Academic journal article Social Security Bulletin

Recipients of Supplemental Security Income and the Student Earned Income Exclusion

Academic journal article Social Security Bulletin

Recipients of Supplemental Security Income and the Student Earned Income Exclusion

Article excerpt

This article presents the results of a first effort to create and statistically analyze a data set containing detailed information on the Student Earned Income Exclusion (SEIE), which is part of the Supplemental Security Income (SSI) program. It presents descriptive statistics on (1) demographic characteristics of SSI recipients with SEIE; (2) various measures of SEIE use, such as dollar amounts excluded per year, numbers of months of use per year, and percentages of SSI recipients using the SEIE; (3) seasonal patterns in SEIE use based on month-by-month SEIE amounts; and (4) seasonal patterns in factors driving month-by-month gains and losses of SEIE eligibility, including changes in earnings, student status, age, and eligibility for SSI, as well as effects of the annual SEIE limit.

Introduction: Supplemental Security Income and the Student Earned Income Exclusion

The Supplemental Security Income (SSI) program provides monthly cash payments to persons who are aged, blind, or disabled and have income and resources below certain limits. SSI payments, roughly speaking, bring a recipient's total income up to at least a specified floor. This floor is the individual federal benefit rate (FBR), in the simplest case of an individual living alone in his or her own household.1 The individual FBR is the maximum possible federal SSI payment to an eligible individual. If the recipient has other income, then depending on its type and amount, actual payments will typically be smaller. This article is based on data from 2004 and 2005; the individual FBR, which is adjusted each year for inflation, was $564 per month in 2004 and $579 per month in 2005.

Among the provisions of the SSI program are several financial supports and incentives for recipients to improve their prospects for employment and self-support. One of these-the Student Earned Income Exclusion (SEIE)-is the subject of this article. The SEIE applies automatically in months when an SSI recipient is under age 22, regularly attending school in grade 7 or above, and receiving earned income (almost always wages).2 This article focuses on persons who received the SEIE in any month when they were due SSI payment during 2004 or 2005.3

Each month's federal SSI payment is typically calculated as the difference between the FBR and the recipient's countable income. If countable income exceeds the FBR, no SSI payment is due. Countable income consists of the recipient's earned and unearned income received in the appropriate month, reduced by certain exclusions such as the SEIE.

For SSI purposes, earned income consists of gross wages, net earnings from self-employment, sheltered workshop earnings, royalties, and honoraria-with wages being by far the most common. When SSI recipients meet the SEIE criteria (age, earnings, and student status), some or all of their earned income is excluded from their countable income. Thus, the SEIE can help an individual gain or maintain eligibility for cash SSI payments and is partly a work incentive and partly a financial support for education. For 2004 and 2005, respectively, the annual limits on the SEIE were $5,520 and $5,670; the monthly limits were $1,370 and $1,410.4

Since April 2005, the SEIE has applied to any working student in grade 7 or above and under age 22 whose income affects an SSI payment.5 Prior to April 2005, the SEIE was known as the Student Child Earned Income Exclusion and, under the more restrictive definition of "child," did not apply if the working student was a head of household or married. For SSI purposes, someone who lives alone and has no dependents can still be a head of household; the defining characteristics of a "head of household" are responsibility for day-to-day household decisions and absence of parental support.

For SSI purposes, a "student" may be regularly attending school (grades 7 through 12), college, university, or other training designed to prepare him or her for a paying job; this includes vocational or technical training and government antipoverty programs such as Job Corps. …

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