Editor's Note: This story originally appeared on The Penny Hoarder.
Anytime a letter bearing the seal of the Social Security Administration arrives, James feels afraid to open it.
A 34-year-old with cerebral palsy, he depends on Social Security disability benefits for the majority of his income. The benefits cover his rent and bills each month. But it’s not enough to live on, so he supplements it with side gigs like DoorDash, Instacart and other delivery apps.
It’s a difficult, frustrating balancing act, trying to work enough to maintain independence — but not so much that his benefits are cut off. It’s also suffused with fear. James talked to The Penny Hoarder about his experience but asked that his last name not be used out of concern of running afoul of the federal agency.
Millions of people are in James’ situation, fearful and confused by the labyrinth of rules governing their benefits.
Disability benefits experts say discrimination, confusion regarding the rules and fear of benefits being cut at any time are all too common. And that’s despite the official Social Security position that people on disability should work to their fullest potential.
Here’s a primer on how the system works.
Is It Legal to Work While on Disability?
Yes, it’s even encouraged. The Social Security Administration helps disabled people find employment through work-incentive programs. How much a disabled worker is allowed to work and earn depends on several factors, and the two primary forms of assistance — Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) — work very differently.
SSI vs SSDI — What’s the Difference?
To be eligible for either program, the Social Security Administration first determines if applicants are disabled using a specific definition.
According to the SSA, “disabled” means applicants:
- Are totally disabled (not partially disabled or disabled in the short-term).
- Can’t do work they previously could before the disability.
- Are unable to adjust to other work because of a medical condition.
- And the disability has lasted (or is expected to last) for at least one year or will result in death.
Beyond this definition, the programs vary greatly.
“Sometimes even beneficiaries don’t get the distinction between the two,” says Kathleen Romig, a Social Security policy expert at the Center on Budget and Policy Priorities. “And the work rules are totally different.”
Supplemental Security Income (SSI)
Supplemental Security Income is a financial-need-based program for elderly and disabled people. The federal government pays a stipend designed to cover basic necessities like food or housing for people who have little-to-no income.
As of January 2021, the maximum federal benefit for is $794 for an individual and $1,191 for a couple per month. Several states add to that amount, according to the Social Security Administration. The total fluctuates annually.
SSI recipients may work and continue to receive their benefits until their total income exceeds $794 after a few deductions are taken into account.
“The first $65 in earnings are disregarded; after that, benefits are reduced by $1 for every $2 earned,” says Romig. “The first $20 in unearned income is also disregarded; after that, SSI benefits are reduced dollar-for-dollar.”
In other words, benefits drop after the first $85 of income each month, no matter if the money is from a job or a friend.
Confused? So are many recipients.
SSI is typically for people who haven’t paid Social Security taxes from past W-2 jobs. Once they work enough in the eyes of Social Security, they may be able to transfer to SSDI. But the vast majority of people on SSI don’t and can’t work.
Social Security Disability Insurance (SSDI)
Social Security Disability Insurance is for people who qualify as disabled and have paid enough Social Security taxes through past employment (typically five to 10 years’ worth of work credits) to qualify for additional benefits.
SSDI recipients are also allowed to work, and the rules are more lax because they have paid taxes into the system for much longer.
This program isn’t for low-income people, per se. But there are monthly limits on how much income someone can earn from a job: $1,310 a month or $2,190 for blind workers. Income and assets outside work earnings are unlimited.
“The benefits for the SSI folks are different because they didn’t pay into the system,” says Paula Vieillet, CEO of My Employment Options, a national employment network and advising company for people on Social Security assistance.
Social Security Work-Incentive Programs and Rules
Only SSI recipients are eligible to join PASS. Folks in this program set work goals, which could include starting a business, attending a college or learning a new skill. Once Social Security approves the plan, all costs related to achieving PASS goals can be deducted from their income, which allows SSI recipients to earn more money and keep their cash benefits.
Both SSI and SSDI recipients are eligible to join Ticket to Work.
They get an exemption from what’s called a Continuing Disability Review. This periodic medical check-in determines if a person meets the strict definition of “disabled.” If an SSI or SSDI recipient has been assigned a Ticket and is making good progress in the program, they don’t need to worry about the medical review or losing their current benefits.
SSDI recipients are also granted a Trial Work Period in which they can work and earn as much as they want for nine months without jeopardizing their benefits.
“What the Ticket program does is it provides protection. It gives people the opportunity to try to go back to work,” Vieillet says. “And if they don’t make it, nothing ventured, nothing lost.”
Why Do Disabled People Still Lose Out?
For starters, federal policy hasn’t kept up with inflation or changes in the labor market, experts say. That’s especially so for Supplemental Security Income, the program James is on.
While the program mainly caters to the elderly and children with disabilities, James’s situation highlights several dated provisions. For example, the $85 income deduction was set when the act was signed into law in 1972. It hasn’t budged since. The $2,000 cap on liquid assets to qualify for SSI was set in 1989.
Another issue is the maximum monthly payout of $794. While this number does change annually, Romig notes it’s well below the poverty line.
For SSI and SSDI recipients who do work, their earned income can fluctuate month-to-month because it’s often hard to stick to a fixed work schedule due to the nature of their conditions. This makes it difficult for even the most earnest recipients to accurately report their income.
“You always want people to work to their fullest potential, of course. This is America,” Romig says. “That’s one of our foundational ideals.”
But the difficulty of navigating the programs coupled with the threat of losing benefits as a worker often clashes with that value.
Experts’ Advice: Don’t Go It Alone
Vieillet says the intricacies of each program are confusing, even to the experts. For the average person, it can be downright overwhelming.
When letters from Social Security start coming in the mail, “they scare the bejesus out of people,” says Teresa Nier, benefits and employment manager with My Employment Options.
For disabled workers, joining a free work-incentive program and employment network can help. Ticket to Work offers benefits protection for recipients who want to test the employment waters.
And organizations like My Employment Options have certified benefits counselors on staff to help applicants trudge through the paperwork and fine print — all while finding a job that fits their unique needs.
To avoid unexpected benefits cuts or having to return overpayments to the agency, “people need to keep Social Security updated with phone numbers and addresses,” Nier says. “Open those letters. Ask questions.”
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.