Scenario:  My son John is 18 and has one more year of high school after this year. He receives the full amount of SSI in Montana, $579/ month. He will start working this February, 10 hours a week, making $6.00/hour. How is this going to affect his SSI check and what should he tell Social Security? John is his own payee.

Answer: There is an SSI “work incentive” that will be of great help to John. It’s called the Student Earned Income Exclusion (SEIE). It allows John to earn up to $1410 per month, and up to $5670 a year, with no decrease in John’s SSI check. Therefore, John can receive his entire SSI check each month until he graduates since he will not be earning over $1410/month or $5670/year. Because John is his own payee, it is his responsibility to report any income, or any other changes, to his local social security office. Changes, including earnings, must be reported by the tenth of the next month. So, when John gets his first paycheck(s) in February, he has to report it by the 10th of March. He has to report his March earnings (and any other changes) by the 10th of April, and so on. It will help for John to let Social Security know that he has gotten a job, and on what day or days he will get paid. He should also send Social Security proof that he is a student to ensure that the Student Earned Income Exclusion is utilized. A letter from the school stating that he is a student, or a copy of his class schedule should do the trick. Below is an example of how John will benefit from the Student Earned Income Exclusion work incentive.

Monthly SSI in 2005 = $579/month
Johns’ gross wages = ($6 x10 hours x 4.5 weeks/month) $270/month
Total monthly income = $849/month

As you can see, John definitely ends up ahead financially by working while he is a student.

Question: Would John be eligible for a PASS Plan to help him with his job?

Answer: To be eligible for a PASS, someone needs to be eligible for SSI (which John is) and have income or resources to set aside to pay for a vocational goal. The income or resources have to be “countable” under the SSI program. Currently, John has no “countable income” according to Social Security rules because as long as he is a student he can earn up to $1,410/month, (and up to $5,670/year) which is excluded under the Student Earned Income Exclusion. So, for now, John has no income to shelter in a PASS. However, if he wanted to save his earnings and accumulate over the $2000 resource limit that SSI allows, he could do so by sheltering the savings in a PASS account to be used toward a vocational goal. This account would not be counted as a resource and he would remain eligible for SSI.

Question: How will John’s wages affect his SSI when he is no longer a student?

Answer: Once John is no longer a student, the SEIE will no longer apply. If his only income is his wages and his SSI , Social Security will count ½ of his wages after excluding the first $85.

So, if John is out of school and now working 20 hours/week this is how his SSI check will change:
  $540/month gross wages (20/week x $6/hr x 4.5 weeks/month)
  -$85 (Total of general and earned income exclusions)
  $455 divided by 2 = $227.50 countable earned income

After calculating John’s countable earned income, SSI will subtract that amount from the amount of SSI for which John is eligible each month.
   $579/ month possible SSI
- $227.50 (countable earned income)
   $351.50/month (SSI due based on John’s earnings)

The $351.50 is the amount that John will receive in his SSI check that comes two months later. Therefore, if John earned the $540 in September, and he reported it by the 10th of October, the change would show up in his November SSI check ($351.50).

If John continues to earn $540/month, John’s total monthly income will be $891.50.
   $540.00 (wages)
+ $351.50 (reduced SSI check)
   $891.50

Question: Since John can’t utilize the SEIE after he graduates, can he have a PASS plan then? If so, what will his overall finances look like then?

Answer: John can definitely have a PASS plan after graduation because he will now have “countable income” he can shelter.

From the example above, we know that John’s wages will decrease his SSI check by $227.50. He can put this entire amount ($227.50) into a PASS plan, and shelter it to help him with his work goal. When John puts his “countable” income into the PASS, SSI no longer counts it, and will look at John’s earnings as though he has NO countable wages. With NO countable earned income there will be NO reduction in John’s SSI check, and he will get the entire $579.00. Plus John will be accumulating a separate pot of money with his $227.50 each month that he can use to help him in his job. His income will now look like this:

Monthly income:
$312.50 (non-countable part of John’s wages, $85 + $227.50)
$579.00 (SSI check)
$227.50 (in PASS to pay approved PASS expenses)
$1119.00 total monthly income

John will have $891.50/month to put towards bills and living expenses, and he will put $227.50 in his PASS account to pay for the approved PASS expenses or save towards a future goal.

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