Articles from prior issues of The Advocate

January/February 2001

Social Security Administration Announces Change in SGA Levels For TWP
20 CFR Parts 404 and 416 affected [Regulations No. 4 and 16] RIN 0960-AF12
Change will impact Old-Age, Survivors, and Disability Insurance and Supplemental Security Income for the Aged, Blind, and Disabled; Substantial Gainful Activity Amounts; “Services” for Trial Work Period Purposes—Monthly Amounts; Student Child Earned Income Exclusion.

A PROPOSED REVISION TO THE RULES will automatically adjust SGA each year, based on any increases in the national average wage index, the average monthly earnings guideline used to determine whether work done by persons with impairments other than blindness is substantial gainful activity. Ordinarily, an employee whose average monthly earnings are not greater than the "primary substantial gainful activity amount," has not engaged in substantial gainful activity without considering other information beyond the employee’s earnings. This revision will increase the minimum amount of monthly earnings and the minimum number of self-employed work hours in month that SSA considers shows that a person receiving Title II Social Security benefits based on disability is performing or has performed "services" during a trial work period, and will automatically adjust the earnings amount each year thereafter; increase the maximum monthly and yearly Student Earned Income Exclusion amounts used in determining Supplemental Security Income (SSI) Program eligibility and payment amounts for student children, and automatically adjust the monthly and yearly exclusion amounts each year thereafter.

This revision is part of an ongoing effort to encourage individuals with disabilities to test their ability to work and keep working. These changes will hopefully provide greater incentives for many beneficiaries to attempt to work or, if already working, to continue to work or increase their work effort.

Since July 1999, if an individual’s average monthly earnings were more than $700, SSA would ordinarily consider that the person engaged in substantial gainful activity. This earnings guideline level applies to all employees including those in sheltered workshops or comparable facilities and, in certain circumstances, to the self-employed. Under the revised rules, the substantial gainful activity amount for people with impairments other than blindness will be adjusted annually. Beginning January 2001, the guideline will be the larger of the previous year’s amount or an increased amount based on the Social Security national average wage index (see section 209(k)(1) of the Act). The annual adjusted guideline will apply to earnings from work activity in months beginning with the month in which the adjusted guideline goes into effect. This means that the first increased amount will apply to earnings in months after December 2000.

Under this revised rule, the substantial gainful activity amount will never be lower than the previous year’s amount. However, there may be years when no increase results from the calculation. Under the calculation provided by this revised rule, SGA level will be determined by the ratio of the national average wage index for 1999 ($30,469.84) to that for 1998 ($28,861.44), which is 1.0557283, and multiply it by the calendar year 2000 monthly-earnings guideline amount of $700, yielding the amount of $739.01. This $739.01 amount is rounded to the nearest multiple of $10, which is $740. Because $740 is larger than the corresponding 2000 amount of $700, the new earnings guideline is $740.

This amount is effective for months of work activity beginning January 2001. Beginning 2002, the guideline will be the larger of $740, or the $700 amount multiplied by the ratio of the national average wage index for 2000 to that for 1998 rounded to the nearest multiple of $10. Any new amount that goes into effect January 2002 will be used only to evaluate earnings from work activity in months beginning with January 2002. Services for the Trial Work Period

The trial work period is a work incentive. During the trial work period, a Title II beneficiary may test his or her ability to work and still be considered disabled. SSA does not consider services performed during the trial work period as showing that the disability has ended until services have been performed in at least 9 months (not necessarily consecutive) in a rolling 60-month period. Section 222(c)(2) of the Act provides that, for purposes of the trial work period, "the term `services’ means activity (whether legal or illegal) which is performed for remuneration or gain or is determined by the Commissioner of Social Security to be of a type normally performed for remuneration or gain." As established in regulations, Sec. 404.1592(b), SSA considers any month in which an employee earns more than $200 from his or her work to be a month of services for the trial work period.

By increasing the monthly amount of earnings considered to be “services” in a trial work period from $200 to $530 for earnings in months beginning January 2001, disability recipients will be encouraged to return to work. Beginning 2002, and for each year thereafter, this amount will be adjusted to the higher of the previous year’s amount or an increased amount based on the Social Security national average wage index. SSA is making these changes as part of the effort to improve incentives to encourage individuals with disabilities to work. Although the dollar amount that ordinarily represents substantial gainful activity was increased from $500 to $700 in 1999, the $200 amount that represents a month of trial work period services has remained the same since 1990. Beneficiaries have been faced with exhausting months of a trial work period while earning as little as $200 a month, even on an intermittent basis. As a result, when beneficiaries were finally able to reach a higher earnings level, they may have already used up many or all of their 9 months of trial work. Increasing the trial work period services amount to $530 should allow more beneficiaries with disabilities to more realistically test their ability to work and will likely lead to work at levels closer to or at substantial gainful activity.

Automatic indexing will allow the trial work period services amount to be a uniformly representative indicator over time of a trial work attempt. SSA will calculate the adjustments in essentially the same manner as is done for increasing the substantial gainful activity amount. The trial work period amount will never be lower than the previous year’s amount. However, there may be years when no increase results from the calculation.

The legislative history of the trial work period provision indicates that Congress did not intend to link the trial work period level to the amount that constitutes substantial gainful activity. Congress enacted the trial work period as part of the Social Security Amendments of 1960. The accompanying House Ways and Means Committee report states,

“Your committee intends that any months in which a disabled person works for gain, or does work of a nature generally performed for gain, be counted as a month of trial work. Thus the services rendered in a month need not constitute substantial gainful activity in order for the month to be counted as part of the trial-work effort.” H.R. Rep. No. 86-1799, at 13 (1960).

This maintains the distinction between the trial work period services amount and the substantial gainful activity amount intended by Congress while providing disabled beneficiaries with greater incentives to test their ability to work. Several comments SSA received from the public about earlier proposed changes stated that SSA did not sufficiently address trial work period issues for the self-employed. SSA revisited that issue and, as a result of the analysis, in the final rules, SSA is increasing the number of hours of self-employed work in a business in a month that it will consider shows that the self-employed person performed services in that month. Since 1990, even if a self-employed person had earnings of $200 or less in a month, SSA would consider that services were performed in that month if the person worked more than 40 hours in the business.

Under this revised rule, if a self-employed person has earnings that are equal to or less than the dollar threshold for services, SSA will consider that services were performed if the self-employed person works more than 80 hours in a month in his or her business. This change will encourage beneficiaries with disabilities to more realistically test their ability to work with respect to self-employment activities.

The Student Earned Income Exclusion

Section 1612 of the Social Security Act establishes the definition of “income” for purposes of the SSI program. This section also states what is excluded from income. Section 1612(b)(1) provides an exclusion from earned income, subject to the limitations (as to amount or otherwise) prescribed by the Commissioner, for a child who is a student regularly attending a school, college, or university, or a course of vocational or technical training designed to prepare him or her for gainful employment. With this section, Congress recognized that students with disabilities incur special expenses to go to school. Under prior regulations, those SSI child beneficiaries who are students have been able to exclude up to $400 a month of earned income with an annual limit of $1,620. By being excluded, this earned income has no effect on eligibility or cash benefit amounts under the SSI program. These monthly and annual amounts have been in place since 1974 when the SSI program began. In response to increases in school expenses since that time, SSA is revising these amounts as part of the effort to help SSI child beneficiaries who are students finance their school attendance and encourage them to work. SSA will increase the earned income exclusion amount, beginning with earned income for January 2001, to $1,290 a month with an annual limit of $5,200. Automatic adjustments to these amounts will also be made each year thereafter to the higher of the previous year’s amounts or increased amounts based on the changes in cost-of-living. The cost-of-living adjustments will ensure that the amounts account for price inflation. A method will be made, similar to that currently used to calculate annual cost-of-living adjustments in the SSI program Federal benefit rates. The only differences are that this new calculation will use the calendar year 2001 amounts as the base amounts and any increases in these amounts will be rounded up to the nearest $10. These amounts will never be lower than the previous year’s amounts. However, there may be years when no increases result from the calculation.

EFFECTIVE DATE: These rules are effective January 29, 2001.

FOR FURTHER INFORMATION CONTACT: For information specifically about these final rules, contact Ray Marzoli, Office of Employment Support Programs, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235-6401, (410) 965-9826 or TTY (410) 966-6210.

For information about eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit the Internet web site, Social Security Online, www.ssa.gov.