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Social Security

Work

Incentives

Are there examples of working without losing benefits?

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  Many individuals are eligible for benefits under both the SSDI and SSI programs at the same time. Tom is one such person. He also qualifies for Medicare. He has a disability and now wants to go to work. Tom began his work at a car dealership in January. The dealership pays him $1,600 a month.

Tom begins working in his trial work period (TWP).

During the TWP, Tom can continue receiving full SSDI benefits for at least 9 months regardless of the amount of his earnings. Each month that Tom earns over $720 in 2012 will count as a trial work period service month. His TWP ends with the 9th month of service in a rolling 60-month period.

Tom completed his TWP and is now eligible for an extended period of eligibility (EPE). Tom has completed his TWP. His EPE begins with the first month after the TWP.
Is Tom performing substantial gainful activity (SGA)? SSA knows that Tom is paid $1,600 a month. But Tom is taking a taxi to and from work at a cost of $350 per month. Tom’s physician confirms that Tom’s condition prevents him from driving. Crowded situations, such as in public transportation, aggravate his condition. Since Tom is paying for the transportation, and there is a medical need for him to take a taxi to and from work, SSA can deduct the cost of his transportation expenses as Impairment Related Work Expenses (IRWE).
Is the employer also subsidizing Tom in some way? Tom is able to complete 5 car repairs a day. The employer pays Tom $1,600 a month, the same rate as employees who produce 6-8 repairs a day. The employer does this because he is aware of Tom’s disability and understands it takes him longer to complete tasks. The employer calculates the service Tom provides is worth $1,300 a month. So yes, there is an employer subsidy, and this can also be subtracted from countable earnings.
How does Tom’s SGA level work activity affect his benefits in the EPE?

In the first month of the EPE SSA determines if an individual is engaging in SGA. If yes, SSA will cease benefits with that month. A beneficiary can be paid for the month of cessation and the two following months, known as the “grace period.”

If Tom’s earnings fall below the SGA limit, benefits can be reinstated without filing an application if Tom is still in his 36-month reentitlement period. If Tom is re-entitled to benefits during the 36-month reentitlement period, he can continue to collect benefits if his work activity is below the SGA limit, even after the 36-month re-entitlement period ends.

Will Tom’s entitlement to SSDI terminate? If Tom continues to work at the same level, with his work activity constantly over the SGA limit, Tom’s entitlement to SSDI will terminate the first month after the end of the 36-month EPE.
Will Tom continue to have Medicare coverage?

If Tom continues to work above the SGA level and no longer receives his SSDI payment, he can continue to have Medicare coverage for at least an additional 93 months after his TWP period. This is as long as he continues to have a disabling impairment (has not medically improved).

Tom can then choose to purchase Premium Medicare Hospital Insurance coverage (Part A). If he purchases Part A, he can then purchase Part B. Since Tom has earned at least 30 quarters of coverage, he can qualify for the reduced Part A rate.

If Tom decides to purchase Medicare coverage after the 93 months, he will have to file an application with Social Security, and we will conduct a medical continuing disability review. After the medical review, if we determine that Tom’s medical condition has not improved, he can purchase Medicare coverage. If Tom’s employer offers him a Group Health Plan, Medicare could be either the primary or secondary payer.

How does Tom’s work activity affect his SSI benefit?

Unlike SSDI, SGA is not an issue after a person becomes eligible for SSI. It is only considered when initially filing for SSI disability benefits, unless the disability is blindness. Therefore, if an SSI beneficiary returns to work, we determine whether the individual continues to meet the non-disability requirements, including income and resources. (TWP and EPE apply only to SSDI, not SSI.) For Tom, we will determine the effect of his $1,600 earnings on his SSI eligibility and payment amount on a month by month basis.

Tom is receiving $300 SSDI monthly for January through December and has monthly wages of $1,600 beginning January.

We start by calculating his SSI payment for January. In this case, since his monthly income does not change, the calculation will be the same for all months of the year. Follow the steps below. It's a bit complicated, but this is how it works!

First, SSA subtracts the $20 general income exclusion from his SSDI. $300 SSDI - $20 = $280 countable unearned income
Then, subtract the $65 earned income exclusion from his wages. $1,600 - $65 = $1,535 earned income
Next, deduct the $350 IRWE from the earned income and divide the result by 2 -- the second step in the earned income exclusion. (**Note: Subsidy is not a SSI earned income exclusion; it only applies to SGA. This means we cannot subtract the $300 per month subsidy that was used in determining SGA for SSDI entitlement. However, IRWE applies to both SGA and SSI income.)) $1,535 - $350 IRWE = $1,185.00 ÷ 2 = $592.50 countable earned income
Then, add the countable unearned income to the countable earned income to determine countable income. $280 countable unearned income + $592.50 countable earned income = $872.50 countable income.
Subtract the countable income from the SSI Federal Benefit Rate (FBR) to determine SSI eligibility and payment amount. $698 in January - $872.50 countable income = no SSI payment. (Note: He might be due an SSI payment if he lives in a state that combines its supplemental payment with the Federal payment, and the combined monthly payment exceeds his countable income.)
SSI Results Tom will not receive SSI payments for January through December of the year he began working because of his monthly earnings and his SSDI benefits. However, he will still be eligible for SSI and Medicaid While Working (under section 1619(b) of the Social Security Act), as long as his earnings remain under his state’s threshold amount, he needs the Medicaid coverage, and he continues to be eligible for SSI except for his earnings.
SSDI Results Tom will not receive SSDI benefits beginning January of the next year for as long as he works over the SGA level.

 


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