Some recipients of Social Security disability insurance (SSDI) are hesitant to work because they're unsure how it will affect their disability payments. While this reluctance is understandable, Social Security has special rules that allow people to continue to receive their full monthly benefit while trying out a part-time or even full-time job. Understanding these rules before seeking employment will help you make sure you're not jeopardizing needed disability payments.
The Trial Work Period (TWP) is designed to allow SSDI recipients to experiment with working while still receiving their full monthly benefit. It consists of a total of nine months, not necessarily consecutive, over a 60-month period. During these nine months, a person may earn an unlimited amount without lowering their monthly cash benefit. The TWP was developed many years ago to encourage disability recipients to go back to work when they can.
A month counts as a TWP month whenever an individual earns more than $910 per month (in 2020) or when a self-employed individual (that is, business owner, freelancer, consultant, etc.) works 80 hours or more in a month.
All of your monthly earnings before taxes apply to the $910 TWP threshold, but you can deduct impairment-related work expenses that you pay for out-of-pocket (such as service animal-related costs, medical supplies, or job coaching). Keep receipts of your impairment-related expenses so that Social Security can total your earnings accurately.
In addition, it is essential to inform your local Social Security office of your earnings for each month you work while receiving benefits. Send a certified letter with a copy of your pay stubs and any impairment-related work expenses by the 10th of the month after a month in which you work. Failure to do so may result in your benefits' being terminated.
For those concerned that a TWP could lead to their benefits being terminated when Social Security conducts a Continuing Disability Review (CDR), it should be noted that CDRs are generally conducted randomly by Social Security. While it's possible for a CDR to occur during a Trial Work Period (or at any other time), a TWP by itself is not likely to raise a red flag with Social Security. If you do have a review, Social Security will look at your medical records, but not your trial work, to see if you are still disabled.
Once you've exhausted your nine-month TWP, you enter the Extended Period of Eligibility (EPE). The EPE is a 36-month period during which you'll continue to receive your full benefit every month as long as you remain disabled and earn less than Social Security's substantial gainful activity (SGA) threshold. In 2020, the SGA level is $1,260 for non-blind individuals and $2,110 for the blind.
If you earn over SGA in any month during the EPE, you'll lose that month's entire benefit, a situation sometimes referred to as the "cash cliff." This will also cause Social Security to find that your disability has "ceased." Once that happens, you will be paid in full for that month and an additional two-month grace period, before benefits terminate.
If you later stop working, or your earnings fall below the SGA level during the EPE, contact Social Security and your benefits will be restarted without having to file a new application. Because it's so easy to re-start your benefits if your work attempt doesn't work out, Social Security calls the EPE the "re-entitlement period."
When the 36-month re-entitlement period ends, your benefits will continue as long as you are medically disabled and not earning SGA. If you earn over SGA for even one month after the 36-month period of re-entitlement, your benefits will terminate. However, if your medical condition makes you stop working again, you may be eligible for expedited reinstatement, if it's within five years of the EPE.
An example may help clarify how the TWP and EPE function in practice.
Andy began receiving SSDI in 2015. In January 2018, he began working part-time as a cashier and earned $500 for the month. The following month, his hours increased and his earnings for the month totaled $800. Because his February wages were over the TWP threshold, February became the first month of his trial work period. He proceeded to earn over the threshold in March, May, July, August, September, October, November, and December 2018. Although these months were non-consecutive (his April and June earnings were below the threshold, so they didn't count as TWP months), Andy used up his nine-month trial work period. Note that even though he was working and earning over the threshold, Andy received his full disability benefit for each month of 2018.
Beginning in January 2019, Andy began the 36-month extended period of eligibility. Andy earned $600 in both January and February, still receiving his full disability amount because this was less than the SGA threshold. However, in March 2019, Andy made $1,450 and thus exceeded the SGA level. Because of this, his disability benefits "ceased," although he remained entitled to March benefits as well as a two-month grace period. He didn't receive benefits after May 2019. He continued to earn over the SGA amount until November 2019, when he became medically unable to work. Andy is again entitled to receive his check in November 2019, and for as long as he is unable to earn at or above the SGA level.
After Andy's EPE expires in December 2021, Andy will continue to receive his regular disability check as long as he does not earn SGA. However, if Andy does start to work and earn SGA even once AFTER the 36-month reinstatement period, he will lose his benefits entirely and will have to reapply.
Medicare coverage comes with SSDI benefits (two years after you become entitled to SSDI). It continues during the Trial Work Period and Extended Period of Eligibility. At the end of your TWP, you'll remain covered by Medicare for another 93 months, even if you're working and earning SGA during this time. Of course, if you remain entitled to disability benefits after the EPE ends, you will still enjoy Medicare coverage as well.
If you're an SSDI recipient wanting to work but unable to perform any of your past jobs, you may be eligible for free vocational rehabilitation, schooling, or technical training through Social Security's Ticket to Work program. Those participating in Ticket to Work will be evaluated at a vocational rehabilitation office and a plan will be developed for the individual to try to return to the workforce. As an added incentive, Social Security may not initiate a Continuing Disability Review of an individual in the Ticket to Work program.
For those who work for themselves, income isn't necessarily a good measure of how much a person is working. To measure whether a self-employed person is working too much to still be considered disabled, Social Security has come up with some elaborate rules based on income earned, number of people who work in the business, and hours worked. These rules apply after the Trial Work Period has ended. To learn more, see our article on what counts as SGA for small business owners.