SSA - POMS: DI 10505.010 - Determining Countable Earnings

A. Countable Earnings

We consider an individual's countable earnings to determine whether they have done substantial gainful activity (SGA). Earnings are the pay or profit that an individual derives from work activity. However, an individual’s gross earnings may include income that is not considered because it is not directly related to an individual’s productivity. For the definition of gross earnings see DI 10505.010B.1. Countable earnings may exclude or deduct certain payments, subsidies, and impairment-related work expenses (IRWE), to accurately reflect the value of the individual’s actual work activity. You do not have to develop for these deductions when monthly gross earnings are under the SGA limit. For the SGA table see DI 10501.015. To determine countable earnings, begin with the individual’s gross earnings and apply the following guidelines:

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Deduct earnings that are not derived from actual work activity (i.e. sick pay, vacation pay, holiday pay, disability pay).
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Deduct the amount of any subsidized earnings, earnings from work under special conditions, and IRWE.
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Evaluate royalties and similar payments for SGA purposes by determining when the income was earned.
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Do not deduct bonuses and incentive payments unless the individual provides evidence that the payment is not based on their own productivity.
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Do not deduct standard payroll deductions such as income taxes, insurance premiums, pension payments, union dues, etc. These amounts are not deductible because they are attributable to the person's work activity.

B. Subsidy and Special Conditions

Work performed under special conditions (including employer-provided accommodation) may indicate that the work is subsidized. An employer may subsidize the earnings of an employee with serious medical impairments by paying more in wages than the reasonable value of the actual work (or duties) performed. When this occurs, the excess amount is considered a subsidy rather than earnings. The value of the subsidy is subtracted from the person's gross earnings to determine if they have performed SGA. For example, if a person with a serious impairment performs simple tasks under close and continuous supervision, the determination of SGA is not based solely on the wages paid. Instead, we first determine whether the person was paid more than the reasonable value of the actual work performed.

Employers or organizations may provide special conditions including job coaching, substitution (where a job coach performs part or all of the individual's job duties), or close and continuous supervision. If an individual is not fully earning their wages because the work is performed under special conditions, exclude income not directly related to the individual's productivity. Do not consider the salary paid to the job coach when calculating the individual's countable earnings for SGA.

1. When to develop subsidy

a.

For initial claims, you must develop alleged (i.e. responses on form SSA-821,) subsidy if the claimant worked above SGA since the alleged onset date or after the date they allege making changes at work due to their impairment, DI 10505.035.
b.
For work CDRs, you must develop alleged subsidy if the claimant worked above SGA within the review period and,
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  the subsidy has never been developed; or
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  it has been more than 24 months since the effectuation date of the review in which subsidy was last developed; or
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  there has been a change of employer, job duties, or rate of pay since subsidies were last developed.
c.
Do not develop subsidy when,
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  determining Trial Work Period (TWP) service months; or
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  the individual has not performed SGA within the review period.
d.
You may develop subsidies when there is a strong indication that subsidy exists. For example:
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  There appears to be a marked discrepancy between the amount of pay and the value of the services; or
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  The nature and severity of the impairment indicates that the employee receives unusual help from others in performing the work; or
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  The employee is involved in a government-sponsored job training and employment program, see DI 10505.025B; or
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  The person is in the military service and is being treated for a severe impairment, see DI 10505.023; or
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  Subsidy is not currently alleged, but has been applied for the same employer in a previous decision; or
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  The employment is "sheltered," as defined in DI 10505.025D.

2. How to develop subsidy

a.
Contact the employer or knowledgeable source listed on form SSA-821-BK by phone to collect subsidy information using a Report of Contact or form SSA-3033. Examples of a knowledgeable source may include:
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  Supervisor
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  Job Coach
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  Vocational Rehabilitation (VR) Counselor
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  Employment Network
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  Community Work Incentive Coordinator
If telephone contact is unsuccessful, mail form SSA-3033 to the employer or knowledgeable source.
b.
Record subsidy information
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  For Work CDRs, document the decision in the work CDR application and code the percentages as specified on the form.
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  For initial claims, document the determination on form SSA-823 Report of SGA Determination.
c.

Store all completed forms in eView or Evidence Portal.

NOTE: Determining the value of the individual's actual services may require contacting other employers or referring to wage information from sources such as O*NET to identify the typical wages paid for similar services

Examples of subsidy

Example 1: Bill, a long-term employee has held a position working 40 hours per week with a salary of $2,850 per month. He can no longer perform his duties full-time. Because of his loyalty to the company, the employer allows him to continue working for the same salary, at 20 hours per week. The reasonable value of his actual services performed is $1,425 per month. Therefore, the subsidy is $1,425 per month, or 50 %.

Example 2: Joe works 32 hours per week, making $17.00 per hour. His gross monthly pay is estimated as $2,357.15 ($17.00 per hour X 32 hours per week X 4.333 weeks per month). See DI 10505.005.A for estimating monthly earnings. The employer pays a job coach to work with him 16 hours per week. The job coach performs all of Joe's duties during those 16 hours, while Joe observes and practices. When Joe is performing the job duties, his services are reasonably worth his wages of $17.00 per hour. Based on this information, we determine that the portion of his monthly pay attributable to the job-coach's assistance is $1,178.58 (50% subsidy). The portion of Joe's monthly pay attributable to his own productivity is $1,178.58.

Example 3: A state VR agency pays for a job coach for Jane. Jane is paid gross wages of $1,800 per month (120 hours at $15.00 an hour). The agency explains that the job coach is with Jane 40 hours per month. For 15 of these hours, the job coach performs the more technical work, while Jane simply observes. During the remaining 25 hours, the job coach observes Jane working. Based on this information, we determine that Jane is fully earning her wages during the 25 hours when the job coach only observes. The amount of Jane's income not directly attributable to her own productivity (due to special conditions) is $225 per month (15 hours at $15.00 per hour). The amount of Jane's earnings attributed to her own productivity is $1,575 (105 hours at $15.00 per hour).

3. Nonspecific Subsidy

If the employer or knowledgeable source cannot provide a specific amount, is unavailable by phone, or does not return the form SSA-3033, gather as much information as possible regarding the employee's productivity and any special assistance received to help quantify the subsidy.

To estimate the subsidy, compare the time, energy, skills, and responsibilities involved in the individual's services with those required for the same or similar work performed by unimpaired individuals in the community. Then, estimate the proportionate value of the individual's services according to the typical pay for that work. The following questions may help determine the time, energy, skills and responsibility involved:

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Why was the individual hired?
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Who performed the duties before the individual was hired and how much time did that person spend on those duties?
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If the individual were separated from the job, would they be replaced; if so, how much time would the replacement spend on the individual's duties?
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Does someone else do the individual's work when they are absent?
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How much time does the replacement take to do the individual's job?

Document any non-specific subsidy amounts on form SSA-823, or in the work CDR application.

Example of nonspecific subsidy

Kevin washes dishes at a restaurant in rural Ohio and earns $25 per hour working 20 hours per week. The average wage for dishwashers in this area is $16 per hour. Kevin has a severe impairment and a representative payee. The payee reports that Kevin receives extra help from coworkers and is given lighter duties. The technician calls supervisor listed on the SSA-821 and they do not answer. The employer does not return form SSA-3033. There are no job coaches or other knowledgeable sources. You document your attempts to contact the employer and use the available evidence (pay stubs, payee statement, and local wage data) to determine that the actual value of Kevin’s work is an estimated total of $1,386.56 per month ($16.00 per hour X 20 hours per week X 4.333 weeks per month).

C. IRWE

When determining countable earnings, deduct the cost of certain items and services that a person, because of their impairment, needs to be able to work. For the policy and procedures on IRWE see DI.10520.000.

D. Non-Countable Earnings

When evaluating countable earnings for SGA purposes, consider only earnings derived from actual work activity. Deduct any sick pay, vacation pay, disability pay, etc. from gross earnings. Deduct any back pay that is not attributable to work during the review period (i.e. work was before the onset date, but back pay received after the onset). If an individual receives sick, holiday, or vacation pay for time off, only the earnings directly attributable to their work activity should be used to determine if the individual has engaged in SGA.

Example of non-countable earnings:

Kiona works at a coffee shop making $15.00 per hour working 30 hours per week for an estimated total of $1,949.85 per month ($15.00 per hour X 30 hours per week X 4.333 weeks per month). Kiona indicates on form SSA-821 that she received sick pay from her employer and writes in the remarks that she was absent from work for one week in both January and February. She provides pay stubs that show 30 hours of paid sick leave each month. The technician deducts the $450 of sick pay from the gross monthly pay for a total of $1,499.85.

E. Bonus and Incentive Payments

Bonus and incentive payments are generally considered to represent the individual’s own productivity unless the individual provides evidence to the contrary. Most companies and state governments require employees to meet specific criteria (such as employed for a certain amount of time, working a set number of hours per week, or directly contributing to areas of increased business activity) to receive these payments. Bonuses based on employer profits, sales, accident reports, etc., should also be counted as earnings, as the employee’s own productivity contributes to the employer’s success.

You do not need to verify whether the bonus is related to the person’s own productivity. Instead, determine if the bonus or incentive payment is for a specific period of time (for example, quarterly). If it is, distribute the earnings over the period in which they were earned. If the payment does not represent a specific period of work activity, or if the time period cannot be determined, distribute the payment over the period the individual worked for the employer, up to but not exceeding one year.

NOTE: If the individual provides evidence that the payments are not related to their own productivity (for example, dividend or shareholder payments), do not include them as countable earnings.

F. Activities Performed in the Past

If an individual receives earnings for activities performed in the past, evaluate the earnings for SGA purposes by looking at when it was earned. Earnings from past work can help estimate the value of current, similar work if there is no determinable income from the current work.

Example 1: Danelle was a painter all her life and sold artwork at multiple galleries. Danelle files for disability when her arthritis prevents her from holding a brush to paint. She continues to receive earnings for reproductions of her paintings. Since the earnings represent work in the past that she is no longer able to perform, we do not count the income for SGA purposes.

Example 2: Before becoming disabled, Renee painted an average of four portraits per month. She receives average of $2,500 per month for the sale the paintings. She has since started sketching portraits. Since Renee’s work is similar to her previous work, the earnings she is receiving can be considered in valuing her current work activity. Renee is now able to produce two portrait sketches per month. Since this is half of what she produced before, the value of the current work is estimated at $1,250 per month.

Social Security

Program Operations Manual System (POMS)

DI 10505.010 Determining Countable Earnings