SOCIAL SECURITY AS A SOURCE OF ASSISTIVE TECHNOLOGY FUNDING By Steve Mendelsohn, Esq. and Susan Goodman, Esq. September, 1995 Many people with disabilities receive benefits through programs operating under the Social Security Act. Older, retired workers and people who are unable to work because of illness or injury, receive payments through the Old Age Survivors Disability Insurance (OASDI). The disability insurance through this program is known as Social Security Disability Insurance (SSDI). Another important program for people with disabilities is the Supplementary Security Income (SSI) program. This program currently covers children and adults with disabilities who have become eligible because of "their inability to engage in substantial gainful activity (SGA)." SSDI and SSI provide important benefits, including health insurance (e.g., Medicare for SSDI, Medicaid with SSI, usually). However, many recipients feel frustrated by what are considered work disincentives in the rules of these programs. People fear that - if they work or try to work - they will lose benefits. And they worry that, if they lose health insurance coverage, they probably will get no private insurance to take its place. People who receive SSDI or SSI benefits need to be informed about "work incentives" in the law. Work incentives are sections in the law that allow you to earn income and keep benefits for expenses related to employment. If used well, work incentives give you the opportunity to use benefits to get necessary training and other supports that you need to get established in work. They also ensure that benefit loss will not occur until you have worked for a specified period. For this discussion, remembering that assistive technology devices are a major expense covered under work incentives, is important. To use work incentives as a source of funds for assistive technology devices or services, you need to understand: (1) the structure of the two programs; (2) the range of work incentive sections in the law; and (3) some administrative complexities and procedures involved in the Social Security Administration's handling of the process. An individual, or someone on their behalf, needs to be able to do planning and record-keeping. None of this is difficult or mysterious. PROGRAM STRUCTURE People often confuse SSDI and SSI, but they are really very different. The programs serve different people, based on differing eligibility criteria, and with different procedures for their operation. SOCIAL SECURITY DISABILITY INSURANCE (SSDI) SSDI is an insurance program. Workers who have paid Social Security taxes (including self-employment taxes paid by people who are self-employed), are entitled to monthly benefits - before and until they reach the age of 65 - if they cannot work because of a disability. The law is strict, requiring that you be medically unable to work because of an illness or injury that has lasted, or is expected to last, for at least one year, or expected to result in death. This definition of disability is a very different one than would apply under a law like the Americans with Disabilities Act (ADA), where the assumption is that people with disabilities can and should be given the opportunity to work. The fact that SSDI is an insurance - not an "income maintenance" - program, is critical to its understanding. You do not lose SSDI for having income. You could win the lottery or inherit money and still remain eligible for SSDI. You lose SSDI benefits only if the government determines that you no longer have a disability, or if it decides that, although you have a disability, you can work. SUPPLEMENTAL SECURITY INCOME SSI is a strictly "means-tested" program. This means that your income and assets must be below a certain level to receive benefits. Eligibility for SSI is also based the severity of your disability, and its impact on your ability to engage in "Substantial Gainful Activity (SGA)." Substantial gainful activity is earnings from work of $500 per month ($940 per month if you are blind). To receive SSI, your income has to fall below a figure specified by the government (the Federal Benefit Rate), and you may not have more than $2,000 in resources (e.g., a savings account, stocks, bonds, etc.). You may remain eligible for SSI while working; however, for income exceeding $85 per month, you will lose $1 of SSI for every $2 earned. If you give the government back $1 in SSI for every $2 in earnings, it is the same as having 50% tax rate. In addition, the $2 will be taxed (at a low rate of 15% for someone who works long enough to be responsible for income taxes). In addition, there may be Social Security and Medicare tax deducted from the wages (at a rate of 7.65%). The state tax on the income is probably around 2%. This means that you are looking at a tax rate of about 75%. For every dollar that you earn, you keep only a quarter. If you have work-related expenses, such as transportation, clothes, lunches, or child-care, those costs have to be taken into account. Until an individual's income rises to a high level, going to work can be a money-losing proposition, even if work is available. Let's be clear: SSDI is all-or-nothing; if you cannot work, you receive the payments; if you can, they stop. If you are an SSI beneficiary and receive income, your SSI will be reduced by the income you receive, but payment may continue. This is where work incentives come directly into play. WORK INCENTIVES In SSDI, the test of your eligibility is based partly on your medical condition and your ability to work. If you make an average of over $500 a month ($940 if you are blind), you are considered capable of "Substantial Gainful Activity (SGA)." Exceptions now exist that prevent benefits loss, even following an income-based determination that you are capable of SGA. TRIAL WORK PERIOD (TWP) The intent of the TWP is to decide if an individual with disability can engage in SGA. During the trial work period, individuals are making more than $75 per month. Each beneficiary is allowed to work for up to 9 months, and keep their benefits. If, after 9 months it is determined that you can work, your benefits will stop three months later. If you are determined unable to engage in SGA during this 9-month period, there will be no interruption of benefits. However, for each period of disability, the 9 months are totaled. For example, you may have been receiving SSDI benefits for 10 years, working "on and off." Let's say that you have worked nine months total. Therefore, you no longer have an opportunity to use the TWP. It is important, if you are going to use the TWP option, and you have been working once in awhile, that you ask whether the whole nine months are available to you. For example: Hilda is on SSDI because she suffered a serious head injury that left her unable to work. Her injuries included some short- term memory loss, migraine headaches, and partial paralysis of her left arm and leg. She had been working for 10 years prior to the injury. Hilda applied for and is receiving SSDI since her injury. After several years of rehabilitation, Hilda and her physicians feel that she can probably return to work. However, Hilda is afraid that if she takes a job, she will not be successful. She is even more afraid that she will lose her SSDI and Medicare when she starts working. The employer told her that she cannot take part in the company insurance plan because of her pre-existing condition. Fortunately, Hilda learns, through a Social Security claims representative, that she can use SSDI Work Incentives to stabilize herself in a job (work for 9 months without losing her benefits) and keep her Medicare. IMPAIRMENT-RELATED WORK EXPENSES (IRWE) AND BLIND WORK EXPENSES (BWE) Impairment-Related Work Expenses (IRWE) are costs of certain items and services that a person with disabilities needs in order to work, that can be deducted from your earnings as SSA decides whether you are capable of substantial gainful activity. This means that, if you deduct the cost of certain impairment- related items, your SSI benefit will not be remain at a higher level. Similarly, Blind Work Expenses (BWE) is income earned by a person who is blind, used to meet expenses that are needed for that person to work, and is not counted in determining SSI eligibility and the payment amount. When the Social Security Administration calculates your average monthly income for SGA, they are supposed to subtract amounts spent on IRWEs and BWEs. If your gross income averaged $501 a month, you might lose your benefits. If the amount was reduced to $499 after taken IRWEs (or $939 for someone who is receiving benefits as a blind person), you would not lose benefits. The law clearly describes the kinds of expenses that qualify as IRWEs, including equipment that you may need to work. So, if your gross income were $600 a month, but you paid $150 a month for AT devices or other IRWEs, your income for SGA purposes would fall below the $500 threshold. The TWP does not apply to SSI because, in that program, income over the allowed amount will automatically trigger a reduction in benefits. Yet the IRWE and BWE provisions play an important role. As with SSDI, the object is to use IRWEs/BWEs to lower your income and keep benefits. To make this clear, we should note that the technical term is "countable" income. People pay taxes on their "taxable" incomes, not their "gross" incomes (taxable income is what remains after deductions and exemptions have been taken into account). Social Security is interested only in your "countable" income, not the total amount you have earned. That includes what is left after all exclusions, including IRWEs/BWEs, are factored. To say that something qualifies as an IRWE or BWE is to say that it is "excludable income," income that is excluded from countability. PLAN TO ACHIEVE SELF-SUPPORT (PASS) Another very important SSI work incentive is the Plan to Achieve Self-Support (PASS). With a PASS, you are allowed to set aside income and resources for use in achieving self- support. The plan must be fairly detailed, explaining the amounts involved, exactly how they will be used, and what the expected outcome will be. The plan needs to be approved by the Social Security Administration before it goes into effect. This distinguishes it from the other work incentives, where advance approval is not required. With work incentives, you must be able to convince the Social Security Administration that the incentive provisions apply once you have already spent the money, which can be risky. Therefore, a PASS may be a better option. ---------- WHAT TYPES OF ASSISTIVE TECHNOLOGY CAN BE DEDUCTED AS IRWE? This is an approved, adapted excerpt (September ,1995) from a manual entitled Accessing Assistive Technology (First Edition, 1995), written by the California Protection and Advocacy Agency, with funding from the California Assistive Technology Project. Allowable expenses that may be deducted as IRWE include payment for the purchase, installation, maintenance, and repair of an impairment-related item or payment for an impairment-related service that is needed for work. There is no separate deduction for the repair or maintenance of vehicles used for transportation to and from work, since these costs are already included in a separate deduction for mileage. Expenses which are made in the work setting, transportation expenses for travel to and from work, and community residence expenses are all deductible as IRWE. Medicare or Medicaid may provide many of the items that are listed below. Any assistive technology that is obtained through those programs is NOT deductible as IRWE. Assistive technology that is deductible is separated into several categories, as follows: MEDICAL DEVICES Durable medical equipment which can withstand repeated use, are primarily used to serve a medical purpose, and are generally not useful to a person in the absence of an illness or injury. They include wheelchairs, hemodialysis equipment, respirators, intermittent positive pressure breathing machines, pacemakers, inhalators, nebulizers, suction machines, traction equipment, braces (leg, arm, back and neck), and similar items (20 C.F.R. 416.976(c)(2), 404.1576(c)(2)). Prostheses include devices that replace internal body organs or external body parts. They include artificial hips and artificial replacements of arms, legs, or other parts of the body. Payments for prosthetic devices that are used for primarily cosmetic, rather than functional, purposes are usually not deductible. Work-Related Equipment means equipment, other than medical devices and prostheses, that an individual with a disability may need to perform his/her job, or transportation to move from home to work, or to control the disabling condition at home or in the work setting, so as to be able to function in a work activity. Costs for these expenses are deductible only when paid for by the individual, and not by the employer. Examples include one-handed typewriters, typing aids such as page-turning devices, measuring instruments, vision and sensory aids for people who are blind, telecommunications devices for people who are deaf, and special tools which have been specifically designed to accommodate the individual's employment. Training to use the equipment is also deductible. If these expenses are deducted as a business expense by a self- employed individual, they are not deductible as IRWE in determining SGA or SSI countable earned income (20 C.F.R. 416.976(c)(4), 404.1576(c)(4)). Residential modifications for individuals employed outside the home may be deducted as IRWE if they are necessary for the individual to get to work. For example, exterior ramps, railings, or pathways are considered part of the total process of enabling a person to get to and from work. Generally, interior modifications are not deductible, since they are primarily intended to facilitate functioning in the home (20 C.F.R. 416.976(c)(4)(ii), 404.1576(c)(4)(ii)). Residential modifications for individuals who work at home may be deducted to the extent that the modifications pertain specifically to the work space in the home. These may include enlarged doorways into an office or work space, or modifications to the work area to accommodate problems in dexterity. Any tax deductions taken as self-employment expenses are not deductible as IRWE (20 C.F.R. 416.976(c)(4)(ii), 404.1576(c)(4)(ii)). Essential nonmedical appliances and equipment, such as portable room heaters, air conditioners, humidifiers, dehumidifiers, electric air cleaners and posture chairs, which are ordinarily not used for medical purposes, are not deductible as IRWE. However, if an individual can establish an impairment-related and medically verified need for such an item, it may be deductible and may be for use in the home or workplace. To be essential, the item must be of such a nature that the lack of it would result in an immediate adverse impact on the individual's ability to function in a work activity. For example, an air cleaner for someone with a severe respiratory condition may be deductible as IRWE. Items typically used for physical fitness, such as exercise bicycles, are not deductible unless prescribed by the treating physician and necessary to enable the individual to work (20 C.F.R. 416.976(c)(4)(ii), 404.1576(c)(4)(ii)). Routine drugs and medical services are deductible if they are necessary to control the disability and allow an individual to work, if the individual pays for them. It is unclear, however, if drugs and medications can be considered assistive technology for most purposes (20 C.F.R. 416.976(c)(5), 404.1576(c)(5)). Other items and services that may be deductible include eyeglasses (if related to a disabling visual impairment), expendable medical supplies such as bandages, face masks, incontinence pads, etc., and the purchase of and expenses associated with dog guides (20 C.F.R. 416.976(c)(6)(ii), 404.1576(c)(6)(ii)). Vehicle modification costs may be deducted if an individual requires a specially modified vehicle in order to work. The cost of the modification (but not the cost of the vehicle) Is deductible as an IRWE if the individual pays for the modification. Any modifications paid for by the rehabilitation funds (e.g., Vocational Rehabilitation) may not be deducted. Individuals may also deduct the operating costs of a modified vehicle which are directly related to work. For persons who wish to secure the full document, Accessing Assistive Technology, contact: Protection and Advocacy, Inc., 100 Howe Avenue, Suite 185N, Sacramento, California 95825 Phone: 800-776-5746 (V/TTY) To secure general information on the project, contact: Assistive Technology Funding & Systems Change Project, 1660 L Street, NW, Suite 700, Washington, DC 20036 Tel: (202) 776-0406 Fax: (202) 776-0414 Email: atfscp@aol.com. To secure information & individual assistance on AT funding issues, contact: 1-800-827-0093 (voice) 1-800-833-8272 (TDD), or (404) 919-8305 (fax) The opinions expressed herein do not necessarily reflect the position or the policy of the U.S. Department of Education, and no official endorsement by the U.S. Department of Education of the opinions expressed herein should be inferred