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Will My Child Lose Their
SSI and Medicaid If They Work?
Paychecks, SSI Benefits, and
Work Incentives


Going to work when you receive Supplemental Security Income (SSI) benefits from Social Security, while a dream for many, can cause concerns and raise questions for a student and his/her family. These concerns and questions about SSI and Medicaid benefits may influence parents’ decisions about whether or not to encourage their son or daughter to work. Many parents are unaware that Social Security encourages SSI beneficiaries to work, and has work incentives and other policies that allow people to work, earn an income, and still maintain their SSI and Medicaid.

Will working students lose SSI eligibility and their Medicaid benefits because they are now earning a paycheck? The answer is NO. While Social Security will count some of the income they earn, a great deal of it is not counted, and by working, they will come out ahead financially. There are several work incentives that SSI recipients can utilize to lower their countable earned income, thereby reducing the impact that wages have on their SSI check.


SSI Work Incentives Include:

  1. Student Earned Income Exclusion (SEIE);
  2. 1619(a) - continued eligibility for SSI even when earnings are above Substantial Gainful Activity (SGA), which is $830/month in 2005; $1380/month in 2005 if you are blind;
  3. 1619(b) - ongoing Medicaid coverage when a person’s earnings are high enough that no SSI check is due;
  4. Plan for Achieving Self Support (PASS);
  5. Impairment Related Work Expense (IRWE) and Blind Work Expense (BWE), which allow people to partially or fully recover expenses they incur while working; and
  6. Section 301.


Student Earned Income Exclusion (SEIE)
In all cases of students with disabilities who choose to work, a Social Security work incentive called the Student Earned Income Exclusion (SEIE) applies. This work incentive allows students under the age of 22 to work and receive their entire SSI check amount (and Medicaid benefits) if they earn less than $1,410 per month, up to a total of $5,670 per year (2005 amounts).

Students who might be eligible for SEIE include:

  • A student who attends classes, either in college for eight hours per week or high school for 12 hours per week;
  • A student who attends a work preparation training course for at least 12 hours per week; and
  • A student regularly attending classes in at least one month of a current calendar quarter or expecting to do so during the next calendar quarter.

Note: Class or training requirements may be reduced for reasons beyond the student’s control, such as illness.

The following information must be reported to the SSI Claims Representative for SEIE to apply:

  • Whether the student was regularly attending school in at least one month of the current calendar quarter, or is expected to attend school for at least one month in the next calendar quarter; and
  • The student’s gross monthly earnings.


SEIE Example
Bill is an 18-year-old student who began working at a greenhouse for a local florist while still in school. He is earning $450/month. Because he is a student, he
qualifies for the Student Earned Income Exclusion. He is able to earn up to $1,410/month ($5,670/year total, using 2005 rates) before his SSI benefits will be reduced.

$ 450 Bill’s Wages
+ 579 Entire SSI Amount
$1029 per month is Bill’s Total Income because of SEIE


Benefit Reduction Formula for Non-Students
Social Security policy allows non-students receiving only SSI/Medicaid to earn $85 per month without any reduction in the SSI check amount. For every dollar ($1.00) above $85 earned, the SSI check is reduced by 50¢, and the person continues to be eligible for Medicaid. For example, when Bill is no longer in school he is not eligible for the Student Earned Income Exclusion. His wages reduce his SSI check by 50¢ for every $1.00 he earns over $85/month. However, he is still financially ahead by working. If Bill’s wages are $450/month, Social Security will disregard the first $85 and then reduce the remaining wages by half. His SSI check will be reduced by $182.50/month. His monthly income will be: $450 in wages plus $396.50 in SSI for a total income of $846.50.

Bill’s Wages
$ 450.00
($450 - $85 = $365; then
$365 ÷ 2 = $182.50 countable earned income; then
reduced SSI amount is $579 - $182.50 = $396.50)
+ 396.50
Total Monthly Income
$846.50


1619(a)
Section 1619(a) allows people who continue to be disabled to receive SSI checks and Medicaid benefits when their earnings are over $830/month (SGA level in 2005). The person continues in 1619(a) status as long as he/she meets all other eligibility requirements for SSI/Medicaid, and his/her earnings are more than the SGA amount per month but less than the SSA “break-even point” (BEP = $1,243 for year 2005). Once a person reaches the “break-even point,” his/her SSI check is reduced to $0, but the person is still considered “eligible” for SSI and Medicaid.

1619(b)
Section 1619(b) provides continued Medicaid eligibility for people who aren’t due SSI benefit checks because their monthly earnings put their countable income above the break-even point.

A second criteria for 1619(b) status requires that a person’s gross earnings fall below certain limits called “threshold amounts.” Earnings at or above the threshold amounts are considered to be sufficient to replace the cost of Medicaid coverage. Threshold amounts vary from state to state. “Individual thresholds” are computed when people have unusually high medical costs, such as attendant care or frequent hospitalizations. Individuals are no longer eligible for 1619(b) when their earnings exceed their individual or their state’s threshold amount.

The final criteria for 1619(b) continued Medicaid is the Medicaid Need Test. Does the person need Medicaid in order to work? The individual must tell SSA how he/she has used Medicaid in the last 12 months, and/or expects to use it in the next 12 months, or of the need for Medicaid if he/she should be injured or ill within the next 12 months. Based on past, current, or future need, SSA will decide whether or not the person meets the Medicaid Need Test, and if he/she does, Medicaid continues.

To qualify for 1619(b) Medicaid status, a person must:

  • Have a disabling condition or be blind;
  • Need Medicaid in order to work;
  • Be unable to afford benefits equivalent to those received if not working; and
  • Meet all other requirements for SSI.

Importance of 1619(b)
Section 1619(b) not only protects Medicaid coverage, but also maintains eligibility to receive SSI cash benefits in future months if countable income falls below the “break-even point.” A person moves into 1619(b) status if she/he is not due an SSI check because of the amount of earned income. If individuals no longer meet SSI eligibility criteria due to any other non-disability requirement, (such as resources above $2000), eligibility is suspended until all eligibility requirements are met. Suspension can last for up to 12 months, beginning when benefits should have been suspended (regardless of when SSA actually takes suspension action). Individuals will be reinstated without filing new applications for SSI if all eligibility requirements are met again within 12 months following the first month of ineligibility. After 12 months of suspension, a new application must be filed.


State Medicaid threshold amounts range from $14,916 in the Marina Islands to $45,095 in Connecticut. For a list of 2005 state threshold amounts visit:
www.ssa.gov/work/ResourcesToolkit/Health/1619b.html

PASS Plan
A Plan for Achieving Self Support (PASS) allows a person with a disability to set aside countable income and/or resources for a specific period of time to realize a work goal. Any person who receives SSI benefits, or receives SSDI and could qualify for SSI, can have a plan. There is no limit to the number of successful PASS plans a person may have in a lifetime.

Basic Requirements
The plan must:

  • Result in a decreased reliance on the Social Security system;
  • Be designed specifically for the person;
  • Be in writing (can be written by anyone);
  • Have a specific work goal that the person is capable of performing (SSA PASS Specialists will presume a PASS to be viable if Vocational Rehabilitation or a certified rehabilitation professional says the goal is feasible);
  • Have a specific time frame for reaching the goal;
  • Show what money and other resources received will be used to reach the goal;
  • Show how the money and resources will be used;
  • Show how the money set aside will be kept separately from other funds;
  • Be approved by the Social Security Administration; and
  • Be reviewed periodically to assure compliance.
PASS plans can fund any service, support or item needed to enable the person to reach their vocational goal. PASS plans have been used to fund: Vocational Profiles, job development, job coaching, transportation, education, training, equipment needed for work, or to start a small business...

Anyone who is eligible for SSI and has income or resources to shelter is eligible for a PASS. If a beneficiary only has SSI and no resources to shelter, they must be working to utilize a PASS.

Student Example
When Matt graduated from high school, he began working. Before going to work, Matt was receiving the full SSI check of $579/month (2005 rates). Now his SSI check has been reduced to $351.50/month due to his countable earned income.

$540 (gross monthly wages)
- 85 (earned and general income exclusion)
$455/2= 227.50 (countable earned income)

$579 (SSI benefit rate for 2005)
-227.50 (countable earned income)
$351.50 (amount of SSI due Matt/month)

Matt’s team decided that he should apply for a PASS plan to enable him to shelter his countable earned income and to use this as a resource to pay for services and supports that he needed to work and to become more self-sufficient. Matt’s vocational goal was to obtain a job in the desktop publishing field. He set aside $227.50/month (all of his countable income) to pay for tutoring to help him advance his computer skills, and to pay for transportation and job coaching that will assist him to maintain his current employment. Once Matt had no countable earned income, he received the full amount of SSI, $579/month, plus sheltered money in an account to pay for necessary work expenses.

$540 (gross monthly wages)
- 85 (earned and general income exclusion)
$455 ÷ 2 = 227.50
$227.50 of his wages are placed into a separate PASS account. Now he has no countable income.

$579.00 (earned in 2005)
- 0 (countable earned income)
$579.00 (amount of SSI due Matt/month)


Monthly Income if Matt Uses a PASS

$579.00 SSI
+312.50 wages after he deposits money into his PASS account
$891.50 PLUS $227.50 in his PASS account to pay for               transportation, tutoring and job coaching.

Monthly Income Without a PASS

$351.50 SSI
+540.00 wages
$891.50 No $$$ sheltered to pay for needed supports


Impairment Related Work Expense (IRWE)
IRWEs enable SSI recipients to recover some of their work expenses incurred as a result of their disability. The cost of the IRWE is deducted from monthly gross wages, thereby reducing the amount of countable earnings used to figure the SSI check. IRWEs are much easier to apply for than PASS plans but they do not provide as much of a financial advantage as a PASS. See the table on pages 29-30 for a comparison of PASS and IRWE.

An IRWE Deduction Must Meet the Following Criteria:

  • Expenses must be necessary for the person to work;
  • Expenses must be related to the person’s disability;
  • Expenses must be paid for by the person and not be reimbursable from other sources;
  • Expenses must be paid in a month in which the person is working; and
  • Expenses must be reasonable.

Deductible IRWEs Include:

  • Supported Employment services;
  • Work-related attendant care services that help a person get ready for work each day, or are needed in the work place, but are not an ADA employer-required accommodation;
  • Services performed by family members who can prove that they suffer economically due to performing the service;
  • Transportation costs, (e.g., vehicle modification to get to work, SSA-approved mileage expenses for travel to and from work, cost of drivers or taxi services);
  • Medical devices, wheelchairs, pacemakers, respirators, etc., which allow someone to work;
  • Prosthetics to enable employment;
  • Residential modifications, either interior (if the person works from the home), or exterior (modifications to enable access to public throughways or transportation)
  • Routine drugs or medical services to ameliorate disability;
  • Diagnostic procedures related to evaluation, control, or treatment of disabling condition;
  • Prescribed non-medical appliances and devices essential for controlling the disabling condition at home or work (e.g., air filtering equipment);
  • Cost of expendable medical supplies; and
  • Cost of service dogs, dog food, licenses, and veterinary services.

There are no time limits on how long a person may use an IRWE. An IRWE isn’t always a monthly, recurring expense; an IRWE may be a one-time expense that is pro-rated over several months, or over as much as a year.

Blind Work Expense (BWE)
Blind Work Expenses differ significantly from other SSA Work Incentive Programs. Blind Work Expenses are only available to persons who receive benefits based on being blind. An allowable BWE is any work-related expense incurred by the person, and includes those expenses that would be considered impairment related work expenses for persons with other disabilities.

Section 301
Section 301 provides for a continuation of SSI and/or SSDI/DAC benefits to people who have medically recovered by SSA standards, but are participating in an approved Vocational Rehabilitation (VR) program, if:

  • They are participating in an approved VR program (school, job development, coaching, situational assessments, site evaluations, etc.) at the time that their disability ceases; and
  • SSA has determined that the person’s continued participation in the VR program will increase the likelihood of permanent removal from the disability benefit rolls.

The Social Security Administration will redetermine SSI eligibility for children between 18-21 when they finish school. Many may be found “medically recovered” and lose their SSI benefits. If they are in approved Vocational Rehabilitation programs, Section 301 may allow them to retain their SSI eligibility while they work on their vocational goals even if they are consider by SSA to be “medically recovered.”


PASS - Plan for Achieving Self Support IRWE - Impairment Related Work Expense
Definition



A way to exclude excess resources and/or various kinds of income from being counted for SSI if they are used to achieve a work goal. A way to exclude income from being counted by SSI by deducting out of pocket, impairment-related expenses, incurred to enable the recipient to work.
Who approves the PASS or IRWE? Must be approved by Regional PASS Cadre before implementing. Approved by local SSA office.
How long does the approval take? Can be approved right away or can take up to 2 months or more. Can be approved on the spot.
How extensive is the process? An extensive plan is written and submitted to the PASS Cadre for approval. The plan includes: a vocational goal, milestones, timelines for achieving the goal, and a budget with justification of vendors and expenses.

An IRWE involves submitting receipts for out-of-pocket, work-related expenses incurred each month, to the local SSA office along with previous month’s pay stubs.

No long range plan required.

What can it pay for? Any expense related to achieving the vocational goal (job development, job coaching, school or training, vehicles, equipment needed for you to work, transportation… anything that you can justify is needed to achieve your goal could be an acceptable expense). An IRWE expense must be incurred due to your impairment and be necessary to work.
How does buying the service or support work?

With a PASS you set up a separate account where you deposit an agreed upon amount of money monthly. PASS expenses are paid from this account. You pay the expenses out of your pocket each month and submit your receipts to SSA to get reimbursed through your SSI check.
Is there a maximum amount you can use for PASS or an IRWE? You can shelter all of your countable income and an unlimited amount of resources with the intention, and plan, to spend them to achieve your vocational goal. The maximum amount that you can shelter is all of your countable income.
Is there a time limit? You set a time frame in your PASS plan to achieve your goal. Employment goals typically are for 18-24 months. (PASS plans can be extended with PASS Cadre approval and plans for new goals can be submitted once the initial plan ends.) No time limit.
What if you make a change in what you are buying? To make a change in what you are buying, milestones, or the vendor providing service, you need to write an amendment to the PASS and get written approval from the Cadre.If you change your vocational goal you need to write a new PASS and obtain approval.

As long as the expense is incurred due to your impairment and is necessary to work it should be reimbursed.

You do not need to notify SSA in advance.

Could you use a PASS or IRWE to shelter resources over the $2000 limit to maintain your SSI and Medicaid eligibility?
You can shelter an unlimited amount of money in a PASS, but remember, the money is then ‘obligated’ to achieve the stated vocational goal.

IRWE’s are not a vehicle to shelter resources. They are an avenue for limiting countable income, thereby increasing the SSI check.

Does a PASS or IRWE help you lower countable income, keeping it under SGA and allowing you to maintain your SSDI check & Medicare?

A PASS does not figure into SGA calculations.

However, a PASS can be used to shelter income or resources of an SSDI recipient to make them eligible for Medicaid and SSI.

IRWEs can reduce countable income below SGA when a beneficiary is applying for SSI, and/or when an SSDI/DAC recipient is trying to keep earnings under SGA.

Can you ever get into an overpayment situation using a PASS or IRWE? If you do not follow your plan for saving, spending, and achieving your goal, you may have to pay back part of your PASS. If the expense that you already incurred is not due to disability and related to work you might not get reimbursed.

Is one strategy more lucrative than the other?

The way your income is calculated in a PASS, you are able to shelter all countable income, thereby keeping yourself eligible for an entire SSI check.

The way an IRWE is calculated, you get reimbursed 50 cents per dollar of expenses.

 


Calculating Countable Earned Income
While Using a PASS

$485.00/month (gross wages)
- 85.00 (earned and general exclusion)
$400.00 ÷ 2 = $200

$200.00
-200.00 (into PASS account)
0.00 (countable income)

$579.00 (full SSI benefit rate for 2005)
- 0.00 (countable income)
$579.00 Amount of SSI due to recipient for this month.

Calculating Countable Earned Income
While Using an IRWE

$485.00/month (gross wages)
- 85.00 (earned and general exclusion)
$400.00
- 200.00 (IRWE expense)
$200.00 ÷ 2 = $100 (countable income)

$579.00 (full SSI benefit rate for 2005)
-100.00 (countable income)
$479.00 Amount of SSI due to recipient for this month.


 

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