| Life After Disability
Table of Contents
Introduction
Government Entitlements
Private Disability Insurance
Debt Management
Introduction
As new treatments offer newfound health and a new sense of hope that AIDS
will become a chronic but manageable disease, many people with HIV who have
been on disability are considering making the transition to work. If you are
one of the many people contemplating making the transition to work, you know
that there are a lot of uncertainties affecting your decision. This brochure
will attempt to answer some of the legal, financial and practical questions
that may be arising for you as you consider whether and how to reenter the
workforce.
Although this brochure is designed to be used by people from every state,
please be aware that states and local municipalities can differ with regard
to matters involving government entitlements and private insurance benefits.
GMHC serves residents of New York City. If you live outside of New York, are
currently receiving any kind of disability benefit and are considering
working, it is a good idea to contact your local HIV/AIDS organization
to find out how your specific benefits will be affected.
Similarly, this brochure relies on laws valid as of January 2003.
Laws and regulations do change, and it is important to seek advice from
your local HIV/AIDS organization to find out the current state of
affairs with regard to insurance, government entitlements and employment
rights.
Government Entitlements: SSI, SSDI, and Medicare
Government entitlements are benefits provided by federal, state and/or local
governments to assist people in need. Some entitlements, such as food stamps,
public assistance, ADAP (the AIDS Drug Assistance Program) and Medicaid are
"means-based" benefits, provided to people below a certain income and asset
level. GMHC's Client Advocacy Unit provides Fact Sheets on most means-based
and other government entitlements. These Fact Sheets can answer most of your
questions about eligibility for, and applying for, these benefits; these
Facts Sheets also address the effects of working on eligibility for these
entitlements.
This brochure will focus specifically on the effects of making a transition
to work for people from every state, on the following government entitlements:
Supplemental Security Income ("SSI"), Social Security Disability Insurance
("SSDI"), and Medicare. As this brochure has a national focus, be sure to
check with your local HIV/AIDS organization about your specific benefits.
What is the difference between SSI and SSDI?
Both benefits are provided to people defined as disabled by the Social Security
Administration ("SSA"). SSI is a means-based entitlement, provided to people
of limited means who do not have a substantial work history. SSDI is provided
to people who have worked and paid FICA taxes for a certain amount of quarters
over a certain number of years.
If I make the transition to work, will I lose my SSI benefits?
Since SSI is a means-based entitlement, if you return to work, the SSA will
look at your SSI budget. If you receive SSI, you are entitled to gross (pre-tax)
earnings of $85 per month (the "disregard") before your benefits are affected;
if you receive a combination of SSI and SSDI, the monthly disregard would be
$65. Once you earn in excess of the disregard, your SSI check will be reduced
by one dollar for every two dollars of gross income earned in excess of the
disregard.
If I make the transition to work, is it possible that I will lose
all of my SSI benefits?
SSI recognizes a "break-even point" where, if your gross earnings exceed a
certain amount, you will not receive SSI in that month. Because some people's
earnings are not consistent from one month to the next, it is possible that
in some months you will reach the break-even point, but in other months you
will not. If you incur twelve consecutive break-even point months, you may
have to file a new application for SSI before you are entitled to any
additional SSI benefits.
What about SSDI? If I return to work, am I still eligible?
SSDI has a trial work period ("TWP") which allows a person to work for up to
nine months in any 60-month period and still collect SSDI benefits. The nine
months do not have to be consecutive. During the TWP, you can earn any amount
of money you are able to earn and still collect the full amount of SSDI. Any
month in which you earn $570 or more in gross monthly earnings will be counted
toward the trial work period.
What happens when the trial work period ends?
At the end of the TWP, if you continue to work, the SSA will continue to pay
benefits for three more months in which your earnings are $800 or more. This
is known as the "grace period." If you continue working beyond the grace
period, SSDI benefits will stop during months in which your gross monthly
earnings are $800 or more.
If I work for over a year, but become disabled again, do I have to
reapply for SSDI?
Following the TWP, the SSA recognizes an extended period of eligibility
("EPE") for 36 months. During this period, if you gross at least $800 per month,
you are considered to be performing substantial gainful (work) activity and
should not receive SSDI benefits during this time. However, if you either become
disabled again and stop working or if your earnings fall below
$800 per month during the EPE, you do not have to reapply for SSDI or go through
a waiting period before benefits begin. Obtain a letter from your employer
stating the date you stopped working or the date your monthly gross earnings
fell below $800, and submit that letter to the SSA. Your SSDI benefits should
resume shortly thereafter.
I've heard people talk about a continuing disability review. What
is that?
The SSA conducts continuing disability reviews ("CDRs") to determine if a
recipient of SSI or SSDI is still medically disabled and eligible for these
benefits.
To be eligible for SSDI, you (and your doctor) represent to the SSA that
you will be unable to perform substantial gainful activity for at least 12
months. Therefore, if you return to work within the first 12 months after
the SSA has determined that you are disabled, and earn $800 or more per
month, it is very likely that the SSA will perform a CDR. If the SSA
determines that you are not disabled, it is possible that the SSA will
try to charge you for overpayments.
If you return to work after you have been receiving
SSI or SSDI for at least a year, and you are performing substantial gainful
activity (your monthly gross earnings are $800 or more) following the TWP,
the SSA may conduct a CDR. If, as a result of a CDR, the SSA determines that
you are no longer disabled, benefits will stop.
I've been receiving Social Security benefits for a long
time and have already become Medicare eligible. What will happen
to my Medicare if I return to work?
During the TWP, while you are still receiving your SSDI checks, you will still
be Medicare eligible, even if your employer offers health insurance benefits.
If you continue performing substantial gainful work activity (your gross
monthly earnings are $800 or more) after the TWP and stop receiving SSDI
checks, you will continue to be eligible for Medicare during the EPE. During
the EPE, you will be responsible for paying the monthly Medicare premiums.
Since you will not be receiving a SSDI check, you must make arrangements to
make the premium payments.
I purchased an individual health insurance policy prior to my
Medicare start-date to cover my prescription costs. If my new employer has
a group health insurance plan, should I give up my individual policy? Must
one accept the employer's plan?
While it will be expensive to maintain, you do not need to give up your
individual policy when offered access to your employer's group policy. Here
in New York, you are able to retain your individual policy when you are offered
a group policy. You may wish to carry both policies for a period of time if you
are uncertain that you will be able to continue working. You will not be able
to enroll in a new individual health plan as long as you have Medicare, and as
a result many choose to continue the individual plan when first beginning a new
job. In addition, you cannot purchase an individual policy while you are eligible
for a group policy whether through a spouse's plan or union. Other states may
vary; check your state's insurance department for regulations in your own state.
If my new employer offers a group health insurance plan, how will it
affect my Medicare coverage?
Your Medicare will last as long as you are in the Trial Work Period (TWP) or the
Extended Period of Eligibility (EPE). If you are under age 65 and your employer
has fewer than 100 employees covered by the group plan, Medicare will be primary.
Health insurance plans offered by these smaller employers are secondary to
Medicare if a person is already Medicare eligible. This means that Medicare has
to be used first to cover medical expenses, and the group health insurance plan
can be used to cover medical expenses not covered by Medicare. If you are under
age 65 and your employer covers more than 100 employees under its group health
insurance plan, Medicare is secondary, and the group health insurance plan would
be your primary source of insurance coverage.
If I am required to give up my individual health insurance policy, for
financial reasons, once I join my employer's plan, but become disabled again in a
couple of years, what kind of insurance will I be entitled to?
If you become disabled again during the EPE, you may be eligible for a COBRA
continuation of your employer's health insurance plan. (COBRA is a federal law
requiring many employers to allow employees to continue coverage under the group
health plan at 2% more than the employer's premium rate for 18 months following
cessation of the employee's employment.) If COBRA is not an option for you and
you are still Medicare eligible, you are not entitled to purchase an individual
health insurance policy. Consequently, ADAP (AIDS Drug Assistance Program), a
Medigap policy or a Medicare HMO may be the only possible options for supplemental
coverage beyond Medicare, including prescription expenses, unless you kept your
individual policy that you purchased before you became Medicare eligible. Potential
changes in Medicare Prescription options may become available as new legislation
is enacted by Congress.
If you become disabled again during the EPE, you will remain eligible for
Medicare whether or not you have continued to pay the Part B premiums while you
were working. There may be a penalty added to your monthly Medicare premium if
you were not paying the Part B premium while working.
If you become disabled from work after completion of the full EPE, you may
be entitled to COBRA continuation of your employer's health insurance plan and
eventually will be Medicare-eligible again, if approved for new SSDI.
For more information about SSI, SSDI, Medicare or other government entitlements
including Medicaid, ADAP, public assistance and food stamps, please contact the
Client Advocacy Unit of GMHC or your local AIDS organization. GMHC's Client Advocacy
Unit serves New York residents and provides Fact Sheets on most means-based and
other government entitlements. The Fact Sheets, which answer most questions about
eligibility for, and applying for, these benefits, can be found on GMHC's website,
www.gmhc.org.
To request printed copies of GMHC's Fact Sheets about specific government benefits
and entitlements, or if you have questions about these benefits and entitlements, you
can contact the Client Advocacy Unit through its Advocacy Helpline:
212/367-1125.
Private Disability Insurance
Some people have private long term disability ("LTD") insurance. An individual
LTD plan is an insurance policy usually purchased directly from an insurer
or insurance broker, and requires you to pay the monthly or quarterly insurance premiums
to retain the policy for your future needs. A group LTD plan is a
policy that is provided most typically by an employer, and either the employee, through
payroll deductions, or the employer pays the premium.
If you are receiving any type of private LTD benefit, whether it is through a group or
individual insurance plan, it is important to read the summary plan description which
describes how your policy works. Since the language in the policy can sometimes be confusing,
you can also consult with an attorney or benefits counselor who can help you interpret the
terms of your LTD policy.
This section will attempt to answer commonly asked questions about the effect of
returning to work on private disability insurance benefits. It is important to remember
that an insurance policy is a contract; while there are provisions that are common in
disability policies, you will have to read the policy or the summary plan description
of the policy that covers you in order to determine how returning to work will affect
your specific LTD insurance coverage.
And if you live in a state other than New York, you should consult with your local
AIDS services organization to see whether your state's insurance laws offer different
protections.
I get LTD benefits through an LTD plan offered by my former employer. Will
I continue to collect LTD benefits once I return to work?
Group LTD plans typically provide 60% of your gross income less any SSDI you are
receiving. Once you are deemed eligible, payments under group LTD plans usually continue
for as long as you remain disabled. Unlike SSDI, however, many group LTD plans do not
have a trial work period. The general rule is that if you return to full-time work, you
lose most or all of your LTD benefit. Some group LTD plans offer a partial or residual
benefit, which would allow you to work part-time or perform a percentage of your former
work duties and still be able to collect part of the LTD benefit. As with all insurance
policies, it is important to read the summary plan description to determine how your
particular plan covers any return-to-work provisions.
I've been out on group LTD for about two years, but I'm thinking of
interviewing for full-time jobs. If I accept one, and get sick again in a few months,
can I go back out on LTD?
The answer depends on your LTD policy's terms. Reading the policy is recommended.
Generally speaking, there are a number of factors. If you return to work for the same
employer from which you went out on disability, and you become disabled again within
a few months, some group LTD policies will allow you to return to the LTD benefit
without a waiting period. If you go to work for a new employer, you would most likely
be required to walk away from your old employer's LTD plan forever, unless your old
group LTD policy has a provision allowing you to access benefits again within a certain
amount of time of your disability recurring. It is also recommended that you check to
see if your old group plan has a provision permitting conversion to an individual plan.
If your new employer provides a group LTD benefit for which you are eligible, there
may be a pre-existing condition limitation that will make you ineligible for the benefit
if you need to go out on an HIV-related disability leave before the limitation period
expires. For example, if your new employer's LTD plan has a 12-month pre-existing condition
limitation, you will not be eligible to make a claim for LTD benefits under this policy
for an HIV-related disability until you have been covered by the policy for 12 full
months. New York insurance law provides a limited exception to the exercise of a pre-existing
condition limitation. Because each state may vary, consult with an attorney or benefits
counselor familiar with your state's laws to find out about more about pre-existing
conditions.
I get LTD benefits through an individual LTD policy. Can I work part- or
full-time and still collect my LTD benefits through this individual plan?
Private individual LTD insurance policies work differently than group LTD insurance.
Although most individual LTD plans will stop paying benefits after you have returned
to full-time work, some individual LTD plans will allow you to work part-time and
receive part of your LTD benefit. As always, read your insurance policy carefully to
determine how it will work for you.
I've been on disability through an individual LTD policy for a long time.
If I go back to work and then become disabled again in the future, can I make another
claim for LTD benefits under that policy?
Most individual plans will remain in effect if you return to work and then become
disabled again; since this is an individual policy, the policy should be yours to
keep as long as you make the premium payments. Again, read your policy carefully so
that you fully understand your rights.
Debt Management
Many people who have been out on disability for a long time owe a considerable
amount of money to creditors. Creditors, including credit card companies, department
stores, health care providers and other non-tax-related credit providers may attempt
to collect such debts in a variety of ways. If you owe money to a credit card company,
for example, and you stop making your minimum monthly payment, the credit card company
may send you letters or even call you at home in an attempt to collect the debt.
Ultimately, the credit card company may sue you.
If you owe money and cannot make a payment, the credit card company can win a
lawsuit against you to pay the debt. If the credit card company wins, the judge
issues a "judgment" in favor of the credit card company and against you. The credit
card company can then enforce the judgment by attaching your assets and using them to
pay off the debt.
However, there are some assets that are exempt from attachment on a judgment. For
example, a creditor with a judgment cannot reach SSDI, SSI or LTD. If any of these is
your only source of income and you have no other assets, then a credit card company
may deem you to be "judgment-proof" (none of your assets could be subject to collection
by creditors). In that event, the credit card company will probably cease its collection
efforts.
Your salary, however, is not exempt from collection on a judgment. Therefore, while
you may have been judgment-proof while you were disabled, once you go back to work and
earn a salary, you may no longer be considered judgment-proof, and creditors may resume
collection.
Please note that the above laws apply to most, but not all, creditors. For example,
the IRS may attach your SSDI, SSI or LTD to pay your tax debt.
I owe a lot of money to several credit card companies, but I have been
judgment-proof for several years. Now I am thinking of making the transition to work.
What can my creditors do?
If a creditor has already obtained a judgment against you, it can take money from your
salary. Through a process called "garnishment," a creditor can take 10% of your gross
salary from each paycheck until your debt is paid off.
How does a creditor garnish my salary?
A creditor with a judgment against you will contact your employer through the Sheriff's
office and inform your employer that it has a judgment against you. The Sheriff will
then order your employer to pay up to 10% of your gross salary to the creditor until
the debt is paid off. Only one creditor can garnish your salary at any one time, so the
most your salary can be garnished is 10% at any one time. Any other creditors must wait
in line for each preceding creditor to be paid off before it can begin its own garnishment
of your salary.
Can I avoid salary garnishment by filing for bankruptcy?
A bankruptcy is a determination by a judge that your financial condition is such that
you cannot pay your debts. There are several types of bankruptcy, the most common of
which is a personal bankruptcy in which the judge discharges all of your debts so that
you can become financially stable.
When you file a bankruptcy petition, a bankruptcy judge looks at your assets at the
time you file your petition, and will not look any further. Therefore, your future salary
is not considered an asset to a bankruptcy judge. If you have no assets other than your
present salary, your debts may be discharged, and your future salary will not be garnished.
In addition, under certain circumstances, your tax debts may be discharged. Be aware that
declaring bankruptcy is a very complicated and serious matter with long-term financial
repercussions. Prior to filing for bankruptcy, you should consult with an attorney.
Is there any other way to avoid salary garnishment?
Since there are costs associated with garnishment, creditors would rather have debts paid
by the debtors themselves. Therefore, a creditor might look favorably on an offer of payment
either in the form of a lump sum or in monthly installments. After you have decided to
work, you can approach your creditors and offer a plan to "work out" the debt. Creditors
will sometimes accept less than full payment to satisfy old debts. In formulating your
offer, you should carefully consider your financial limitations. By working out the debt
directly with the creditor, you avoid involving your employer and may even save some
money in the process.
I owe a lot of money in back taxes. When I was out on disability and living
on a restricted income, my tax debt was placed in an "uncollectible" status, although
interest and penalties continued to accrue. Will I have to repay the government all of
that money if I go back to work?
Yes; the city, state and federal tax authorities are creditors who can garnish your
salary. However, government creditors are usually "first in line" and can garnish your
wages before credit card companies or other non-governmental creditors. Further, the
Internal Revenue Service can garnish a far greater portion of your wages than other
creditors.
If you have tax debts, you should therefore try to avoid garnishment, and there are
two ways to do so. You may attempt to work out a monthly payment agreement with the
IRS and other government creditors. Or, you may offer a lump sum to settle the tax
debt altogether. This is called an "Offer in Compromise." Depending upon your specific
circumstances, the creditor may accept an offer of far less than what you actually owe.
You should consult with a tax professional before deciding how to deal with your tax
debts.
Once I have begun working, are contributions to a retirement plan subject
to collection on a judgment?
It depends. Pension and/or retirement plans are exempt from collection on a judgment
and may not be attached by a creditor who has a judgment against you.
However, pension and/or retirement plans are legally subject to collection by the
IRS for tax debts. For public policy reasons, though, the IRS rarely takes pension
funds. Tax law is very complicated, and if you have tax debts you cannot pay, you
should consult with a tax professional.
The GMHC Legal Services and Client Advocacy Department holds monthly debt
management seminars, where you can speak directly with an attorney or paralegal
regarding your credit issues.
For more information about private insurance, debt management or the legal
implications of returning to work, call the GMHC Legal Services and Client Advocacy
Department at 212/367-1040, or your local AIDS organization.
© 2003 Gay Men's Health Crisis
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