Benefit Development Resource Toolkit: Work Incentives

Many people with disabilities want to work but are concerned about how earnings will affect the benefits they receive under Medicaid, Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). The Social Security Administration (SSA) and New York State Department of Health (DOH) provide incentives to help people who are blind and/or disabled achieve greater independence through employment without jeopardizing their SSI or Medicaid benefits.

Work incentives allow an individual to test their ability to work and become self-supporting and independent. These supports are intended to help people with disabilities enter or re-enter the workforce by protecting their eligibility for benefits and/or health coverage.

Remember to always report work and the amount of earnings to benefit paying agencies.

This section covers common terms and work incentives for people with developmental disabilities.

An individual’s initial and continued eligibility for Social Security disability benefits is contingent upon whether they can engage in substantial gainful activity (SGA). SGA is the performance of significant and productive physical or mental work for pay or profit. Although evaluation of SGA applies to a disabled individual’s initial eligibility for SSI, it does not apply to SSI applicants who are blind.

SGA amounts typically change as part of the yearly Cost of Living Adjustment (COLA) and are higher for people who are blind. 

More information about SGA, including the current levels, can be found in SSA’s Red Book - A Guide to Work Incentives at https://www.ssa.gov/redbook/.

An individual receiving Social Security disability (SSDI) benefits is allowed a trial work period (TWP) consisting of at least 9 months, not necessarily consecutive, within a 60- month period. A month is counted as a trial work period month if the individual’s earnings for that month are greater than or equal to the current TWP amount set by SSA.  During the individual’s TWP, if the individual continues to be disabled, they continue to receive the full amount of their SSDI benefits, regardless of the amount of their earnings. After the individual’s 9-month trial work period is completed, SSA reviews whether the individual can work despite a disabling impairment and then decides whether benefits will continue or end.

After the TWP ends, an individual will receive a 36-month extended period of eligibility during which SSDI benefits can be paid for each month they do not perform substantial gainful activity. This extended period of eligibility applies only if the individual continues to meet the SSA definition of disability.  If they have Medicare Parts A, B, and/or D coverage, it will continue for at least 93 consecutive months starting the month after the last month of the TWP.

More information about TWPs, including the current level, can be found in SSA’s Red Book - A Guide to Work Incentives at https://www.ssa.gov/redbook/.

The earned income exclusion allows more than half of an individual’s earned income, including pay received in a sheltered workshop or work activities center, to be excluded.  SSA and Medicaid exclude the first $65.00 of monthly gross earnings plus one-half of the remainder. This means that less than half of an individual’s gross earnings are counted when calculating the SSI payment amount and Medicaid eligibility.  The earned income exclusion is in addition to the $20.00 general income disregard.  

Under the Ticket to Work program, people ages 18-64 receiving SSI and/or SSDI receive a “Ticket”, which they can use to obtain employment services, vocational rehabilitation services, and other support services they may need to get or keep a job. Use of the Ticket is voluntary and there is no penalty to people who choose not to use it.  Services provided to people under this program must be rendered by an approved Employment Network (EN) or State Vocational Rehabilitation (VR) agency at no cost to the individual.

SSA does not conduct Continuing Disability Reviews when an individual is using a Ticket to Work.

More information about Ticket to Work, including where to find a list of ENs, can be found in SSA’s Red Book - A Guide to Work Incentives at https://www.ssa.gov/redbook/.

Under section 1619(a) of the Social Security Act, SSI beneficiaries can receive SSI cash payments even when their earned income exceeds the substantial gainful activity (SGA) level. The earned income is not excluded but is used in the calculation of the individual’s SSI payment. To qualify for this incentive, the individual must:

• Be eligible for an SSI payment for at least one month before they begin working at the SGA activity level
• Have the same disability as when they applied for SSI
• Meet all other eligibility rules, including the income and resource levels

Under 1619(a), the individual remains eligible for Medicaid because they continue to be in receipt of SSI.

Example – Section 1619(a)

Ed is disabled and has received an SSI cash payment for 10 years. He does not have any other benefits and he is not blind. Recently he took a job that pays him more than the monthly SGA level. He continues to be disabled and his resources are less than $2,000 (the SSI resource limit). Ed can continue to receive SSI cash payments because of the 1619(a) provisions even though his earnings exceed the substantial gainful activity level.

Under section 1619(b) of the Social Security Act, Medicaid coverage continues for most working SSI beneficiaries when their earnings become too high to allow for an SSI cash payment. To qualify for this incentive, an individual must:

• Have been eligible for an SSI cash payment for at least one month
• Still meet the disability requirement for SSI
• Still meet all other requirements for SSI, including the resource level
• Need Medicaid in order to work
• Have gross earned income that is insufficient to replace SSI, Medicaid, and any publicly funded attendant care

Example – Section 1619(b)

Susan has been receiving an SSI cash payment for 5 years. She lives in a Voluntary Operated Individualized Residential Alternative (VOIRA). She recently began working at a local department store and her total earned and unearned income per month exceeds the substantial gainful activity level. Her SSI has been terminated. She continues to be disabled and she would not be able to work if she did not have her Medicaid coverage. She meets all other SSI eligibility requirements. Susan can continue to receive her Medicaid coverage even though her SSI payments have been discontinued.

If Susan earns more than is allowed under 1619(b), she may be eligible for the Medicaid Buy-In Program for Working People with Disabilities (MBI/WPD).

Working individuals who are Medicaid recipients may be eligible for the Medicaid Buy In for Working People with Disabilities (MBI-WPD) program, the program is discussed in the Medicaid section of this toolkit.

The costs of certain impairment-related items and services that an individual needs to work are deducted from earnings in calculating substantial gainful activity, SSI payments, and Medicaid spenddown amounts.  For expenses to qualify as IRWEs, the individual must apply to SSA or Medicaid and provide appropriate documentation of the expenses.

An impairment-related item or service is considered an IRWE under the following conditions:

• The item or service enables the individual to work
• The item or service is needed because of a disabling impairment
• The individual paid the cost of the item or service and was not reimbursed by another source (e.g., Medicare, Medicaid, or private insurance)
• The cost is “reasonable”, meaning it represents the standard charge for the item or service in the community
• The expense was paid in a month that the individual had earned income or performed work while using the impairment-related item or service

If an individual has IRWEs, SSI excludes those expenses in determining the amount of countable earned income used to calculate the individual’s SSI payment. IRWEs may increase an individual’s SSI payment.  IRWEs are excluded by Medicaid when determining the individual’s countable earned income.  IRWEs may be used to meet or reduce an individual’s Medicaid spenddown amount.

The following are some examples of Impairment Related Work Expenses:

• Modifications made to an automobile to allow the individual with disabilities to drive
• Wheel chair ramps
• Special foods to maintain dietary restrictions at work
• One-handed typewriter
• Interpreter for the deaf
• Typing aids

Example – Impairment-Related Work Expenses

The following example shows the effect of IRWEs on an individual’s SSI payment amount.

Karl is disabled and lives alone. He receives SSI and has monthly gross earned income of $361.00. He has no unearned income. SSA has approved IRWEs of $100.00 per month for Karl.

Karl’s countable earned income decreased by $50, which increases the amount of SSI he is entitled to receive by $50. 

Blind work expenses are costs an individual who is blind pays from their own funds when they work and are not reimbursed by another source. The expenses do not need to be related to the individual’s blindness. For expenses to qualify as BWEs, an individual must apply to SSA or Medicaid and provide them with documentation of the expenses. The approved expenses are then deductible from the individual’s earnings as BWEs.

The amount of earned income an individual who is blind uses to meet these expenses does not count in determining SSI eligibility and in calculating the amount of the individual’s SSI payment amount if the individual is:

• Under age 65
• Age 65 or older and received SSI payment based on blindness for the month before they attained age 65
• Age 65 or older and received payments under a former state plan for aid to the blind for the month before they turned age 65

In calculating the individual’s SSI payment, the BWE exclusion is applied to the individual’s gross monthly earned income immediately after applying any portion of the general income disregard ($20.00) deducted from earned income and all other earned income exclusions except the income set aside to fulfill an approved Plan to Achieve Self Support (PASS).  BWES may increase an individual’s SSI payment. 

BWEs are excluded by Medicaid when determining the individual’s countable earned income.  BWEs may be used to meet or reduce an individual’s Medicaid spenddown amount. 

The following are some examples of BWEs:

• Service animal expenses
• Transportation to and from work
• Federal, state, and local income taxes
• Social Security taxes
• Attendant care services
• Visual and sensory aids
• Translation of materials into Braille
• Professional association fees
• Union dues

The following example shows the effect of BWEs on an individual’s SSI payment amount.

Example – Blind Work Expenses

The following example shows the effect of BWEs on an individual’s SSI payment amount.

Ray is disabled and lives alone. He receives SSI and has monthly gross earned income of $361.00. He has no unearned income. SSA has approved BWEs of $40.00 per month for Ray.

Ray’s countable earned income decreased by $40, which increases the amount of SSI he is entitled to receive by $40. 

Plan for Achieving Self-Support

A Plan for Achieving Self-Support (PASS) allows an SSI or Medicaid recipient with a disability or blindness to set aside income and/or resources for a specified period for an approved work goal.

For SSI recipients, money set aside under an approved PASS is not counted for initial or continuing SSI eligibility decisions (i.e. income and resources that are set aside are excluded under the SSI income and resource tests). Having a PASS may help an individual qualify for SSI or may increase the amount of the individual’s SSI payment.

A PASS may exclude unearned and earned income and resources. SSI does not count income or resources set aside under a PASS when calculating the SSI payment amount. Usually, the individual cannot use their SSI payment for the expenses necessary to reach his or her occupational goal because the SSI is needed to pay for ordinary living expenses.

For Medicaid beneficiaries who are not receiving SSI, money set aside under an approved PASS is not counted as income or as a resource.  A PASS may eliminate or decrease their Medicaid spenddown amount and allow them to save resources above the applicable level. 

To request approval of a PASS, SSI recipients must submit the details of the plan to SSA in writing.  Form SSA-545-BK is preferred and SSA staff is available to assist with writing a PASS.  A list of SSA employees who are experts at handling PASS applications can be found at https://www.ssa.gov/disabilityresearch/wi/passcadre.htm.  Individuals not receiving SSI must contact their Medicaid district for approval of a PASS.

Examples of Plans for Achieving Self-Support are setting aside money to go back to school or to obtain specialized training for a job. The goal of a PASS should be to allow the individual to earn enough to reduce or eliminate their need for benefits provided under the Social Security or Supplemental Security Income programs.

More information about PASS can be found in SSA’s Red Book - A Guide to Work Incentives at https://www.ssa.gov/redbook/ and in the Medicaid Reference Guide at  https://www.health.ny.gov/health_care/medicaid/reference/mrg/mrg.pdf.

Property Essential to Self-Support

Property Essential to Self-Support (PESS) allows an SSI recipient to exclude certain resources that are essential to the individual’s means of self-support. Property used in a trade or business or used by an individual for work as an employee is totally excluded. For example, the value of tools or equipment that an individual needs for work is totally excluded.

More information about PESS can be found in SSA’s Red Book - A Guide to Work Incentives at https://www.ssa.gov/redbook/ and in the income section of the Medicaid Reference Guide at: https://www.health.ny.gov/health_care/medicaid/reference/mrg/mrg.pdf.

Expedited Reinstatement of Benefits

An individual whose Social Security disability benefits were terminated because of work activity can request reinstatement of his/her benefits. The individual must be unable to work because of the same or related original medical condition and must file the request for reinstatement within 60 months from the month of termination. The individual may be able to receive provisional SSI payments while SSA decides whether the individual meets the reinstatement requirements.

The following summarizes which benefits allow for the work incentives described in this section.

Medicaid:

• Earned income exclusion
• 1619(a) & 1619(b)
• IRWE
• BWE
• PASS

SSI:

• Earned income exclusion
• Ticket to Work
• 1619(a) & 1619(b)
• IRWE
• BWE
• PASS
• PESS
• Expedited Reinstatement of Benefits

SSA:

• Ticket to Work
• IRWE
• Expedited Reinstatement of Benefits

For additional Information about Work Incentives:

SSA’s Red Book - A Guide to Work Incentives at https://www.ssa.gov/redbook/

SSA’s Ticket to Work site at https://choosework.ssa.gov/index.html

SSA’s toll-free number: 1-800-772-1213

SSA’s website at www.ssa.gov.   

Medicaid Reference Guide at https://www.health.ny.gov/health_care/medicaid/reference/mrg/mrg.pdf

Local Department of Social Services at https://www.health.ny.gov/health_care/medicaid/ldss.htm