Introduction to Social Security
Work Incentives which Apply
to Students and
Young Adults in Transition
by Ellen Condon

Work incentives are programs developed by Social Security to entice Social Security beneficiaries and recipients to return to work or begin working. The incentives are intended to reduce the negative impacts of wages on individuals’ benefits.

What is a PASS plan?
PASS is a work incentive program for SSI (Supplemental Security Income) recipients. PASS stands for Plan for Achieving Self Support. In a PASS plan, a person with a disability is allowed to set aside resources or income for a specified length of time, thereby accumulating monies to purchase goods or services which allow the person to become more self-sufficient. Students or adults may be eligible for a PASS plan. PASS plans can fund equipment; services such as job development, job coaching, personal care, or transportation; and school or training. Basically anything a person needs to become employed, advance their employment or maintain their employment are justifiable expenses in a PASS plan.

PASS plans must:

• Increase an individual’s self-sufficiency and decrease their reliance on the Social Security system,
• Be in writing,
• Include a vocational goal which will be achieved through the plan,
• Have a set amount of time within which the plan will be achieved,
• Be approved by SSA,
• Include milestones or steps which will allow a person to reach their goal,
• Have a budget for expenses to be paid for through the plan, and
• Provide documentation of where the money will be set aside and how it will be kept separate from other funds.

Who is Eligible for a PASS plan?
To be eligible for a PASS plan a person must be eligible for SSI, or receive SSDI (Social Security Disability Insurance) and be medically eligible for SSI. In addition, the person must have resources or income which are reducing the SSI benefit below the Federal Benefit Rate of $552.00 per month for the year 2003. In some cases a PASS plan can make people eligible for SSI by reducing their countable income. More than one PASS plan can be written for a person as long as the vocational goal changes.

What is Supplemental Security Income or SSI?
SSI is a needs-based program which offers a financial benefit to people with low income levels who have a disability, or to people age 65 and older. Eligibility for SSI is income and resource based and SSI usually comes with Medicaid insurance. The amount of SSI an individual receives monthly fluctuates based upon their countable income. There is a maximum amount which individuals can receive monthly. This amount increases each January. For example, the Federal Benefit rate or maximum amount a person could receive for 2003 was $552.00 a month.

Income:
Children under the age of 18 qualify for SSI based upon their parents’ income combined with their own income which could include: wages, child support, or survivors benefits. In 2003 an only child, below age 18, who has a disability living in an one-parent household having a gross monthly income below $2333.00 would qualify for at least some SSI. (If a household has more than one child with a disability or the income is a combination of earnings and another type of income, the local SSA office determines the amount per household allowed to be earned and how much SSI would be received). In 2003 an only child, below age 18, who has a disability living in a two-parent household having a gross income under $2887.00 a month would qualify for some SSI. Again, the amount of SSI depends on the exact amount of wages. Families with additional children with or without disabilities should ask SSA for assistance with the calculations to determine if they are eligible.

Keep in mind that students under the age of 18 qualify for SSI based upon their parents’ income and resources while students 18 and over qualify on their own accord.

Resources:
The SSI program has specific limitations governing allowable resources which include property, personal items and cash. These resources must not exceed the specified amount at the beginning of each month. The current limit is $2,000 for individuals and $3,000 for couples. An additional $2,000 is allowed for each child with a disability. This means that to be within the resource limits, an individual must have less than $2,000 in liquid assets (or $3,000 for a couple). Liquid assets are defined as cash, items which could be liquidated, such as: retirement accounts, life insurance policies, etc. Each person is allowed to own the residence in which they live and one car, which are not counted as liquid assets. If a person owns a second vehicle, it is considered a liquid asset and is valued at whatever amount of cash for which it could be sold.

Allowable Resources Under the SSI program include:

• House or property that the individual lives in,
• Life insurance policies not exceeding $1,500 combined cash value/person,
• Household goods and personal property that do not exceed $2,000,
• Property Essential to Self Support (PESS),
• Burial accounts/spaces for the person and their immediate family not over $1,500 in value,
• Retroactive Title XVI (SSI payments) or Title II checks (SSDI), within the first 6 months of receipt,
• Property in trust or inaccessible to the person with a disability,
• Income sheltered in a PASS plan, and
• One automobile regardless of value, if it is necessary for work and/or medical treatment.

Income and resources which reduce monthly SSI checks below the Federal Benefit Rate can make one eligible for a PASS plan. Examples include:

• An adoption subsidy,
• Parent’s SSDI (a disabled or retired parent), or an individuals SSDI,
• Parent’s Veteran’s or Railroad Retirement benefits,
• Survivor’s benefits (if a parent is deceased),
• Wages (parents wages for children and their own wages at age 18), and
• Child support.

Adults with disabilities may continue to receive SSDI, Railroad benefits, Veteran’s benefits and Survivor’s benefits through their parents’ accounts as long as they continue to meet each program’s eligibility requirements. At age 18 students must reapply for SSI even if they were receiving SSI as a child. The medical definitions of disability are slightly different for children than they are for adults. SSA’s Blue Book lists all of the medical definitions and qualifications.

Reporting Wages to Social Security
By the 10th of each month, SSI recipients are required to report their income earned from the previous month by sending an original pay stub. Keep copies of all information sent to SSA.

Student Earned Income Exclusion
In 2001, SSA substantially increased the amount that students are allowed to earn before their earnings reduce their SSI benefits. In a sense this is quite positive; students can earn wages without fear of reducing their SSI benefits, however as a result they typically are not eligible for PASS plans until they are no longer considered students. Again, students are not eligible for a PASS plan until income or resources reduce their monthly SSI check below the Federal Benefit Rate.

In 2003, students can earn up to $5,410.00 a year or $1,340.00 a month before their wages impact their SSI checks. Students still need to report all their wages to the local SSA office and may be required to prove that they are a full time student. Full time students are defined as individuals: up to age 22 attending college classes at least 8 hours per week, who are in high school at least 12 hours per week, or who are enrolled in a work preparation program or course at least 12 hours per week.

Impact of Wages on SSI
For non-students, Social Security will count one-half of a person’s earnings, over the first $85.00 gross each month. For every $2.00 earned over the first $85.00, Social Security will reduce the individual’s SSI check by $1.00. If the individual’s income fluctuates month to month so will the SSI check.

Example:
Maclaen began working his senior year in high school. He was receiving SSI and continued to receive the full amount as he didn’t surpass the Student Earned Income Exclusion amount. The day after graduation Maclaen he was no longer considered a student and he was working 20 hours a week earning $480.00 a month.

Typically his earnings would reduce his SSI check by at least $197.50 a month. However as part of his transition planning his IEP team developed a PASS plan for Maclean, and sheltered $197.50 a month. Therefore, Maclaen earns $480.00 a month but puts $197.50 from his wages into his PASS account each month leaving $282.50 for spending or saving. He then receives the full amount of SSI, $552.00 a month (see calculations below). This money was budgeted to pay for his transportation to and from work and for follow-along support on his job.

Maclaen is on the waiting list for supported employment services through the state Developmental Disabilities agency. Without follow-along support he could lose his job and not have the supports necessary to find and learn a new job. Rather than waiting for state funding, Maclaen uses the money sheltered through his PASS plan to pay his family to drive him to work and he has hired his teacher from school to provide follow-along support. With a PASS plan, a student can choose the services they want to purchase and from whom they would like to purchase them. The rates of pay are negotiated between the person with a disability and the provider. The rates must be justified in the PASS plan when it is submitted, but the consumer has more control and latitude over their funds than if they were using state funds.

Calculating Maclaen’s Income on SSI Without a PASS Plan:
Monthly Gross Wages                                  $480.00
Less Earned Income Exclusion                      -$85.00
                                                                    $395.00

                                                                      395.00
                                                                            ÷ 2
Amount of countable earned income              $197.50

2003 Monthly Federal Benefit Rate               $552.00
Amount of Countable Earned Income            -197.50
Amount of SSI Check with $480/mon.          $354.50
Wages and Without a PASS

Total Monthly income:                                   $354.50 SSI
                                                                   +$480.00 wages
                                                                     $834.50

Calculating Maclaen’s Income on SSI With a PASS Plan
Monthly Gross Wages                                   $480.00
Less Amount Sheltered in PASS                  -$197.50
                                                                     $282.50 Wages

Wages                                                           $282.50
SSI Check                                                   +$552.00
                                                                      $834.50 Monthly Income**

**plus Maclaen still has the $197.50 he sheltered in his PASS account to use to support his employment.

Blind Work Expense: (BWE)
People who are blind can deduct any expense from their countable income that is related to work. Expenses include all taxes (local, state and federal), lunches bought at work, transportation, medical services, prescriptions, attendant care and work equipment. BWEs are also easier to apply for and less formal than PASS plans, but reimburse the person for expenses already incurred. They do not allow the individual to set aside money for a future expense.

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