Noxious Earnings Restrictions

Marta Russell

My friend David just went through what could be termed an noxious and unproductive bout with the Social Security Administration(SSA). David was an understudy for Dustin Hoffman's Rainman character (autistic) and works for a large chain electronics retail corporation. He remains qualified for Supplemental Security Income (SSI) even though he has a job because he is disabled and earns so little money. When David wanted a computer he saved for six long years before he was able to have the funds to buy one. His SSI check is reduced in proportion to his earnings.

The story is a simple one. After the LA earthquake David and his mother had to move out of their apartment for earthquake repairs. David went to stay in board and care facility while his mother made other arrangements for herself for the months it took to do the repairs. Prior to this move, David had been sending SSA the required reports of his earnings so SSA could calculate deductions. But due to the disruption of the earthquake David's routine was upset and he did not send the copies of his pay checks to SSA during the months he was not living at home. SSA put a stop on David's SSI check due to not getting his reports.

David and his mother got a hearing before an Administrative Law Judge where David's mother presented the judge with proof of his earnings. As caretaker of his SS and SSI accounts, she plead that although she is ultimately responsible for sending in the copies of his pay checks, she has given David any and every possible means of being as self-sufficient and independent in keeping with independent living philosophy. Therefore, she allowed him to make and send his reports himself, which he is very capable of doing and had done without failure prior to moving into the group home. As it turned out, David thought that he did not have to send the pay checks because he was living at the group home, not at his home. In his mind sending in the reports was connected to living in his home. As his mother explained it “David is not capable of lying, he doesn't know what that is.”

Further David's mother told the judge that she had explained to each of the three care-takers he was with during that time out of the house, that he needed to send SSA the copies of his pay checks each month. But the judge made no allowances for David's misunderstanding, the group home's failure to follow a parent's instructions or his mother's ultimate not seeing that the report had been sent. Instead, the judge held that not sending the reports was enough reason and discontinued David's SSI payments.

David had his mother to fall back on for financial support, but what about others who may not have such support and innocently make mistakes and get penalized? A loss of a few hundred dollars to some may mean losing their apartments and winding up on the streets or create conditions where they can no longer hold a job. It can even end in death, as in the case of quadriplegic Lynn Thompson who living on SSI ($600 per month) tried to earn some extra money by stuffing envelopes at home. Unbeknownst to her, the work she did was in violation of SSA regulations. When she reported her income to SSA, they responded with a letter stating that she had received an overpayment of $10,000, and that her benefits would be terminated until it was paid back. SSA claimed that her MediCal and attendant benefits would also be cut off. Losing one's attendant is a ticket for a nursing home, but loss of Medi-Cal is a death sentence (SSA was wrong about this part, she would not have lost her Medi-Cal). After a grueling and demeaning contest with SSA, Lynn Thompson killed herself. She left a recorded message saying that the reason for her suicide was that SSA had put her through hell and she could no longer live with the anxiety.

This past spring President Clinton signed The Social Security Earnings Test Elimination Act which permits seniors to earn as much as they want and continue to receive their Social Security retirement benefits in full without any deductions. Proponents attributed the bipartisan consensus that green lighted the bill in Congress to unprecedented economic growth and subsequent worker shortages nationwide. The move was predicated on government's perception that it would serve the economy for seniors to continue working. There is a case to be made for ending earning limitations for disabled workers on Social Security disability benefits as well.

Under the previous regulations, both seniors and disabled persons under 65 collecting Social Security benefits were financially penalized for working -- but the penalties were not spread evenly. Seniors 65 to 69 who earned more than $17,000 annually lost $1 in benefits for each additional $3 earned. Under Social Security Disability Insurance (SSDI) rules, a disabled worker can continue to collect benefits as long as earnings do not exceed $700 per month. When earnings topple the $700 mark for nine months, one no longer qualifies for benefits (blind limit is $1,000).

For those on SSI, the needs based disability program that David is on, the eligibility formula gets more complicated. Federal rules allow earnings up to $65 per month without losing any SSI dollars but then one loses $1 in benefits for each additional $3 earned. Once one earns twice their SSI check (plus $65) they will reach the "break even" point and will be severed from benefits. The cut-off amount varies from state to state but for the majority of Californians on SSI, it is about $17,388 per year (some plans allow for deduction of work related expenses and this can push the cut-off a bit higher).

These numbers raise basic questions about distributive fairness and treating groups evenhandedly. Do people realize that workers on SSI (but not SSDI) are boxed into asset limitations which do not apply to seniors who get Social Security? Once an SSI recipient saves over $2,000, s/he no longer qualifies for disability benefits, no matter that one is still impaired. In light of this, is it equitable that seniors with no limitations on their bank accounts are now permitted to earn unlimited sums and not lose a penny of their Social Security when disabled people are forced into abject poverty to keep theirs?

Is it equitable that a worker on SSI has their income docked once they earn over $65 and that they lose the right entirely to collect benefits at approximately the same level of annual earnings - $17,000 - that a senior's Social Security check began to be reduced by the former retirement earning limitation rules?

The equity question is important because poverty is chronically disproportionate amongst the disabled population. A 1998 National Organization on Disability/Louis Harris Survey found that fully a third of adults with disabilities live in a household with an annual income of less than $15,000 compared to one in eight of those without disabilities - a 22 point gap. Poverty deepens for those surviving on Social Security benefits.

The difference in treatment between the senior and disabled workers needs to be leveled to reflect hardship. Disabled workers, for instance, often have not worked as many years as seniors who have had a lifetime to build up their financial assets. Despite the ADA, many disabled workers find themselves without a job when they acquire a disability. Due to medical and other expenses, many disabled workers run through any savings and retirement accounts they had managed to acquire pre-disablement.

Some workers have not only lost their jobs but have lost their houses and their cars - everything they owned - waiting for Social Security disability benefits to be approved. Other persons on disability benefits have lost years of employment due to prejudicial discrimination and a systemic economic discrimination that forces them into unemployment when they would prefer to have a job. If they do get a job, disabled persons may find hardship in the form of underemployment since workers with impairments are more likely to work part time and more sporadically than nondisabled workers for both economic and noneconomic reasons.

Many disabled workers will never be able to recapture the income they forfeited upon disablement but they also may continue to lose ground because of earnings gaps. In 1995, for instance, disabled workers earned on average only 72.4 percent of the amount nondisabled workers earned (Census Bureau).

In addition, there are practical administrative reasons to do away with earning limitations. Any work activity can result in sudden termination of crucial benefits whether Social Security (SSA) administrative determinations are right or wrong. Work rules are so complex it takes a degree in SSA policy to manage work without triggering a predicament. Even when one does get the rules right, disabled workers can find themselves in receipt of incorrect letters of benefits termination and overpayment notices from SSA and embroiled in bureaucratic appeals or appearances before an Administrative Law Judge. One may find themselves deemed ineligible for Medicaid or personal assistance services or beset with a hefty share of cost on benefits even though one is earning too little money to pay for these services. Are the confusing and bureaucratically costly rules really necessary or productive?

Disability earnings limitation rules can become work disincentives or impediments to work. They can inflict unnecessary trauma as in Lynn Thompsons and others cases. Politicians agree that it is beneficial to the nation that seniors continue to work and collect all of their Social Security benefits even if they make over $100,000 per year. The new rule is projected to cost the treasury billions of dollars. The penalty placed on working disabled persons when their costs often exceed the average worker's has never been truly reasonable. The $2,000.00 cap on monetary assets for SSI eligibility is totally outdated. What harm would be done to this wealthy nation if disabled workers on SSDI and SSI were allowed to earn as much as they could without fear of losing their benefits? How about changing the rules so those on SSI may have assets over $2,000? Then perhaps, the largely impoverished working disabled population could get a financial leg up on life.

Disabled persons don't become nondisabled either physically, mentally or economically just because they work. They retain their impairments and the labor market disadvantages that come with them under the current economic system. As an associate who favors a lifelong disability income parity benefit put it “I believe that if you have gone through enough to get disability benefits, you have paid far more than the price of a sub-poverty level dole.”

If the nation can give wealthy seniors a financial boost it can afford to do the same for the disabled population.

 

Marta Russell is author of Beyond Ramps: Disability at the End of the Social Contract (Common Courage Press 1998).

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