Module #6

SSDI, Subsidies, and Substantial Gainful Activity During the 36-Month Extended Period of Eligibility

Reducing Countable Earned Income through Subsidies or Special Conditions of Employment to Determine Month-by-Month Eligibility for SSDI Payments

This module will assist you in understanding and explaining to youth and their families the use of subsidies and special conditions to reduce countable income during the extended period of eligibility (EPE).  You will learn: what the 36-month EPE is; how the substantial gainful activity (SGA) rule operates to determine SSDI payment or nonpayment months during the EPE; how subsidies and special conditions can be used to reduce countable earnings to determine whether the beneficiary has performed SGA; and strategies for keeping track of subsidies and special conditions, and sharing information with the Social Security Administration (SSA) to support their use during individual months of the EPE.  This toolkit is relevant to youth who receive SSDI on their own earnings record and to youth who receive SSDI Childhood Disability Benefits (CDB) on the earnings record of a parent who is retired, disabled, or deceased.

I. What is an Employment-Based Subsidy or Special Condition?

A subsidy exists when the employer:

  • willingly pays an employee more in wages that the value of the work performed; or
  • receives full value from an employee’s services because the employer or some third party provides extra services to the employee.

Since SSA typically refers to the second example as a “special condition,” we will separately discuss these two concepts as subsidies and special conditions.  Readers will note in the discussion below that sometimes these two concepts overlap.

A deduction from countable earnings.  When making an SGA determination, SSA is concerned only with the amount of an individual’s earnings that represents the real value of the work he or she performs:

  • With a subsidy, the employer is paying the individual more than the value of the work performed.  For example, if a youth with a disability produces only 70 percent of what the employer would expect from an employee without a disability, the employer has provided a 30 percent subsidy.  If the monthly gross earnings paid were $1,500, $450 of that amount is considered a subsidy (.30 x $1,500) and subtracted from the gross wage, with $1,050 considered the countable earnings for the month ($1,500 – 450).
  • With a special condition, the individual produces full value for the wage paid because either the employer or a third party provides some extra services that allow the employee to overcome the limitations of his or her disability.  Extra services may involve for example extra supervision, job coach services, or a mentor’s services.  SSA will assign a monthly value to the special conditions and deduct that amount from gross earnings to determine countable earnings to be measured against the SGA level that applies.  For example, if the 22 year old SSDI beneficiary is paid $1,400 gross for the month and SSA values the extra services at $250 for the month, countable earnings are reduced to $1,150 for the month ($1,400 – 250).

In these examples countable earnings have been reduced below the 2019 SGA level for non-blind beneficiaries ($1,220 per month), meaning that SSA would not find that SGA was performed that month, and making it a payment month if within the 36-month EPE.

SSA considers subsidies and special conditions when making SGA determinations:

  • On an SSDI application because an SGA finding will result in a denial of benefits;
  • During the EPE to determine if there has been a Cessation Month;
  • After the Cessation Month and Three-Month Grace Period to determine month-by-month eligibility for an SSDI payment during the remainder of the EPE; and
  • After the 36-month EPE to determine whether SSDI should be terminated.

This toolkit will focus on subsidies and special conditions during the 36-month EPE.

SSA will not consider subsidies and special conditions in determining whether earnings are enough to count as a Trial Work Period (TWP) month. 

The value of a subsidy or special condition can be used to reduce countable earnings to determine if an SSDI beneficiary had SGA-level earnings during a month.

II. Circumstances Indicating a Strong Possibility of a Subsidy

When considering whether the youth with a disability has earned above the SGA level, some indicators that a subsidy may exist include the following:

  • The youth works shorter hours or has fewer duties than others.
  • Extra help or supervision is given.
  • The youth produces less, or their work is of lesser quality than others.
  • The youth is frequently absent or receives more breaks or rest periods.

See POMS DI 10505.010 A.1. for a longer list of what SSA considers to be indications of a possible subsidy.

III. How is the Value of the Subsidy Calculated?

SSA recognizes two types of subsidies: the specific and the non-specific subsidy.  SSA’s policy envisions that the employer provides the needed information to calculate a subsidy by filling out Form SSA-3033 ("Employee Work Activity Questionnaire"), but often this information comes to SSA as an employer’s letter.  The employer’s written information is usually most helpful when there has been communication with the employer on the beneficiary’s behalf, by a service provider (e.g., a vocational counselor or benefits planner) who is familiar with SSA-3033 and SSA’s policy for calculating a subsidy.

Employer Calculates Specific Subsidy 

SSA’s policy notes that the employer “will designate a specific [subsidy] amount after figuring the reasonable value of the employee’s services” and that “an adequate [employer’s] explanation as to how a specific subsidy was calculated will normally suffice without … additional development [by SSA] ….”  POMS DI 10505.010 A.2.

Example # 1 - subsidy designated by employer. Marilyn, age 19, receives SSDI Childhood Disability Benefits.  She has a mental health disability and recently dropped out of high school.  She works in a warehouse and earns $1,400 gross per month.  Although Marilyn does not have a job coach, the employer provides her with more supervision than other employees, tolerates more frequent breaks, and tolerates a slower pace of work.  The employer explains all this in a letter and concludes that Marilyn’s pay is subsidized by 25 percent or by $350 monthly.  SSA can be expected to accept the employer’s conclusion and determine that Marilyn’s countable wages are $1,050 per month ($1,400 – 350), less than the 2019 SGA level of $1,220.  She will qualify for an SSDI payment if this occurs during her EPE.

The Non-Specific Subsidy

The employer may identify a certain percentage or amount as a subsidy with no details of how it was calculated.  Or the employer may detail specific circumstances to justify a subsidy but not assign a value to it. With either case, SSA instructs its staff to send the employer Form SSA-3033 (“Employee Work Activity Questionnaire”).  SSA’s policy requires the agency to determine the amount of the subsidy by estimating the proportionate value of the beneficiary’s services according to the prevailing pay scale for such work.

Example # 2 – a non-specific subsidy.  Abdul, age 24, receives SSDI on his own record having earned the minimum six Social Security credits by age 21.  He has an intellectual disability, finished his public education at age 20, and now works in a nursing home as a janitor.  He earns $1,600 gross per month.  His duties are like those of other janitors.  Because of his disability, however, he works more slowly, is given the least challenging sections of the facility to clean, and very often must be reminded by a supervisor to go back and do tasks that he forgot.  Initially, the employer reports to SSA only what Abdul’s duties are and the hours he works.  Abdul’s vocational counselor, after consulting with his benefits planner, works with the employer to get all the information above on a letter to SSA.  The employer, however, declines to assign a value to any subsidy. In submitting the letter to SSA, the vocational counselor references POMS DI 10505.010 A.3., and urges SSA to find a subsidy of 30 percent ($480) based on the factors presented.  SSA agrees and determines that Abdul’s countable wages are $1,120 per month ($1,600 – 480), less than the 2019 SGA level of $1,220.  Abdul will qualify for an SSDI payment if this occurs during his EPE.

IV. How is the Value of a Special Condition Calculated?

Job coaching is a common special condition, typically supplied through a private agency.  For an individual with a learning disabilities, like the example below, the job coach may provide a range of services such as modeling of job duties; observing work and correcting deficiencies; identifying strategies to stay on task and eliminate distractions; and reinforcing appropriate on-the-job behaviors including appropriate communication with supervisors, co-workers, and customers.

SSA’s policy provides a protocol to determine the value of the job coach’s services to be deducted from gross wages to determine monthly countable earnings.  After determining the number of job coach hours that directly support the SSDI beneficiary’s work, SSA multiplies that number by the beneficiary’s hourly wage to determine the monthly value of the special service.  The following example shows how this can work.

Example 3 – Calculating the value of job coach services.  Sharon, a 21-year-old SSDI beneficiary with a learning disability, works at a grocery store, is paid $13 per hour, and has gross earnings of $1,560 per month.  Her primary job duties include keeping cashier stations stocked with grocery bags, bagging groceries, assisting customers with getting groceries into vehicles, and bringing shopping carts from the parking lot to the store.  The ABC Agency provides 20 hours of on-site job coaching services per month. Job coach services include modeling each of her job duties to show how the job is done; correcting deficiencies observed; and reinforcing the appropriate way to communicate with co-workers, her supervisor, and customers.  SSA will value the job coach subsidy at $390 per month (20 hours times Sharon’s $13 hourly wage).  This reduces Sharon’s countable monthly wage to $1,170 ($1,560 – 390), which is less than the 2019 SGA level of $1,220 per month.  Sharon will qualify for an SSDI payment if this is a month during her EPE

During the 36-month EPE, if the value of a subsidy or special condition reduces the beneficiary’s monthly countable earnings to a level that is at or below the SGA rate for the year, the beneficiary will be eligible for an SSDI payment for that month.

V. Strategies for Documenting and Submitting Proof of Subsidies or Special Conditions to SSA

The beneficiary and those working with him or her (e.g., a parent, benefits planner, or vocational counselor) need a system for collecting information to support the existence of a subsidy and/or special condition.

SSA Forms Related to Subsidies or Special Conditions

  • SSA-821-BK, Work Activity Report (used when SSA conducts a work-related Continuing Disability Review for an individual who worked as an employee; SSA-820-BK is used for a self-employed individual).  This form is completed by the SSDI beneficiary, often with help from a parent, a benefits planner, or a vocational counselor.  SSA uses this completed form and supporting documentation to determine if the beneficiary had earnings at the SGA level during a period under review.  See questions 5 and 6.A. related to establishing a subsidy or special condition.
  • SSA-3033, Work Activity Questionnaire (used to obtain more detailed information from the employer when SSA learns through completed Form 821-BK or other information that a subsidy or special condition may exist).

How the Beneficiary and Those Working with Him or Her can be Proactive in Supporting Proof of a Subsidy or Special Condition

Most SSDI beneficiaries prefer to learn as early as possible key SSA determinations related to their work activity, including:

  • when they have completed a Trial Work Period;
  • when their EPE begins and ends;
  • when a Benefit Cessation Month occurs;
  • which months, during the EPE, are SSDI payment months and which are not; and
  • whether they will face an SGA-related SSDI termination after the EPE.

While we recommend working with a well-trained benefits planner to help address those issues, only SSA can provide definitive decisions on these issues after reviewing documents supplied by the beneficiary and the employer.  Since SSA may not always start a timely work-related Continuing Disability Review even when earnings have been timely reported, a good strategy is to submit the completed forms and supporting documentation to SSA before it asks for them.  The key role that a benefits planner, vocational counselor, or parent can play in this process is to help the beneficiary and his or her employer provide SSA with the information it needs to appropriately consider all information related to subsidies and special conditions that will be key in deciding whether earnings were above the SGA level during the months being reviewed.

  • Start with a completed Form SSA-821-BK.  If SSA has documented a ninth Trial Work Period month of if the benefits planner believes the TWP has ended and the beneficiary has had gross earnings at the SGA level, this completed form should get in as soon as possible.  As noted above, use questions 5 and 6.A. to document the existence of any subsidy or special condition.
  • Get the employer to fully complete Form SSA-3033.  Since this is SSA’s approved form for documenting a subsidy or special condition, it is always best to have the employer complete this form.  If the employer is willing to check one of the boxes in question 6 (stating that the beneficiary works at a certain percentage of “other employees’ productivity”), that could help lock in a subsidy value if the employer also provides adequate reasons for this conclusion.
  • Obtain supporting letters from the employer, a job coach, or on-site supervisor.  Form 3033 has very little room for narrative comments even if the employer completes it.  Often, Form 3033 is completed by someone with little or no on-site experience, making the job coach and supervisor letters important if available.
  • Cover letter from benefits planner, vocational counselor, or a parent.  This can highlight key information in documents being submitted, with reference to key SSA policy that supports a finding of a subsidy or special condition.

Beneficiaries Must Also Make SSA Aware of Reductions from Countable Earnings for Paid Time Off and Impairment-Related Work Expenses

This module has focused on the use of subsidies and special conditions to reduce countable earnings during the EPE.  SSDI beneficiaries will also want to document, month-by-month, any PTO and IRWEs that can also be a basis for reducing countable earnings.  Those topics are covered in Module 4 and Module 5.