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The challenge of counting earned, unearned and in-kind income for Social Security purposes

Although I probably found him a bit frightening as a toddler, one of my favorite Sesame Street characters, in reminiscence, is Count von Count. This might be because of the clever in corporation of medieval motifs and music into many of his sketches. Or maybe I admire his passion for making numbers and counting accessible to children. The Count, as he was called for short, valued things not because of some intrinsic characteristic, but for the fact that they could be counted. In an early sketch, the Count and the Cookie Monster are debating ownership of a plate of cookies. Cookie Monster (of course) wants to eat the cookies and the Count (also of course) wants to count the cookies. They easily arrive at a compromise because the Count can count them first before handing them to Cookie monster for consumption. As an adult, one of my favorite sketches is in which the Count proposes to the Countess. After declaring his fondness for her “one-two beautiful eyes,” “her one cute little nose,” and her “one-two shell-like ears,” he asks her to marry him. She refuses, even while declaring that she has feelings for him. So, he tries again and she says “no” again. He tries a third time and she says “no”. After the fourth proposal, there are signs that she might capitulate and agree. But the Count stops her. He is deriving more joy from counting his proposals and her rejections than he would if she agreed and stopped the process.

I suspect that Count von Count had a hand in the Social Security regulations that determine what income is “countable” and what is not. For certain, he must take delight in these rules, which (by their complexity) could keep him happily occupied for the centuries, which (as a vampire) he probably has to live. First, there is the approach used to count income for the purposes of determining a beneficiary’s Supplemental Security (SSI) payment. The maximum amount of SSI payable is $794/month for 2021. This amount is reduced for beneficiaries, who have countable earned income, unearned income, and “in-kind” income in the following ways:

  • The first $20 of unearned income does not count. After that, any unearned income, such as unemployment benefits, Social Security Disability or Childhood Disability benefits, or interest on a bank account, reduce the maximum SSI benefit payable dollar for dollar.

  • The first $65 of earned income does not count. Unless the beneficiary has no unearned income, in which case the first $85 of earned income does not count. After that, one-half of the remainder of earned income counts to reduce the maximum SSI payable dollar-for-dollar. Another way of looking at this is that earned income in excess of $65 (or $85 if applicable), reduces the maximum SSI payable by 50 cents on the dollar.

  • If a beneficiary is over 18 and lives in the household of another without paying anything for food and/or shelter, s/he is receiving “In-kind Support and Maintenance” or “ISM”. There are two methods for counting ISM. If the beneficiary pays for neither food nor shelter, then the maximum SSI payable is reduced by 1/3. If the beneficiary lives in the household of another but does NOT receive both food and shelter or if the beneficiary lives in her/his own household but receives assistance from another in purchasing food and shelter, then the maximum SSI payable is reduced by 1/3 OR the actual value of assistance provided, whichever is less.

All this is complicated enough, but it gets even more convoluted, when one takes into ac-Count (pun intended) that some unearned income and some earned income is dis-Counted even before we get to the calculations above. Unearned income that never counts for the purposes of SSI calculation includes but is not limited to:

  • Other types of needs-based assistance such as Temporary Assistance to Need Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) payments.

  • Scholarships and grants that are used to pay tuition and education-related fees. Any portion of the grant or scholarship that could be used to pay for food and shelter, however, IS countable.

  • The first $60 of unearned income in a calendar quarter if it is received “infrequently” or “irregularly”. In other words, a once-in-a-while cash gift from family or friend might not count.

  • Veterans’ benefits.

  • AmeriCorps payments.

  • Unearned income contributed to a Plan to Achieve Self-Support (PASS). If a person, who receives or could receive cash benefits based on disability, and who has a work-related goal that costs money, the person can create a plan to achieve that goal. The plan must include a timetable and must provide details of the steps and the expenses, associated with each. If the PASS is approved, then unearned income, contributed to the PASS, does not count.

There are certain Work Incentives, built into the Social Security regulations, that can help a beneficiary reduce the amount of earned income that the Social Security Administration counts both for determining the size of the beneficiary’s SSI payment and for determining the beneficiary’s ongoing eligibility for SSI, Social Security Disability Insurance (SSDI), and Childhood Disability Benefits (CDB, aka Disabled Adult Child or DAC benefits). These work incentives include:

  • Impairment Related Work Expenses (IRWE). If, due to her/his disability, in order to work, a beneficiary needs to pay out-of-pocket for goods, services, or medical treatments. Then the cost of those things, once approved by the SSA, is subtracted from earned income before it is counted. For example, if I have a service animal and the monthly cost of maintaining that animal is $250, then $250 of my earned income may not be counted.

  • Employer subsidy. If the employer pays a beneficiary the same as s/he pays others with the same job title and description but for some reason the beneficiary/employee is less productive, then the portion of the beneficiary-employee’s earnings (that represent the difference in productivity) are not counted. For example, suppose a beneficiary-employee requires an extra hour of breaktime within every eight-hour shift. Then that beneficiary-employee may be only 87.5%–let’s call it 90%–as efficient as other employees with the same job title and description. In such a case, only 90% of the beneficiary-employee’s earned income would be counted.

  • Earned income contributed to a PASS–similar to the unearned income exemption described above, and earned income contributed to a PASS does not count.

Count von Count would probably have his biggest counting challenge yet counting all earned, unearned, and “in-kind” income in dollars and cents. However, careful analysis with good financial planning can make all the counting much easier, and a person with a disability will be able to earn Social Security Income, while earning money through work simultaneously. That person just needs to ensure that s/he is counting all the important factors.

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