Social Security disability work incentives

Q: I receive Social Security disability and want to return to work. What will this do to my benefits?

A: For specific information about your own benefits, contact Social Security and speak with a representative.

In general, special rules called work incentives make it possible for people with disabilities receiving Social Security or Supplemental Security Income (SSI) to work and still receive monthly payments and Medicare or Medicaid.

Remember that Social Security, including disability (SSDI), and SSI are different programs, with different work incentives for returning to work.

Always report a return to work. This is very important. Also report related changes including stopping the work.

For Social Security disability, a main work incentive is the trial work period (TWP).

The trial work period allows you to test your ability to work for at least 9 months. During a trial work period, you receive full disability benefit regardless of how much you earn as long as your work activity has been reported and you continue to have a disabling impairment. The 9 months does not need to be consecutive and your trial work period will last until you accumulate 9 months within a rolling 60-month period. Certain other rules apply. In 2015, gross monthly earnings of $780 or more will usually count as a month toward the TWP.

After a trail work period is completed, your work activity will be reviewed to see if you earnings are considered substantial gainful activity (SGA) . Exceptions apply but, in general, in 2015 monthly gross earnings of at least $1,090 are considered SGA for a person who is not blind and $1,820 for a person who is blind. Ongoing ability to work at a substantial gainful activity level can result in benefits being stopped.

If this occurs, you have an extended period of disability (EPE).

This means that if your disability benefits stop after successfully completing the trial work period and ongoing work at the substantial gainful activity (SGA) level, your Social Security disability benefits can be automatically reinstated without a new application for any months in which your earnings drop below the SGA level.

This reinstatement period lasts for 36 consecutive months following the end of the trial work period. You must continue to have a disabling medical impairment in addition to having earnings below the SGA level for that month.

Continuation of Medicare.

Of major importance, even if cash benefits end, for most beneficiaries existing Medicare coverage continues through the EPE and beyond.

Most persons with disabilities who work will continue to receive at least 93 consecutive months of Hospital Insurance (Part A); Supplemental Medical Insurance (Part B), if enrolled; and Prescription Drug coverage (Part D), if enrolled, after the 9-month Trial Work Period (TWP).

You do not pay a premium for Part A. Although cash benefits may cease due to work, you have the assurance of continued health insurance. (93 months is 7 years and 9 months.)

This is not a complete list of work incentives for Social Security disability insurance (SSDI). There are different work incentives for Supplemental Security Income (SSI). More general information is here.

Again, for details about your own benefits, speak to a Social Security representative.

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Changing a child’s representative payee

Q: My ex-wife receives Social Security disability benefits for herself plus benefits for our daughter, for whom she has custody. Within the next few months, I will have custody and our daughter will live with me full-time.

Will Social Security start sending benefits for her to me or will they continue going to my ex-wife? Will the amount change when she is living with me?

A: A person receiving benefits on behalf of someone else is their representative payee. As a general guideline, the parent with legal custody is the preferred payee compared to a parent without custody but exceptions exist based on individual situations.

Changing the representative payee for your daughter, or anyone, is not automatic. You will need to request a change by completing an application to be the new payee for your daughter. This is not an online application so contact your Social Security office to do this. Expect to prove that you have custody and that your daughter is living with you.

A worker’s, in this case your ex-wife, own Social Security amount is based on his or her earnings history over many years. Benefits to a child or other family member do not change how much the worker receives for himself or herself.

Assuming you become your daughter’s representative payee, with her benefits sent in your care, the individual Social Security benefit of your ex-wife will not change although she would no longer receive the amount for your daughter.

The Social Security benefit amount for a child is based on the earnings record of the worker and will be the same wherever the child is living.

Representative payees are responsible for using Social Security benefits on behalf of the eligible person. As representative payee, you will have to report how funds for your daughter are used. Other responsibilities include reporting if your daughter is no longer living with you. Details are in the Guide for Representative Payees.

Retirement amount not limited by marriage

Q: Is there a total amount of Social Security benefits payable to a couple?

A: No, although this is a popular myth.

There is no marriage penalty, limit or other reduction when each member of a couple is eligible for their own Social Security retirement. Amounts to each member of the couple are based on their personal work records and ages when starting retirement. Amounts received by husband or wife do not affect what the other receives. Each independently starts Social Security when best for them.

Go to the SSA Retirement Planner at www.socialsecurity.gov/planners/retire/ to estimate your personal benefit amount at different retirement ages.

Note that the above refers to when each member of the couple receives their own, individual, retirement. There can be a financial benefit to a married couple if both receive Social Security through one person’s work record instead of separately.

For example, this could be if one member of a couple had low career earnings and was eligible for spousal benefits as husband or wife instead of their own personal retirement. In this case, the amount of spousal benefits is limited because they are based on the earnings of the person with the higher career earnings and not their own work record.

More about spousal and other family benefits is at the SSA Retirement Planner in the “Already near retirement age” section or go directly here.

Earnings test not just for retirement benefits

Q: Do the Social Security earnings limits apply just to retirement? Do they apply if receiving widow’s benefits?

A: Yes, earnings limits apply for survivor benefits. The annual earnings test applies individually to everyone younger than their full retirement age (FRA) unless that person receives benefits due to their own disability. People of all ages receive Social Security and the earnings test applies to many of them.

For examples, if both members of a couple receive Social Security retirement, the earnings test applies separately to each until full retirement age. The earnings test also applies to a child, not disabled, receiving benefits through a parents record whether the parent is retired, disabled or deceased.

The earnings test does not apply to people receiving benefits because of their own disability but it does apply to non-disabled family members, including spouse and children, receiving benefits through the disabled person’s record.

Many young people receive Social Security benefits. Earnings test amounts are the same whether SSA retirement, survivors or disability is involved. Different amounts can be earned during the calendar year before benefits are reduced based on if the person is under full retirement age (FRA) the entire year, reaches FRA during the year, or is already FRA. The earnings test ends when you reach FRA.

Based on year of birth, full retirement age ranges from 65 to 67. Retirement FRA is 66 for people born in 1943 – 1954. Note that FRA’s for survivors benefits are different from retirement FRA’s.

Earnings test details are here.

Separate earning rules and work incentives apply if you receive Social Security due to your own disability. Contact Social Security before returning to work. General information is here.

When are you age 62 for Social Security?

Q: I was told that if you retire at 62, you have to be 62 plus one month of age before you are eligible to collect Social Security retirement. Is this true?

A: This is along the correct path but wanders a bit from full accuracy. A more accurate way of stating this is that a person must be at least age 62 through the entire month to receive benefits for that month.

A person reaching age 62 during a month is not usually at least age 62 for the entire month so benefits can first be received starting for the next month. This applies only in the actual month a person reaches age 62. For all following months they are at least age 62 all month.

However, based on actual day of birth in a month, Social Security retirement might be payable for the month a person reaches age 62. A person born on the first of the month is considered age 62 for that entire month and could start benefits effective with the month they reach age 62.

For example, a person born on February 20 is not age 62 for the full month until March. A person born on February 1 is considered age 62 for the entire month and can receive a benefit for February.

Why is this? Legal precedent holds that people attain their age on the day before their birthday. Therefore, a person born on the first of a month is considered age 62 for the entire month.

On a related topic, Social Security benefits for a month are paid in the following month. For example, payment for March is received in April.

The Social Security Retirement Planner, www.socialsecurity.gov/retire2/, has lots of information and calculators to help you plan your benefits. Today’s topic is on the “Find Your Retirement Age” page.

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Should I file for early retirement to get benefits for my child?

Q: I am near age 62 and have a daughter, age 16. If I start Social Security retirement, can she receive benefits? Is doing this a good idea?

A: If you start Social Security retirement, at age 16 your daughter should be eligible to receive benefits through your record. Information about benefits to children is at www.socialsecurity.gov/pubs/EN-05-10085.pdf.

Deciding whether starting your retirement benefits at age 62 in order for her to be eligible is completely up to you. Are you ready to retire? Does this fit your overall retirement planning?

On the plus side, payment to a child or any other family member does not reduce your own amount. Your amount, based on earnings history and age when starting benefits, is the same whether or not other family members receive through your record. In this situation, your retirement plus a separate benefit for her would be payable. On the negative, starting your Social Security retirement at age 62 or anytime younger than full retirement age (FRA), for you age 66, gives you a permanently reduced benefit amount.

Estimate your own retirement amounts at the Retirement Planner section (www.socialsecurity.gov/retire2/) of the Social Security website. For the following example, assume that your full retirement age amount is $2,000 per month. Starting your benefits when first eligible at 62 reduces this to 75 percent giving you a monthly amount of $1,500. Future cost-of-living increases will increase this but the 25 percent reduction is permanent.

As the only eligible child, your daughter’s benefit amount is one-half of your full retirement amount, not one-half of your actual benefit amount, so she is eligible for $1,000 per month until age 18, perhaps longer if she is still in high school at age 18.

Ideally, you will be enjoying your retirement for many years. Based on your long-term financial plans, is it wise to choose a permanent twenty-five percent reduction in your SSA retirement in order to have your daughter receive benefits for a year or so? If considered as part of your individual retirement financial planning, either starting now or waiting could be good. The choice is yours.

 

Why is school information asked on a disability application?

Q: The online Social Security disability asked for my school background. Why does this matter if my doctor says I am disabled? 

A: There are two basic areas considered when someone applies for Social Security disability. First, they must have worked long enough and recently enough to be insured. Second, they must meet the Social Security definition of disability. Asking about school and work experience helps determine if a person meets the disability definition. 

The definition of disability for Social Security is different than other programs. No benefits are payable for partial or short-term disability. 

The disability definition emphasizes ability to work. In addition to the work requirement, to be found disabled under Social Security rules you cannot do the work that you did before, you cannot adjust to other work because of your medical conditions, and your disability has lasted or is expected to last for at least one year or expected to result in death. Age, work experience and education are considered in the decision.  

You are asked about your work experience and education to help determine your ability to work. Making this decision follows a national step-by-step process. Opinions of your doctor and other medical providers are important but generally only one part of making a decision.  

Broadly speaking, two people with the same medical condition might receive different decisions based on their age, work experience or educational backgrounds. For example, compare someone age 50 having a high school diploma and work experience involving heavy lifting to someone age 30 with a college degree and a desk job. The ability of each to do work previously done, or to adjust to new work, could be very different and result in different decisions for the same medical condition.

This is a broad example. There are injuries and illnesses that are routinely approved based on medical diagnosis alone. 

Learn more or file an application at the Disability section of the Social Security website, www.socialsecurity.gov.  From there, go to the Disability Planner section. 

In the Disability Planner, learn how you qualify for Social Security disability benefits including work requirements, disability definitions and the steps followed in making the decision.   

Completely different from Social Security retirement, survivors and disability programs, Social Security administers the need-based Supplemental Security Income (SSI) program, also having disability benefits.  

You do not need to start SSA retirement when you retire

Q: Do you get full Social Security benefits if you retire early but do not actually start SSA retirement benefits for several years until reaching full retirement age (FRA)? I was born in 1965 so my retirement FRA will be 67, but I have no intention of working that long and plan on not needing those Social Security benefits right away.

A: The amount of your Social Security retirement is partly based on when you start those benefits, not when you stop working. You can retire without starting Social Security. Each month of delay in the start of Social Security retirement, up to age 70, provides a higher amount.  

There is no one best time to start Social Security retirement. Decide when to do so as part of your overall retirement planning. The Social Security Retirement Planner section has lots of information and calculators to help you. 

Much can change in both your life and Social Security legislation by the time you are age 67. Keep informed of future program changes.

Special payments after retirement

Q: I retired in 2014 but expect income in 2015 from work done before I retired. Will this lower my 2015 Social Security benefits?

A: For people younger than full retirement age, the Social Security annual earnings test, also called the retirement test, concerns how much can be earned from wages or self-employment in a calendar year without reducing benefits during that year.

Termed a special payment, money received for work done before retirement is not normally included for the earnings test. Income received after retirement is a special payment if the last thing done to earn it was completed before stopping work. Examples could include accumulated vacation or sick pay, bonuses and sales commissions. If self-employed, net income received after the first year you retire is a special payment if you performed the services to earn the payment before becoming entitled to receive Social Security. 

For example, say a person retired at the end of 2014 and started receiving Social Security retirement as of January 2015. In January, the person receives payment from the former employer for unused vacation time. Since this vacation pay was earned before retirement, it is considered a special payment and not counted towards the 2015 annual earnings limit. 

Two local occupations often receiving special payments for SSA retirement purposes are insurance salespeople and farmers. Insurance commissions for policies sold before retirement but received after the year of retirement are usually special payments. If a farmer fully harvested and stored a crop before or in the month of entitlement to SSA benefits, and then carried it over for sale in the next year, the income will not affect benefits for the year of sale. Keep documentation related to this. 

As always, this is general information.  To learn more, read the SSA publication, Special Payments After Retirement, at www.socialsecurity.gov/pubs/10063.html or contact Social Security.  Annual earnings test information is at www.socialsecurity.gov/retire2/whileworking.htm.

Benefits from first spouse if no longer married to second

Q: I am married for the second time and receive my own Social Security retirement. My first husband and I were married for 18 years and he earned lots more money than I did. If I was single again, could I draw Social Security from my first husband? 

A: The answer to this question could go in several directions depending on the amount of the person’s own retirement, other benefits received, if the marriages ended by death or divorce, and other items. Without more information, this question cannot be answered.  

The Social Security website, www.socialsecurity.gov, is great for general information, retirement planning and online services, including online applications, but when you have a detailed question such as this one, speak to a SSA representative to discuss your options. Having the Social Security number of all parties involved would be useful. Call the SSA national toll-free number at 1-800-772-1213 (TTY 1-800-325-0778) (7:00am – 7:00pm) or your local office 

Based on age, a widow or widower can start receiving Social Security survivors benefits as early as age 60. Remarriage before age 60 prevents payment. Remarriage after age 60 (for age based benefits) will not affect eligibility to survivors benefits. If twice widowed, benefits might be payable through the work record of either deceased spouse or the person’s own retirement work record. 

Survivor benefits might also be payable to the divorced spouse of a deceased worker if the marriage had lasted 10 years or more. 

More about Social Security survivors benefits is here. 

The original question did not specify that the first husband had died. If the couple had divorced, benefits to her through his work record might be payable since they were married at least 10 years, if she was not married. Information about benefits for divorced spouses is here. 

If the second marriage continues, there is the potential for spousal benefits.