Last week, my sons’ summer program was not in session. While I enjoyed spending time with my boys—among other things like re-learning how to shoot a real bow and arrow after several decades—there was something lacking. I missed the pleasure of those first minutes of friendly conversation with each client before we would sit down to work. I missed the sometimes tedious but always rewarding process of sorting out some kind of unique and seldom-seen Social Security disability scenario. I missed the excitement of hearing from a client that their Social Security, Medicaid Wavier, college or employment application had been successful. I missed sharing with people in my professional network our collective frustration at the stock market’s volatility and the fact that no financial planning software can seem to do 100% of what we need it to do so. I missed organizing my knowledge around a particular financial or disability-related topic, so that I could write a blog or an article. In short, I missed working. I missed the sense of productivity that never seems to come with housework or teaching at home. I missed being able to help someone have more confidence in her/his financial future. I missed making a contribution.
For most of us, work is a huge component of our adult lives. Most of us probably remember our first job as a teenager. We may not have been passionate about the actual responsibilities, but there was a distinct satisfaction in holding and cashing a paycheck and knowing that we had taken an irreversible step towards adulthood. From our mid- to late-teens until our mid- to late-sixties or beyond, work provides structure, social connections, learning and development opportunities, goals, a part of our identity, a place to belong and make a contribution, and (of course) a way to support ourselves and our family financially. I know from my own experience and that of family members, friends, and even clients that extended periods of unemployment sadly undermine our emotional, mental, and even physical health, while finding that next job generates renewed hope and a sense of well-being.
All of these things are absolutely as much true for person with a disability as for anyone. In almost every special-needs-planning scenario, I encourage my clients to consider work as a meaningful element of the life of the person with a disability and income generated by that work as a meaningful component of cash inflow to the long-term support plan for the person with a disability. Work income can make a difference. Let us suppose that the person with a disability, who is at the center of the plan, works 20 hours/week at $15/hour for roughly 52 weeks a year. If claiming her/himself, the worker will owe no federal income taxes at that rate, and (depending on the state) may owe little or no state income tax, leaving the entire amount to be spent to supplement the basic items and services, covered by government benefits. For more about government benefits, please see my previous blog. Taking into account FICA taxes, which they will pay, the person will have an extra $14,000 plus to spend.
Moreover, since a worker earns one Social Security credit for every $1,410 in gross income, s/he will be accumulating the maximum possible of four credits per year. A person who is 23 or younger and has accumulated 6 credits is already “insured” for Social Security income on her/his own record. Older workers require somewhat more credits to be insured as per this article. At the point where s/he is fully insured, the worker with a disability will begin to receive a Social Security Disability Insurance (SSDI) payment, in addition to any Supplemental Security Income (SSI) s/he may be receiving. Where a worker will see a reduction of 50 cents in her/his SSI benefits for every dollar earned, that worker will continue to receive her/his full SSDI benefit until earnings consistently exceed $1,260/month (2020). As the worker builds a longer work history and/or her/his earnings increase, the SSDI benefit s/he receives will also increase. So up to a point, the worker, by working, can also receive a larger Social Security benefit.
Of course, there is a threshold above which the worker with a disability no longer meets the Social Security definition of “having a disability”. This is at the point where Social Security considers the person to be performing Substantial Gainful Activity (SGA), defined as consistently earning more than $1,260. Fear of reaching that point is the primary reason families give for discouraging work for their members with a disability. Note that SSI is reduced for any earnings over $85/month, but only by half as much as the earnings, so any person receiving SSI only is almost always better off working from a financial standpoint. It may be that a person who receives just SSDI is best served by working just under the SGA threshold and maintaining her/his full SSDI benefit. Or it may be that the person’s work earnings can easily make up for the lost SSDI. The approach I take with my clients is to encourage work and then to use Social Security, Medicaid, and Medicare work incentives to maximize both work earnings and public benefits.
For example, workers with disabilities may be able to deduct certain Impairment Related Work Expenses (IRWE), before their work earnings are counted by Social Security. They may also be able to deduct the value of certain employer accommodations. Earnings contributed to a Plan to Achieve Self Support (PASS) are not counted either. Even if the person does reach a point when her/his countable earnings preclude the receipt of any cash benefit, the person can still continue her/his Medicaid to pay for both health care and support services under section 1619 of the Social Security code or Medicaid Buy-in (called Health Benefits for Workers with Disabilities in Illinois). Medicare can also be continued for up to 93 months after a person’s cash SSDI benefit are discontinued and can be continued for even longer than that for a small premium.
The goal of long-term financial planning in any situation, including one of special needs, is to maximize all potential streams of income. Spending time at home doing family-related needs is meaningful, but being able to work to earn money and contribute to society is also meaningful. For a person with a disability, government benefits may be significant sources of long-term financial support. However, work, too, though, can be a desirable source of self-support for one with a disability or for anyone for that matter, particularly because not only does it afford a tangible paycheck and earned money and income for your expenses, it affords the additional intangible and invaluable benefits of self-esteem, purpose, and a way to connect to the larger community.