Considerations for Youth
Case Studies
Case Study 1: Can Miguel Afford to Finish High School?
Miguel, age 18, has a mental health disability and lives with his parents. He receives SSI of $943 per month and has no other income. It is late June and most of Miguel’s friends have graduated from high school, but he needs at least one more year of school to get a high school diploma. Miguel is considering the impact of a part-time job at a local pizzeria, paying $935 gross per month, if he drops out of school or stays in school.
Think about it. What needs to happen?
Miguel needs to understand how his SSI benefit will change, depending on whether he stays in school.
If Miguel drops out of school, he is entitled to the usual earned income exclusions. The SSI program excludes the first $20 general income exclusion as there is no unearned income and the $65 earned income exclusion, plus an additional 50 percent of his wages is excluded. What remains is Countable Earned Income. Countable Earned Income is subtracted from the SSI Base Rate. The amount left over is Miguel’s new SSI cash payment of $518.
|
Explanation |
Calculation |
|---|---|
|
Miguel’s Gross Earned Income |
$935 |
|
Subtract the $20 General Income Exclusion |
$935 – $20 = $915 |
|
Subtract the $65 Earned Income Exclusion |
$915 – $65=$850 |
|
Divide by 2 to compute the additional 50% exclusion and learn the Countable Earned Income |
$850/2 = $425 |
|
Subtract the Countable Earned Income from the SSI Base Rate to compute the SSI payment |
$943 – $425 = $518 |
|
Miguel’s Total Income |
$935 (wages) + $518 (SSI) = $1,453 |
Under the usual earned income work incentives, Miguel’s combined income of $1,453—$518 (SSI) + $935 (wages)—is $510 more than before he started working (i.e., $510 of his wages is not counted). This has created an incentive to work, but if he stays in school, he will make out even better.
If Miguel stays in school and benefits from the SEIE, his entire monthly paycheck will be excluded by the SSI program. This means he will keep his full SSI payment of $943 and his full paycheck of $935 (less any taxes). Miguel’s combined income of $1,878—$943 (SSI) + $935 (wages)—is $935 more than before he started working.
|
Explanation |
Calculation |
|---|---|
|
Miguel’s Gross Earned Income |
$935 |
|
Subtract the SEIE |
$935 – $935 = 0 |
|
Subtract the Countable Earned Income from the SSI Base Rate to compute the SSI payment |
$943 – 0 = $943 |
|
Miguel’s Total Income |
$943 SSI + $935 wages = $1,878 |
The takeaway
If Miguel stays in school, he can use the SEIE and work while keeping his full SSI payment. His total monthly income would be $1,878 per month ($943 SSI + $935 wages).
If Miguel drops out of school, then the SSI program will count $425 of his wages after applying the general and earned income exclusions. Miguel’s SSI payment will be reduced from $943 per month to $518 per month. His total monthly income will be $1,453 ($518 SSI + $935 wages).
The SEIE provides an incentive for Miguel to stay in school.
Case Study 2: Should Esther Take Auto-Body Repair Training?
Esther, age 19, recently left high school without a regular diploma. She has a moderate hearing loss and a learning disability. While in high school she did an unpaid internship at an auto collision shop. After she left school, in July, the collision shop hired Esther to work part-time doing unskilled work (prep work on vehicles, general clean up, etc.). She works 18–20 hours per week and earns an average of $885 gross per month.
The usual earned income exclusions put Esther’s SSI Countable Earned Income at $400 per month. This reduces her SSI payment to $543.
|
Explanation |
Calculation |
|---|---|
|
Esther’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 compute the additional 50% exclusion and learn the Countable Earned Income |
$800/2 = $400 |
|
Subtract the Countable Earned Income from the SSI Base Rate (2024) to compute the SSI payment |
$943 – $400 = $543 |
|
Esther’s Total Income |
$885 (wages) + $543 (SSI) = $1,428 |
Esther is considering enrolling in an auto-body collision repair training program. She likes the work she is doing but is worried about losing her SSI and Medicaid.
Think about it. What needs to happen?
Esther enrolls in auto-body collision training program: Her State VR program agrees to fund a 10-month training program for her to attain a certification in auto-body collision. The program starts September 1st and involves 16 hours per week of combined in-class work and shop practice. Her collision shop employer will serve as her required field placement during the latter stages of the program. If Esther satisfactorily completes the program, starting pay is expected to be in the $18–$22 per hour range, with room for future pay increases.
Esther benefits from SEIE during the training program: This program meets the “regularly attending school” requirement, as it is at least 15 hours per week (with shop practice) and is to prepare her for employment. She continues working at the collision shop, 18–20 hours per week and with an increase in her rate of pay, earns an average of $1,000 per month. During the time she is both working and attending the program, the SEIE will result in all her monthly pay being excluded. Her SSI payment will go back up to $943 per month during the 10-month period.
|
Explanation |
Calculation |
|---|---|
|
Esther’s Gross Earned Income |
$1,000 |
|
Subtract the SEIE |
$1,000 – $1,000 = 0 |
|
Subtract the Countable Earned Income from the SSI Base Rate to compute the SSI payment |
$943 – 0 = $943 |
|
Esther’s s Total Income |
$943 (SSI) + $1,000 (wages) = $1,943 |
Using the SEIE work incentive, Esther gets an extra $400 per month in SSI or about $4,000 more during the September through June program. This creates a tremendous incentive for her to attend this program and move in the direction of self-support.
The SEIE will apply to this vocational training program. All her wages during the 10-month training period will be excluded and her SSI payment will remain at $943 per month.
The takeaway
Esther is better off financially when she returns to school because she can use the SEIE to get her full SSI payment while working. Also, she will keep her Medicaid eligibility.