Trapped in D.C.

Hi Everyone: Hope 2010 has been treating you well so far. I have been taking some down time from the traveling so far this year, except I recently drove to D.C. to spend some time with my sister Quimby and ended up being stranded for a while so I thought I would share a photo memory from that experience. Hope the weather is better where you are! Here’s a question I received recently…

Dear Ben,

I receive SSDI based on my own work history (no SSI.) I’ve started a business making and selling jewelry. This is not a hobby, I plan on selling my jewelry at consignment shops and on my own at craft fairs around the state to make a profit. My question is, how does social security treat my self-employment income in deciding if I’m working substantially each month (above SGA)? Someone told me they just take my entire yearly income and divide by 12; is that right?

Jerry
Goodman, WI

Dear Jerry,

Good question, and one that requires more than a brief and simple answer. Due to the nature of self employment, identifying a self-employed person’s monthly countable income for Substantial Gainful Activity (SGA) purposes can be more complicated than it is for a person who works for wages. For a beneficiary with wages, the Social Security Administration (SSA) contacts the employer who can provide a definite amount an employee earned in any month, but with self-employment SSA depends on the beneficiary’s records of time spent working and earnings which can be irregular and difficult to evaluate exactly.

The basic principal to remember is that in determining countable income for SGA purposes, what matters is when income was earned and not paid: SSA needs to know the value of a beneficiary’s work when it was performed. So the critical factor is not when someone actually receives payment for work but rather when the income was earned.

The method you mentioned is how self employment income is counted for Supplemental Security Income (SSI) purposes: SSA takes the total of the net earnings that an SSI recipient received in a calendar year, divides that by 12, and assigns that same amount of earned income to each month of the year. Even if an SSI recipient has months without self-employment activity or income, all 12 months are used in averaging. However, for SGA, which is the issue you as a Social Security Disability Insurance (SSDI) beneficiary are concerned with, SSA tries to identify when you earned the income.

In comparing the income of a self-employed individual to the SGA monthly earnings guidelines ($1000 in 2010), SSA uses the portion of a self-employed person’s income after the deduction of allowable expenses (which yields Net Earnings from Self Employment or NESE) and the value of certain types of assistance (unpaid help, un-incurred business expenses, IRWE). The final amount then is the countable income which SSA considers the actual value of work performed for SGA purposes.

SSA uses a beneficiary’s own business records and income tax returns to determine the countable income for any particular month of self employment activity. SSA considers each month of self employment activity separately in trying to figure the value of the work performed regardless of the actual income received in the month.

However, if establishing monthly countable earnings is not possible due to the kind of variables that often part of self employment, SSA may have to average the earnings over a period of work. This is similar to the averaging process SSA uses with wages but with an important difference. In averaging wages SSA already knows what the countable income is for each month (from the employer) and from that recognizes that the beneficiary is somewhat over SGA some months and under others; so to support the beneficiary’s work effort, SSA averages those amounts over a representative period to see if the resulting figure is below SGA. On the other hand, with self-employment SSA averages the accumulative income from a representative period in order to arrive at the countable income assigned to each month in the period.

For self employment income averaging, SSA takes a beneficiary’s total countable self employment income from a representative period and divides it by the number of months in that period. A representative period is a period of months in which the person actively engaged in work activity with no significant changes in the work pattern or when there is a no regulatory change in the SGA earnings level, which normally occurs every calendar year (for example, from $980 in 2009 to $1000 in 2010.) SSA averages separately each representative or distinct period of work activity. (POMS DI 10510.012B5)

So if a self-employed beneficiary does not engage in work activity for a month or more, the month(s) could not be included in a representative period for averaging and would end any representative period just before.

In the case of a beneficiary who is self-employed as a sole contractor working on a regular basis and receiving about the same income consistently, averaging to arrive at the monthly countable income probably would not be appropriate. In your case, SSA will analyze the period you were engaged in your jewelry business and see if it is possible to determine from your records when you earned your income. It may be necessary to average your income depending on all the factors involved.

As you can see, it is important for self-employed beneficiaries to maintain accurate, complete, and timely records and to work with SSA to keep them informed of your work status.

Good luck with your business.

Ben

Aloha from Kauai, Hawaii

Happy belated Thanksgiving everyone! As I indicated in my last post, some warmth was in the plans for my next travel destination. I’m happy to be checking in with you from paradise – Kauai, Hawaii. Even more exciting, my sister Quimby was able to join me for part of this trip and experience her first surf lesson – not bad for a beginner – keep up the good work Sis. We look forward to your reports on what’s happening in Washington next year. Here’s a question I received recently.

Dear Ben,

I receive both regular social security disability (SSDI) benefits and SSI disability payments. Earlier this year I was overpaid the regular social security benefits, and I just agreed to have $50 a month taken out of my SSDI benefit to repay the money I owe.

I know that SSA counts the gross amount of my SSDI benefit against my SSI payment, so I was wondering how much will SSA use in figuring my SSI payment now: the amount I actually get after the $50 repayment is taken out, or the full benefit amount I normally received before I started repaying the overpayment?

Jesse
Seneca WI

Dear Jesse,

The full amount of any Title II (regular social security) benefit before any deductions normally counts as unearned income in computing a monthly SSI payment. However, an exception applies when the Title II overpayment occurred while the person was receiving SSI and when the overpaid amount was included in the countable unearned income during that time. In such a case, SSA will count just the amount of the Title II payment after overpayment withholding and not the full, regular amount. This is called the “double counting” exception because SSA cannot count your Title II against your SSI twice.

It looks like this exception applies to your case, that the overpayment occurred while you were receiving SSI and the overpaid money was already taken into account when SSA computed your SSI earlier. So while you’re repaying the overpaid amount, SSA will use the lower SSDI amount you actually receive in figuring your SSI payment.

Ben

References: POMS SI 00830.110B2 | SI 00830.115 | SI 00830.210

Quimby's surfing lesson

Antarctica

My friend Nate from ERI is always asking me when I’m going to take a trip to someplace interesting like Antarctica so I’m very excited to give him a shout out from that very place! “Hey Nate! Thanks for the suggestion.” I can report that I have not seen any polar bears from land, air or sea so far. As a matter of fact, from what I understand and from personal experience, spotting polar bears is not very easy. What is easy is keeping in touch with what’s happening at home. I received this excellent question recently – a topic that comes up frequently.

Dear Ben,

I have a client who is disabled and receives both SSDI disability benefits and SSI disability payments. His aunt is 85 years of age and is planning to move out of her house that she owns (worth about $80,000) and into an apartment. She wants to give the house to my client to live in. If she does this and he moves into the house, would he lose his SSDI and SSI?

Neil
Greendale, WI

Dear Neil,

Receiving a house or any other gift does not affect a person’s Social Security Disability Income (SSDI) benefits. And there is no asset limitation for entitlement to SSDI.

On the other hand, there are rules regarding how much in income and resources a person can have and be eligible for Supplemental Security Income (SSI.) The month your client receives ownership of the house, Social Security considers its value as income to him that month because the house provides him shelter; however, the value of shelter is capped at the Presumed Maximum Value (PMV) for in-kind support, which in 2009 is $224.66 (one-third the Federal Benefit Rate for an individual of $674.). So he would be charged with $224.66 as income for that month.

The month after that, the house becomes a resource that he owns. The countable resource limit for an individual for SSI is $2000, however, a home a person owns and resides in is not a countable income so does not count toward that $2000 limit. So as long as he still meets all the other SSI eligibility qualifications, your client will be eligible again with that month. (Source: Social Security Administration POMS SI 00815.550C2 | SI 01120.005 | SI 00835.300)

Please make sure your client contacts his local Social Security office when he receives ownership of the house.

All the best, I’m definitely going to choose someplace warm next!
Ben

Manarola, Italy

Hello Friends

I’m checking in from one of the most beautiful places I have ever been – Manarola, Italy. I received the following question about Childhood Disability Benefits (DAC).

Dear Ben,

Several years ago my father died when I was 19 and I started to receive DAC benefits (I think they’re officially Childhood Disability Benefits) based on his record. But when I got married three years ago, the benefits stopped. I just got divorced and was wondering if I could start up the DAC benefits again on my father’s record since I’m no longer married. I’m still disabled and haven’t been able to work. Also, my mother who is 63 has been working all her life but is retiring and will be applying for retirement social security soon – can I get anything because she’s retiring?

Bruce
Bosstown, WI

Manarola, Italy

Dear Bruce,

Unfortunately, you cannot receive benefits again on your father’s record. Re-entitlement on the same earnings record for a DAC is not possible after a marriage that ended by death or divorce. (POMS RS 00203.015A)

However, it sounds like you may be able to be entitled as a DAC on your mother’s record once she starts receiving Social Security retirement benefits. If a former DAC beneficiary is not married, she/he may be newly eligible on the other parent’s record because the rules for initial entitlement rather than re-entitlement apply. (POMS RS 00203.020)

Also note that if a DAC marries a person who is entitled to a Social Security Title II benefit (retirement, survivor, auxiliary, or disability but not child benefits for someone under 18), DAC benefits would continue. (POMS RS 00203.035A3)

So be sure to contact your local Social Security office when your mother applies for retirement to start the disability application process for yourself.

Ben

Normandy, France

Hi Ben,
I’ve been getting SSDI based on my own work for several years now and I’ll be coming up on the normal retirement age, 66, in a couple of years. I was wondering if my disability benefit amount will change once I hit retirement age?

Otto
Moquah, WI

Dear Otto,

Someone in your situation cannot receive Social Security disability benefits in addition to or instead of retirement benefits. Once a person is over the full retirement age (now 66), he or she cannot be eligible for Disability Insurance Benefits (DIB.) A person can only receive DIB if younger than the full retirement age and no longer able to do substantial work because of a disabling condition.

For those receiving DIB when turning full retirement age, the payments become retirement benefits. The benefit amount is the same as before, but the rules regarding work, Substantial Gainful Activity (SGA), and medical reviews no longer apply since the payments are technically no longer disability benefits. Similarly, Widow(er) Disability Benefits (WDB) essentially become Widow(er) Benefits when the widow(er) turns full retirement age.

One way to look at DIB or WDB payments is as a form of early retirement benefits intended to tide a person over until reaching full retirement age when those payments automatically become retirement benefits.

Note, however, that Childhood Disability Benefits (often called Disabled Adult Child or DAC benefits) are different. Those who are entitled to DAC benefits continue to receive them past full retirement age as long as they remain disabled. It is unlikely a Childhood Disability Beneficiary would ever medically recover after full retirement age, but the disability rules regarding work, SGA, and work incentives still apply.

Ben

CN Tower, Toronto, Ontario, Canada

Hi Ben,

I have a question about 1619b, earning and CIP1b funding. If a single adult on SSI earns approximately $20,000 per year and has the option of taking company “private” insurance would this person be ineligible for Medicaid (1619b)? Let’s consider this person meets all other eligibility requirements for MA. Also, If this person private insurance covers all medical costs, but MA is needed to cover CIP1b waiver services would he be in jeopardy to loose his waiver services?

I want to make sure my client does not loose his CIP1b waiver services if he would receive private insurance through his employer.

Thank you,
Brian

Hi Brian,

Your question is an excellent one. Hopefully you will be able to attend the WDBN webcast featuring Social Security Administration’s Bob Monahan and Connie DaValt next month on September 17th – go to the WDBN Training page for more information. They will be talking about 1619(b) in their presentation.

In the meantime, let’s take a look at your question.

Individual’s who have Medicaid are able to have private insurance simultaneously. 1619(b) does require that a person need Medicaid in order to work, and that can still be done even though the primary payer is the Private Health Insurance. It is quite often that an individual will still need Medicaid to pay for some services that the Private Insurance does not.

Also, the individual is getting CIP1b which shows that the individual needs Medicaid.

As long as the person you are working with continues to have a disability and have assets under $2,000, he should be eligible for 1619(b). Also, he must have earnings below the annual threshold. In 2009 that is $32,156 or $34,459.48 for someone who receives the E-Supp, or higher yet for someone who has an individualized threshold. He will remain eligible for CIP1b in Financial Group A and have no cost share.

If he is interested in having assets higher than $2,000 he may want to consider MAPP. He could have MAPP and CIP1b. In this situation, he would not have a cost share, and with his projected earnings from your example, he would have a premium of $25 (unless he has IRWE or MRE). Remember with MAPP, if he stops working and wishes to return to SSI, he would first need to spend down his assets. You can have him contact his local MAPP/HEC Specialist if he is considering this.

The last option I can think of is that he doesn’t take the private health insurance. I have seen this happen with no negative impact. The gentleman you are working with can review the services he needs and compare that to what he receives with Medicaid. It is important to investigate the costs that he may incur with Private Health Insurance before taking it. In some cases, the costs of Private Health Insurance are higher with no additional services.

Niagara Falls

Hi Ben

I am working with a couple who are planning to get married in August. They are both working and are both in 1619(b) status. He also receives an SSDI payment on his own record of $618.00. She is earning around $1450 per month and he is earning around $450 per month.

They want to know what affect marriage will have on their benefits.

I am thinking that they would both be able to stay in 1619(b) status so that wouldn’t change. Is that right? If he stopped working though he would lose 1619(b) but she would still keep it since she is working right? If she stopped working, they would both be eligible for a small SSI payment and Medicaid.

They would have the $3,000 asset limit as opposed to the $2,000. Am I on the right track? Am I missing any important things?

Thanks for your assistance!
Amber

Hi Amber,

This is a timely question as I am visiting one of the most popular wedding and honeymoon destinations. You are on the right track. Both members of an SSI couple are eligible for Medicaid under 1619(b) if they are both working and their total combined income causes ineligibility for payment (POMS SI 02302.010C.2) Of course, both still need to meet the other requirements for 1619(b): being disabled and meeting all the other SSI eligibility factors, needing Medicaid to work, and having gross earned income below the yearly threshold amount.

If he stopped working and she kept working at the same level, she would be eligible for 1619(b) but he would not; a non-working spouse loses Medicaid when the earned income of his or her SSI spouse causes ineligibility for payment. If she stopped working and he continued at his current level, they both would be eligible for a federal payment, the state supplement, and Medicaid.

You should remind them that as an eligible couple their Federal Benefit Rate (FBR) will be $1,011 per month rather than the FBR of $674 for each as individuals; and that for a couple the $20 general and $65 earned income exclusions are applied only once to their combined income.

As you stated, their resource limit will be the couple’s $3000. Note that at marriage their resources will be combined, and that the resource exclusions (one home, one auto, etc.) apply to their combined resources.

Another possibility is that if his SSDI payment is a Disability Insurance Benefit (DIB), she could be potentially entitled to wife’s benefits at age 62 or with a child of her husband’s in her care.

I hope this answers their questions, and congratulate them for me on their betrothal.

Ben

Beijing, China

Dear Ben,

Recently I found a MCO member, who was disenrolled due to being over asset limits for Medicaid. He is working so wouldn’t he be eligible for Family Care using MAPP with a $15,000 asset limit?

Thanks, Maribeth

Here’s my response:

Hi Maribeth:

Thank you for your question. This question comes up frequently. You are correct. Someone who is receiving Family Care benefits can have higher assets if also enrolled in MAPP. In the situation that you described, if a person’s assets are higher than $2,000 and they meet all the other criteria for MAPP: at least age 18, have adjusted income below 250% of the FPL for their group size, have assets below $15,000 and pay their premiums, then they are eligible for Long Term Care Services in Group A. Their eligibility will continue as long as they meet the requirements set forth for the MAPP program.

Source: DHS 10.34(2)

(2) INDIVIDUALS ELIGIBLE FOR MEDICAL ASSISTANCE. A person who is eligible for medical assistance under ch. 49, Stats., and chs. DHS 101 to 108 is financially eligible for the family care benefit. Cost sharing requirements for the family care benefit for a medical assistance-eligible person are those that apply under ch. 49, Stats., and chs. DHS 101 to 108.

Beijing, China at Tiananmen Square

Visiting Tiananmen Square in Beijing, China where they recently marked the 20th anniversary of the military crackdown on student protesters who gathered demanding democracy. Tiananmen Square is the world’s largest public square, and the very heart of modern China. Oddly, we lunched at a McDonald’s nearby which sported a “famous western people” theme – including images of Jim Morrison and Sean Connery. Not exactly what I expected. Speaking of students…here’s a question I recently received:

Hi Ben:

I have a follow-up question to the presentation John Benbow did at the last WDBN meeting. If a person is using a Student Earned Income Exclusion, should they avoid using the telephone reporting system?

Thanks!
Stephanie

Here’s my response

Stephanie,

Social Security’s SSI Automated Telephone Wage Reporting system (SSITWR) does have certain technical limitations, but a recipient having the Student Earned Income Exclusion (SEIE) work incentive can still use the new telephone system.

On the other hand, if a recipient has Impairment Related Work Expenses (IRWE) or a Plan to Achieve Self Support (PASS) work incentives reporting via phone is an exclusion. Someone with multiple employers in a month is also an exclusion.

For clarification or more details, contact your local Social Security office.

Ben

Appalachian Trail

Hi Ben!

I had a question recently about State-Only 1619(b) and assets. In getting the answer I was told State-Only 1619(b) works “just like federal 1619(b)” yet I am unclear exactly how that works as well. So, my question is this: If a person is receiving Medicaid under 1619(b) and goes over $2,000 in assets one month but then is back under $2,000 three months later can that person go back onto 1619(b)?

Thanks for all your help, Ben! Enjoy whatever destination you find yourself in next! Terri

Terri,

The short answer to your question is: yes, the person in the situation you described would regain 1619(b) status.

The reason has to do with the distinction between “suspension” of SSI and “stop payment” of SSI.

Suspension occurs when a person becomes ineligible for SSI; for example, having excess resources at the beginning of a calendar month. Generally an SSI recipient has twelve (12) consecutive months after the effective date of suspension to be reinstated (without a new application) if eligible again.

More from the Appalachian Trail!

Stop payment status is an interruption in SSI payments and not the loss of eligibility; 1619(b), not receiving payments due to work earnings, is a stop pay situation so eligibility continues. Cash payments may be reinstated on a stop pay record regardless of how long the recipient has been in non-pay.

If a recipient becomes ineligible during a stop pay period (such as in your case), the payments are suspended and the principle stated above applies: the recipient has 12 consecutive months to be reinstated to pay status or stop pay status (1619b) if eligible again. Of course, to regain 1619(b) eligibility, the person would also need to meet the other 1619(b) requirements. (POMS SI02301.201)

To put it another way, an SSI recipient who does not meet a nondisability requirement in a month (other than excess income due to work) goes into suspense status and stays there until the first month within the next 12 in which all requirements are met for 1619(b) or regular payments. (POMS SI 02302.010E.1)

I’m responding to you from Max Patch (near Hot Springs, NC); I am hiking on the Appalachian Trail where the mountains are high and smoky. I was playing a little mandolin (see Mom I do practice!) and these two fellow hikers stopped to listen for a while!

Ben