Using SSI Work Incentives
Nuts & Bolts
Overview
This tool describes work incentives used by the Supplemental Security Income (SSI). These incentives create an economic safety net for SSI beneficiaries on a path to work and financial independence.
Reviewing How Income Affects SSI Payments
Tool 3 describes how SSI payment rates are calculated by subtracting a person’s Countable Income from their state’s SSI Base Rate. As a review, consider the example of Carolina. Carolina is 23 years old and receives $440 in Social Security disability benefits. She has no other income. Here is how Carolina’s monthly SSI payment is calculated:
Explanation |
Calculation |
---|---|
Unearned Income (Social Security) |
$440 |
Subtract the $20 General Income Exclusion |
$440 – $20 =$420 |
Carolina’s Countable Unearned Income |
$420 |
Subtract Carolina’s Countable Unearned Income from the SSI Federal Benefit Rate (2023) (no State Supplement) |
$914 – $420 = $494 |
Carolina’s SSI payment |
$494 |
Generally, the income received in a month is used to determine the SSI payment 2 months later (i.e., if Carolina received this income in June, it would affect her SSI payment in August).
Since Carolina receives at least $1 of SSI, she will qualify for automatic Medicaid in most states. For information about how earned income can affect Medicaid, see Tool 6.
Earned Income Disregards: $20, $65, and 50 Percent
All SSI recipients who have earned income may use three disregards (also called exclusions). These disregards are used to reduce the amount of Countable Earned Income:
- If the recipient has no unearned income, the $20 General Income Exclusion is applied to earned income.
- The Earned Income Exclusion calls for $65 of earned income to be subtracted.
- And, 50 percent of the remaining earned income is excluded.
The result is Countable Earned Income. Countable Earned Income, along with any Countable Unearned Income, is subtracted from the SSI Base Rate to determine the SSI payment.
Example of Earned Income Disregards: Lisa
Consider Lisa, who was previously unemployed and receiving monthly SSI payments. Lisa begins a part-time job earning $885 gross per month. This is how Lisa's new SSI payment will be calculated:
Explanation |
Calculation |
---|---|
Lisa’s Gross Earned Income |
$885 |
Subtract the $20 General Income Exclusion |
$885 – $20 = $865 |
Subtract the $65 Earned Income Exclusion |
$865 – $65 =$800 |
Divide by 2 to find the Countable Earned Income |
$800/2 = $400 |
Subtract the Countable Earned Income from the SSI Federal Benefit Rate (2023) (no State Supplement) |
$914 – $400 = $514 |
Lisa’s SSI payment |
$514 |
Lisa’s net monthly gain from working is $485 (the amount of the earned income exclusions) less any tax withholding. In the 41 states where Medicaid is automatic for SSI beneficiaries, Lisa’s Medicaid will continue. In the remaining nine states, her Medicaid eligibility will be determined separately. (For more about Medicaid, see Tool 6.)
When a person who gets SSI begins earning wages, their net gain will be more than half their gross wages.
Calculating SSI Payments on the Web
The online, interactive SSI Calculation Worksheet can help you calculate Countable Unearned Income and Countable Earned Income.
It can also calculate an expected monthly SSI payment.
About the Student Earned Income Exclusion (SEIE)
The powerful Student Earned Income Exclusion (SEIE) is for students who are under age 22 and “regularly attending school”—see Tool 5 for a definition of regularly attending school. It applies to the first $2,220 of gross earnings per month, up to $8,950 per year in 2023.
Let’s go back to Lisa, from the earlier example. Assume she is age 17 and attending high school (or college). She makes $585 gross monthly by working after school and on weekends. The SSI program will exclude the entire $585 each month for a full 12 months from her Countable Income, as her total annual earnings of $7,020 remain below the annual $8,950 limit. In this example, Lisa’s SSI payment will remain at $914 each month. Even though Lisa’s paycheck is $300 less in this example, the SEIE causes her net gain to be more.
The Student Earned Income Exclusion rewards youth who stay in school and start working. In most cases, the student keeps the full SSI payment and full paycheck.
For details about the Student Earned Income Exclusion, see Tool 5.
About Impairment-Related Work Expenses (IRWEs)
An Impairment-Related Work Expense (IRWE) is the reasonable cost of an item or service that, because of a disability or medical condition, a person needs and uses in order to work. Examples include home health aide services, medical or prosthetic devices, drugs, medical services, residential modifications, and special transportation services.
To be deductible as an IRWE, the expense must meet a three-part test:
- The expense must be paid by the worker and not paid or reimbursed by another source.
- The expense must relate to the individual’s disability or a condition for which they are receiving treatment.
- It must be true that without the item or service, the person would be unable to work.
Example of IRWEs: Martin
Martin earns $885 gross per month at a part-time job. He has cerebral palsy, uses a cane for mobility, and cannot walk well enough to reach a nearby bus stop to take public transportation. He pays a local agency $135 per month to take him to work and back several times per month. Without this transportation he could not work.
This will meet SSI’s criteria as an IRWE, and his SSI payment is calculated as follows:
Explanation |
Calculation |
---|---|
Martin’s Gross Earned Income |
$885 |
Subtract the $20 General Income Exclusion |
$885 – $20 = $865 |
Subtract the $65 Earned Income Exclusion |
$865 – $65 =$800 |
Subtract the IRWE deduction from the $800 running total |
$800 – $135 = $665 |
Divide by 2 to compute the Countable Earned Income |
$665/2 = $332.50 |
Subtract the Countable Earned Income from the SSI Federal Benefit Rate (2023) |
$914 – $332.50 = $581.50 |
Martin’s SSI payment |
$581.50 |
Note that Martin is earning the same amount per month as Lisa in the first example above. With the $135 IRWE deduction, Martin’s SSI payment is $67.50 higher than Lisa’s—half the value of the IRWE.
About Blind Work Expenses (BWEs)
The Blind Work Expense (BWE) is for individuals who meet Social Security’s definition of “blind.” These individuals can take many income exclusions that are not allowed for any other disability. This is because although a BWE is a cost related to earning income, it does not have to be related to blindness.
Common BWEs include:
- Federal, state, and local income taxes
- Social Security and Medicare taxes (FICA)
- Meals consumed during work hours
- Guide dog expenses (including food, licenses, and veterinary services)
- Medical devices, medical supplies, and therapy
- Training to use a disability-related item (e.g., cane travel) or an item attributable to work (e.g., computer training)
Example of Blind Work Expenses: Veda
Veda, who is statutorily blind, works and earns $18,420 per year ($1,535 per month). She has the following expenses that meet SSI criteria as BWEs:
Item or Service |
Cost |
---|---|
Income taxes (federal, state, local) |
$57 |
Social Security and Medicare taxes (FICA) |
$117 |
Transportation |
$95 |
Guide dog |
$45 |
Lunches |
$132 |
Readers |
$105* |
Total of Veda’s BWEs |
$551 |
*If Veda’s employer pays for readers as a reasonable accommodation under the Americans with Disabilities Act, this cost will not qualify as a BWE.
Here is how Veda’s monthly SSI payment is calculated:
Explanation |
Calculation |
---|---|
Veda’s Gross Earned Income |
$1,535 |
Subtract the $20 General Income Exclusion |
$1,535 – $20 = $1,515 |
Subtract the $65 Earned Income Exclusion |
$1,515 – $65 =$1,450 |
Divide by 2 to compute the additional 50% exclusion |
$1,450/2 = $725 |
Subtract Veda’s BWEs from the running total. The Countable Earned Income is $174. |
$725 – $551 = $174 |
Subtract the Countable Earned Income from the SSI Federal Benefit Rate (2023) |
$914 – $174 = $740 |
Veda’s SSI payment |
$740 |
By using BWEs, Veda’s SSI payment increases by $551 (i.e., by the full amount of the BWEs).