WORKING WORLD: Work-at-Home Proofreader Earns Too Much

By Tamar Asedo Sherman

A previous column on working at home (April 2008) struck a nerve. I received many letters asking for more information. Most intriguing to me is the situation presented by Kim Kosmatka, a former teacher, who created a home-based business. She wrote:

“Ten years ago, when life with multiple sclerosis demanded a job from home, I started freelancing as a proofreader. Work has been somewhat steady, but not like last year. What a banner year! I knew I was going to exceed the social security dollar limit. I even hired and trained another proofreader to help me.

“Still, after doing taxes, I earned too much. How do I pay Social Security back? Where can I get information to help me? I have been on SSDI since 1989.

“Unfortunately, this year is much slower. That’s the way of a freelancer….feast or famine, I guess.”

I referred her back to previous columns I had written where I talked about “work incentives” that the Social Security Administration has implemented to encourage those of us who receive disability benefits to go back to work, at least part time, and enable us to keep our cash benefits and Medicare or Medicaid while we test our ability to work.

For the SSDI program, there is a trial work period of 9 months during which you can receive full benefits regardless of how much you earn, as long as you report your work activity and continue to have a disabling impairment. Kim said she had a trial work period about 10 years ago. She is entitled to a new one, since so much time has elapsed without her working above the Substantial Gainful Activity (SGA) level, which was $900 per month in 2007, $940 in 2008.

You can earn more than the SGA, because you get to deduct all of your Impairment Related Work Expenses (IRWE) from your earnings before arriving at the net income for that month, or for someone who is self-employed, computed for the year, divided by 12. Those deductions include attendant care services to help you prepare for work or help you while at work; transportation costs, including mileage to and from work or medical appointments for your car, taxi services, modifications to vehicles; medical devices such as wheelchairs, pacemakers, respirators, prostheses; co-pays for prescription drugs and medical treatments; some home modifications if you work inside the home, to create accessible workspace, or, if you work outside the home, only modifications to the exterior, such as ramps.

If you are self-employed, you also get significant income tax deductions for running your own business, before taking the IRWEs for SSA reports. If after all those deductions you still earn above the SGA, as Kim said she did, your benefits will stop for the months your earnings are considered “substantial.”

So Kim wanted to know how to proceed. She wrote to me: “I couldn’t find anything on what happens or what you should do when your earnings demonstrate SGA.” It’s such a rare occurrence for someone to go over the limit that no one has dealt with the issue before.

Kim continued, “I simply called SSA and asked ‘Now what should I do?’ . . . They said no action will be taken until 2007 earnings are posted in October, then I’ll get a letter advising . . . Bottom line: I’ll have to pay back 2007 earnings, so I’ve got to get more work for 2008!”

Kim said she’s okay with paying back the amount she earned over the limit, but her biggest fear is losing eligibility for Medicare, even though she is currently covered by her husband’s health insurance plan. Again, SSA wants to allay people’s fears. According to its website: “If your benefits ended because you worked and had earnings, you can request that your benefits start again without having to complete a new application. While we determine whether you can get benefi ts again, we can give you provisional (temporary) benefits for up to 6 months” as long as your request for reinstatement is within 5 years from the month your benefits ended.

A new law extended Medicare Part A (Hospital) premium-free coverage for 4.5 years beyond the current limit. This means that you could work and still potentially retain your Medicare, for FREE, for up to four and a half years.

For help in making an informed choice about returning to work, contact your local Incentives Planning and Assistance (WIPA) Program. Check the Social Security website, www.ssa.gov under “Are you receiving disability benefits and interested in working?” or call 1-800-772-1213.

Tamar Asedo Sherman is an employment specialist. She can be reached at tsherman@unitedspinal.org.