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Wednesday January 3, 2001

Catherine Noe, Press Officer

For Immediate Release

410-965-8904 FAX 410-966-9973


Social Security Online

SOCIAL SECURITY

Social Security Administration
Increase in SGA Level

The Social Security Administration today announced several new rules that took effect January 1, 2001, that will allow more persons with disabilities to test their ability to work without fear of losing their cash benefits and important health care coverage. These new rules are part of a package of proposed regulations announced by President Clinton as part of the 10th anniversary of the Americans with Disabilities Act in July. Final regulations were published in the Federal Register on December 29, 2000.

"These new regulations will encourage individuals with disabilities to test their ability to work," said Kenneth S. Apfel, Commissioner of Social Security.

The first new rule increases the amount of earnings that are considered to be gainful employment. Beginning January 1, a Social Security Disability beneficiary can earn $740 a month and remain eligible for benefits. The Social Security Administration uses the term "substantial gainful activity" (SGA) to determine if work is substantial enough to make a person ineligible for benefits. Under the new rule, the current monthly SGA earnings limit of $700, which became effective July 1999, will be automatically adjusted annually based on increases in the national average wage index. This amount applies to people with disabilities other than blindness.

"This new rule is good news for Social Security Disability beneficiaries," commented Commissioner Apfel. "Disability beneficiaries will now be able to count on having an SGA level that accurately reflects annual increases in the national average wage."

The second new rule affects the trial work period (TWP). Currently, the TWP allows disability beneficiaries to test their ability to work for at least nine months. During the TWP, Social Security beneficiaries may earn any amount and receive full Social Security Disability benefits. Currently, earnings of $200 in a month count as a trial work month. The rule increases that amount to $530 per month and links annual changes to increases in the national average wage index. After completion of nine trial work months, the SGA level is used to determine whether earnings are substantial or not. If earnings fall below the SGA level, full benefits generally continue. If earnings are higher than the SGA level, cash benefits are normally suspended while medical benefits continue.

The third and final rule in the package allows for more income to be excluded when a student who receives Supplemental Security Income (SSI) returns to work. Under current SSI law, when a student under the age of 22 works, up to $400 of earned income (wages or self-employment) per month is not counted when determining eligibility. The maximum yearly exclusion is $1,620. The new rule increases the monthly excluded amount to $1,290 and the maximum yearly amount to $5,200. This yearly exclusion roughly corresponds to what a student may realistically earn in part-time or summer employment. In addition, both amounts will be automatically annually adjusted based on increases in the cost-of-living index.

SSA pays cash benefits to people whom, due to the onset of a disability that is expected to last more than a year or result in death, are unable to earn a substantial wage. SSA administers two disability programs: Social Security Disability Insurance and Supplemental Security Income.

Social Security Disability Insurance pays monthly benefits to people who have earned enough Social Security credits. Credits are earned by working and paying Social Security taxes. Benefit payments are financed by the Social Security Disability Insurance Trust Fund. This program pays an average monthly benefit of $786 to 5 million workers with disabilities. In addition, some 1.6 million members of their families receive monthly benefits.

SSI, a cash assistance program where eligibility is based on financial need, provides monthly payments to people who have low income and few assets. Although this program is run by the Social Security Administration, the payments are financed by the general revenue funds, not from Social Security taxes. Nationwide, there are 6.6 million people receiving SSI benefits, including 900,000 disabled children.

The increase in the SGA level affects both Social Security Disability Insurance benefits and SSI benefits. The term SGA is part of the statutory definition of disability that requires an individual to be unable to engage in substantial work for initial and ongoing eligibility under the Social Security Disability Insurance program and initial eligibility under the SSI program.

The trial work period is relevant only to the Social Security Disability Insurance program, while the student earned income exclusion is relevant only to the SSI program.

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