Special Work Incentives for Youth – the Student Earned Income Exclusion
This toolkit will help you understand the Supplemental Security Income (SSI) program’s Student Earned Income Exclusion (SEIE). You can use this toolkit to help youth and their families understand that work and a paycheck earned by the SSI beneficiary will always result in more combined income (SSI + earnings) and can retain their full SSI payment plus their paycheck.
The Student Earned Income Exclusion: A Brief Summary
The maximum monthly SSI payment 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 (FBR + optional SSP) for your state. All examples in this toolkit use 2019’s $771 FBR with no SSP.
The SEIE: This powerful work incentive is available to students who are under age 22 and “regularly attending school.” During 2019, it excludes the first $1,870 of gross monthly earnings, up to a yearly maximum of $7,550. These amounts are adjusted annually to reflect cost-of-living increases.
A simple example: Reggie, age 17, just finished his third year of high school, and plans to return to school as a full-time student in September. He receives SSI of $771 per month and gets automatic Medicaid (i.e., he resides in one of 41 states in which Medicaid is automatic for SSI recipients). Reggie works a summer job at a supermarket and will earn $885 gross each month during July and August. This will be his first earnings of 2019. Reggie qualifies for the SEIE as he is under age 22 and regularly attends school. Since his gross earned income is less than $1,870 per month, all of his July and August earnings will be excluded and not counted by the SSI program. His $771 SSI payment and his automatic Medicaid will continue.
The SEIE is a “stay-in-school incentive”: If the youth remains in high school, a college, or other qualifying program, the SEIE applies and typically all earnings will be excluded with the SSI payment remaining the same. However, if the youth ceases to attend school the SEIE is no longer available.
You can tell youth and families: The Student Earned Income Exclusion rewards youth who stay in school and earn money through working. The SEIE allows the student, in most cases, to keep the full SSI payment and full paycheck.
Compare - The Earned Income Disregards for Non-Students under 22: As explained in the examples below, under the earned income exclusion rules for those who do not qualify for the SEIE the first $65 of gross earnings are excluded ($85 if there is no unearned income) and 50 percent of the remainder is excluded. This results in a little less than half of the earned income counting toward reducing the SSI payment for those not eligible for the SEIE.
For more information on the range of earned income exclusions, see Toolkit #4, “Using SSI Work Incentives to Create Economic Safety Nets and Pathways to Work.”
Meeting the Student Earned Income Exclusion’s “Regularly Attending School” Requirement
When one of the following is established, the “regularly attending school” requirement is met:
When the youth takes one or more courses of study and attends classes:
- In a college or university for at least 8 hours a week; or
- In grades 7-12 for at least 12 hours a week; or
- In a training course to prepare for employment for at least 12 hours a week (15 hours a week if the course involves shop practice); or
- For less time for reasons such as an illness that are beyond the student's control.
When the youth is home-schooled by choice:
- The youth is instructed at home in grades 7-12 at least 12 hours per week; and
- The home-school instruction, typically by a parent, meets the home-school laws of the student’s state of residence.
When the youth is home-schooled because a disability interferes with the ability to attend school, the requirement is met if:
- He or she is studying a course or courses given by a school (grades 7-12), college, university or government agency; and
- Having a home visitor or tutor who directs the study.
Online students can meet the requirement if:
- The student studies in a course or courses given by an online school in grades 7-12, a college or university, or a government agency; and
- The online school is authorized by the laws of the state in which the online school is located.
Summer employment or employment during school breaks meets the requirement if:
- The youth regularly attended school before the summer or school break; and
- The youth tells the SSI program of his or her intent to resume attending school when classes resume, or actually does resume regularly attending school after the break.
See our Print and Go Tip Sheet, “The Student Earned Income Exclusion: A Special Work Incentive for Students Up to Age 22.”
The Student Earned Income Exclusion: Three Examples
Practical work experience can help the youth in many ways. It helps the young person get a feel for what he or she likes to do. It helps to build a resume. And it brings in extra money. The SEIE couples the importance of gaining valuable work experience with the value of remaining in school.
You may need to make the young person and the family aware of the SEIE and other work incentives, as some youth and their parents may resist all opportunities for the youth to work. This is often because they have misinformation about the impact of work on SSI. Some may wrongly believe that any work will lead to a loss of SSI. Others may wrongly believe that the youth will lose a dollar of SSI for every dollar of earnings.
You are in a unique position to educate youth and families about the SEIE. Using the examples and other resources in this toolkit, you can show how work can bring extra money to the youth with no reduction to the SSI payment.
Example 1: High school student has part-time summer job and works fewer hours during the school year.
Miguel, age 18, has a mental health disability and lives with his parents. He receives SSI of $771 per month and has no other income. It is late June and most of Miguel’s friends have graduated from high school, but he needs at least one more year of school to get a high school diploma. Consider the impact of a part-time job at a local pizzeria, paying $935 gross per month, if he drops out of school or stays in school.
If Miguel drops out of school, he is entitled to the usual earned income exclusions. The SSI program excludes the first $85 each month ($20 general income exclusion as there is no unearned income and the $65 earned income exclusion), plus an additional 50 percent of his wages is excluded. What remains is countable earned income which is subtracted from the SSI base rate. The amount left over is Miguel’s new SSI cash payment:
|$935||Gross Wages||$771||2019 SS Rate|
|-$85||Earned Income ($20 + $65)||-425||Net countable income|
|$850||$346||New SSI cash payment|
|-$425||Additional 50% exclusion|
|425||Net countable earned income|
Under the usual earned income work incentives, Miguel’s combined income of $1,281 ($935 wages, $346 SSI) is $510 more than before he started working (i.e., $510 of his wages is not counted). This has created an incentive to work, but if he stays in school he makes out even better.
If Miguel stays in school and benefits from the SEIE, his entire monthly paycheck will be excluded (or ignored) by the SSI program. This means he will keep his full SSI payment of $771 and his full paycheck of $935 (less any taxes). Miguel’s combined income of $1,706 ($935 wages, $771 SSI) is $935 more than before he started working.
Miguel works part-time during the school year: The pizzeria has him work Saturdays, some afternoons, and during school periods. His gross pay averages $535 per month and, because he is still eligible for the SEIE (with yearly earnings below $7,550), he keeps his full SSI payment of $771.
Example 2: Attending a 10-Month Vocational Training Program While Working Part-Time.
Esther, age 19, receives SSI of $771 per month, and recently left high school without a regular diploma. She has a moderate hearing loss and a learning disability. While in high school she did an unpaid internship at an auto collision shop. After she left school, the collision shop hired Esther in July to work part-time doing unskilled work (some prep work on vehicles, general clean up, etc.). She works 18 to 20 hours per week and earns an average of $885 gross per month.
How earnings affect SSI when Esther in not a student: The usual earned income exclusions reduce her countable income to $400 per month ($885 – 20 – 65 = $800 – 400 = $400), reducing her SSI payment to $371 ($771 - 400).
Esther enrolls in auto-body collision training program: Her State VR program agrees to fund a 10-month training program for her to attain a certification in auto-body collision. The program starts September 1st and involves 16 hours per week of combined in-class work and shop practice. Her collision shop employer will serve as her required field placement during the latter stages of the program. If Esther satisfactorily completes the program, starting pay is expected to be in the $18 to $22 per hour range, with room for future pay increases.
Esther benefits from SEIE during the training program: This program meets the “regularly attending school” requirement, as it is at least 15 hours per week (with shop practice) and is to prepare her for employment. She continues working at the collision shop, 18 to 20 hours per week and, with an increase in her rate of pay, will earn an average of $1,000 per month. During the time she is both working and attending the program, the SEIE will result in all of her monthly pay being excluded. Her SSI payment will go back up to $771 per month during the 10-month period.
Using the SEIE work incentive, Esther gets an extra $400 per month in SSI or about $4,000 more during the September through June program. This creates a tremendous incentive for her to attend this program and move in the direction of self-support.
The SEIE will apply to this vocational training program. All her wages during the 10-month training period will be excluded and her SSI payment will remain at $771 per month.
Example 3: College student works summer job, benefits from SEIE, and uses ABLE account to save money toward future expenses.
Cherise is 20, has cerebral palsy, and uses a power wheelchair for all mobility. She receives $771 per month in SSI and attends college full time, studying business administration. She does not work between January and May and will work during June, July, and August at ABC Corporation and earn $1,750 gross per month. During September, October, and November she will work part-time at ABC and earn $650 gross per month.
Cherise benefits from SEIE: Cherise meets the age and school attendance requirements and is eligible for the SEIE. During all months noted her gross pay will be less than $1,870 and her $7,200 in total earnings will be below 2019’s $7,550 SEIE limit. Her SSI will remain at $771 per month for the rest of the year. If Cherise earns more than the $7,550 maximum for 2019, her additional wages will be subject to the $65/$20 plus 50 percent exclusion rules.
Cherise opens ABLE account to deposit excess savings for future expenses: Cherise would like to save a lot of her summer and school-year earnings toward the purchase of a van which she can drive from her wheelchair (with modifications to be funded by the VR agency). She decides to open an ABLE account, which will allow her to accumulate assets which will not count toward the SSI program’s $2,000 resource limit. Cherise deposits most of her summer earnings into the ABLE account and, by the end of the summer, has deposited $3,500 into the account. She hopes to deposit another $1,000 into the account from her part-time work in September through November.
A more detailed explanation of the ABLE account appears in Toolkit #7, “Supporting Asset Development and Accumulation.”