Going to work when you receive
Supplemental Security Income (SSI) benefits from Social
Security, while a dream for many, can cause concerns
and raise questions for a student and his/her family.
These concerns and questions about SSI and Medicaid benefits
may influence parents’ decisions about whether
or not to encourage their son or daughter to work. Many
parents are unaware that Social Security encourages SSI
beneficiaries to work, and has work incentives and other
policies that allow people to work, earn an income, and
still maintain their SSI and Medicaid benefits.
What happens to an SSI benefit check when a person
starts earning a paycheck - will working students lose
SSI eligibility and their Medicaid benefits because
they are now earning a paycheck? The answer is NO.
While Social Security will count some of the income
they earn, a great deal of it is not counted, and they
will come out ahead financially. This is how it works.
Student-Earned Income Exclusion (SEIE)
In all cases of students with disabilities who choose
to work, a Social Security Work Incentive called the
Student Earned Income Exclusion (SEIE) applies. This
Work Incentive allows students under the age of 22
to work and receive their entire SSI check amount (and
Medicaid benefits) if they earn less than $1,550 per
month, up to a total of $6,240 per year in 2008.
Students who might be eligible for SEIE include:
- A student who attends classes, either in college
for eight hours per week or high school for 12
hours per week.
- A student who attends a work preparation
training
course for at least 12 hours per week.
- A student regularly
attending classes in at least one month of a current
calendar quarter or expecting
to do so during the next calendar quarter.
- NOTE: Class
or training requirements may be reduced for reasons
beyond the student’s control, such
as illness.
The following information must be reported to the
SSI Claims Representative for SEIE to apply:
- Whether the student was regularly attending school
in at least one month of the current-calendar quarter,
or is expected to attend school for at least one
month in the next calendar quarter; and
- The student’s
gross monthly earnings.
SEIE Example
Bill is an 18 year-old student who began working at
a greenhouse for a local florist while still in school.
He is earning $450/month. Because he is a student,
he qualifies for Student Earned Income Exclusion. He
is able to earn up to $1,550/month ($6,240/year total)
before his SSI benefits will be reduced in 2008.
Bill’s Wages $450
Entire SSI Amount $637
Bill’s Total Income $1087/month
because of SEIE
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Benefit Reduction Formula for Non-Students
Social Security policy allows non-students receiving
SSI/Medicaid to earn $85 per month without any reduction
in the SSI check amount. For every dollar ($1.00) above
$85 earned, the SSI check is reduced by 50¢, and
the student continues to be eligible for Medicaid. For
example, when Bill is no longer in school he is not eligible
for the Student Earned Income Exclusion. His wages reduce
his SSI check by 50¢ for every $1.00 he earns over
$85/month. However, he is still financially ahead by
working. If Bill’s wages are $450/month, Social
Security will disregard the first $85 and then reduce
his check 50¢ for each additional $1.00 he earns.
His SSI check will be reduced by $182.50/month. His monthly
income will be: $450 in wages plus $454.50 in SSI for
a total income of $904.50.
Bill’s Wages $450.00
($450 - $85 = $365)
($365 ÷ 2 = $182.50)
($637 - $182.50 = $454.50)
Reduced SSI Amount $454.50
Total Monthly Income $904.50
Calculating
an SSI Check Amount Based on Wages (when SEIE doesn
not apply)
Step
#1
Gross Wages =
Subtract the SSI general and earned income exclusions
of $85
Remainder = $
Step #2
Divide the Remainder (from Step #1) by 2.
This is because the SSI check is reduced 50¢ for
every $1.00 earned above the first $85.00
Step #3
Subtract Total Countable Earned Income (from Step
#2) from the SSI Federal Benefit Rate of $637 per
month to get your SSI check amount (due in 2 months)
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$_______
-$ 85.00
$_______
$_______
÷
2 =
$_______
$637.00
-
$_______
=
|
Remainder
= Total Countable Earned Income
2008 Federal Benefit Rate
Total Countable Earned Income
SSI Check Amount |
Opportunity for a PASS Plan
Because Bill is receiving SSI, and he
has income that is reducing his SSI check, he now has
an opportunity to use another Social Security Work Incentive
called a Plan for Achieving Self Support (PASS Plan).
Instead of losing $182.50 from his SSI check, he could
shelter that amount in a PASS Plan and use that money
to support his current or future employment.
To apply for any of the benefits administered
by Social Security, contact your local Social Security
office. The Social Security Administration publishes
a large selection of informational brochures that explain
the different benefits in detail. You may access this
information through SSA’s website at http://www.socialsecurity.gov
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