Two Best Kept Secrets Benefits Counselors Need to Know
Description: This article details two lesser-known Supplemental Security Income (SSI) provisions that benefits counselors can use to assist clients: the exclusion of Federal Work Study (FWS) earnings and the strategic use of a Plan to Achieve Self-Support (PASS). It provides practical case examples demonstrating how beneficiaries can utilize these specific exclusions to fund educational and vocational goals without jeopardizing their essential benefits.
Introduction
The life of a benefits counselor (often referred to as a benefits planner, benefits adviser, or work incentives counselor) can be anything but dull or routine. While you may cover similar issues in many cases, even the most experienced of our readers cannot have answers at their fingertips for every issue that comes up. In fact, your co-authors of the Deeper Dive series, who have written or co-authored countless policy briefs, newsletters, and other resource materials over more than three decades are regularly humbled by what we do not know.
It was with this in mind that we did a presentation on Best Kept Secrets for the 2021 NABWIS conference, supported by a 12-page resource document highlighting what we considered to be some of the little gems that often are not well publicized or, if learned during training, are easily forgotten when they do not regularly come up with your work. For this article, we are taking two of those “secrets” that relate to income and resource exclusions available in the Supplemental Security Income (SSI) program, including:
SSI’s exclusion of earnings received through the Federal Work Study (FWS) program and the exclusion from countable resources when some of those earnings are retained for later use, even when they will not be used for education-related expenses. In that section of the article, we contrast the more limited SSI income and resource exclusions when funding for the student job comes from a source other than the FWS program.
SSI’s exclusion from countable income of any money that is set aside, in an approved Plan to Achieve Self Support (PASS), to pay for items and services that will pave the way toward self-supporting work. Our PASS examples include the common use of Social Security payments and the much less common use of deemed income to pay for PASS expenses, thereby creating SSI eligibility or increasing SSI payments by one dollar for every dollar set aside in the PASS.
As always, our article includes references to key policies and other resources in text or footnotes with hotlinks wherever appropriate.
SSI Exclusion of Federal Work Study Earnings as a Best-Kept Secret
The Federal Work-Study (FWS) program provides needs-based funding for part-time work for undergraduate, graduate, and professional students at universities, colleges, and community colleges. An FWS grant to a student is part of the school’s financial aid package and supplements assistance received from Federal Pell Grants1 and other sources. When a college or university participates in the FWS program, up to 75 percent of funding for an FWS job comes from the federal program with at least 25 percent coming from the school. See 2023-2024 Federal Student Aid Handbook.
Based on recent data, the average FWS grant ranges from $2,000 to $5,000 per student for an academic year. See The College Investor (6/4/23). At a minimum, students must be paid at the prevailing federal minimum wage of $7.25 per hour but many schools report paying a much higher hourly wage. See e.g., State University of NY, College of Environmental Science and Safety, FWS Program Student Handbook 2024-25, noting hourly rates paid of $15 per hour. At the $15 per hour rate, a $3,000 annual grant would allow a student to earn $1,500 per semester. This would translate into 100 work hours each semester, or 10 hours per week for 10 weeks. Some students may opt to work fewer hours during a semester and then work additional hours during a school break, between semesters, or during the summer.
SSI Program Will Exclude Federal Work Study Earnings.
When the FWS funding is received under Title IV of the Higher Education Act of 1965 (HEA) or through the Bureau of Indian Affairs (BIA), the FWS wages are excluded from income and resources “regardless of use … [and the] resource exclusion
… does not have a time limit ….” Regardless of how long the earnings are held, they are excluded from resources. Social Security Program Operations Manual Systems (POMS) SI 00830.455 B (policy notes that “State educational assistance programs, including work-study, funded by LEAP [Leveraging Educational Assistance Partnership] or SLEAP [Special Leveraging Educational Assistance Partnership] are programs under Title IV of HEA,” and benefit from the SSI income and resource exclusion).2
The SSI exclusion is more limited when the student employment is funded through a non-HEA or BIA grant. When funding for the student’s job comes from another grant, scholarship, fellowship, or gift, any portion of that funding that is “used for paying tuition, fees, or other necessary educational expenses at any educational institution, including vocational or technical education, is excluded from income.” And any portion of that funding that is not used for the noted educational expenses, “but will be used for paying this type of educational expense at a future date is excluded from income in the month of receipt.” POMS SI 00830.455 C. The policy states that this exclusion does not apply to any portion of this funding set aside for or used for food, clothing, or shelter. Even funds that are retained to meet educational expenses later will be considered a countable resource by SSI if retained for more than nine months.
Given these contrasting policies, it is important for SSI beneficiaries and their benefits counselors to get clear information on whether the student’s job is funded under the FWS program or is funded by a non-FWS source. The examples below illustrate why these distinctions are so important.
Example 1 – Student job funded by FWS. Jerome, age 20, receives SSI of $943 per month.3 He is in the second year of a four-year college program and was awarded
$3,000 in FWS assistance for the 2023-24 school year, He expects to use $1,500 of the funding in the Fall semester and the remaining $1,500 in the Spring semester as a research assistant to the school’s history department. Because the student job will be supported by an FWS grant under HEA Title IV, 100 percent of this income is excluded by SSI and any retained FWS earnings will not be considered a resource by SSI. Jerome’s SSI will continue at $943 per month.
Example 2 – Changing Jerome’s facts, extra money from a non-FWS job. Let’s assume the history department is very happy with Jerome’s work and offers him a job during the four-week winter break between semesters. It involves tutoring high school students enrolled in a college advanced placement history class. This job is funded through the college’s alumni association, to support a student’s educational costs, and will pay $1,285 gross for work performed during the month of January. Although this does not meet the criteria for exclusion under HEA Title IV, the SSI program will exclude these earnings so long as used for educational expenses or saved for future educational expenses and spent on those expenses within nine months.
Jerome tells his benefits counselor about the unexpected income and explains that he’d like to use this money during Spring break to visit his grandparents in Arizona. The benefits counselor explains that using the money this way would defeat any right to have it excluded under the SSI rules governing exclusion of earnings for a job funded by sources other than HEA Title IV. See POMS SI 00830.455 C. However, she explains that Jerome can have all $1,285 of his January earnings excluded under SSI’s Student Earned Income Exclusion (SEIE) rules. He is eligible for the SEIE because he is under the age of 22 and attends college for at least 8 hours per week. The SEIE allows up to $2,290 per month and up to $9,230 per year of his earnings to be excluded by SSI. See POMS SI 00820.510. Since SSI will not count any of his January earnings, once the SEIE is requested and approved by the SSI program, his SSI will remain unchanged and use of the money for non-educational purposes will not limit this exclusion.
Example 3 – Changing facts again. Jerome is 23 and not eligible for the Student Earned Income Exclusion. In this situation the benefits counselor explains that using the January earnings toward the Arizona trip would result in the money being treated under SSI’s general rules for determining countable earnings, i.e., $20 general exclusion, $65 earned income exclusion, and additional 50 percent earned income exclusion ($1285 – 20 - 65 = 1200/2 = $600 countable income). With $600 of countable income the revised SSI payment would be $343 per month ($943 – 600).
The benefits counselor then suggests an alternative strategy. Jerome can plan to use all of the $1,285 to pay for educational expenses to take advantage of the POMS SI 00830.455 C exclusion. Then, rather than use the $1,500 of Spring Semester earnings on educational expenses, most of these FWS-funded earnings would be saved toward the Arizona trip. All $1,285 of his January earnings would be saved and depleted in the next four months on educational expenses. By using this alternative strategy Jerome can fully benefit from the extra money made during Winter break and can make the trip to visit family. This strategy would also work for any number of other purchases that would not meet the “educational expense” criteria for SSI to exclude this income funded by non-HEA Title IV money (e.g., deposit on an off-campus apartment, purchase of new clothing, or buying groceries when he moves off campus).
SSI’s Plan to Achieve Self-Support Exclusions as a Best Kept Secret
The Plan to Achieve Self-Support (PASS) is an SSI work incentive that allows individuals with disabilities to set aside income (earned, unearned, deemed, or in-kind) and/or resources to be used to achieve specific work goals. A PASS can be established, for example, to cover the costs of obtaining an education, receiving vocational training, starting a business, or purchasing support services that enable an individual to work. The vocational goal of the PASS must include a goal to reduce or eliminate the person’s SSI or Social Security Disability benefits depending upon the type of benefits being received immediately before the PASS is initiated.
A PASS is the means to acquire the goods and services needed for starting work or expanding earning capacity at an existing job, not the means to fund these costs on a permanent basis. The purpose of a PASS is to increase or maintain income-producing capabilities, thus reducing the participant’s reliance on government benefits. For a PASS to be approved by SSA, there must be a reasonable chance that the individual can achieve their vocational goal. There must also be a clear connection between the vocational goal and the increased or maintained earning capacities.
The income and/or resources set aside in a PASS do not count when determining eligibility for SSI or calculating the amount of the SSI benefit that an individual will receive. In determining SSI eligibility, individuals must meet an income and resource test. If the individual’s income (including earnings and unearned income such as Social Security) and/or resources are too high, the individual will not be eligible for SSI. However, by sheltering this income and/or resources in a PASS, individuals could then meet the income and resources test, thus potentially qualifying for SSI and, in 42 states, for automatic Medicaid.
What follows are two cases, the case of Efraim who will exclude countable unearned deemed income from a spouse4 to fund a PASS and the case of Eva who will exclude countable Social Security Childhood Disability Benefits (CDB) to fund a PASS. While some readers may not think of the PASS as a best-kept secret, with only 270 approved PASSes in existence nationwide as of December 2022, this work incentive has sadly become largely invisible.5 Since an approved PASS often results in funding hundreds or thousands of dollars of costs related to a long-term work goal, the PASS should always be one of the options our readers consider when providing benefits counseling services.
Efraim’s case: Efraim is a 30-year-old man who lived alone and received $943 in SSI. In April 2024, he proposed to his girlfriend and married her in May 2024. She has a job and when he reports the marriage and her income to the SSI program, the claims specialist informs him that $620 of her income will be deemed available to him and that his SSI will be reduced to $323. This throws a wrench in Efraim’s plans to go to college and become an occupational therapy assistant. The newlyweds had planned to use some of the wife’s earnings to fund his education.
Efraim visits his State vocational rehabilitation (VR) agency and learns that they will support his occupational goal to attend a 2-year community college program to become an occupational therapy assistant. His State-VR agency will pay for tuition, transportation to college, and books. Efraim will still need $700 for a laptop, $13,500 for a used car to travel to work when he graduates, and $680 for 6 months of car insurance, a total of $14,880 for these expenses.
Efraim speaks to a benefits counselor about a PASS to cover the expenses that the VR agency will not pay for. He is delighted to hear that he can place the countable deemed income of $620 in a potential PASS to cover the expenses and that his SSI will be increased to $943. With assistance from the benefits counselor, the PASS proposal is submitted and approved by the SSI program. Over 24 months, Efraim will save $14,880 ($620 x 24) for the laptop, used car, and car insurance. With the approved PASS, he will still have the same amount of money to live on each month ($943 SSI and the $20 of his spouse’s income that was excluded) as he would have without a PASS.
Eva’s case: Eva is 18, has cerebral palsy, and uses a power wheelchair to get around. Eva receives $520 in Social Security Childhood Disability Benefits (CDB). She receives $443 in SSI (the SSI program excludes $20 of CDB and counts $500). Thus, her total income is
$963 ($943 + $20). She is a first-year college student and on track to get her bachelor’s degree in education and then a master’s degree in education in a little over 4 years. Her vocational goal is to be a high school English teacher. Eva needs a wheelchair-accessible van to travel to a student-teaching placement, job interviews, and a teaching job when hired. The vocational rehabilitation agency will pay $38,000 for modifications to the van and driving classes but Eva must first purchase the van.6 She has done some window-shopping, and a van will cost her $24,000 (after a $4,000 down payment taken from her ABLE account, funded by high school graduation gifts7).
If Eva proposes and is approved for a PASS, she can save $500 per month toward the
$24,000 needed to purchase the van. With this $500 now excluded through her PASS, her countable income is reduced to $0, and her SSI payment will be $943 per month. She saves $24,000 over 48 months to purchase the van and she still has the same amount of money to live on each month ($943 SSI and $20) as she would have without a PASS. In Eva’s case, she will also want to factor in sales tax on the purchase price, the first 6 to 12 months of vehicle insurance, and the cost of an emergency road service like AAA to aid her if her van breaks down. Eva’s benefits counselor will work with her to identify any extra costs likely to be incurred as she moves forward with her vocational plans.
Keep in mind that in Eva’s case the PASS could work out the same if countable income was instead deemed income from the parent. In this case, suppose Eva received a
$500 per month Child’s Insurance Benefit (CIB) - a benefit for children up to age 18 or 19 paid on a parent’s record, rather than CDB. If at age 17, $300 of her parent’s earnings were deemed available to her, her SSI payment would be $143 (with $500 of countable CBD and $300 deemed from the parent). That would make up to $800 of countable income available to go into a PASS to start saving earlier toward the van purchase. For the high school student proposing a PASS, she must be prepared to identify a specific job as a work goal and the steps to reach that goal. This is not unlike the need to identify a specific work goal when applying for support from the State VR agency, during her senior year in high school, to fund costs related to attending college.
Need to file SSI application, with the PASS proposal, in some cases. If a PASS applicant receives only Social Security Disability Insurance (SSDI) payments and no SSI prior to submitting a PASS proposal they will need to file an SSI application with the PASS proposal. For example, Nellie was receiving $1,020 of SSDI and no SSI. She proposed to set aside $600 of her SSDI in a PASS to pay for expenses related to her work goal and thereby qualify for an SSI payment of $543 per month ($943 – 400 countable income). In her case, she must submit an SSI application when she submits the PASS proposal. If the PASS proposal is approved and Nellie’s resources are within SSI limits, she should now be approved for an SSI payment of $543 per month. Nellie must be prepared to meet her monthly needs going forward based on $963 of disposable income after the PASS is approved ($943 SSI plus $20 SSDI exclusion) rather than the $1,020 she has coming in before the PASS was approved.
Use of a PASS and ABLE Account Together
We have heard that some people think that the ABLE account’s emergence has made the PASS unnecessary. In fact, as good at the ABLE account is as a savings tool – with SSI excluding ABLE resources up to $100,000 – it will not exclude the monthly income of the SSI beneficiary that is deposited into the ABLE account. Only the PASS will allow for exclusion of the beneficiary’s income. Also, the PASS has no disability age of onset restrictions, whereas feasible ABLE candidates must have a disability onset before age 26 (or before age 46 effective January 1, 2026).
In many cases, the ABLE account and the PASS can work side-by-side to pave the way for an independent future. For example, in Eva’s case her family could have started an ABLE account for her in 2016 at age 10. With modest yearly deposits and ABLE account earnings, Eva might have had $10,000 or more in ABLE assets at the time of her high school graduation with no adverse impact on her expected SSI eligibility.
Summary:
These two real-life examples illustrate that the PASS, a little-used and powerful best kept secret, can provide much needed free money from the SSI program to individuals with a feasible vocational goal that will either decrease their reliance on disability benefits or eliminate the disability benefit.
SSA’s detailed policy on the PASS can be found at POMS SI 00870.001 through SI 00870.100 and can help in understanding the intricacies of the PASS. Even more useful to individuals interested in a PASS or to benefits counselors helping an individual apply for a PASS is www.passonline.org. Passonline was created by one of the authors of the Deeper Dive series. It provides thorough and clear explanations about the intricacies of applying for a PASS. In addition, Passonline includes the PASS application form that can be completed on the platform and then printed for submission to SSA’s regional PASS specialist. To assist applicants, each question on the PASS application includes a drop-down menu with sample answers and tips about how to best answer each question. We encourage benefits counselors to visit the website, become familiar with it and then use it to best assist the PASS applications of disability beneficiaries.
Conclusion
The co-authors believe that SSI’s exclusion of earnings received through the Federal Work Study (FWS) program and the exclusion from countable resources when some of those earnings are retained for later use, even when they will not be used for education-related expenses, is a best kept secret. We also believe that SSI’s exclusion from countable income of any money that is set aside, in an approved Plan to Achieve Self Support (PASS), to pay for items and services that will pave the way toward self-supporting work, is a best kept secret. We hope that by highlighting these two little-known provisions, benefits counselors will utilize these two wonderful provisions to assist many beneficiaries in the future. Benefits counselors should promote these two provisions to persons with disabilities, their families, and friends.
As always, please let us know of your successes or challenges as you seek to use the information in these articles in your day-to-day work.
Dated: April 11, 2024
Authors: James R. Sheldon, JD (Board Member), Disability Consultant and Edwin J. Lopez-Soto, JD (NABWIS member), Extension Faculty, Cornell’s Yan Tan Institute (YTI)
Footnotes:
1 Federal Pell grants are awarded to undergraduate students based on “exceptional financial need.” Some graduate students who are enrolled in a teacher certification program might also qualify for a Pell grant. See Federal Student Aid – Federal Pell Grants.
2 See POMS SI 00830.455 B.1 for a list of HEA Title IV federal financial assistance programs, including Pell grants, which provide financial support to students and are subject to the same SSI exclusions from income and resources as those that apply to FWS earnings.
3 The examples all use the $943 SSI federal benefit rate for 2024. The SSI rate will be different if a different year is involved or if the State pays an optional State Supplement Payment.
4 Deemed income from a spouse or parent is considered unearned income of the SSI beneficiary.
5 See SSI Annual Statistical Report, 2022. Earlier SSI statistics document much higher PASSes in existence in earlier years: 10,322 in 1995, 1,721 in 2002, 1,582 in 2005, and 948 in 2013, slipping to 323 in 2021. See links for earlier statistical reports on the 2022 statistical report page.
6 Very few State VR agencies will pay for the lease or purchase of a vehicle, but all can pay for vehicle modifications when needed to benefit from an approved program of vocational rehabilitation.
7 See Achieving a Better Life Experience (ABLE) Accounts and the Benefits Counselor, Article
#9 from the NABWIS Deeper Dive Series located on the Members-Only section of the NABWIS website.
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