Work Incentives Working Group

State Public Benefits Manual

Returning to Work:
Questions and Answers for People Recieving SSI and/or SSDI


State Public Benefits Manual


The Social Security Administration (SSA) has several "work incentive" programs to encourage people who receive disability benefits to return to work. These programs are designed to allow a person to work and continue to receive cash benefits and Medicaid and/or Medicare coverage. The type of work incentive program that an individual participates in depends on the type of benefits he/she receives, and the goal they have in returning to work. If an individual receives both an SSI check and an SSDI check, both of the work incentives apply. You will have to understand how each check is affected by earnings.


SSA refers to working as "substantial gainful activity (SGA)." If an individual is earning more than $740 a month when he/she applies for SSDI or SSI benefits, SSA will presume that he/she is not disabled. If an individual is receiving SSDI and goes back to work and earns more than $530 a month3 for 9 months, SSA will evaluate his/her work activity to see if he/she is performing SGA. If he/she earns more than $740 a month after the trial work period, SSA will find that he/she is performing SGA and cut off his/her benefits. There are deductions that an individual can take from his/her gross monthly earnings to reduce his/her monthly income to below $740. These will be discussed below.

Countable wages are the gross monthly wages an individual earns minus the expenses involved in working. SSA recognizes certain expenses that one can deduct from gross monthly wages to reduce monthly income below the $740 a month SGA rule.

a. Subsidies: If an employer pays an individual and the individual is not really doing the work that the job requires, (because the employer wants to be nice to the individual) the "earnings" could be considered as a subsidy and the money would not be counted as income, or could be used to reduce gross earnings to below SGA. If an individual has a job coach, the individual's wages should be considered subsidized. Get this information from the employer.

b. Business related expenses: self-employed persons can deduct the reasonable cost of business-related expenses from monthly gross earnings. This would also reduce countable wages.

c. Impairment Related Work Expenses (IRWEs): these are expenses that are necessary to go to work and stay on the job - items such as personal attendant care, medical or prosthetic devices, drugs and medical services, residential modifications and special transportation (such as cab fare).The individual must pay for these expenses out of pocket. IRWEs can be deducted from gross monthly earnings to get below the $740 a month SGA. SSA must approve IRWEs.

Example: You earn $780 a month in gross wages. Because of your disability, you must pay out of pocket for your prescription. This expense costs you $300 a month. Your countable wages for SSA purposes are therefore $550 ( $850 minus the $300 prescription costs). Since your countable wages are less than $740 per month, your SSDI benefits will continue.

$850 (gross monthly earnings)
- $300 (prescription)
$550 (countable wages)

d. Blind Work Expenses: Persons who are blind are allowed additional deductions from their wages. Examples of blind work expenses are: transportation expenses to and from work, the cost of lunches, federal, state and local income taxes, expenses related to the care of a seeing eye dog, etc. All of these expenses can be used to reduce gross earnings. The SGA limit for blind individuals is $1,240 in 2001 (it goes up every year).


Keeping the safety net of the SSDI check

As we just learned above, the magic number for Substantial Gainful Activity (SGA) is $740 a month. To make things more complicated, however, the trial work period "work incentive" uses $530 a month as a threshold (started in January 2001). Any month in which a SSDI recipient's earned income is over $530 (or $200 before 1/1/01) will count towards his/her 9 month Trial Work Period. In months before January 2001, the trial work period amount is $200.


Think of the Trial Work Period as 9 months when an individual can earn as much as s/he wants to and still receive the entire SSDI benefit check. It allows an individual to try to work. The Trial Work Period is nine months out of a sixty-month period. Each month in which an individual earns more than $530 in any month counts as a trial work period month. The individual keeps all of his/her earnings and still receives his/her SSDI check. Once an individual accumulates nine months (the months do not have to be consecutive) where earnings are over $530 a month, there is a 3 month grace period in which the individual will continue to receive his/her SSDI check while his/her earnings are over $740 a month. After the Trial Work Period, SSA should review the individual=s medical condition to see if he/she is still disabled. This is called a Continuing Disability Review. If the individual is still disabled, he/she will have the benefits of the 36 month Extended Period of Eligibility (see below). If SSA finds that he/she is no longer disabled, he/she will lose his/her SSDI check and his/her Medicare coverage.

Example: You become disabled in May, 1992, and began receiving SSDI benefits in November 1992. You then return to work in January, 2001. From January, 2001 to January, 2006, you can work a total nine months and earn over $530 in each of those nine months and not lose any of your SSDI benefits. You could earn any amount of money in any of those nine months and not lose any of your benefits.


If an individual's SSDI benefits are stopped because of completion of the Trial Work Period, but his/her work activity ends, or falls below $740 a month during the 36 months following a Trial Work Period, he/she does not have to file a new application for benefits. During the next 36 months, he/she will not be entitled to receive his/her SSDI benefits in any months in which he/she earns over $740 a month, but he/she will be entitled to benefits in any month in which his/her earnings fall below $740 a month. This assumes that he/she continues to be disabled.

Example: If your Trial Work Period ended in January, 2001 because you have worked nine months over $200 a month, you will still get your SSDI check for February, March and April, 2001, even if you are earning over $740 in those months. If you are still earning $740 in May, you would not be eligible for a May SSDI check. However, if your earnings fall below $740 a month in any month after April, 2001, you are eligible for an SSDI check for only the months that fall below the SGA limit up to January, 2004.

Keeping Medicare coverage

SSDI recipients are eligible for Medicare coverage after two years of SSDI eligibility. During the Trial Work Period, (assuming the individual is on Medicare) Medicare will continue. Medicare coverage will also be extended for 78 months following the Trial Work Period.

New law: Effective October 1, 2000, Medicare coverage will be extended for an additional 4.5 years after the Extended Period of Eligibility. This means that an individual will receive free Medicare Part A coverage, although they will not be entitled to an SSDI check. (This assumes they are working over $740 a month). SSA will notify an individual if s/he is entitled to the extended Medicare coverage.

Medicare Extension Under the Ticket to Work
And Work Incentives Improvement Act

The Ticket to Work and Work Incentives Improvement Act (TWWIIA) extended Medicare coverage for working SSDI beneficiaries from 36 months to 78 months after the Trial Work Period. Figuring out whether an individual qualifies for the extension is rather complicated. If the individual’s Medicare termination date under current law is not effective until after 9/30/00, her/she will get four and _ years of extended coverage after the Extended Period of Eligibility. The factors in determining whether coverage continues are:

  • Does his/her disability still meet SSA’s rules?
  • When did his/her Trial Work Period (TWP) end?
  • Is he/she working at Substantial Gainful Activity (SGA) ($740 a month in 2001)?
  • Did he/she complete the initial 24 months waiting period for Medicare eligibility?

SSA has developed a computer tool to quickly assess an individual’s eligibility for continued Medicare coverage. The SSA Redbook on Work Incentives also has examples of how the extension works.

If an individual declines Medicare Part B when it is first offered, her/she can only sign up for it during a general enrollment period (January 1st through March 31st each year) or a special enrollment period. The special enrollment period for a person with a disability is a period during which enrollment may occur for an individual:

(1) Who did not enroll during his or her initial enrollment period because he or she was covered under a group health plan based on his or her own current employment or the current employment of any family member; or

(2) Who enrolled (or was deemed to be enrolled) in his or her initial enrollment period ( and any subsequent special enrollment periods), and has been covered under a group health plan based on his or her own current employment or the current employment of any family member.

The special enrollment period may occur during any month a person is covered under a group health plan based on current employment, or during the 8 month period that begins the first full month after employment or group health plan coverage ends, whichever comes first.

When an individual’s EPE began prior to July 1997, a return to work effort at SGA could generate a Medicare termination prior to September 30, 2000. It depends on the SGA activity in their EPE.

If at the end of the 36th month extended period of eligibility, the individual is earning over $740 a month, their SSDI checks and eligibility will end. At that point, if a worker continues to be disabled he/she will receive Medicare for 4.5 more years. After that, the worker with a continuing disability can Abuy in@ to Medicare after the extended period is exhausted by paying a premium. There is also a provision where the State could pay for the Medicare coverage if the worker=s earnings are below a certain level.

Note: If in the 36th month of the Extended Period of Eligibility the individual=s earnings are less than $740 a month, their SSDI benefits will continue until the next month that the earnings go over $740 in 2001.

SSA may send checks each month, even though the beneficiary is not entitled to them because of earnings. The SSDI beneficiary should keep track of his/her earnings, report them to SSA, and ask SSA periodically to give him/her a printout with his/her Trial Work Period and Extended Period of Eligibility months.


Keeping the safety net of the SSI check

Since SSI is a means-tested program based on financial need, any income will affect the amount of the SSI check. For an individual who is on SSI and working, SSA has a method to disregard a percentage of earned income, so that not all earnings will be counted to reduce the SSI benefit.

Earned income is money received from employment or self-employment.

Unearned income is anything other than wages, including SSDI payments.

The first $20 of earned and unearned income is subtracted. In addition, SSA subtracts $65 plus 50% of the remaining earned income. This is called the earned income disregard.

Example: You receive $530 from SSI. You go back to work and earn $600 a month in gross wages. SSA will subtract the first $85 ($20 + $65 deduction) of the $600 to get $515. Then SSA subtracts 50% of the remainder (50% of 515) to get $257.50. Then SSA subtracts the $257.50 from the $530 SSI benefit to get $272.50, which is how much you can get in SSI. Thus you have earnings of $600 from employment, and SSI benefits of $272.50, for a total monthly income of $873.50.

You have improved your monthly income by $372.50 by going to work.

Earned income….Example:
$600 – gross wages
-$85 ($20 income disregard + $65 earned income disregard)
$515 divided by 2
=$257.50 = countable earned income for SSI purposes
$530.00 (SSI benefit amount or whatever one usually receives from SSI)
-257.50 (countable earned income)
272.50 (new SSI benefit amount)

Therefore, the individual has a monthly income of $600 in earned income and $272.50 in SSI, for a total of $872.50. He/she has improved his/her monthly by $372.50 by going to work.

Remember, if you have business related expenses, or IRWEs, you would deduct them from your gross wages before you subtract the income disregard of $85, and then take 50% of the remainder. That gives you a larger SSI benefit.

Student Earned Income Exclusion

If an individual is under age 22, not married or head of the household, and regularly attending school, SSA does not count up to $1,290 of earned income per month when figuring the SSI payment. (Before January 1, 2001, the monthly exclusion was $400 a month). The yearly exclusion for student earned income is $5,200. (Before January 1, 2001, it was $1,620 a year). These amounts will be automatically adjusted each year by SSA based on any annual increases in the cost-of-living index.

"Regularly attending school" means that the student 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 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 than indicated above for reasons beyond the student’s control, such as illness.

If the student is home taught because of a disability, he/she may be considered "regularly attending school" by:

  • 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.

SSA applied the student earned income exclusion before the general income exclusion or the earned income exclusion.

Example: In June 2001, student earns $1,500 at a summer job.

$1,500 – earnings
-1,290 – student earned income exclusion
-20 – general income exclusion
-65 - earned income exclusion
divided by 2 – SSI earned income disregard
$62.50 – countable earned income
New SSI benefit computation- $530
- 62.50

Property Essential for Self Support

Since SSI is a means-tested program, any resources over $2,000 will make an individual ineligible for SSI. A provision called "Property Essential for Self Support" allows an SSI recipient to exclude certain resources which are essential to the recipient<s means of self support. Property which is used in a trade or business or used by a person for work as an employee is totally excluded. Also, up to $6,000 of equity value in non-business property can be excluded:

  • if it is used to produce goods or services essential to daily activities
    (e.g., land to grow food for household) or
  • if the property yields an annual rate of return of at least 6% of its equity value.

Plan for Achieving Self Support (PASS)

The PASS program allows disabled SSI and SSDI beneficiaries to receive SSI by excluding from their SSI eligibility and benefit calculations any income or resources used to pursue a work goal. For example, an individual receiving SSDI could set aside part or all of the benefit in a PASS and become SSI eligible. Anyone interested in pursuing a PASS must submit an application to their local SSA office (there is an application form), and the PASS must be approved by SSA before her income and resources will be excluded. More information can also be obtained from the work incentive liaison at his/her local SSA office, or the PASS specialist at 1-800-842-0588.

Keeping Medicaid coverage

1. 1619(a) Coverage
This provision allows a SSI recipient who earns over $SGA ($740 in 2001) to keep receiving Medicaid. Since the greatest worry for those who receive benefits and go back to work is the fear of losing health coverage (Medicaid), it is good to know that you can keep Medicaid without a spenddown under 1619(a). The 1619(a) provision refers to a section in the Social Security Act that created this provision.

The way it works is this: when an individual earns over $740 a month in gross income, and reports it to SSA, SSA should enroll the individual in the 1619(a) program. (SSA will use the earned income disregard and exclusions to income to continue to determine the amount of the SSI benefit.) SSA will also notify the Illinois Department of Human Services (IDHS) that an individual is on the 1619(a) program. IDHS should continue his/her Medicaid eligibility without a spenddown.
In order to continue to be eligible for 1619(a), an individual must meet the following conditions:

  • have been eligible for an SSI payment for at least one month prior to starting work at the $740 level;
  • continue to be disabled; and
  • meet all income and resource requirements of the SSI program.

It is important to remember to keep track of resources - if he/she goes over the $2,000 resource limit, he/she will no longer be eligible for SSI. Also, every month that he/she earns less than $740, he/she will be off the 1619(a) program. She could then be facing the possibility that he/she would have a spenddown with Medicaid, since IDHS will count some of his/her earned income below $740 in determining his/her financial eligibility for Medicaid.

2. 1619(b) Coverage
If an individual is a working SSI beneficiary, and her gross monthly earnings reach a threshold amount, she will no longer be eligible for cash SSI benefits. The threshold in 2001 is $1,145 a month. Once he/she earns over $1,145 a month, an individual is no longer eligible for SSI cash. He/she should, however, be eligible for continued Medicaid coverage without a spenddown. If an individual receives both SSI and SSDI, as soon as the SSI check disappears because of earnings, the individual is 1619(b) eligible.

In order to be eligible for 1619(b) continued Medicaid coverage, an individual must meet the following conditions:

  • have been eligible for an SSI payment for at least one month prior to starting work at the SGA level;
  • continue to be disabled;
  • need Medicaid coverage to work;
  • earn gross income at levels that are insufficient to replace Medicaid with private insurance; and
  • have gross income below the threshold amount (in 2001 $23,271 in Illinois) and meet resource requirements of the SSI program.

As long as the individual reports his/her income to SSA, SSA should put him/her in 1619(b), assuming he/she meets the above-stated conditions.

****Special Note: Individuals on SSI who go back to work and earn over $740 a month or who lose their SSI check because of earnings, should not be cut off Medicaid. If an individual receives a notice from IDHS that he/she is being cut off Medicaid, he/she should go to her local SSA office immediately and request written verification that the individual is 1619(a) or (b) eligible. He/she should take that paper to her local IDHS office. Once an individual reaches the final threshold amount as determined by the state (in 2001 it is $23,271 in Illinois), SSA will assume that an individual is able to replace Medicaid with private insurance, and he/she will no longer be eligible for 1619(b).

What happens if the individual’s disability improves?


A disincentive to going back to work is the possibility that SSA could find that the individual has medically improved and that an individual is no longer disabled. This is called a Continuing Disability Review (CDR). The CDR should be performed soon after the 9th month of the Trial Work Period and after an individual is in 1619 status. Usually, the fact that an individual is working is not enough to terminate benefits - an individual has to show medical improvement that allows them to work above the SGA level.

If an individual improves medically while he/she is participating in an approved vocational rehabilitation program and participation in the program increases the likelihood of his/her permanent removal from the rolls, he/she can continue to receive benefits while in the program. Once he/she is finished with the program, his/her benefits would end.

Timely reporting of all earned income to SSA is especially critical for SSI beneficiaries. Most SSI beneficiaries have overpayments beSSAcause does not know how much money the person makes, and cannot correctly calculate the amount of the SSI check. SSA uses an accounting method called retrospective monthly accounting to determine the amount of a monthly SSI check. For example, if Ms. X's SSI benefit amount is being determined for September, SSA uses Ms. X's countable income from July to determine the benefit amount for September. Make sure that an individual takes paycheck stubs to SSA on a monthly basis.