(PPS-114)

SSR 84-26

SSR 84-26: TITLES II AND XVI: DEDUCTING IMPAIRMENT-RELATED WORK EXPENSES FROM EARNINGS IN DETERMINATIONS AS TO SUBSTANTIAL GAINFUL ACTIVITY UNDER TITLES II AND XVI AND AS TO COUNTABLE EARNED INCOME UNDER TITLE XVI

PURPOSE: To state the policy regarding impairment-related work expenses (IRWE) which may be deducted from earnings under titles II and XVI in determinations as to substantial gainful activity (SGA) and which may be deducted from earned income under title XVI in determinations of a recipient's countable earned income. (This Program Policy Statement (PPS) is applicable to the IRWE of employees and of self-employed persons.)

CITATIONS (AUTHORITY): Sections 216(i), 223(d), 1612(b) and 1614(a) of the Social Security Act, as amended; Regulations No. 4, Subpart P, sections 404.1571, 404.1572, 404.1573, 404.1574, 404.1575, 404.1576, and 404.1584; Regulations No. 16, Subparts I and K, sections 416.971, 416.972, 416.973, 416.974, 416.975, 416.976, 416.1112 and 416.1124; 48 Federal Register 21931 (May 16, 1983).

PERTINENT HISTORY: Under the disability provisions of the law, except within the trial work period (TWP) provisions, a person who is engaging in SGA is not eligible for payment of disability benefits. (A temporary provision of the Act, section 1619(a), in effect until December 31, 1983, authorized continued disability payments to title XVI recipients engaging in SGA provided their income was within specified limits. These payments are being continued for the year 1984 under a demonstration project (49 Federal Register 9774, March 15, 1984).) SGA is defined in the regulations as work "that involves doing significant physical or mental activity . . . [and] is the kind of work usually done for pay or profit. . . ." See Social Security ruling (SSR) 83-33, PPS-107, Determining Whether Work Is Substantial Gainful Activity -- Employees, regarding evaluation of work activity of employees. See SSR 83-34, PPS-108, Determining Whether Work Is Substantial Gainful Activity -- Self-Employed Persons, regarding evaluation of work activity of self-employed individuals.

IRWE paid before December 1, 1980, are deductible from earnings in determinations as to SGA only to the extent that such expenses exceeded what would have been work-related expenses if the person were not impaired. For instance, if the individual had to use special transportation to get to work, only the amount by which the cost of such transportation exceeded what the individual, if unimpaired, would have had to pay for regular transportation would be deductible as an IRWE in determinations as to SGA. However, expenses for items, e.g., medication or equipment, which the individual required whether or not he or she worked wold not be deductible.

The law provides that, effective on or after December 1, 1980, the cost of certain items and services that an impaired person needs in order to work can be deducted from earnings in determinations as to SGA even though such items and services are also needed for normal daily activities. The cost of certain attendant care services, medical devices, equipment, prostheses, and similar items and services may be deducted. The costs of routine drugs and routine medical services are not deductible unless the drugs or services are necessary to control the disabling condition so as to enable the individual to work. The amount of IRWE that may be deducted is subject to reasonable limits, and deductions for needed items and services will be made only if the cost is paid by the impaired individual.

IRWE will also be deducted from earned income for the purpose of determining a Supplemental Security Income (SSI) recipient's countable earned income. However, an individual initially filing for title XVI disability payments who is working and alleges IRWE must first be eligible using the SSI Federal income test without the deduction of IRWE. Once an individual has qualified for the IRWE exclusion, the individual retains the right to use of the exclusion, when applicable, as long as he or she remains continuously eligible for months after November 1980; i.e., continues to meet all SSI nonincome criteria and has total countable income, after the IRWE exclusion, that does not exceed the full Federal benefit rate (FBR) or, if applicable, the higher income limit for a combined Federal/State payment level (FBR plus a federally administered optional State supplementary level). (See 20 CFR 416.1112(c)(5) and 416.2030.)

POLICY STATEMENT: An impaired individual who, on or after December 1, 1980, is working and has an IRWE may be eligible for IRWE deductions if he or she meets the SSA definition of disability; and because of a physical or mental impairment(s), requires assistance (services, medical devices, etc.) in order to work, whether or not such assistance is also needed to enable the individual to carry out normal daily functions; and pays the cost of such assistance, i.e., has not been, cannot be, and will not be, reimbursed by any source for the expense. (Payment must be within "reasonable limits" and must be made in cash (including checks or other forms of money); payment in-kind is not deductible.)

A. Definitions of Provision. An IRWE means an expense for an item or service which is directly related to enabling an impaired individual to work and which is necessarily incurred by that individual because of a physical or mental impairment. Such an expense may involve payment for the purchase, installation, maintenance and repair of an impairment-related item or payment for an impairment-related service. (Exception: There can be no separate amount deducted for maintenance and repair of automobiles or vans used for transportation to and from work, since these costs are included in the mileage rates indicated in section B.7. below.)
1. Attendant Care Services. For purposes of this provision "attendant care services" are those forms of physical assistance which help an impaired individual meet his or her essential personal needs at home or at work, such as bathing, toileting, dressing, cooking, eating, communicating, traveling to and from work, and similar personal needs. However, this definition is applicable only to those services which can be shown to be needed to enable the individual to work.
Payments made for attendant care services are deductible as IRWE if the services are needed in the work setting or in assisting the impaired individual in traveling to and from work.
Payments made for attendant care services rendered in the home are deductible only if the services relate to preparations for going to work, or to assistance required by the impaired individual immediately upon his or her arrival home from work. Some examples of allowable in-home attendant care services would be those relating to bathing, dressing, cooking, eating, administering medications, or arranging medical devices in the period of time immediately preceding the impaired individual's departure for work, or immediately following his or her return home from work. Such services should generally require no more than 1 or 2 hours in the morning or evening. Examples of attendant care services, the costs of which would not be allowable as deductions, would be those performed on nonworkdays, or those performed at any time which involve shopping or general homemaking (e.g., cleaning, laundry).
Costs for attendant care of the impaired individual are deductible even if, while attending to that individual, the attendant performs services which incidentally also benefit the individual's family. An example would be a situation in which the attendant, in addition to helping the impaired individual bathe, dress, etc., also cooks for him or her and other members of the individual's family may incidentally share the meal.
Payments made by the impaired person for services rendered to someone else are not deductible. Payments are deductible only when the services are provided for, or the items are used by, the impaired individual. For example, any payment by an impaired individual to care for his or her child is not deductible.
If an impaired individual pays a member of his or her family to perform attendant care services, such payment generally will not be deductible as an IRWE unless it is established that the family member (who has been otherwise employed) suffers economic loss by reducing (the number of hours of) or terminating his or her own employment in order to perform such service. The payment must be made to the family member in cash (including checks or other forms of money); payment in kind (e.g., room and board) is not deductible. For the purpose of this provision, a "family member" is anyone who is related to the impaired individual by blood, marriage, or adoption, whether or not that person lives with the impaired individual.
2. Medical Devices. Medical devices are defined as durable medical equipment which can withstand repeated use, is primarily used to serve a medical purpose, and is generally not useful to a person in the absence of an illness or injury. Examples in this category are wheelchairs, hemodialysis equipment, respirators, intermittent positive pressure breathing machines, pacemakers, inhalators, nebulizers, suction machines, traction equipment, braces (leg, arm, back and neck), and similar items.
3. Prostheses. Prostheses include devices that replace internal body organs or external body parts. Examples of prosthetic devices are artificial hips and artificial replacements of arms, legs, or other parts of the body. Payment made for a prosthetic device that is used primarily for cosmetic rather than functional purposes usually is not deductible.
4. Other Equipment. Other equipment means items, other than durable medical equipment and prostheses, which an impaired individual may need to perform the tasks required in his or her job, or to move from home to mode of transportation, or to control the disabling condition at home or in the work setting so as to be able to function in a work activity.
a. Work-Related Equipment. Payments for equipment which is impairment-related and necessary for the impaired individual to do his or her job are deductible when the equipment is paid for by the impaired individual and not provided by an employer. Costs paid by the individual for training in the use of such equipment are also deductible. Examples of such equipment are one-handed typewriters, typing aids (e.g., page-turning devices), measuring instruments, vision and sensory aids for the blind, telecommunications devices for the deaf, and special tools which have been specifically designed to accommodate the individual's impairment. (Where a self-employed individual deducts the costs of such equipment as a business expense, the cost is not deductible as an IRWE in determining SGA or SSI countable earned income.)
b. Residential Modifications. Residential modifications are defined as changes which are made to the impaired individual's home in order to accommodate his or her functional limitations. Whether or not the cost of residential modifications will be deductible as IRWE, however, depends upon the location of the impaired person's place of work
(1) Individual Employed Outside the Home. An impaired person who is employed away from home may require changes outside his or her residence which permit the individual to get to his or her means of transportation (e.g., the installation of an exterior ramp for a wheelchair-confined person or special exterior railings or pathways for someone who requires crutches). Getting to one's mode of transportation can be regarded as part of the total process of getting to and from work. Payment for modifications which make possible the individual's movement from his or her residence to transportation would be deductible, therefore, as an IRWE. However, changes which modify the interior architecture or operation of the impaired individual's residence are primarily intended to facilitate his or her functioning in the home environment; therefore, payment for these changes are not deductible as IRWE. Examples of such modifications are the enlargement of doorframes and the lowering or rearrangement of kitchen appliances and bathroom facilities for a person who is wheelchair-confined, or the installation of a stairway chairlift for someone with leg braces.
(2) Individual Works at Home. Payments for modifying the interior of the home in order to create a working space to accommodate an individual's impairment are deductible to the extent that the modifications pertain specifically to the work space. Examples of such modifications are the enlargement of a doorway leading into an office or any other type of work area or the modification of the work space to accommodate problems in dexterity. However, when the determination involves payments made by a self-employed individual who works at home, the costs of such modifications generally are deductible from gross income as business expenses. Any such costs deducted as business expenses are not deductible as IRWE.
c. Nonmedical Appliances and Equipment. Payments for devices which are used by an individual who works at home or elsewhere and which are not ordinarily used for medical purposes, such as portable room heaters, air conditioners, humidifiers, dehumidifiers, electric air cleaners and posture chairs, are not generally deductible as IRWE. However, in some unusual situations, the impaired individual may be able to establish an impairment-related and medically verified need for such an item because it is essential for the control of the disabling condition both at home and in the work setting. To be considered essential, the item must be of such a nature that if it were not available to the impaired individual there would be an immediate adverse impact on his or her ability to function in his or her work activity. If the situation is as described above, payment for the item is regarded as an IRWE regardless of whether the item is used at home or in the work place. An example is the need for an air cleaner by an individual with severe respiratory disease who cannot function in a nonaircleaned environment.
Expenses for items which are used for physical fitness purposes, such as an exercycle, are not deductible unless the items are prescribed by the treating physician as necessary for treatment of an individual's impairment and necessary to enable the individual to work.
5. Routine Drugs and Routine Medical Services. Payments for routine drugs and routine medical services are deductible if such drugs and services are necessary for control of the disabling condition, thereby enabling the individual to work, and if the individual pays for them.
"Routine" refers to the regularly prescribed type of medical treatment or therapy followed for the particular impairment. "Control" refers to reducing or eliminating symptoms or slowing down progression of the disease.
Even if the drugs or medical services do not control the impairment, payments for such items are deductible if the drugs or medical services were provided with the medical objective of controlling the condition.
Examples of items in this category are anticonvulsant drugs needed to control epilepsy or anticonvulsant blood level monitoring; radiation treatment or chemotherapy for cancer patients; corrective surgery for spinal disorders; and antidepressant medications for mentally ill persons.
a. Diagnostic Procedures. Payments for diagnostic procedures are deductible only if the objective of the procedures is related to the control of the disabling condition to enable the individual to work, and the impaired person pays for such procedures. For example, payment for a diagnostic procedure is deductible if it is performed to ascertain how the impairment is progressing or to determine what type of treatment to provide for the impairment.
Examples of items in this category, the costs of which would be deductible, are electroencephalograms and brain scans undertaken with respect to a disabling epileptic condition and tests to determine the extent to which appropriate medications are controlling a diabetic condition.
b. Drugs and Services for Minor Physical or Mental Conditions. Payments for drugs or medical services which are used by the impaired individual only for minor physical or mental problems not resulting in any significant loss of function are not deductible. Examples of such items and services are: yearly routine physical examinations, allergy treatment (when such condition does not constitute a disabling condition), dental examinations, optician services and eyeglasses (when unrelated to a disabling visual impairment).
6. Similar Items and Services. This category includes items and services, other than those defined in subsections 1 through 5 above, which are related to an individual's impairment and are needed in order for the individual to work and for which he or she pays. The following are examples.
a. Medical Supplies and Services. Included here are, for example, physical therapy, and medical supplies of an expendable nature, such as incontinence pads, catheters, bandages, elastic stockings, face masks, irrigating kits, and disposable sheets and bags.
b. Dog Guide. Expenses paid by a person disabled by blindness in owning a dog guide are deductible as an IRWE since the dog enables the individual to overcome functional limitations related to basic mobility and travel. Deductible expenses include the costs of purchasing a dog, food, licenses, and veterinary services.
c. Transportation Costs. Transportation costs paid by an impaired individual are deductible if certain conditions discussed below are met. Such costs, including operating costs, are deductible in the manner specified in section B.6. below.
(1) Modified Vehicles. An impaired person may have deductible transportation costs if he or she requires structural or operational modifications to a vehicle in order to drive, or be driven, to work. If the impaired individual requires a specially modified vehicle in order to work, the cost of the modification (but not the cost of the vehicle) is treated as an IRWE. Modifications to the vehicle must be critical to its operation by, or its accommodation of, the impaired person and must be directly related to the impairment; i.e., without the modification the individual would either be unable to drive, or would be unable to ride in, the vehicle. To be deductible the cost of the modification must be paid by the impaired individual. Vocational rehabilitation (VR) agencies will often agree to pay for modifications to vehicles purchased by handicapped persons; the costs of such modifications paid by the VR (or any other source) may not be deducted from the individual's earnings. Most cases involving modifications to a vehicle will be clearcut, but the necessity for the modification should be verified through the treating physician or VR agency.
(2) Special Transportation Situations. An impaired person may also have deductible transportation costs if, solely because of the impairment, he or she requires a special means of transportation in order to get to and from work. Such situations must be verified by a physician (or VR counselor, when appropriate) and include such things as the inability to use available public transportation, the need for driver assistance, or the use of taxicabs.
7. "Reasonable Limits." The law provides that an amount equal to the cost to the individual of attendant care services, medical devices, equipment, prostheses, and similar items and services will be deductible from earnings in determining SGA and SSI countable earned income. The deductible amount, however, is subject to reasonable limits. Generally, the amount paid for medical services, medical devices ("durable medical equipment"), prostheses, and similar medically-related items and services will be considered reasonable if it is no more than the Medicare prevailing charge established for the same item or service in the individual's locale under Part B of title XVIII of the Social Security Act (Health Insurance for the Aged and Disabled).
Prevailing charge information is available from individual Medicare carriers through Social Security district offices (DO). If the amount paid for an item or service exceeds the Medicare prevailing charge in the individual's locale, an amount equal to the prevailing charge will be deducted from earnings. If the impaired individual wishes to establish the reasonableness of the amount paid, he or she may rebut the prevailing charge guidelines by demonstrating that the amount paid is consistent with the standard or normal charge for the same or similar item or service in his or her community. If the reported item or service is not listed in the Medicare guidelines, the amount paid will be considered reasonable if it does not exceed the standard or normal charge for the same or similar item or service in the impaired individual's community.
B. Determining When IRWE Are Deductible and How They Are Distributed.
1. General.
a. Statutory Limitations. To be deductible, payments must be made after November 30, 1980. Payments made after that date which result from purchase agreements made before December 1, 1980, are also deductible. All payments must be made by the impaired person. (No deduction will be allowed to the extent that payment has been or will be made by another source. No deduction will be allowed to the extent that the impaired person has been, could be, or will be, reimbursed for any payments by any other source.) All payments, however, must meet the criteria specified in subsections 1.b. through 1.g. below and sections 2. through 6. below.
b. Items. Payments the individual makes after November 30, 1980, for an item that was purchased at any time are deductible, whether the item was purchased before or after the individual began working, if the individual needs the item in order to work.
c. Services. Payments the individual makes after November 30, 1980, for services are deductible if the services are received while the individual is working. Deductions for services may be made even though a person must leave work temporarily to receive the services. The costs of any services received before the individual began working are not deductible.
d. Limitations on Applicability of Deduction Provision.
(1) "Earnings" vs. "Services" in Evaluation of Work Activity. The SGA decision in a case involving IRWE for items or services necessary for the individual to work generally will be based upon the individual's "earnings" and not on the value of "services" rendered by the individual. In other words, the questions of comparability and worth of the work generally will not be raised when IRWE are involved. The exception to this would be the situation in which a person is in a position to control or manipulate the amount of his or her earnings, e.g., the person is self-employed and the value of services rendered is clearly worth an amount greater than the earnings received. If it is necessary, in those rare instances, to determine the value of services rendered, see the guidelines in SSR 83-33, PPS-107, Determining Whether Work Is Substantial Gainful Activity -- Employees, and in SSR 83-34, PPS-108, Determining Whether Work Is Substantial Gainful Activity -- Self-Employed Persons.
Except for the matter of "services," the deduction of IRWE does not alter any of the basic concepts for evaluating SGA, e.g., in averaging earnings, in establishing disability, or in determining whether a person's disability has ceased. However, after a person's disability has ceased because of SGA, and the only issue is whether he or she is entitled to benefit payments during any remaining months of the extended period of eligibility, the matter of SGA must be determined on a month-to-month basis and the concept of averaging earnings is not applicable. (See SSR 82-67, PPS-77, Extension of Eligibility for Benefits Based on Disability.)
(2) Trial Work Period. The provision regarding IRWE deductions for items or services necessary for work does not apply for the purpose of determining whether a month of "services" is chargeable for TWP purposes. In other words, deductions will not be made to determine whether a person's monthly earnings can be reduced to $75 or less. However, during the TWP, IRWE can be deducted from an individual's earned income in determining SSI countable earned income and the SSI payment amount.
e. Uniformity of Deductions. The amount of the deductions must be determined in a uniform manner in both the title II and title XVI programs. Therefore, the amount of deductions must be the same for both SGA determinations and SSI payment purposes. (For exception, see g. below.)
f. Amount of Deductions. The amount of IRWE to be deducted from earnings or from earned income is the total allowable amount which the impaired person has paid for the item or service. That is, the amount to be deducted is not determined by assigning a certain portion of the expense to work activity and a certain portion to nonwork activity (e.g., 40 percent of the time at work and 60 percent of the time at home). Exceptions: attendant care services (see section A.1.) and vehicle operating expenses (see section B.6.). The amount to be deducted will, however, be subject to "reasonable limits" (see section A.7.).
g. SSI Self-Support Plans. For purposes of determining countable income, IRWE are not deductible from earned income if the income used for the purchase of the impairment-related item or service has been deducted previously as part of a plan for achieving self-support. However, any portion of the payment for an item or service paid with income that has not been deducted as part of the plan for achieving self-support can be deducted as an IRWE if the expense itself meets the requirements for an IRWE deduction. For purposes of determining SGA, the entire amount paid for the item or service is deductible. (Example: An individual purchased an impairment-related item necessary to achieve his designated occupational objective at a cost of $600. He paid the bill with $500 designated for his plan for achieving self-support and $100 of other income. For purposes of determining countable income, $100 is deductible. However, for SGA purposes, the entire $600 is deductible.) (If only $550 may be deducted because of the "reasonable limits" provision, for countable income purposes $50 is deductible and for SGA purposes $550 is deductible.)
2. Kinds of IRWE Payments and Methods of Deduction. Expenses for impairment-related items and services may be paid in a number of ways depending on the kind of item or service involved and the manner of purchase. Such payments are to be deducted according to the methods described here and the limitations discussed in 3 and 4 below.
a. Recurring Expenses. Some IRWE are paid on a recurring basis. In the case of durable equipment (respirator, wheelchair, etc.), the cost is ordinarily paid over a period of time under some type of installment purchase plan. In addition to the cost of the purchased item, interest and other normal charges (e.g., sales tax) that an individual pays on the purchase would be deductible. Generally, the amount the individual pays monthly will be the deductible amount. In the case of ongoing attendant care or medical services (e.g., physical therapy), the costs are generally paid, and are deducted, on a monthly basis. Such costs are deductible only if the services are received while the individual is working. (If the entire cost of the purchased item cannot be deducted because of the "reasonable limits" provision, the interest and other charges must be proportionately reduced. See Example 1 below.)
EXAMPLE 1:
The impaired person starts work in October 1981; she earns and receives $400 a month. In the same month she purchases a medical device at a cost of $4,800 plus interest charges of $720. The term of the installment contract is 48 months. No downpayment is made, and she begins her monthly payments in October. The monthly allowable deduction for the item would be $115 ($5,520 divided by 48) for each month of work during the 48 months. (If, instead of $4,800, only $4,200 may be deducted because of the "reasonable limits" provision, since $4,200 is seven-eights of $4,800, only $630 of interest charges, or seven-eights of $720, is deductible.)
NOTE: A special rule applies in the unusual situation in which, on a recurring basis, a person is billed and pays IRWE less frequently than monthly, e.g., quarterly. In this situation, these expenses either may be deducted entirely in the month payment is made or allocated over the months in the billing period, whichever the individual selects.
b. Nonrecurring Expenses. Part or all of an individual's IRWE may not be recurring (e.g., the impaired person makes a one-time payment in full for an item or service). Such nonrecurring expenses either may be deducted entirely in 1 month, or may be prorated over a 12-consecutive month period, whichever the individual chooses. He or she should consider which method will provide more benefits, including the amount of SSI payment in SSI cases.
EXAMPLE 2:
The impaired person starts work in October 1981; he earns and receives $525 a month. In the same month he purchases and pays for a deductible item at a cost of $250. In this situation a $250 deduction for October 1981 could be allowed, reducing the individual's earnings below SGA for that month.
In the above example, if the individual's earnings had been at or just above the SGA earnings amount (e.g., $320 a month), he would probably have chosen to have the $250 payment projected over the 1-year period, October 1981-September 1982, thus providing an allowable deduction of $20.83 a month for each month during that period. This deduction would reduce the earnings below the SGA level for 12 months.
c. Downpayments. An individual may make a downpayment on an impairment-related item, or possibly a service, to be followed by regular monthly payments. Such downpayments either may be deducted entirely in 1 month, or may be allocated over a 12-consecutive month period, whichever the impaired individual chooses. The individual should understand that the downpayment is allocated in order to provide for uniform monthly deductions.
When the downpayment is allocated over a 12-month period, the following calculation is made: the total payment to be made over a 12-consecutive month period beginning with the month of downpayment (i.e., the downpayment plus the regular monthly payments that will be made during that period) is determined and the total is allocated equally over the 12 months. Beginning with the 13th month, the regular monthly payment amount is deducted. If the regular monthly payments extend for less than 12 months, the total amount payable (downpayment plus monthly payments) is allocated over the shorter period.
EXAMPLE 3:
The impaired person starts working in October 1981, at which time she purchases special equipment at a cost of $4,800, paying $1,200 down. The balance of $3,600, plus interest of $540, is to be repaid in 36 installments of $115 a month beginning November 1981. The individual earns and receives $500 a month. In this situation a $205.42 monthly deduction is allowed beginning in October 1981 and ending in September 1982. After September 1982, the deduction amount would be the regular monthly payment of $115.
Calculation for above example:
Downpayment in 10/81 $1,200
Monthly payments 11/81 through 09/82 +1,265
12) $2,465 = $205.42
EXAMPLE 4:
While working, an impaired individual purchases a deductible item in July 1981, paying $1,450 down. (The individual earns and receives $500 a month.) However, the first monthly payment of $125 is not due until September 1981. In this situation, a $225 monthly deduction is allowed beginning in July 1981 and ending in June 1982. After June 1982, the deduction amount would be the regular monthly payment of $125.
Calculation for above example:
Downpayment in 07/81 $1,450
Monthly payments 09/81 through 06/82 +1,250
12) $2,700 = $225
d. Rentals or Leases. When the impaired individual rents or leases an item while working, the allowable deductible amount is the actual monthly charge. Where the rental or lease payments are made other than monthly (e.g., weekly), it is necessary to compute monthly payment amounts. As with other costs, rental or lease payments are subject to the "reasonable limits" provision. An amount that does not exceed the standard or normal rental or lease charge for the same or similar item in the impaired individual's community is considered reasonable.
3. When IRWE Are Deductible in Title II or Title XVI SGA Determinations. In most instances, an individual is working in the month in which an IRWE is both incurred and paid. The payment amount is, therefore, directly deductible from earnings attributable to the month of work activity. Occasionally, however, an IRWE payment may be made before the first, or after the last, month of work activity. Specific limitations are applicable to the deduction of such payments from earnings.
a. When To Deduct Expenses Paid Before Work Started.
(1) The Expense Must Be for a Durable Item. Durable items are things that can be used repeatedly. These include, but are not limited to, medical devices (e.g., wheelchairs, braces), prostheses, work-related equipment (e.g., typing aids, electronic visual aids), residential modifications, nonmedical appliances (e.g., air cleaner), dog guides and vehicle modifications. Things that are not considered durable items (and, therefore, their costs are not deductible) include, but are not limited to, services, drugs, oxygen, diagnostic procedures, medical supplies (e.g., catheters, incontinence pads), and vehicle operating costs.
As with all expenses, the expense must be paid by the individual in cash (including checks or other forms of money, rather than in-kind), and it must be within the "reasonable limits" guidelines. The item must be required in order for the individual to work (i.e., the individual must use the item while working), and this need must be verified. The expenditure may be a monthly (recurring) payment, a one-time (nonrecurring) payment, or a downpayment, but may not be made for a rented or leased item; and it must be made sometime in the 11 months preceding the month work started. (The individual must have been disabled when payment was made. That is, payments made prior to the established onset date of disability cannot be deducted.)
(2) How To Determine Deductible Amount for Recurring Expenses. When an item is paid for in installments, it is necessary to determine the total amount of the installment payments (including a downpayment) that were made for the particular item during the 11 months preceding the month work started. This total amount is considered to have been made in the month of the first payment (for that item) within this 11-month period.
The total of these payments (installment and downpayment, if any) is allocated over a 12-month period beginning with the month of the first payment (but never earlier than 11 months before the month work started), but only that part of the total which is apportioned to the month work began and the following months is deducted.
For example, if a person purchases an item 4 months before the month work began and begins monthly payments of $240 at that time, the individual would have paid a total of $960 preceding the month work started; this total amount is considered to have been made in the first month of payment, that is, 4 months before the month work began. The deductible amount would be $640 ($960 divided by 12 multiplied by 8). (The monthly payments of $240 that the individual continues to make while working would, of course, also be deductible in accordance with the instructions for recurring expenses in subsection 2.a. above.)
(3) How To Determine Deductible Amount for Nonrecurring Expenses. When an item is paid for with a one-time payment during the 11 months preceding the month work started, it is necessary to allocate the payment over a 12-month period beginning with the month of payment, but only that part of the payment which is apportioned to the month work began and the following months is deducted.
For example, if an item is purchased 7 months before the month work began and is paid for with a one-time payment of $300, the deductible amount would be $125 ($300 divided by 12 multiplied by 5). If an item is purchased 3 months before the month work began and is paid for with a one-time payment of $600, the deductible amount would be $450 ($600 divided by 12 multiplied by 9).
(4) How To Handle Deductible Amount as IRWE. The deductible amount, as determined by the above formula, is considered to have been made in the first month of work, and is deductible in the same manner as a nonrecurring expense as described in subsection 2.b above; that is, the total deductible amount is deducted in 1 month or allocated over a 12-consecutive month period, whichever the individual selects.
For example, if an individual had the three purchases described in subsections (2) and (3) above during the 11-month period preceding the month work started, the total deductible amount would be $1,215 ($640 plus $125 plus $450). This amount would be deducted at one time or allocated over a 12-consecutive month period, whichever the individual selects, beginning with the first month of work (for purposes of determining SGA), or the first month income is received (for purposes of determining SSI countable earned income).
NOTE: Expenses for these durable items which the individual continues to pay while working are deductible in accordance with instructions for recurring expenses in subsection 2.a. above.
b. When To Deduct Expenses Paid After Work Stopped. A person may have required an item or service in the month he or she began working but was no longer working in the following month when payment for the item or service was made. Under the regular rules, the payment would not be deductible for SGA purposes because the payment was not made in a month of work. In order not to penalize the individual, the payment should be deducted. This is an exception to the regular rules. In this unusual situation, the payment should be deducted in the month the work was performed.
4. When IRWE Are Deductible in Determining SSI Countable Earned Income. In most instances an individual is working and receives earned income in the month in which an IRWE is both incurred and paid. The payment amount is, therefore, directly deductible from earned income received in the month of work activity. In unusual situations, however, the payment of an IRWE may not correspond to either a month of work activity, or a month in which earned income is received, or both. Specific limitations apply to the deduction of such payments from earned income.
a. A disabled individual may make an IRWE payment, in anticipation of work, prior to the first month of work activity. See the discussion of procedures applicable to such cases in 3.a. above.
b. A disabled individual may make an IRWE payment in the month before or after earned income is received or in the month after work stopped.
(1) If an SSI recipient starts working and makes an IRWE payment in one month but does not receive earned income until the following month, deduct (or begin allocating) the payment amount in the first month earned income is received. (Example: Individual begins working on August 24 and makes an IRWE payment on August 31, but does not receive his first paycheck until September 7; the IRWE is deducted from earned income received in September.)
(2) If an SSI recipient makes an IRWE payment in the month after he or she last worked and received earned income, and the payment was for an impairment-related item or service used while working, the payment amount should be deducted from the earned income received in the last month of work. (Example: Individual receives a service necessary to enable him to work on April 3; he stops working on April 14, receives his last paycheck on April 28, and pays for the service on May 2; the IRWE is deducted from earned income received in April.)
(3) If an SSI recipient is no longer working in the month he or she receives earned income and makes an IRWE payment, the payment amount should be deducted from earned income in the month of nonwork only if the income received is for work activity (e.g., not income received as a silent partner in a business), and the work activity was performed in a period when the individual required the impairment-related item or service. (Example: Individual uses an impairment-related item for work throughout January but stops working on January 26; on February 9 he receives his last paycheck for January employment and that same day pays the bill for the item used in January; deduct the IRWE amount from earned income received in February.)
5. Proration of Expenses for Attendant Care. In may cases the attendant may perform services which are not allowable under SSA's definition of attendant care services (per subsection A.1. above). Therefore, the total amount paid the attendant each month should not be deducted, but only the amount which covers those services related to assisting the individual to prepare for work, getting the individual to and from work, helping the individual on the job, and assisting the individual immediately upon returning home from work. In order to determine the amount to be deducted as an IRWE for attendant care services, it is necessary to prorate the attendant's earnings as follows:
a. The number of hours spent each day by the attendant in providing the specified allowable services should be determined.
b. The attendant's monthly earnings should be divided by the total number of hours worked in a month (or the weekly earnings should be divided by the number of hours worked in a week) in order to ascertain the hourly wage.
c. The number of allowable attendant care hours (from a., above) should be multiplied by the hourly wage to arrive at daily attendant care expenses.
d. The amount of allowable daily attendant care expenses (from c., above) should be multiplied by the number of work days in the month to arrive at the deductible expense for attendant care services for the month.
6. Special Transportation Costs. Transportation costs which the impaired individual necessarily incurs because of his or her impairment are deductible as specified below.
a. Modified Vehicles.
(1) Modification. Where structural or operational modifications are made to a vehicle (e.g., a handbrake is specially installed on an automobile for the individual whose impairment involves the legs, or an electric lift is added to a van for the individual who is wheelchair-confined), without which the impaired individual could not get to and from work, the actual cost of the modification (but not the cost of the vehicle) is deductible if paid by the impaired individual.
(2) Operating Costs. In addition to the cost of the modification, the operating costs of a modified vehicle which are directly related to work (for travel to and from place of employment) are also deductible. For the purpose of IRWE, the determination of operating costs of a particular vehicle is based upon the weight of the vehicle when empty, and on a mileage rate corresponding to that weight. Operating costs include the cost of gas and oil (excluding taxes), maintenance, parts and tires, tolls and parking, insurance, and State and Federal taxes. These operating costs are based upon data compiled by the Federal Highway Administration. Additional deductions for the cost of any of the above items are not permitted.
The following chart is to be used for 1982 and later model vehicles. See asterisked note below concerning pre-1982 model vehicles.
A Vehicle Weighing: Is Defined for IRWE Purposes as: And Has an Allowable Mileage Rate of:
Less Than 2,500 Lbs. Empty "Subcompact" $.15*
Less Than 3,000 Lbs. Empty "Compact" $.16*
Less Than 3,500 Lbs. Empty "Intermediate" $.18*
3,500 Lbs. or more Empty "Large" $.19
Passenger Van "Van" $.23*
* For a pre-1982 vehicle add $.01 to the mileage amount indicated above for each year prior to 1982; for example, if an individual has a 1977 large automobile, the appropriate mileage rate would be $.24. This adjustment for the age of the vehicle, however, is limited to 10 years. The adjusted mileage amount would, therefore, never be more than $.10 over the 1982 rate for the particular type of vehicle. For example, if an individual has a 1970 large automobile, the appropriate mileage rate would be $.29.
(3) Weight of Vehicle. If the vehicle classification is not known (i.e., whether subcompact, compact, intermediate or large, as shown above), it will be necessary to ascertain the weight of the vehicle in order to determine the proper amount to deduct for operating costs. The impaired individual may be able to provide the weight information from specification literature received with the vehicle. This information may also be obtained by contacting a local dealer of the particular make of vehicle. If the vehicle classification is not known and the weight cannot be obtained from either the impaired individual or a vehicle dealer, the mileage rate of $.17 should be used to determine the individual's vehicle operating costs.
(4) Determining Monthly Operating Cost. The monthly operating Cost is determined as follows: The individual's daily mileage cost to and from work is calculated according to the rates shown above, or the rate as adjusted for the age of the vehicle. The daily mileage cost is multiplied by the number of days worked per week to obtain the weekly amount. The weekly amount is multiplied by 13 (number of weeks in a calendar quarter), and the product is divided by 3 (number of months in a calendar quarter).
b. Special Transportation Situations. An individual has a deductible transportation expense when a physician (or VR counselor, when appropriate) verifies that the individual, because of his or her impairment, requires a special means of travel to and from work, and the individual's situation appears, as discussed below, to warrant deduction of the expenses.
Evaluation of special transportation situations must be based on two factors: the availability of public transportation in the individual's community, and the individual's capacity to drive a vehicle to work. Public transportation here means standard public forms of transit, e.g., bus, subway, or train, designed for use by the general public. To deal with these issues, the individual's situation may be identified in the following.
(1) Public Transportation Available in the Individual's Community.
Situation: Individual can use public transportation -- his or her impairment does not prevent getting to and from, and traveling on, public transit.
Action: Transportation expenses may not be deducted as IRWE.
Situation: Individual cannot use public transportation because of physical or mental limitations resulting from impairment.
For example, individual is wheelchair-bound and public transportation has not been altered for handicapped people; the individual cannot manage getting on and off public transportation (e.g, impairment prohibits travel from home to bus stop); the individual is blind and uses a dog guide not permitted on public transit, or individual is not mobility-trained in use of public transportation; the nature of impairment precludes travel on public transportation (e.g., individual with respiratory illness requires special air-treated environment); or a mentally retarded person cannot negotiate public transportation (e.g., transfers, directions, schedules).
Action: When need and payment are verified, the following special travel expenses may be deducted: the cost of a trip to and from work by taxicab; or the cost of the impaired individual's driving an unmodified vehicle to and from work (at a per mile rate as indicated in subsection a. (2) above); or the cost of paying another person (not a cab driver) to drive the individual to and from work. (If the impaired person is driven to and from work in his or her own vehicle, the vehicle operating costs (at a per mile rate as indicated in subsection a. (2) above) are deductible, in addition to any reasonable amount paid the driver. If the driver is a family member, development must verify payment in cash or by check for the service rendered.)
(2) Public Transportation Not Available in the Individual's Community
Situation: Individual is able to drive an unmodified vehicle to work -- his or her impairment does not prevent driving.
Action: The individual's expenses of driving an unmodified vehicle may not be deducted as IRWE.
Situation: Individual is unable to drive an unmodified vehicle to work because of his or her impairment (not simply because he or she is not licensed to drive).
For example, the individual could not handle vehicle controls; the individual is blind; or, the individual is mentally retarded and cannot be licensed to drive.
Action: When need and payment are verified, the following special travel expenses may be deducted: the cost of a trip to and from work by taxicab; or the cost of paying another person (not a cab driver) to drive the individual to and from work. (If the individual is driven to and from work in his or her own vehicle, see the second Action instruction for subsection (1) above.)
C. When IRWE Are Developed and Verified. Several issues must be verified before IRWE may be deducted: The individual's need for the impairment-related item or service in order to work; correlation of the impairment(s) reportedly requiring an IRWE item(s) and service(s) with the medical basis of disability; the amount of the charges for those items or services (and the reasonableness of the charges); and proof that the individual paid for the items or services (and was not, cannot be, and will not be, reimbursed for the expenses paid).
1. Initial Claims.
a. Title II. A claimant initially filing for title II benefits who is working and alleges IRWE may benefit by a deduction of IRWE from earnings in a determination as to SGA. When reported earnings are already below the SGA level, no development of IRWE is necessary. When reported earnings are at the SGA level, it is necessary to determine first whether the deduction of alleged IRWE would reduce earnings below the SGA level. If alleged IRWE would not reduce earnings below the SGA level, no further development is necessary. If alleged IRWE would reduce earnings below the SGA level, it is necessary to develop and verify.
b. Title XVI. A claimant initially filing for title XVI payments on the basis of disability (but not blindness) whose income is within specified limits and who is working and alleges IRWE may benefit by a deduction of IRWE from earnings in a determination as to SGA. It is not necessary to develop IRWE when alleged IRWE would not reduce earnings below the SGA level, or when the claimant's countable income, without deduction of the alleged IRWE, is greater than the Federal benefit rate (FBR). Technically, IRWE are always deductible for SGA purposes, but if countable income is too high, the claimant is ineligible.
However, it is necessary to develop and verify expenses if the alleged IRWE would reduce earnings below the SGA level, and the claimant's countable income, without deduction of the alleged IRWE, is equal to or less than the FBR; or reported earnings are already below the SGA level, and the claimant's countable income, without deduction of the alleged IRWE, is equal to or less than the FBR.
At any point in an evaluation period where it is established that a claimant meets the SSI income test without any IRWE deduction, the adjudicator will calculate that claimant's SSI payments for that month of eligibility, and for all consecutive subsequent months of eligibility using the full deduction.
NOTE: The following examples demonstrate when it is or is not necessary to develop IRWE in title XVI claims situations. Subparts D and K of Part 416 of title 20 of the CFR explain how benefit amounts are computed.
EXAMPLE 1:
An SSI claimant lives in a State with a federally administered optional supplement. His combined Federal/State monthly payment level is $414.70 (Federal, $314 and State, $100.70). In April 1984 he has earnings of $720 a month. He has IRWE of $425 a month. He is not eligible for the IRWE exclusion. Even though his IRWE bring him below the SGA level, he does not meet the Federal income test before application of the IRWE exclusion. However, he is eligible for a $97.20 State supplement (computed without any IRWE exclusion).
EXAMPLE 2:
An SSI claimant lives in a State which does not have Federal administration of its supplementation program. In April 1984 she has earnings of $400 a month and a private pension of $200 a month. She has IRWE of $200 a month. She is not eligible because her countable income, without exclusion of IRWE, exceeds the Federal payment level ($314 per month as of January 1, 1984).
EXAMPLE 3:
An SSI claimant lives in a State with a federally administered optional supplement. His combined Federal/State monthly payment level is $350. In April 1984 he has earnings of $500 a month. He has an IRWE of $210 a month. In addition to being below the SGA level with the IRWE, he meets the Federal income test ($314) without any IRWE exclusion and so qualifies for use of that exclusion. Six months later, he begins receiving a $250 monthly private pension from a former employer. He no longer qualifies for a Federal SSI payment but continues to meet the combined Federal/State payment level: therefore, he continues to qualify for the full IRWE exclusion and receives a $7.50 monthly supplementary payment. (See subsection C.2.b. below.)
EXAMPLE 4:
An SSI claimant in April 1984 has earnings of $400 a month and alleges IRWE of $65 a month. Although he meets the Federal income test ($314) without exclusion of IRWE, he is not eligible on the basis of disability because his earnings after all allowable exclusions still demonstrate SGA.
EXAMPLE 5:
An SSI claimant in April 1984 has earnings of $450 a month and alleges IRWE of $175 a month. The claimant appears to be eligible. She meets the Federal income test ($314) before exclusion of IRWE, and after IRWE are deducted she is below the SGA level.
c. Concurrent Title II-Title XVI. The procedures described in subsections C.1.a. and b. above should be followed.
2. Continuing Disability Cases.
a. Title II.
During TWP. IRWE development is not necessary because benefits would not be affected during the TWP.
After TWP. It is necessary to ascertain whether there were any IRWE during, as well as after, the TWP in determining if cessation after the TWP due to SGA is warranted. It is also necessary to determine issues of subsequent reinstatement and suspension (see SSR 82-67, PPS-77). The instructions outlined in subsection C.1.a., above, should be followed.
No entitlement to TWP. The instructions outlined in subsection C.1.a., above, should be followed.
b. Title XVI.
During TWP. IRWE development is necessary in all cases when earned income is over the $65 per month earned income exclusion (or up to $85 per month if the $20 general exclusion has not been used up on unearned income) to determine if the SSI payment amount might be affected. (Prior to April 1, 1982, when countable income was determined on a quarterly basis, the applicable earned income figures were $195 or up to $255 per calendar quarter.) IRWE should be developed and verified for exclusion from earnings in determining countable earned income and the SSI payment amount. An individual retains eligibility for the IRWE exclusion for all subsequent consecutive months in which countable income, with use of the IRWE exclusion, does not exceed the Federal payment level, or if applicable, the combined Federal/State payment level. (See Pertinent History and example 3 in subsection C.1.b. above.)
After TWP. As above, IRWE development is necessary in all cases when earned income is over the $65 per month earned income exclusion (or up to $85 per month if the $20 general exclusion has not been used up on unearned income) to determine if the SSI payment amount might be affected. It is further necessary to ascertain whether there were any IRWE during, as well as after, the TWP in determining if cessation after the TWP due to SGA is warranted, and also to determine issues of subsequent reinstatement and suspension, per SSR 82-67, PPS-77.
c. Concurrent Title II-Title XVI. The procedures described in subsections C.2.a. and b. should be followed.
D. Documentation Issues. The following is intended to serve only as a reminder of issues that require documentation and not as an all-inclusive list of policy guidance.
1. Need for Item or Service. The need for an impairment-related item or service is established where an individual's disability is sufficiently severe to result in functional limitations requiring assistance in order for him or her to work. Routine drugs and routine medical services are "needed" when they are required to control the disabling condition, thereby enabling the individual to function at work. A number of questions must be raised, then, in order to establish need for an item or service.
a. Do the individual's functional limitations require him or her to have assistance (items or services) in order to work?
b. Does the alleged expense meet the statutory definition of IRWE (i.e., is it determined to be attendant care services, durable medical equipment, prostheses, other equipment, similar items and services, or routine drugs or routine medical services necessary for the control of the disabling condition, as defined in section A., above)?
c. Does the expense pertain to the impaired individual (not to another person)?
d. Does the impairment(s), which reportedly requires the individual to use a particular item or service, correlate with the established medical basis of disability?
2. Payment for Item or Service.
a. Payment Issues. There are several issues relating to payment which must be resolved:
(1) Was the expense paid after November 30, 1980?
(2) For determinations as to SGA, was payment made in a month the individual was working? (See section B.3. above for rules regarding payments made on durable items before the individual started working and payments made on items or services after the individual stopped working.)
(3) For determinations as to SSI countable earned income, was payment made in a month earned income was received? (See section B.4. for rules regarding payments made on durable items before the individual started to receive earned income and payments made on items or services after the individual last received earned income.)
(4) Did the payment pertain to an item that was used, or a service that was received, in a month in which the individual was working?
(5) Was the payment within "reasonable limits"?
(6) Was the expense paid by the impaired individual?
b. Obtaining Proof of Payment. The impaired person must provide proof that he or she paid for the item or service. A verifying statement signed by the individual and copies of cancelled check(s), or paid receipt(s), etc., would be adequate to prove payment. The statement should include an assertion that no reimbursement will be received for the IRWE and that no agency or other source is underwriting the expense for the individual. Where the individual is unable to provide proof of payment, the prescribing source (if also the supplier) or the supplier of the item or service can verify payment.
c. Services by a Family Member. Whenever services (attendant care, transportation) are involved, the file should be documented as to whether the provider of the service is a family member. If the provider is a family member, the following documentation must also be included on a statement signed by the impaired individual and the attendant:
(1) A statement of attendant's duties and periods of time when performed.
(2) Certification that services have been rendered and that payment in cash (including checks or other forms of money, but not payment in kind) is being received from the impaired individual.
(3) Evidence that payment is made on a regular basis (e.g., cancelled checks).
(4) A statement which establishes the history of the impaired individual's need for an attendant, i.e., information which establishes prior ongoing employment of an attendant before the issue of IRWE became relevant to the impaired person.
(5) A statement which establishes how the family member suffers an economic loss by serving as attendant (e.g., identification of the job which the attendant relinquished, or documentation regarding the reduction of hours in other remunerative work, and the recording of the date on which the individual stopped working or reduced his or her hours of work).
(Where appropriate it should be ascertained whether these payments have been reported under the Federal Insurance Contributions Act. Such reporting helps establish the credibility of attendant care payments and protects the interest of the person rendering such services.)
d. Reimbursement of Expense. Deduction of IRWE is not allowable to the extent that the individual has been, could be, or will be, reimbursed for such expenses by any source (such as through a private insurance plan, Medicare or Medicaid eligibility, or other plan or program).
(1) Any portion of IRWE the person pays that is not reimbursed or not reimbursable is allowable as a deduction. If, for example, a person pays $80 for crutches and receives no reimbursement, the full $80 is allowed as a deduction. But if an agency, plan, or program reimburses him $64 of the $80 purchase price, his expense deduction is only $16. (If, pursuant to the "reasonable limits" provision, it is found that the standard cost of these crutches is $70 rather than $80, only $6 ($70 minus $64) is deductible.)
(2) If the individual reports there is no possibility of reimbursement from a private insurance plan, a signed statement to that effect should be obtained from him or her.
(3) Verification of Medicare or Medicaid eligibility can be obtained from microfiche records, Master Beneficiary Record and SSI queries.
(4) When the individual alleges that Medicare did not pay 80 percent of the reasonable charges, or that the charge for the item or service satisfied part or all of the annual deductible, the individual must provide proof of these allegations.

EFFECTIVE DATE: The policy explained herein is effective as of the date of publication of this PPS.

CROSS-REFERENCES: Program Operations Manual System, sections DI 00503.800-DI 00503.860; SSR 83-33, PPS-107, Determining Whether Work Is Substantial Gainful Activity -- Self-Employed Persons; SSR 83-35, PPS-109, Averaging of Earnings in Determining Whether Work Is Substantial Gainful Activity; SSR 82-67, PPS-77, Extension of Eligibility for Benefits Based on Disability.

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