The Basics of Social Security Disability Benefits, and What One-Stops Should Know
What One-Stops Should Know
What You Should Know
Many people with disabilities that use One-Stop system services receive some type of Social Security disability benefits. Nationwide, over 8 million people with disabilities receive some form of these benefits.
When people with disabilities decide to seek employment, one of their key concerns is how employment will impact their social security benefits. Benefit regulations can be complex. One-Stop staff dont need to be experts; however, it is a good idea to have some understanding of the Social Security disability benefit programs in order to help recipients find employment.
People with disabilities often perceive employment-related regulations for Social Security benefits as insurmountable barriers to employment. However, in many cases, there is misunderstanding concerning the impact that employment will have on an individuals benefits. By providing information on basic Social Security Administration requirements, and assisting customers to obtain expertise in benefits management, One-Stop staff can help people with disabilities become more willing and confident in seeking employment.
Areas that One-Stop staff should be familiar with:
- The difference between the two Social Security disability programs: SSI and SSDI
- How employment and earned income impact SSI and SSDI
- Basic information about Social Security Work Incentives: PASS, IRWE, Blind Work Expense, Student Earned Income Exclusion
- Upcoming changes in the Social Security disability program under the Ticket to Work and Work Incentives Improvement Act of 1999
- Resources available for additional assistance
The Basics of Social Security Disability Benefits
Two Social Security Disability Programs:
- SSI - Supplementary Security Income
- SSDI - Social Security Disability Insurance - also referred to by Social Security simply as Social Security benefits
Note: Some people receive benefits from both programs
Requirements to Qualify for SSI (Note: The SGA amounts are for 2003, and are adjusted annually for inflation)
- Liquid assets of no more than $2,000 ($3,000 for a married couple).
- Earnings below the Substantial Gainful Activity level of $800 per month (individuals who are blind do not have to meet this requirement).
- Once individuals qualify for SSI, they can earn more than SGA, and still receive a portion of their cash benefits.
Requirements to Qualify for SSDI (Note: The SGA amounts are for 2001, and are adjusted annually for inflation)
- Must meet one of the following criteria:
- Previous worked & paid Social Security taxes.
- Unmarried with a parent who receives Social Security benefits.
- Unmarried with a deceased parent who worked & paid Social Security taxes.
- Earnings below the Substantial Gainful Activity level of $800 per month ($1,330/month for people who are blind).
Medical Coverage for SSI: Usually Medicaid
Medical Coverage for SSDI: Usually Medicare
Effect of Income on Cash Benefits for SSI:
- Monthly checks gradually reduced in relation to income
- After the first $85.00 of earned income, SSI check is reduced by $1.00 for every $2.00 earned
Effect of Income on Cash Benefits for SSDI:
All or Nothing
Receive full monthly benefit until going over earnings limit of $800 per month ($1,330/month for people who are blind) 2003 figures. After exceeding earning limit for 12 months, check is completely stopped.
Effect of Income on Medical Benefits for SSI:
Even if cash benefit ends, individual keeps Medicaid coverage until going over the threshold limit, an annual income limit that varies from state to state (from $12,000 to over $25,000)
Note: The impact of employment on Medicaid benefits may be significantly reduced as a result of TWWIIA. Check with your local Medicaid or Social Security office for the most current information.
Effect of Income on Medical Benefits for SSDI:
When cash benefits end, Medicare coverage stays in effect for 7-1/2 years (this includes an expansion of 4-1/2 years under the new TWWIIA legislation, as of 10/1/2000).
Calculating the Impact of Earnings from Employment
- Income is counted according to the date the pay was issued, not earned (e.g.: a paycheck issued on May 5 for the week ending April 28 would count for May.)
- Social Security uses gross income figures (i.e.: before taxes) to calculate the affect of income on benefits.
- Remember, SSI checks are gradually reduced in relation to income. SSDI checks, however, are all or nothing (either you get the full amount or nothing).
- With very limited exceptions, individuals receiving social security disability benefits (SSI or SSDI) are always going to be financially better off by working, at least on a part-time basis.
How Income Affects SSI Benefits
- Cash benefits are reduced in relation to income.
- The first $85 are not counted. This is called the Earned Income Exclusion.
If the person is working:
Step 1: (Gross Monthly Earnings from Job - $85) divided by 2 = Countable Income
Step 2: Benefit Rate (Standard SSI payment) Countable Income
= SSI Monthly Payment While Working
If the person receives SSI and SSDI:
Step 1: SSDI Monthly Payment $20 = Countable Income
Step 2: Benefit Rate (Standard SSI payment) Countable Income
= SSI Monthly Payment While on SSDI
- Medicaid Coverage: Even if cash benefits are eliminated, Medicaid coverage remains in affect until annual earnings reach the threshold amount under 1619b (this figure varies by state, from $11,000 to over $29,000). To maintain Medicaid coverage, the insurance must be used at least once every 12 months.
- If a persons income exceeds this level, they may be able to lower countable income and still qualify for Medicaid through the use of IRWEs, PASSs, etc. See page 246 for Methods for Preserving Benefits.
- After an individuals income exceeds the threshold level, if income drops back below that level within the next twelve months, the individual again becomes eligible for Medicaid and SSI cash payments (if applicable) without having to reapply.
- Under the new TWWIIA legislation, states will have the option of significantly expanding Medicaid coverage and reducing the impact of employment on Medicaid. Contact your local Medicaid or Social Security office to obtain the most current information on this issue.
How Income Impacts SSDI Benefits
- Earnings less than Substantial Gainful Activity level (SGA) - $800/month ($1,330 for individuals who are legally blind) - no effect on benefits.
Note: These are the 2003 SGA amounts, which are adjusted annually for inflation.
- First 9 months of working: no limit on earnings, and no effect on benefits.
How the System Works
- Months in which an individual earns above $570/month (2003 figure - adjusted annually for inflation) count as trial work months.
- After accumulating 9 trial work months over a 60-month period, individual enters extended period of eligibility.
- Individual remains in extended period of eligibility for a minimum of 36 months.
- If earnings remain below the Substantial Gainful Activity level (SGA), benefits continue indefinitely. (Note: a Social Security Work Incentive known as an IRWE can be used to stay below the SGA; information on IRWEs is contained later in this section.)
- If earnings remain above the Substantial Gainful Activity level, SSDI cash benefits continue for 3 more months, then stop.
- If earnings drop below the Substantial Gainful Activity level during any of the 36 months of extended eligibility, individual will receive a SSDI check for that month.
- SSDI cash benefits can be started again during this 36 month period of extended eligibility without a new application.
- Under the new TWWIIA legislation, once benefits end, they can be reinstated at any point within the next 5 years without a new application
- Medicare Coverage: Coverage continues free of charge for at least 93 months after end of trial work period, and for as long as individual remains below the substantial gainful activity level of earnings. If free Medicare ends, individual can purchase Medicare coverage for approximately $300/month. States are required to pay the Medicare hospital premiums for individuals below certain income levels.
Institute for Community Inclusion