When someone receiving Social Security starts working, it’s important they know that some costs can be deducted when figuring out their benefits. Social Security offers special rules called work incentives that help people keep more of their earnings. Two key work incentives are an Impairment Related Work Expense (IRWE) and a Blind Work Expense (BWE).
What is an IRWE?
An IRWE is a cost that helps a person with a disability work. This cost is subtracted from the person’s gross wages and allows them to keep more of their benefits check. For an expense to qualify as an IRWE, it must meet five conditions:
- It must directly support the person’s ability to work.
- It must relate to the person’s disability.
- The person must pay for it out of their own pocket.
- The person must pay for it during a month in which they worked.
- The expense must be reasonable.
Examples of an IRWE include, but not limited to:
- Prescription medications
- Therapy
- Service animals
- Medical supplies or devices
- Attendant care services that help prepare someone for work
Example: IRWE and Social Security Disability Insurance (SSDI)
Henry receives a $900.00 SSDI check. He works part-time and was recently offered more hours, increasing his monthly income to $1,700.00. At first, he thinks this is great, but then he remembers the Substantial Gainful Activity (SGA) level. His new earnings would place him just over the 2025 limit of $1,620.00.
However, Henry currently pays $150.00 per month for his prescription co-pays and medical equipment. If an IRWE is approved, his $150.00 IRWE would be subtracted from his gross income, reducing his countable earnings to $1,550.00, which is below the SGA threshold.
Step-by-step calculation:
- Gross Income: $1,700.00
- IRWE Deduction: – $150.00
- Countable Earnings: $1,550.00
Since $1,550 is below the SGA threshold of $1,620.00, Henry will continue getting his $900.00 SSDI check and his gross wages of $1,550.
To apply for an IRWE, the beneficiary must complete a few forms. The first is Form SSA-820-BK for employed individuals and Form SSA-821-BK for self-employed individuals. These forms allow you to declare the IRWE. Form SSA-795, also known as the “Statement of Claimant or Other Person,” and submit it with supporting documentation to Social Security. Beneficiaries should contact the local Social Security office for help with the application process. Supplement Security Income (SSI) and SSDI recipients can apply for an IRWE.
What Is a BWE?
To qualify for a BWE, an individual must be defined as statutorily blind by the Social Security Administration. Any expense related to working can be submitted, even if it’s not connected to the person’s disability. Like an IRWE, a BWE is subtracted from wages, helping a person keep a larger benefit check. To qualify, the person must be under age 65. If they are 65 or older, they must have received SSI the month before turning 65.
Examples of a BWE include, but are not limited to:
- Meals purchased at work
- Union dues
- Uniform costs
- Federal, state, and local income taxes
- Any of the IRWE examples listed above
Example: BWE and SSI
Manuella receives SSI as a Statutory Blind individual. She works 20 hours per week at a bakery, earning $15.00 per hour. Her monthly expenses include:
- $200.00 in taxes
- $150.00 for medications and therapy
- $50.00 for breakfast at work
Manuella worries that her earnings will cause her to lose her SSI check. Let’s see how a BWE helps her.
Step-by-step calculation:
- Unearned Income: $0.00
- Earned Income: $1,299.00/month ($15 × 20 hrs × 4.33 weeks)
- Subtract General Income Exclusion (GIE) of $20: $1,299.00 – $20.00 = $1,279.00
- Subtract Earned Income Exclusion (EIE) of $65: $1,279.00 – $65.00 = $1,214.00
- Divide by 2: $1,214.00 ÷ 2 = $607.00
- Subtract BWE ($200 + $150 + $50 = $400): $607.00 – $400.00 = $207.00
- Countable Earned Income (CEI): $207.00
- Federal Benefit Rate (FBR) – CEI: $967.00 – $207.00 = $760.00
- SSI Check Amount: $760.00/month
Manuella will continue receiving $760.00 in SSI benefits, plus her gross wages of $1,299.00.
To apply for a BWE, the beneficiary must complete a few forms. The first is Form SSA-820-BK for employed individuals and Form SSA-821-BK for self-employed individuals. These forms allow you to declare the BWE. Form SSA-795, also known as the “Statement of Claimant or Other Person,” and submit it with supporting documentation to Social Security. Beneficiaries should contact the local Social Security office for help with the application process. Only SSI recipients can use a BWE.
Additional Information
Social Security offers a detailed chart comparing an IRWE and a BWE. Remember that the final approval decision for an IRWE or a BWE is made by Social Security. To understand how these and other work incentives affect a person’s benefits, the individual should speak with a benefits counselor. This may be someone from a local employment agency or from their state’s Work Incentives Planning and Assistance (WIPA) program.
In Indiana, beneficiaries can contact the Benefits Information Network (BIN) at the Center on Community Living and Careers by emailing cclc@iu.edu or calling 812-855-6508.
Resources
- Center on Community Living and Careers Work Incentive Fact Sheets
- Work & Disability: Benefits, Incentives, and Asset Building Course
- Social Security Red Book: A Guide to Work Incentives and Employment Supports