incentives provided by Social Security Trial Work Period Extended Period of Eligibility Impairment Related Work Expenses Continuation of Medicare Entitlement Expedited Reinstatement of Benefits SSI Earned Income Exclusion 1619b Continuation of Medicaid Plan for Achieving Self Support Ticket to Work
What is the Ticket to Work Program Anyhow? It s an invitation and encouragement be considered for employment services. The Ticket doesn t guarantee vocational services or employment, but it does provide disability beneficiaries with the opportunity to seriously explore the job options that are available to them.?
Points to Ponder About the Ticket to Work Disability beneficiaries who assign their Tickets to the vocational agency they are working with (such as MRS) are exempted from further medical reviews by Social Security. If a vocational agency succeeds in helping a customer return to work at a financially gainful level of income, the agency can apply to Social Security for reimbursement of costs associated with rehabilitating the customer. The Ticket to Work program applies to both SSDI and SSI beneficiaries. The Ticket does not remove or replace any other provisions about the effects of working on benefits.
What Are the Specific Work- Related Provisions That Apply to SSDI?
A person who receives SSDI is Entitled to a 9 month Trial Work Period when he or she goes to work. For a month to count as one of the Trial Work Period months, earnings must be greater than $850 gross per month (2018) There is no limit on how much can be earned during the Trial Work Period months; a beneficiary will continue to be paid full SSDI benefits, and Medicare health insurance will continue! To keep track of how many of the 9 months are being used up, it is necessary to report to Social Security when work starts or stops.
Once the Trial work Period Ends, the Rules Change. Starting with the 10th month of working, SSDI cash benefits can be paid only for those months when gross earnings are below the amount that Social Security considers to be substantial. This amount is currently $1180 gross per month (2018). The 3 year period following the end of the Trial Work Period is called the Extended Period of Eligibility. It allows a person to resume payment of benefits easily if monthly gross earnings fall below $1,180 due to disability.
What Happens to Medicare Coverage? Even if cash benefits are stopped because earnings are substantial, Medicare coverage continues for at least 7 ¾ years past the end of the Trial Work Period!
Here s a probing question... Q: What if a beneficiary has expenses for things needed medically in order to go to work, and these expenses have to be paid for out of the beneficiary s own pocket? Don t they count for something? A: They do indeed! Social Security calls them Impairment Related Work Expenses. The amount of such expenses can be used to figure whether monthly earnings are over or under the substantial earnings limit. In some cases, having such expenses may enable a full SSDI check to be paid when otherwise it couldn t.
And Here Is Another Question Q: What if disability benefits are eventually terminated due to work activity. Is there any quick way to get back onto the benefits if needed? A: There is now a provision called the Expedited Reinstatement of Benefits! If benefits end and within 5 years of their termination a person s medical condition requires getting back onto them, reinstatement of cash benefits and health insurance can be applied for. Up to 6 months of temporary benefits will be paid while the new application is being reviewed. This provision applies to SSDI and SSI!
In addition to Expedited Reimbursement, Does Social Security Have Any Other Special Work Incentives for SSI Recipients?
Work Incentives for People Who Receive Supplemental Security Income (SSI)? In addition, to Expedited Reinstatement, SSI provides Unearned Income formula.
The Formula: 1. Figure out the total gross wages paid to the SSI recipient in a month. 2. Subtract out $85 if the only income the recipient has is SSI, or $65 if other income besides SSI (like Social Security) is being received. 3. Divide what s left in half. 4. Monthly Gross Wages - $85/2 = amount by which an SSI check must be reduced because of earned income.
How About an Example? Let s say a recipient is entitled to SSI of $750 each month. No other income but SSI is being paid. He or she goes to work and starts to earn $600 gross/month. Apply: Monthly Gross Wages - $85/65 2 = the amount by which the SSI check must be reduced because of the new earnings. 1. $600 minus $85 = $515. 2. $515 2 = $257.50. 3. SSI check of $750 - $257.50 = $440.50 SSI still payable.
What happens if the Entire SSI Payment Is Zeroed Out by the Formula? There s a special provision called 1619b that allows Medicaid coverage to continue even if so much is being earned that SSI payments must stop!
What about those Impairment Related Work Expenses (IRWE s)? As under SSDI, there is a credit under SSI for Impairment Related Work Expenses. Such expenses, for which you have paid, can be subtracted from earnings in determining how much of the earnings count against the SSI payments. This results in higher monthly SSI payments being made. Examples of IWRE s include paying for treatment not covered by Medicaid, paying for special transportation necessitated by your disability.
SSI Plan for Achieving Self- Support (PASS) If money to pay for a job goal is needed, then it may be possible to establish a PASS. Social Security will not count income and/or resources included in a PASS when determining effect of these savings on SSI entitlement. This can result in extra payments from the SSI program to help replace money that is being set aside toward a person s vocational goal.
Requirements for setting up a PASS The plan to achieve employment must be realistic and clearly thought out. The plan must be in writing (SSA-545). The plan must be approved by Social Security. The recipient must be capable of performing the work that is the PASS goal. The plan must show what money is already available and what money will be needed to reach the job goal. The plan must be reviewed periodically by Social Security.
What Social Security Programs Are Available for Children and Young Adults? If a parent who worked under jobs covered by Social Security retires, becomes disabled, or dies, a Social Security benefit can be paid to a child 1.Under age 18, 2.During ages 18 and 19 if the child is a full-time student, 3.At age 18 and over (throughout the lifetime) for a child who was disabled before age 22.
Questions Children and Young Adults Q: Are any of these Social Security benefits based on financial need? A: No. The wealth or poverty of the child and of the parent/s is not considered with these benefits. Q: If a child is disabled, when should medical issues concerning the disability be raised with Social Security? A: If a child is under age 18 and is drawing benefits on a parent s account, development of the child s disability should be started with Social Security when the child is age 17 1/2.
More Questions Children and Young Adults Q: What if a parent of a disabled child doesn t retire, become disabled, or die until the child is older and is already an adult? A: Such an adult-child can start to draw on the parent s Social Security record - as long as it can be established that the disability began before the child became age 22 and has existed continuously since. Sometimes it s very difficult to obtain proof of a disability that occurred many years ago. Parents can help, when possible, by securing medical evidence of a child s disability and having it available for the time, often years later, when it may be needed.
Supplemental Security Income (SSI) - for Young People SSI makes payments for disabled children, regardless of their ages. Because SSI is based upon financial need, the income and resources of the child must be considered. The income and resources of the parent/s the child lives with must also be considered up until the time the child turns age 18.
Important Information About SSI If the parents income and resources are too high to permit the payment of SSI for a disabled child, the child may still become entitled to SSI upon reaching age 18, since then the income and resources of the parent/s are no longer considered. Since the SSI program does not allow for the payment of back benefits, it is essential that an application be filed for the child s SSI as soon as possible when the child turns age 18!
Scary Ideas People Have About SSI Rocking the Social Security boat by changing anything, such as allowing a child to engage in a school s vocational program! Allowing SSI checks to be reduced, or jeopardizing SSI entitlement by letting a child have income from a job! Creating an overpayment that has to be paid back! But Social Security becomes a lot less scary when you know some basic program rules!
Just the Facts! Learning about jobs through a school s vocational program does not affect Social Security benefits, unless the child is earning an actual wage as the result of being employed. A child under age 18 or a student-child aged 18-19 receiving Social Security benefits would have to earn over $7350 gross in a year before the benefits would be affected (for every $2 over the limit, $1 is withheld from benefits).
More Facts If an adult-child drawing disability benefits on the Social Security record of a parent goes to work, the earnings affect the Social Security benefit as happens for anyone drawing a Social Security Disability benefit: The adult-child is entitled to a Trial Work Period of 9 months, during which earnings from employment will have no effect upon the benefits. Starting with the 10 th month of working, and continuing for at least 3 years, full monthly disability benefits will be paid when earnings are not substantial (under $1180/month of gross earnings).
SSI and the Effect of New Income Because the SSI program is based upon financial need, any new income can have the effect of reducing the amount of the SSI payment. So, if a child on SSI goes to work, that s new income. Social Security has a formula to determine how much of the work income will affect the SSI payments. Under the formula, the first $85 of gross earnings per month does not count, and also ½ of the remaining wages does not count. EXAMPLE: If a child earns $185 gross wages in a month, the first $85 doesn t count, leaving $100, and half of that $100 also doesn t count, leaving only $50 that does count. The SSI payment will be reduced by $50.
The Student Earned Income Exclusion (SEIE) is a Special Provision Just for Students SEIE allows SSI recipients under age 22 and regularly attending school to exclude earnings from being counted against SSI payments. Regularly attending school means taking one or more courses at least. 8 hrs/week in college. 12 hrs/week in grades 7-12. 12 hrs/week in job training. for even less time if beyond student s control. can include home study The current limits on earnings excluded under this provision are $1820/month and $7350/year.
Student Earned Income Example A student earns: April - $800 under the SEIE monthly maximum May - $900 under the SEIE monthly maximum June - $1,500 under the SEIE monthly maximum July - $1,500 under the SEIE monthly maximum August - $1,500 under the SEIE monthly maximum September- $1,500 under the SEIE monthly maximum But the student is $350 over the annual SEIE maximum apply the Earned Income Exclusion to the $350. $350-85= $265/2 = $132.50 this amount can be subtracted from the September SSI payment. $750-$132.50 = $617.50 reduced SSI payment for September Data based on 2018 COLA
What About Overpayments Scary! The worst that can happen is that Social Security will send a letter asking that the overpayment be repaid. It can be repaid by monthly installments, with no interest being charged. If the monthly rate of withholding proposed by Social Security is too high, the rate can generally be negotiated. Like any action taken by Social Security, overpayments can be appealed, and under certain conditions overpayments can even be entirely waived
Social Security Benefits for Young People - 1 SOCIAL SECURITY BENEFITS (SSB): A child under age 18 does not need to be disabled, but parent/s must be retired, disabled or deceased Benefits stop at age 18, or go to age 19 for full-time students Not based on financial need. No health insurance
Social Security Benefits for Young People - 2 SSDI: If child (of retired, disabled, or deceased parent/s) is disabled before age 22, a Disabled Adult Child (DAC) benefit is payable for lifetime (DACs receive Medicare)
Social Security Benefits for Young People - 3 Supplemental Security Income (SSI): Child must be disabled to qualify. Child of any age can qualify, and SSI can continue into adulthood. Based on financial need - income and resources of parent/s are considered until the child turns age 18. Child receiving SSI qualifies automatically for Medicaid. Has special provision called Student Earned Income Exclusion that exempts substantial earnings for eligible students.
How Earnings from Employment Affect Benefits for Young People SSB Benefits For Child Under 18 And Student 18-19: Child would have to earn over $$7,350 per year (2018) before earnings would have any effect. SSB For Disabled Adult Child (DAC Benefits): Earnings during the first 9 months of working do not affect benefits (Trial Work Period). For 3 years after the Trial Work Period, no benefits can be paid when monthly gross earnings exceed $$1,180 month(2018) SSI Disabled Child (DC Benefit): Formula allows first $85 plus ½ of the remainder of monthly gross earnings not to be counted. If child is a student, $7,350/year of child s gross earnings can be excluded up to age 22.
The End but it is hoped that from this ending will be the start new beginnings for you!