SSDI recipients' benefits reduced if working?

justtemp · Joined: 03 Oct 2007 Posts: 11

I just read that SSDI recipients who return to work will lose a dollar of benefit money for every dollar they earn at work. Is this true? I've read about SSDI and work rules in great detail and have never heard this.

Here is the link below where I read this:
http://healthcare-economist.com/2006/04/27/ssdi-1-for-2-reform/

Please consider my example: An SSDI individual goes back to work part-time as a self-employed person not using Ticket to Work and earns say, $5K for the year. If the above is true, and the recipient received $12K a year in SSDI benefits, then the person's income for the year would basically be $12K plus $5K, then minus the $5K equals $12K. ??? If this IS true, then I don't get how this is possibly an "incentive".

I'm sure I'm very confused. Please keep answers simple. Thanks so much.

David Traver · Posted: Sat Jul 05, 2008 02:47 pm Post subject:

There are two major disability systems at SSA:

Guest · Posted: Sun Jul 06, 2008 05:05 am Post subject:

You've confirmed what I thought, which is that the information on that website was completely incorrect. Thanks so much David.

David Traver · Posted: Sun Jul 06, 2008 01:12 pm Post subject:

You are welcome. Thank you for using Connect.

JOA · Joined: 13 May 2004 Posts: 1748

Dear Guest:

The magazine article in question is over 2 years old. It represents a rather remarkable misreading of an academic paper (also over 2 years old) having to do with a particular proposal. Perhaps the most misleading paragraph in the whole magazine article is this one:

justtemp · Joined: 03 Oct 2007 Posts: 11

JOA, you wrote:

"This omits some complications. But at bottom, it's correct. Continuing, the academic paper explains the effect of a PROPOSED change:

Quote: Under the $1 for $2 benefit offset, an SSDI recipient who earns more than the SGA after the TWP would not be terminated from the rolls. Instead their DI benefits would be reduced by $1 for every $2 earned above the SGA disregard. In simple terms, the $1 for $2 amounts to replacing the current 100% forfeiture of benefits due to earnings in excess of SGA, with a 50% surtax."

Are they still considering the implementation of this proposal today?

Also you wrote:
"Quote: The idea of extending the $1 for $2 offset to the SSDI program is extremely popular with disability advocates. They claim that the threat of loss of benefits due to earnings in excess of the SGA after the TWP is the primary reason why those SSDI beneficiaries who are able to return to work, do not do so."

I'm not certain why this is so popular among disability advocates, as it's my understanding that;

1) The threat of losing SSDI benefits occurs well before the issue of SGA even surfaces. As soon as you're even contemplating a return to work which you report, there is a threat. I doubt there are hardly any recipients who successfully make it through any of the current stages of the work incentives without losing their benefits.

2) The threat of the loss of Medicare would be an even bigger issue, which I'm assuming they do not address in the proposal. If they don't include it, then in my mind this is a very incomplete proposal. I guess they're assuming that those who return to work will have their healthcare paid for by an employer. This is erroneous, as I doubt that there are many jobs today that will pay an employee's health insurance if they only work part-time. Also, this leaves out the self-employed who have to incur this cost themselves.

Please advise. Thanks so much for clarifying.

David Traver · Posted: Wed Jul 09, 2008 11:46 am Post subject:

Just temp has a good grasp of the uncertainty surrounding return-to-work issues for the disabled under DIB (Title II).

The way I explain it to my clients is along these lines. First, I explain the trial work provisions and the less-than-SGA monthly trigger for each month of trial work. So, every month in which a person earns $670 or more rings the bell for one month of trial work as of 2008 (the amount changes every year). Ring the bell 9 times in any 60 month period and the benefits cease. http://www.ssa.gov/OACT/COLA/twp.html Often beneficiaries are incorrectly informed by SSA offices that the bell is rung at the $940 SGA amount. http://www.ssa.gov/OACT/COLA/sga.html Thus, they get screwed after nine-months of reliance upon erroneous information.

I also explain that even if a beneficiary stays below $670 in earnings (the 2008 number) they are not safe. State DDS offices perform continuing disability reviews on a regular basis as they are required to do by law. DDS offices often look at the work performed and factor that in as an element to cease benefits based upon a new finding of residual functional capacity (RFC). http://tinyurl.com/6hareo The local DDS then use the new RFC to cease benefits. Similarly, if the claim was originally paid under a listing, DDS offices often use the demonstrated work functioning to show that a listing is no longer met or equaled. http://tinyurl.com/5a6spo

So, it all comes down to this. If you (the beneficiary) feel that you have recovered well enough to return to full time work with benefits, you should do so. You will make more money, your life will be richer, and you won't have to watch T.V. so much. On the other hand, if you cannot live without Medicare, if you are not sure about your capacity to work on a sustained full-time basis until you reach retirement age, then you have to do a very careful risk analysis with not too much information. The assumption is, sadlly, that you will be ceased from disability benefits if you show any new capacity for work.

It is not fair, it is not good public policy, but that's the risk one has to assess. Work at all and risk it all. For many it is worth the risk. For most it is a very bad bet.

Universal health care will change this risk calculus significantly by de-linking health care from disability status. Until then, the value of the Medicare is so great that it is unwise to risk it at all under any circumstances. Reliably fair assessment of claims by DDS offices would also significantly change the calculus in favor of working, but that's never going to happen in our lifetimes.

JOA · Joined: 13 May 2004 Posts: 1748

Dear justtemp:

You asked a question directly of me. The courtesy of your inquiry obligated an attempt to respond. I want to avoid anything anecdotal. I also want to focus directly on your question. Sadly, this leaves me mostly admitting ignorance. But maybe we can set some boundaries on this ignorance.

Your specific question to me was this:

MJB · Guest

This is in response to David Traver to add some twists to what he said. You use up your trial work months if during 9 months in a 60 month period you gross the service month amount, which is $670 this year. Once you complete 9 months, you stop rolling over and the trial work months are there forever. Before that the oldest ones drop off. Your extended period of eligibility starts the month after you completed your trial work month. Your disability does not cease until your first month at an sga level ($940 this year). It can cease years after your trial work period ended and after your EPE (extended period of eligibility) is over, meaning you have to file a new application when you stop work to prove again that you are eligible for benefits.