Module #4

Using SSI Work Incentives to Create Economic Safety Nets and Pathways to Work

This toolkit will help vocational rehabilitation (VR) counselors understandand explain to youth and their families the Supplemental Security Income (SSI) program’s range of work incentives that create a pathway toward work and an economic safety net in the event a work attempt is not sustained.

Background on How Earned and Unearned Income Affect the SSI Payment Rate

The maximum monthly SSI payment (or base amount) for 2019 is based on a $771 federal benefit rate (FBR) with an optional State Supplement Payment (SSP).  To determine the amount of the monthly SSI payment, any countable unearned and earned income is subtracted from the SSI base rate for your state.  All examples in this toolkit use the $771 FBR with no SSP.

A simple example:  Carolina is 23 years old and receives $440 in Social Security disability benefits.  Here is how Carolina’s monthly SSI payment is calculated.

Social Security $440.00 SSI-FBR $771.00
General income exclusion 20.00 Countable unearned 420.00
Countable unearned income $420.00 SSI payment $351.00

Generally, the income received in a month is used to determine the SSI payment two months later (i.e., if Carolina received this income in June it would affect her SSI payment in August).  Since Carolina receives at least $1 of SSI, she will qualify for automatic Medicaid in most states.

See Print and Go Tip Sheet, “An SSI Beneficiary’s Right to Automatic Medicaid Eligibility in Most States.”

Earned Income Disregards Available to Youth

The $65, $20, Plus 50 Percent of Remaining Earned Income Disregards

All SSI childhood (i.e., up to age 18) and adult recipients are entitled to this exclusion.  Starting with monthly gross earned income, the first $65 is excluded ($85 is excluded if there is no unearned income) and subtracted from gross earned income.  Then 50 percent of the remaining earned income is excluded.  The result is countable earned income which, along with any countable unearned income, is subtracted from the SSI base rate to determine the SSI payment.

SSI Calculation Worksheet online

Consider Martin, age 17, who drops out of school and takes a part-time job earning $885 gross per month.  This is how Martin’s new SSI payment will be calculated:

Gross earned income $885.00 SSI-FBR $771.00
General income exclusion - 20.00 Counted income 400.00
Earned income exclusion 65.00    
  800.00 SSI Payment $371.00
Additional 50 percent exclusion 400.00    
Countable earned income $400.00

Martin’s net monthly gain from going to work is $485 (the amount of the earned income exclusions) less any tax withholding.  In those 41 states in which Medicaid is automatic for SSI recipients, Martin’s Medicaid will continue.  In the remaining nine states Medicaid eligibility will be separately determined.

The VR counselor can tell youth and families: In all cases, when a young person who gets SSI begins earning wages, their net gain will be about half of his or her gross wages.

The Student Earned Income Exclusion (SEIE)

This very powerful work incentive is available to students who are under age 22 and “regularly attending school.”   It excludes the first $1,870 of gross earnings per month, up to $7,550 per year in 2019.

Let’s go back to Martin, age 17, from the previous example.   Assume he continues to attend high school (or moves on to college) and makes $585 gross monthly working after school and on weekends.  The SSI program will exclude the entire $585 each month for a full 12 months, as his total annual earnings of $7,020 (if he worked every month for this amount) remain below the annual $7,550 limit.  In this example, Martin’s SSI payment will remain at $771 each month.  Even though Martin makes $300 less in the second example, his net gain is more because he is still in school.

The VR counselor can tell youth and families: The Student Earned Income Exclusion rewards youth who stay in school and start working.  The SEIE allows the student, in most cases, to keep the full SSI payment and full paycheck.
 
See Toolkit # 5, “Special SSI Work Incentives for Youth:  The Student Earned Income Exclusion,” for a more detailed discussion of this work incentive.  See also our Print and Go Tip Sheet, “The Student Earned Income Exclusion:  A Special Work Incentive for Students Up to Age 22.”

Impairment Related Work Expenses (IRWEs)

IRWEs are the reasonable cost of items and/or services that, because of a disability or medical condition, a person needs and uses in order to work.  This includes items such as home health aide services, medical or prosthetic devices, drugs, medical services, residential modifications, and special transportation services.

To be deductible as an IRWE, the expense must meet a three-part test:  it must be paid by the worker and not paid or reimbursed by another source; it must relate to the individual’s disability or a condition for which he or she is receiving treatment; and without the item or service, the person must be unable to work.

Lisa is a recent high school graduate, does not attend college or a training program, and earns $885 gross per month at a part-time job.  She has cerebral palsy, uses a cane for mobility, and cannot walk well enough to reach a nearby bus stop to take public transportation.  She pays a local agency $135 per month to take her to work and back several times per month.  Without this transportation she could not work.  This will meet SSI’s criteria as an IRWE and her SSI payment will now be calculated as follows:

Earned income $885.00 SSI-FBR $771.00
General income exclusion - 20.00 Counted income 332.50
Earned income exclusion 65.00    
  800.00 SSI payment $438.50
IRWE Deduction - 135.00    
  665.00    
Additional 50% exclusion 332.50    
Total counted income 332.50    

Note that Lisa is earning the same amount per month as Martin in the first example above.  By using the $135 IRWE deduction, Lisa’s SSI payment is $67.50 higher than Martin’s – half the value of the IRWE.

Blind Work Expenses (BWEs)

Individuals who are “statutorily blind” are allowed many exclusions from income not allowed for any other disability.  This is because a BWE does not have to be related to blindness, but need only be a cost related to earning income.  Some of the common BWEs include:  federal, state, and local income taxes; Social Security and Medicare taxes (FICA); meals consumed during work hours; training to use a disability-related item (e.g., cane travel) or an item attributable to work (e.g., computer training); guide dog expenses (including food, licenses, and veterinary services); medical devices, medical supplies, and therapy).

Vijay is statutorily blind, works and earns $18,420 per year ($1,535 per month).  He has the following expenses that meet SSI’s criteria as BWEs:

Income taxes (federal, state, local) $57
FICA 117
Transportation 95
Guide dog 45
Lunches 132
Readers* 105
Total $551

*If Vijay’s employer pays for readers as a reasonable accommodation under the Americans with Disabilities Act, this will not qualify as a BWE.

Calculation of SSI Payment:

Gross earnings $1,535 SSI-FBR $771
Gross income exclusion - 20 Countable income 174
Earned income exclusion 65    
  1,450 SSI payment $597
Additional 50% exclusion 725    
  725    
Blind work expenses 551    
Countable income $174    

Using BWEs, his SSI payment increases by $551 (i.e., by the full amount of his BWEs).

Section 1619(b) - Continued Medicaid for Youth Who Lose the Right to an SSI Payment through Work and Wages

As noted in this and other toolkits, an SSI recipient who works will see his or her SSI payment gradually decrease as they earn more money.  If a recipient is paid at the SSI 2019 Federal Benefit Rate of $771 per month, the right to an SSI payment will end when he or she earns $1,627 or more gross per month (assuming there is no unearned income and only the basic earned income exclusions are used).

The good news is that most recipients will be able to keep Medicaid, in these circumstances, because of a special work incentive known as 1619(b).  A transition-aged youth should be able to keep Medicaid after losing SSI because of countable wages, if the following key 1619(b) criteria are met:  the individual continues to meet the SSI disability or blindness criteria; their unearned income is still within SSI limits; resources are within SSI limits; they received SSI payments, or were 1619(b) eligible, at some time during the last year; they will need Medicaid for foreseen or unforeseen expenses; and they have annual income below a state-specific threshold.  Section 1619(b) eligibility thresholds differ greatly from state to state, with about half the state having eligibility thresholds below $35,000 per year and half having eligibility thresholds above that figure.

For much greater detail on the section 1619(b) work incentive, see our Toolkit # 6, “How Earnings Impact Medicaid.”  Also see, as part of this Toolkit, the Print and Go Tip Sheet, “An SSI Beneficiary’s Right to Continued Medicaid, through 1619(b), When Losing SSI through Work and Wages.”