TN 4 (07-08)

# DI 60090.012 Determining Amount of Offset

## A. Policy – amount and period of offset

Once a substantial gainful activity (SGA) cessation has been determined, beneficiaries participating in the Benefit Offset Pilot Demonstration (BOPD) will have monthly benefits reduced by $1.00 for every $2.00 of earnings above the SGA amount for months in the offset period. The offset period will begin with the later of:

The month after the month of enrollment in the BOPD, or

The month after the grace period.

The offset period will end with:

The month the extended BOPD EPE ends, or

The close of the month in which the beneficiary elects to withdraw from the project or ceases to be eligible for the project.

Months outside of the offset period are subject to usual program rules. Auxiliary benefits are not subject to offset and auxiliaries will continue to receive their full monthly benefit amount during the offset period under the BOPD project, even if number holder (NH)’s are in complete offset.

The amount of the offset for the NH will be determined based on an estimate of earnings minus an estimate of any IRWE/Subsidy (or other amounts not attributable to the individual’s own productivity). If the participant is subject to offset for the entire year, the offset will be based on estimates of earnings and any applicable work incentives for the entire calendar year. If participant is subject to offset for only part of the year, the offset will be based on estimates for only that portion of the current calendar year consisting of months in the offset period.

EPE Monthly payment determinations after an SGA cessation, will not be made once the offset period has begun. An end of year reconciliation will be made when the year is closed and exact figures for earnings and all applicable work incentives are known, much like the annual earnings test for retirement beneficiaries. Follow these procedures to determine the amount of the monthly offset for BOPD participants.

## B. Procedure for partial years of offset - first and last year of participation

For years in which the participant’s benefits are subject to offset for only part of the year, the amount of the monthly offset will be determined based on the annual estimate of earnings. Use the following charts depended on whether work incentive deductions (i.e. IRWE, subsidy) are involved.

### 1. Partial Year Offset Calculation- No Work Incentive Deductions

Partial Year Offset Calculation Worksheet

First month of offset: ____________

Number of months in the offset period: ________

Step 1 | Determine estimate of monthly wages by taking annual estimate and dividing by 12 | $ |

Step 2 | Multiply the number of months in offset period by the amount determine in step 1. | $ |

Step 3 | Determine prorate SGA (number of months in the offset period x monthly SGA amount) | $ |

Step 4 | Subtract the amount determined in Step 3 from the amount determined in Step 2. | $ |

Step 5 | Divide the amount determine in Step 4 by 2 (for $1 for $2) | $ |

Step 6 | Divide the amount determined in Step 5 by the number of months in the offset period (rounding up to the nearest dime) | $ |

Step 7 | Subtract the amount determined in Step 6 from the current MBA to determine Offset MBA. | $ |

### 2. Partial Year Offset Calculation—Work Incentive deductions involved

Partial Year Offset Calculation Worksheet

First month of offset: ____________

Number of months in the offset period: ________

Step 1 | Determine estimate of monthly wages by taking annual estimate and dividing by 12 | $ |

Step 2 | Determine monthly IRWE/Subsidy or other amounts that are not attributable to the individual’s own productivity. | $ |

Step 3 | Determine monthly countable wages by subtracting the amount determined in step 2 from the amount determined in step 1. | $ |

Step 4 | Multiply the number of months in offset period by the amount determine in step 3. | $ |

Step 5 | Determine prorate SGA (number of months in the offset period x monthly SGA amount) | $ |

Step 6 | Subtract the amount determined in Step 5 from the amount determined in Step 4. | $ |

Step 7 | Divide the amount determined in Step 5 by 2 (for $1 for $2) | $ |

Step 8 | Divide the amount determined in Step 6 by the number of months in the offset period (rounding up to the nearest dime) | $ |

Step 9 | Subtract the amount determined in Step 7 from the current MBA to determine Offset MBA. | $ |

**EXAMPLE 1:** Ms. Smith enrolls in the BOPD in January 2006 and her annual estimate for the year is $25,000 and she alleges IRWE of $50.00 per month. Her monthly benefit amount is $1662.20. Following usual development for work activity and earnings and applying the usual rules concerning the TWP and SGA cessation. It is determined that the 9^{th} TWP month is March 2006 and an SGA cessation determination is made in April of 2006. First month of offset is July 2006. Determine the offset as follows:

Partial Year Offset Calculation Worksheet

First month of offset: July 2006

Number of months in the offset period: 6

Step 1 | Determine estimate of monthly wages by taking annual estimate and dividing by 12 | $2083.30 |

Step 2 | Determine monthly IRWE/Subsidy or other amounts that are not attributable to the individual’s own productivity. | $50.00 |

Step 3 | Determine monthly countable wages by subtracting the amount determined in step 2 from the amount determined in step 1. | $2033.30 |

Step 4 | Multiply the number of months in offset period by the amount determine in step 3. | $12,199.80 |

Step 5 | Determine prorate SGA (number of months in the offset period x monthly SGA amount) | $5160 |

Step 6 | Subtract the amount determined in Step 5 from the amount determined in Step 4. | $7039.80 |

Step 7 | Divide the amount determined in Step 5 by 2 (for $1 for $2) | $3519.90 |

Step 8 | Divide the amount determined in Step 6 by the number of months in the offset period (rounding up to the nearest dime) | $586.70 |

Step 9 | Subtract the amount determined in Step 7 from the current MBA to determine Offset MBA. | $1075.50 |

## C. Procedure for Full Years of Offset

For full years encompassed by the offset period, the amount of the monthly offset will be determined based on the estimate of annual earnings and any estimates for applicable work incentives for the entire year. To determine the offset monthly benefit amount (offset MBA):

Full Year of Offset Calculation Worksheet

Step 1 | Estimate of annual earnings (if monthly total is provided, multiply the monthly total x 12 to determine annual earnings estimate). | $ |

Step 2 | Estimate of annual IRWE, subsidy or any other amounts not attributable to the individual’s own productivity (if monthly total is provided, multiply the monthly total x 12 to determine annual IRWE estimate). | $ |

Step 3 | Subtract amount determined in Step 2 from amount determined in Step 1. | $ |

Step 4 | Monthly SGA x 12 | $ |

Step 5 | Subtract the amount determined in Step 4 from the amount in Step 3 | $ |

Step 6 | Divide the amount determined in Step 5 by 2 ($1 for $2) | $ |

Step 7 | Divide the amount determined in Step 6 by 12, (rounding down to the nearest dime) | $ |

Step 8 | Subtract the amount determined in Step 7 from the current MBA | $ |

## D. Procedure – Adjustments

Adjustments in the monthly benefits will be made quarterly if the participant reports either an increase or decrease in the **annual **work estimate of more then $1000.00. A report that a beneficiary has stopped work does not necessarily mean full benefits should be reinstated. Instead the participant should provide a new annual work estimate. Using a revised annual work estimate calculate the offset following the steps in DI 60090.012B. in this section or DI 60090.012C. in this section, as appropriate, to determine the new offset amount. Forward the ACR to the BTE for input of an adjusted offset MBA effective with the month of report of change.

**EXAMPLE**

Mr. Taylor enrolls in March 2006 and estimates earnings of $32,000 for the year, no IRWE. A cessation was determined in 2004, and his benefits are currently in suspense. The first month of the offset period is April 2006. Mr. Taylor’s monthly benefit amount (MBA) is $1320.50. The offset MBA is computed as described in DI 60090.012B. in this section and determined to be $417.20 monthly.

Mr. Taylor reports that he stopped working at the end of July. And the state reports a new annual estimate of $19,574.36. The partial year offset adjustment is calculated as follows:

**NOTE:** Non-work months are still counted as offset months in the calculation.

Partial Year Offset Calculation Worksheet

First month of offset: 04/2006

Number of months in the offset period: 9

Step 1 | Determine estimate of monthly wages by taking annual estimate and dividing by 12 | $1631.20 |

Step 2 | Determine monthly IRWE/Subsidy or other amounts that are not attributable to the individual’s own productivity. | $0 |

Step 3 | Determine monthly countable wages by subtracting the amount determined in step 2 from the amount determined in step 1. | $1631.20 |

Step 4 | Multiply the number of months in offset period by the amount determine in step 3. | $14680.80 |

Step 5 | Determine prorate SGA (number of months in the offset period x monthly SGA amount) | $7740.00 |

Step 6 | Subtract the amount determined in Step 5 from the amount determined in Step 4. | $6940.80 |

Step 7 | Divide the amount determine in Step 5 by 2 (for $1 for $2) | $3470.40 |

Step 8 | Divide the amount determined in Step 6 by the number of months in the offset period (rounding up to the nearest dime) | $385.60 |

Step 9 | Subtract the amount determined in Step 7 from the current MBA to determine Offset MBA. | $934.90 |

## E. Policy- end of year reconciliation

When the year is closed, there will be an end of year reconciliation similar to the annual earnings test for retirement beneficiaries. The states will submit to SSA, final earnings information (W2’s, Schedule SE’s, pay stubs), and any necessary documentation of IRWEs, subsidy or proof of any other amounts that were not attributable to the individual’s own productivity.

### 1. Annual period of offset

The annual offset period for reconciliation purposes begins with the first month offset is applied and continues until the later of the:

end of the year,

termination of the project,

month the beneficiary withdraws from the project, or

months it is determined the beneficiary is no longer eligible for the project.

If offset was applied for only part of the year and then stopped because the beneficiary stopped working, the annual offset period for reconciliation purposes is the first month of offset through the end of the year.

### 2. Documentation

Documentation of annual earnings for full years encompassed by the offset period will consist of W2s, Schedule SEs or paystubs. Documentation for partial years comprising the offset period can either be supported by paystubs or a signed statement from the beneficiary indicating how much was earned during the offset period. Accept the statement of the participant unless there is reason to question the accuracy of the information. If the W2 or Schedule SE does not correspond with the information on the statement, or you have some other reason to question, verify earnings through the employer following normal earnings verification procedures in DI 10505.005.

Verification and documentation of IRWE will follow normal procedures outlined in DI 10520.025.

## F. Procedure - end of year reconciliation

The earnings and any other information needed for end of year reconciliation will be sent via secure email by the states to OCO CPS. CPS will establish an ACR and route the information to the DE.

### 1. DE Procedures

The DE will review the documentation provided by the state and determine the amount of countable earnings (monthly gross earnings minus any work incentive deductions) for the offset period. When the correct offset MBA based on actual countable earnings has been determined, route the ACR to the BTE to reconcile. Calculate the correct offset MBA using the following charts:

#### a. Partial Year Offset

Partial Year Offset Calculation Worksheet

First month of offset: ____________

Number of months in the offset period: ________

Step 1 | Determine total countable earnings (monthly gross earnings minus any work incentive deductions) for the offset period | $ |

Step 2 | Determine prorate SGA (number of months in the offset period x monthly SGA amount) | $ |

Step 3 | Subtract the amount determined in Step 2 from the amount determined in Step 1. | $ |

Step 4 | Divide the amount determine in Step 3 by 2 (for $1 for $2) | $ |

Step 5 | Divide the amount determined in Step 4 by the number of months in the offset period (rounding up to the nearest dime) | $ |

Step 6 | Subtract the amount determined in Step 6 from the current MBA to determine Offset MBA. | $ |

#### b. Full Year Offset

Step 1 | Determine total countable earnings (gross earnings minus work incentive deductions) for the year | $ |

Step 2 | Monthly SGA x 12 | $ |

Step 3 | Subtract the amount determined in Step 2 from the amount in Step 1 | $ |

Step 4 | Divide the amount determined in Step 3 by 2 ($1 for $2) | $ |

Step 5 | Divide the amount determined in Step 4 by 12, (rounding down to the nearest dime) | $ |

Step 6 | Subtract the amount determined in Step 7 from the current MBA | $ |

### 2. BTE procedures

When the ACR is received, review the PHUS, MBR, and/or information in file to determine the amount of benefits actually paid during the offset period based on the estimated earnings and IRWE information.

To reconcile: subtract amount actually paid from amount that should have been paid. If the figure is positive, beneficiary is underpaid. If the figure is negative, beneficiary is overpaid.

If beneficiary is underpaid;

Pay the amount due by using an AA entry on the HST screen.

Release an adjustment notice-code an A18, G in the ENB, and include the following dictated language:

“Because you are participating in the Benefit Offset Demonstration, we will continue to pay you by reducing your benefit $1.00 for every $2.00 you are earning over the substantial gainful level.”

If the beneficiary is overpaid, follow the steps outlined in DI 60090.015E.

## G. Procedure—Dual-entitlement cases

For participants who are dually-entitled, apply the offset to the Title II benefit based on disability. Do not apply the offset to a Title II benefit that is NOT based on disability (i.e., widows, mothers, auxiliary benefits). If the participant is dually entitled to Title II benefits that are both based on disability (i.e., DIB/CDB, DIB/DWB) the offset will apply to the total monthly benefit payable unless the participant has not completed the TWP under one of the entitlements. In that situation, the offset will apply to the portions of DI benefits that have been SGA ceased. If the TWP has been completed and SGA ceased under both Title II disability entitlements, the offset will apply to the total monthly benefit payable.

Use the same procedures in DI 60090.012B and DI60090.012C to calculate the offset amount. The only adjustment that may be needed in dual-entitlement cases is in the last step when the offset amount is subtracted from the total MBA. In some dual-entitlement situations, subtracting the offset amount from the total MBA will be inappropriate when a portion of the benefits are not subject to the offset. The offset will only be subtracted from the portion of Title II benefits that are based on disability and have ceased due to SGA.

In the event other deductions are applicable, the priority of deductions for BOPD participants will be as follows:

Non-Blind Participant

WC offset

Benefit offset

Annual earnings test

Garnishment

Incorrect payments

Overpayments

Blind Participant

WC offset

Annual earnings test (note: AET earnings are higher than SGA)

Benefit offset

Garnishment

Incorrect payments

Overpayments

To Link to this section - Use this URL: http://policy.ssa.gov/poms.nsf/lnx/0460090012 | DI 60090.012 - Determining Amount of Offset - 06/06/2013Batch run: 06/06/2013Rev:06/06/2013 |

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