How IRWE (Ur-wee) ABLE to earn more and still PASS the eligibility criteria for disability benefits?

BY ALEXANDRA BAIG, MBA, CFP

In this article, we are going to show you how to use Impairment Related Work Expenses (IRWE), Plans to Achieve Self-Support (PASS) and Achieving a Better Life Experience (ABLE) accounts to maximize the amount you can earn from working and the amount you can save and accumulate without affecting your SSI or SSDI benefits.

"How much can I earn and not lose my Social Security Benefits?" I get this question a lot from my clients with disabilities who want to go to work or increase their work hours, but do not want to jeopardize their cash benefits. The question is analogous to asking a dietician, "How much can I eat and still lose weight?" The answer to both questions is: "It depends."

In the latter case, it depends on how tall you are, how old you are, how high your metabolism is and how active you are. In the former case, it depends on which Social Security benefit you are getting and which Work Incentives you can use to reduce the income and resources (assets) that Social Security counts.

If you have a disability and work, the income you receive from work affects different benefits differently. For example, once you earn more than $85 (or $65 if you have any unearned income), your income from work reduces your Supplemental Security Income (SSI) by 50 cents for every dollar you earn. That $85 represents a small Work Incentive called the Earned Income Exclusion. But if you are under 22 years old and a full-time student, then you qualify for a much larger Work Incentive called the Student Earned Income Exclusion, which is $1,870/month up to $7,550/year. So, all else equal, if you are 22 or over or not a student, you may start losing 50 cents on the dollar once you earn your 86th dollar in the month. But if you are 21 and in full-time school, you can earn more than $1,700 more and still keep your full SSI. It depends.

With Social Security Disability Insurance (SSDI), you will continue to receive your full SSDI benefit until you begin earning consistently at or above the level Social Security has determined to indicate Substantial Gainful Activity. That level is $1,220 for 2019 if you are not blind and $2,040. Social Security has a series of steps to let you try out whether you can work steadily to earn at SGA-level. During some of the steps, you may be able to earn above the SGA level and still keep your full benefit. Once you've completed all the steps, your entire benefit goes away if you are still working at SGA level. That said, there are some things you can do to reduce the amount of income Social Security counts and applies towards that SGA threshold. So, it depends.

IT ADDS UP: People with disabilities sometimes have particular expenses related to their disability, including physician and therapist visits, prescription drugs, over-the-counter medications, assistive technology, service animals, adapted vehicles, prostheses and similar expenses.

In this article, we are going to show you how to use Impairment Related Work Expenses (IRWE), Plans to Achieve SelfSupport (PASS) and Achieving a Better Life Experience (ABLE) accounts to maximize the amount you can earn from working and the amount you can save and accumulate without affecting your SSI or SSDI benefits. IRWE and PASS are relevant to maintaining both SSI and SSDI as well as Medicaid to the extent that one's Medicaid eligibility is linked to one's SSI eligibility. ABLE is relevant to keeping SSI and Medicaid.

People with disabilities sometimes have particular expenses related to their disability. Such expenses might include the deductibles and copays on physician and therapist visits for treatment or maintenance, the co-pays on prescription drugs, the cost of over-the-counter medications, the cost of assistive technology, the cost of purchasing, training and maintaining a service animal, the cost of purchasing an adapted vehicle, the costs of buying and maintaining prostheses and similar expenses. If these expenses are for an item or service that is 1) required by the person's disability, 2) paid for out-of-pocket; i.e., not covered by any of the person's insurance and 3) necessary for the person to work, that item or service may be considered an Impairment Related Work Expense or IRWE. It is not necessary that the item or service be required ONLY for work. It may also be necessary for daily life.

Some expenses incurred by people without disabilities for convenience may be incurred as a necessity for people with disabilities and thus may be considered IRWE. For example, if I do not have a disability and I opt to take an Uber rather than the public fixed-route bus, that is a convenience. But if I do have a disability that limits my mobility and the bus is not accessible for me, then the Uber fare becomes IRWE. If I do not have a disability but find noise-cancelling headphones help me concentrate in my open-plan office, that is just a preference. If I have a disability that impacts my focus and attention, then those noise-cancelling headphones may be an IRWE.

Social Security needs to approve each IRWE on claimant-by-claimant basis because what is IRWE for you may not be IRWE for me, depending on the characteristics and severity of our disabling conditions, the type of insurance coverage we have, the nature of our work and other distinctions. You are most likely to get your IRWE approved if you make a clear connection between the expense and your disability— either the disability under which you qualified for benefits or another condition diagnosed by a medical professional that also impacts your capacity to work. You must also explain clearly how you would not be able to work without the item or service. Finally, you must provide to the Social Security Administration a cost figure that is reasonable. Recurring monthly expenses will be approved for monthly deduction as long as the person is working, and the item or service remains required. One-time expenses are generally approved for deduction in the month paid; however, for large ticket items, the expense may be pro-rated for deduction over 12 months or over the terms of the payment plan, if any.

IRWE can have a significant impact on how much a person can earn and still maintain benefits. If I receive the full SSI benefit of $771/month (2019) and start a job in which I make $885/month, my SSI will decrease by $400 after taking into account the earned income exclusion. I will still be better off by working, because I will have $885 + $331 = $1,216 vs. the $771 I had on SSI alone. But, if I have IRWE of $500/month, then my SSI will decrease by only $150/month and I will have $885 + $621 = $1,506. If I receive SSDI of $2,000 and take a job in which I earn $1,500/month and I am not blind, I lose my entire SSDI check, and I actually end up worse off by working. But If I have $500 of IRWE, then my countable income is only $1,000 and, thus, below the SGA level and I keep my entire SSDI check. Now, I have $3,500/month in income.

As a worker or a prospective worker with disability, you might realize that you need additional education or industry-specific training to start or advance a career. Perhaps you want to work in bookkeeping, horticulture, hospitality, interior design, IT, health care, music or manufacturing and realize that you will have a stronger resume with a certificate? Perhaps you want to complete your bachelors or master's degree in your previous or even new field. Perhaps your academic skills are sufficient, but you need to learn a new software system or otherwise upgrade your computer skills. Or perhaps you need to purchase additional assistive technology to move forward and upward with work. Perhaps you have decided your best route to work is as an entrepreneur. You have a good idea for a small business, but you need to buy equipment, set up a website and pay for a marketing coach. All of these scenarios pose a challenge because it might be hard to set aside income to pay the required expenses.

A Plan to Achieve Self-Support or PASS can address these challenges. If you are a person with a disability, you can create a PASS and the income set aside to fulfill the plan will not be counted for purposes of SSI eligibility. In addition, income set aside and left to accumulate for plan expense not yet incurred will not be counted as a resource for purposes of SSI eligibility. Your PASS must provide a road map to a specific work goal that will, once achieved, reduce your reliance on your SSI and SSDI cash benefits. The plan must have specific steps and a specific time frame. Each item and step required to fulfill the plan must have a definite and reasonable cost assigned to it. Here's an example. Suppose I currently work at the dollar store at the minimum wage of $8.25/hour. My goal is to work as a Heating, Ventilation, Air Conditioning or Refrigeration (HVAC) service technician, where my wages will start at $16.50/hour. To pursue this course, I need to obtain an HVAC service technician certification, which requires 33 credit hours at my local community college. Tuition is $140/credit hour, so my program will cost $4,620. Textbooks and course materials will cost $200. I detail this clearly in my PASS in writing, using form SSA545-BK. I submit my PASS and it is approved by Social Security.

I work 30 hours per week at the dollar store, earning a gross monthly wage of $990/month. After my $85 earned income reduction, I have $905 remaining. My countable income is half of that or $453, which then reduces my monthly SSI benefit from $771 to $771 - $453 = $318. After creating my PASS, I begin to save $300/month towards my work goal. Contributions to my PASS are deducted from my countable income. Now, my reduction is only $153, so I receive $771 $153= $618/month of SSI.

Suppose, instead, that I worked before developing my disability. Now, I receive $1,000 in SSDI. Since SSDI is unearned income, which reduces my potential SSI dollar for dollar, I am not eligible to receive any SSI at all because my SSDI exceeds the maximum SSI payment. Prior to my disability, I worked as a sports instructor at the YMCA. My disability precludes the physicality of that kind of job, but my overall health has improved such that I can return to work. I want to retrain as an ophthalmic technician. The position requires an Associates of Science degree and 64 credits for a total cost of $8,960. Textbooks and course materials are another $200. As an ophthalmic technician, I would earn $40,000/year, well above the $1,220/month threshold of substantial gainful activity. I would go off my SSDI benefits with those earnings. I detail this clearly in my PASS in writing, using form SSA-545BK. I submit my PASS and it is approved by Social Security.

Prior to creating my PASS, I was not eligible for SSI; however, now, I decide to set aside $400/month from my SSDI. My countable income is thus reduced from $1,000 – 20 (unearned income exclusion) = $960 to $560. I am now eligible for $771 – 560 = $211 in SSI. It is important to note that in both this and the prior example, money that I accumulate for the purpose of fulfilling my PASS does not count as a resource for SSI eligibility. The money set aside for my PASS must be clearly separated from my other funds.

The question of countable resources, as noted above, used to be more significant for SSI eligibility. SSI recipients remain limited to $2,000 of countable resources held in their own names. However, the relatively new Achieving a Better Life Experience (ABLE) accounts now provide a welcome exception to this rule. ABLE accounts may be opened by any person whose disability began before age 26 and who meets the Social Security definition of having a disability, whether or not they are receiving cash benefit. The person with a disability, who is the owner of the account, as well as any other party, can contribute up to $15,000 to the ABLE. If the person with a disability works, s/he can contribute up to an additional $12,000 from work earnings. Funds in the account grow tax deferred and the growth is not taxed if the funds are removed for Qualified Disability Expenses, a very broad definition. Funds can be invested and withdrawn easily, and the accounts have low management and investment fees.

The most important characteristic of these accounts, though, is that the balance will be disregarded by Social Security until it reaches $100,000. At that point, the person's SSI eligibility will be suspended but not revoked. If the account balance dips below $100,000, eligibility will resume. A person's Medicaid eligibility will remain until the account reaches $400,000. The accounts do have a payback feature in which funds remaining in the account at the owner's death may be claimed first by Medicaid; however, given the modest contribution levels and the newness of the accounts, this will not be a concern for some time to come.

Increasing your weekly exercise and swapping out the white flour and processed sugar in your diet for whole grains and fruit will probably allow you to eat more while still meeting your weight loss goals. Using IRWE and PASS will allow you to earn more while still keeping your SSI and/or SSDI cash benefits. ABLE will allow you to save more while still keeping your SSI and Medicaid benefits. As a person with a disability, you may face bigger hurdles to employment than the general population. Use IRWE, PASS and ABLE are flexible tools to help you meet the challenge.•

ABOUT THE AUTHOR:

Alexandra Baig has an MBA from the University of Michigan and her CERTIFIED FINANCIAL PLANNER™ designation, and is a member of the Academy of Special Needs Planners. Alexandra's first career was as a stock market analyst in Hong Kong and China. A search for a more meaningful life's work took her to L'Arche, an international, interfaith network of communities where people with and without intellectual and developmental disabilities share life. Her work at L'Arche introduced Alexandra to the financial planning challenges of people with physical, intellectual, developmental and behavioral disabilities and their families. In particular, she is wellversed in the government benefits available to people with special needs and the rules governing them. Her goal is to help people with disabilities and their families make the most of public and private money to live the life they chose.