A sunset ride on the Erg Chebbi Dunes, in the Sahara, Morocco.

Hi Everyone:

It’s been difficult to stay in touch lately and I hope you are all doing well. Here’s a recent pic from my travels from the Erg Chebbi Dunes, in the Sahara, Morocco. It was a beautiful sunset but I don’t mind saying I was a little afraid of this camel who’s name was Fred – odd but there you have it! Here’s a question I received recently:

Dear Ben Spec,

I recently had a change to my benefits, and I am concerned about my Medicaid. I was getting SSI and a DAC payment concurrently. When my father passed away, my payment of $650 increased to $975. I am working and getting paid about $150 each month.

I was told that I would lose my Medicaid so I should apply at the county economic support office. I did this, but I was not put into a Special Status Medicaid Category as I had assumed I would. The office told me it has something to do with my shelter costs. My mother no longer makes me pay rent because I stopped receiving SSI. I was under the impression that paying shelter costs wouldn’t affect my Medicaid eligibility because it is no longer tied to SSI. Can you please explain to me why I am not eligible for EBD Medicaid with the DAC Special Status Disregard?

I have been enrolled in MAPP, and it’s free. This is great and I don’t mean to complain, but I am still confused about not being placed into the DAC Special Status Medicaid category.

Yours truly,
Sara of Melrose, WI

Dear Sara,

I am so glad you contacted me with this question. The Special Status Medicaid programs can be a bit trickier than they appear. Many people believe that someone is automatically eligible for Special Status DAC Medicaid if disregarding the DAC payment makes the person eligible for SSI. There is a little more to it.

First, an individual must have lost eligibility for SSI because of a DAC payment. The increase in your DAC payment caused you to lose eligibility for SSI, so you do meet this eligibility factor.

The second factor in eligibility is your countable income. Your DAC payment increase is disregarded because you were once getting concurrent benefits of SSDI and SSI at the same time. The disregard is applied to your full SSDI payment. After that, your countable income can be found.

Finally, your countable income is compared to your Personal Income Limit and/or the Med Needy Income Limit. If your countable income is below either of these limits, you are going to be eligible for this type of Medicaid. You will also be automatically eligible for the Medicare Savings Program, QMB.

Taking a glance at the information you sent, it looks like you do not have any shelter costs. This may be causing your Personal Income Limit to be lower than your countable income. Your countable income is definitely higher than the Med Needy Income Limit, so you wouldn’t be eligible through the use of that test. Again, from the information you sent, it looks like MAPP is your best option at this time.

If you paid toward shelter costs, there is a chance that you would be eligible for the Special Status DAC Medicaid. You can contact your local Economic Office or benefits specialist to find out more information.

Off to new adventures!
Ben

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