What are the disability income limits for 2022?
If you employ someone who receives SSI, SSDI, or Medicaid benefits, you may be aware that they are limited in the amount of income they can receive in a month to continue to collect their benefits. While many people don’t necessarily need to keep their income payments and want to work longer and longer for you, they may need all they can get from the Medicaid services they offer to have a living. independent.
You might have had discussions with them in the past about wanting to have them more hours or paying them what you actually think they’re worth instead of limiting their working time and income, but they may have declined out of concern for what the change would do to their benefits.
If their income is limited to the amount of substantial gainful activity (SGA), you have the option, each January, to increase their salary by one touch to match what they are allowed to earn without compromising their advantages. In January, people limited to SGA will be able to earn $ 1,350 per month compared to $ 1,310 per month in 2021.
Certainly, the best way to pay them might still require you to see some of your employment practices change. The easiest way is to go from a 26-week pay period (bi-weekly) to a 24-week pay period (twice a month). Not only will they be able to avoid the pesky 5 week stress, but you will also be able to pay them exactly what they are allowed to receive.
Let’s look at the numbers for the coming year 2022:
If you paid your employees the full LMS for the entire year, your employees who use government benefits will be eligible to receive $ 16,200 per year, or $ 675 by paycheque before any taxes or other deductions.
If you were to pay your employees equal wages throughout the year on a 26 pay schedule, they couldn’t receive the full $ 16,200 per year. In the example of a pay period that ends on a Friday, for 2022 with the first paycheck issued on January 14, there are two months that would have three paychecks, July and December.
To keep paycheques stable, the employee may be required to take unpaid leave during the busiest time of your business cycle. If you want them to be able to have the ability to take off whenever they want with a paycheck like you provide to your other employees, a tier paycheck should only account for two months after their SGA amount ends, amounting to paychecks of $ 450 per pay period. Over 26 pay periods at $ 450, this comes down to only $ 11,700 per year, or a reduction in salary of $ 4,500. Not negligible.
Not all people receiving disability benefits are required to stay under the SGA limits for all of their earned income. Based on their state’s Medicaid program, they may be eligible for a reduction in more of their earned income as an incentive to work for disabled workers, contributing more themselves to the Social Security program, federal and state taxes. The laws of each state are different as to how much a disabled worker can earn and hold in assets. Not all employees will automatically know that they are eligible for these Medicaid membership programs. An employee who has limited his work hours for fear of losing his benefits because he is making too much money should check if he is eligible for any of these Medicaid programs, which could significantly change the amount he receives. could earn every month.
The real attraction for your employees to switch to a 24 week pay period is knowing what they will be paid and keeping it stable without worrying about the reshuffle around the 3 month pay period. It can be meaningful for all employees. This time can be much more stressful and confusing for an employee who is limited by their need to remain eligible for their Medicaid and Social Security payments. And for you! Shifting pay periods would simplify the entire year payroll in the long run.
What does the transition to a 24 week pay period look like from a 26 pay period cycle? In fact, it’s not that simple either. We are talking about increasing the overall monthly salary of people who receive government benefits, but it changes the dynamics of the paycheck schedule of all your employees. If they are willing to pay their bills every two weeks and they have to change their behavior to accommodate twice a month, this change is worth discussing with your employees well in advance.
You are required to notify your employees of a change 30 days before it takes effect. However, it is important to ensure that they can maintain their current obligations by paying their bills every two weeks to switch to a bi-monthly schedule.
It’s not uncommon for one of your employees or coworkers not to be in a place where they can just spend a few more days after receiving their paycheck and everything is fine. Many people regardless of income pay their bills on a paycheck basis and we need to make sure that there is some understanding and what a change with the change in your business practices. Make sure you have financial education resources available to them so they can access the help they need to meet their financial obligations.
Elizabeth wolleben yoder, CFP is the Director of Financial Planning at Planning across the spectrum. She primarily meets with individuals and families to meet the unique needs of people with disabilities to ensure they understand the impact of government benefits on their planning and how to find more local support, housing and employment resources. all in the context of financial planning.