FINISHED FILE

NDI
JULY 19, 2023

NET EARNINGS FROM SELF‑EMPLOYMENT AND SSDI/MEDICARE
1:00 PM CT

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(Recording in progress)

>> MOLLY SULLIVAN: Welcome, everyone. We have lots of people rolling in as I speak. Good morning, or good afternoon. From whichever part of the country you are joining from, I am so glad you are able to join us today.
We are going to get started in just about a minute. In the meantime, if you can take a moment to just maybe post a Chat in the Chat Box about what city you are joining us from.
And you can do that by clicking the Chat icon in your Zoom control panel. I am just going to give it maybe a minute or less, and then we will get started on the logistics.
Okay, well I am going to get us started with a few logistics. So, our time together today, then we will jump into the topic you all have joined to learn a little bit about it.
The audio for today's meeting can be accessed using computer audio, or by calling in by phone.
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If you would prefer, you can ask your question in ASL. Please raise your hand and wait to be called on by the host. If for some reason your question isn't answered during the Webinar, or if you are listening by phone, or if you are unable to use the Chat Box, please email ajones@ndi‑inc.org. This Webinar is being recorded and the materials for the PowerPoint will be available at the website at disabilitysmallbusiness.org on the past events page in one to two weeks.
All right. Well, hello and welcome to today's session! This Webinar is titled Net Earnings from Self‑Employment and SSDI/Medicare. My name is Molly Sullivan. I am with Griffin‑Hammis Associates, which we call GHA for short. GHA is an organization that has been providing training and technical assistance for over 30 years to individuals and Employment Programs across the country to become self‑employed small business owners.
For this Webinar I am joined by my incredible colleague, Ciara Ladroma. Ciara will be monitoring the Chat throughout the Webinar. You can click on the icon that reads Chat on the bottom of your Zoom control panel to access the Chat. Please use it to ask questions, share ideas, or leave comments.
We will absolutely be stopping for Q&A a couple times during this Webinar. So, if you post a question in the Chat, just know that we are going to do our best to tackle it during one of the Q&As.
Lastly, I want to thank the US Small Business Administration, and the National Disability Institute in leading the Community Navigator Pilot Program, which creates the space for this Webinar. While the Webinar is funded by the US Small Business Administration, all the opinions and conclusions and recommendations that we express here are those of ours, the authors, and do not necessarily reflect the views of the SBA.
At the end of the web that are we will share information about upcoming events and the National Disability Institute team will share information about the resources available through the Small Business Administration website.
All right. So, with that, let's take a look at the plan for our time together today.
So, today's Webinar will explore how Self‑Employment Earnings affect SSDI and the Medicare that comes with it. To tackle this top anything, I will take a few minutes to make sure everybody knows what SSDI is, and what the related Medicare is.
One, we will look at what Self‑Employment Earnings are. Once we have covered those two core topics, we will bring them together and look at how Self‑Employment Earnings affect SSDI and how the Self‑Employment Earnings affect Medicare.
I do want to acknowledge this is a fairly big agenda, so I will really stay focused on the Self‑Employment Earnings, SSDI and Medicare. We won't be covering Supplemental Income during today's Webinar which is the other cash benefit that Social Security administers. More we will be covering Medicaid today.
So, for starters, we have more Webinars on self‑employment. This Webinar is part of a series we started last year and are forking up this year. Last year in 2022 we did five Webinars on topics related to benefits and self‑employment. The first one was really a basic overview of the common public benefits, which explained not only the eligibility rules for Social Security Disability Insurance, SSDI, but also, we covered in that Webinar, Medicare, eligibility for Supplement Security Income and Medicaid.
In this Webinar that we did last year, we addressed common business structures, and some of the key considerations in choosing a business structure when receiving SSDI, Medicare and Medicaid. The third Webinar we did was about Social Security's Plan for Support, PASS for short, and how PASS pays for business' expenses.
Before that we had self‑employment resource exclusions, talking about the financial resource limits based on grants.
That Webinar explored the work incentive for self-support and the ABLE accounts as a tool.
Okay? The fifth Webinar we did explain the concept of Net Earnings from Self‑Employment and how they are calculated. I will be talking about the topic of Net Earnings from Self‑Employment today, but please know we have a program that goes into more detail that you can watch if you would like to dig into more on that topic.
So far in 2023 we did one Webinar on Net Earnings from Self‑Employment and SSI/Medicaid. You can watch all the Webinars we have done so far on the small business website on the web page. And Ciara, when you get a minute, if you can pop a link in the Chat Box, that would be great so folks can grab and save that. 
Now, during 2023 we will be doing three more Webinars that cover benefits and self‑employment. That includes the one you joined today about SSDI and self‑employment.
Then we also have one that we will be doing in the coming months that is about reporting self‑employment income for the SSI Program, and another on reporting self‑employment income for the SSDI program. So, we really tried to break these up into bite‑sized pieces, if you will, for Webinars so that each and every one of these can be a little bit confusing in terms of content.
So at the end of the Webinar we will explain how you can subscribe to the National Disability Institute and get email alert when is remaining Webinars for this year are open for registration. Now, the Webinars can be a great way to build your knowledge, for sure, if you or someone you work with would like one‑on‑one help understanding how work will affect benefits.
I encourage you to reach out to a Benefit Planner. I would like to take a minute to make sure everybody has an understanding of what a Benefit Planner is and the process surrounding that.
So, a Benefits Planner is a professional that generally works for a non‑profit organization, a state agency, or even some kind of an Employment Program. They specialize in understanding public benefit work rules. Now, Benefit Planners have a handful of titles that they could be going by. It could be a Community Work Incentives Coordinator, it could be a Benefits Counselor, it could be a Benefits Claimer. It could be a Work Incentives Coordinator. Those are just a few examples.
But what is true about all of these titles is that they are really titles for professionals who are providing one‑on‑one counseling for People with Disabilities, about potential changes to benefits when working. And how to use the special benefit program work rules to maintain healthcare and other needed benefits.
Now, every state has at least one benefit planning program called a Work Incentive Planning and Assistance program that is often called WIPA, W‑I‑P‑A for short. You can find the WIPA project in your area by using this find help feature at choosework.SSA.gov, or you can find the WIPA project in your area by calling (866)968‑7842. You can also use the TTY number, which is (866)833‑2967. Now, in some states the State Vocational Rehabilitation agency also provides Benefits Planning as a part of their services.
So, if you or anyone you are working with, is receiving services from a State VR Agency, be sure to ask the VR Counselor for help finding a Benefit Planner.
And another option I would like to share is potentially contacting your local Center for Independent Living, and asking them if they can provide help in finding you a Benefit Planner. If you are not familiar with Centers for Independent Living, they are non‑profits that support People with Disabilities in living independently.
Now, some CILs, they are called CILs for short, often have Benefit Planners on‑staff, while others may not have one on‑staff, but may be able to help you find a Benefit Planner in your area.
As you are listening to the details I share with you, rather than trying to take in all the details, set goals and try to understand all the basics. If you are renewing benefits, get connected with a Benefit Planner who can provide more in‑depth advice and guidance for your situation. All right!
With that in mind, with all of that in mind, let's begin building your knowledge about some of these benefits, starting with a brief review of what SSDI is, and the related Medicare.
The Social Security Disability Insurance is called SSDI for short. It is a monthly cash benefit, and the benefit is based on a person's previous work and earnings, and it is administered by Social Security.
There are two eligibility rules for SSDI. First, a person must meet Social Security's definition of disability or blindness. Second, a person must have reached insured status, which simply means the person must have worked and paid enough into the Social Security Trust Fund.
Now, Ciara is going to put a link in the Chat Box to a Social Security web page that provides more details on SSDI eligibility, since we are not really going to dig into the details of that here.
So, for anybody who wants more information about SSDI eligibility, just check on that link that Ciara will share with you.
If a person is eligible for SSDI, the benefit amount will be based on the person's lifetime earnings. Technically their average lifetime earnings. That means the benefit amount could be $300 per month f one person, and it could be $3,600 per month for another person. The exact amount is based on the person's previous earnings. 
Now in 2023 the average SSDI amount, just to give you a sense of what the average benefit is, the average benefit amount this year is $1,483 a month. I want to acknowledge that the reality of these benefit programs is their names can be confusing. A lot of them sound alike, so it is really important for a person who is receiving a benefit from Social Security to confirm which benefit they have before they start gathering information about how the benefit could be affected by work.
That is because each benefit as a different work rule. So, there are a handful of ways to confirm if a person has SSDI. A few potential ways to do that include the person logging on to their My Social Security account and looking at what benefit they have listed as their type of benefit there.
Also possible for a person to call Social Security, either the local office or the national toll‑free number, and ask the operator to confirm which type of benefit.
Also, a person can look at recent letters they got from Social Security that indicate which benefit they have. For most people, they may have a preference for how they want to go about confirming that, but it is really important to take that step since there are different cash benefits and they have different work rules.
Today we will be talking about the SSDI. Let's take a minute and look at how Medicare fit into this picture. So, Medicare is a Federal Health Insurance Program. Now, Social Security handles the eligibility process for Medicare, but most everything else about Medicare is administered by the Centers for Medicare and Medicaid Services. To be eligible for Medicare, a person must fit into an Eligibility Group. The eligibility group that most people know about is for people aged 65 or older. In fact, the vast majority of people who get Medicare are getting it, because they fall into that age 65 and older group. Okay?
For our time together today, what I want you to know is that there is a Medicare Eligibility Group for people who have SSDI. With that Eligibility Group, people that get SSDI automatically get Medicare after they have completed a 24‑month waiting period.
If a person stops getting SSDI because of their work, but they still have a disability, they can actually keep that Medicare. Now, we are going to talk more about that important point later in this Webinar, but what I want you to know is to get Medicare, you have to fit into a Medicare Eligibility Group. People that want have stopped getting SSDI due to work are part of those two Eligibility Groups.
If you would like to learn more, I recommend reading some of the information in a CMS publication called "Medicare and You". It is a great publication with lots of information. Ciara, if you can pop information about Medicare and You, please pop that in the Chat.
Now, you can log into your My Medicare account, which is something you do through Medicare.gov. You can also call the Medicare toll‑free number, which is easy to remember. It is 800‑Medicare. But the actual numbers for it are (800)633‑4227. The TTY number is (877)486‑2048 and Ciara will pop that information in the Chat Box, as well. We are filling up that Chat Box for you.
So, I realize this is a good amount of information. So what I would like to do is look at an example person who is receiving Medicare and SSDI so that you are clear about those two benefits, and then I will check in for questions.
Okay. So, our scenario person is Jana. She is 35‑years‑old. She was diagnosed with multiple sclerosis and stopped working because of it at the age of 32.
Now prior to this diagnosis, she had worked as a cashier for about 10 years. Now, Jana was found eligible for SSDI, and she receives $1,050 a month in that cash benefit. $1,050 is her SSDI amount. So, let's just unpack this example.
So, you can see Jana meets the two basic SSDI eligibility. Because for MS and the severity of it, she met eligibility and because she worked as a cashier for 10 years, she worked enough to meet insured status. Now the SSDI she gets, which is $1,050, is based on her previous earnings.
Lastly, the final piece about Jana is that she automatically became eligible for Medicare 24 months after she became entitled to SSDI. Okay.
So, before I move us onto the topic of self‑employment earnings, which is the second core topic we will cover today, I would like to check‑in and see if there are any questions folks have about the basics of SSDI and the related Medicare? Ciara, do you have any questions in the Chat Box for me?
>> CIARA LADROMA: Hi there. This is Ciara speaking. We don't have any questions, yet. So, we can keep going.
>> MOLLY SULLIVAN: Perfect. Wonderful. Okay.
So, I am going to move us on to our second round of information. So, this next topic is about Net Earnings from Self‑Employment. And to get us started on this topic, what I would actually like to do is just take a minute and look at the broader topic of earnings. What I want to show you is where Net Earnings from Self‑Employment fits into that broader topic of earnings.
So, for the sake of this Webinar, I want you to think of earnings as being money that a person gets for work that they perform. Now, in the United States, the majority of people are employees of a company or organization, and they get their earnings from an employer.
Now, in this situation it is easy to determine a person's earnings. The employer generally pays an hourly wage, or a salary, and gives the employee a paycheck at regular intervals. It may be once a week. It may be once‑a‑month. Essentially, we have an employer getting a paycheck to an employee.
For Social Security purposes, generally the gross wages from the employer are the person's earnings. So, for example, let's say I work for a company that is offering pet grooming services like dog washing. We will pretend I am one of the dog washers.
So, I work, in this example, 100 hours over the course of the month. And I get paid $13 an hour. That means I would earn $1,300 for my work that month. That is my gross wages that I am paid by the company.
Now, this arrangement is often called Wage Employment. Because the employee is being paid a wage by their employer. So, what about someone who owns a business? What are their earnings? Generally, one of two situations can occur. Either the business owner sets themselves up as an employee of the business in which they actually get a paycheck from their own business, because they have set themselves up as an employee. You can get a W2 from their own business at the end of the year. Or the second situation is the business owner does not set themselves up as an employee of the business.
Now, in the second scenario where the owner doesn't go through the process of setting themselves up as an employee of the business, it is actually by far the most common of the two situations. In fact, the Small Business Administration Office of Advocacy reports that 81% of all small business owners do not set themselves up as employees. And often that is because they are very simple businesses, and it is more headache than it is worth to do that.
Now where the second situation where the person is not setting themselves up as an employee, the business owner isn't getting the paycheck from the business.
Instead their Net Earnings from Self‑Employment work are the earnings. That is what their earnings are.
So, not only are their earnings for for IRS purposes, but they are also the person's earnings for Social Security purposes. The net earnings are often called NESE, so you will often hear me use that term because Net Earnings from Self‑Employment is often a long term, so NESE can be quicker to say.
Now, considering the vast majority of businesses fall under this second situation.
If you are an employee of a business, I urge you to reach out to your Beth &%C1 &%F0
Er and talk through the situation with them.
So, let's dig into this concept of Net Earnings from Self‑Employment and look at an example to make sure you have a basic understanding of this concept. Then I will check in for questions you may have about NESE.
All right, so you now know when a business owner does not set up an employee by business, what happens is their earnings, for Social Security purposes, are going to be the Net Earnings from Self‑Employment in their business. So, what is NESE? Understand NESE, you first need to understand two key terms. The first key term is Business Revenue. Now, Business Revenue is basically just the money that the business brings in. Let's say, for example, I am a massage therapist and I get paid $3,000 per month from all my customers. That $3,000 is my Business Revenue. All right?
The second key term is Business Expenses. These are items and services have to pay for to run my business. So sticking with the massage therapy example, let's say I had $1,000 in expenses last month. Maybe I had to pay for rent, insurance, I had to buy newly linens, maybe new lotions, etc. So, keeping those terms in mind, let's take a look at the two steps involved in calculating NESE.
Step 1, I take my Business Revenue, and I subtract my Business Expenses. The result is Net Profit. Okay? In my massage therapy example, if we take $3,000 of Business Revenue, and we subtract $1,000 of Business Expenses, we get $2,000 of Net Profit. That is step 1.
In step 2 I take my Net Profit. As a deduction I have to pay more in Social Security taxes than people that are wage employees which a deduction to even the playing field.
So, after applying that 0.9235 deduction, I end up with $1,847 in Net Earnings from Self‑Employment.
Now, for the SSDI program, Social Security is looking for the value of the work in a month I performed. That is how SSDI is performed. They want to know the value of the work you did.
So, they will use my actual monthly NESE, in a lot of cases, but in some cases may average my NESE over a period of time.
So, let's say, for example, in my massage therapy business, I give customers a discount if they buy 10 massages at once. Now, I will likely be getting that customer massages over a two-to-four month period of time to get them all ten of their pre‑paid massages delivered.
So, in the month that they buy the ten massages, the business revenue doesn't reflect the work I did in that month, right? Because I am actually doing the work over two to four months.
So, in situations like that it is important to let Social Security know your revenue for the month is not a good reflection of the work you are doing in the month. So, they can decide if it makes sense to average your NESE over several months, or if it makes sense to just count your actual NESE for that month.
So, you can see it the important for business owners to keep a record of monthly Business Revenue and Business Expenses. It is important to do that for many reasons, but if you are somebody who is receiving a Social Security Disability benefit, it is helpful for managing that benefit if you have got a record of monthly Business Revenue, and monthly Business Expenses. Otherwise, Social Security has no option but to average, because they won't know what your monthly actuals are.
All right. Let's take a look at one more example. This time with our scenario person, Jana, then I will check‑in for questions about this NESE concept before we dive into the SSDI.
All right. So, Jana decided to pursue her passion, which is graphic designing, so she become as self‑employed graphic designer. She charges her customers $75 an hour, and she invoices them monthly for all the work she did in that month.
Given that, Social Security is likely to use her actual monthly NESE and not average.
So, assuming that that is how it plays out, from January through June, Jana had two customers, and she brought in $2,000 in Business Revenue each week. She also had $500 in Business Expenses each week, like internet, insurance and office supplies.
So, let's calculate Jana's monthly NESE from January through June. Interest are two steps. In our first step we take our $2,000 of Business Revenue, and we subtract her $500 of Business Expenses. And the result is $1,500 of Net Profit from each of those months, January through June.
Now in the second step of the NESE calculation, we take her Net Profit of $1,500, and we multiply it by 0.9235. That result is $1,385 of monthly NESE for January through June. Okay? So those ‑‑ that amount, the $1,385 is Jana's earnings January, February, March, April, May and June.
Okay, now business, except for Jana in July through December, which is great, she makes $3,000 in Business Revenue in each of those months, and she still has $500 in monthly Business Expenses. So, let's calculate her NESE for the second six months of the year.
So, in step 1, we take her $3,000 of business representative, and we subtract her $500 of Business Expenses that gives Jana $2,500 of Net Profit each month from July through December.
Now in step 2 we take $2500 of Net Profit and multiply it by 0.9235 and the result is $2,308 each month from July through December. Those are a few examples of how to calculate NESE.
So, what I would love to do is check‑in to see if there are any questions about that topic of NESE, and then we will switch to our third core topic, which is really putting all of these pieces together, and looking at how NESE affects SSDI/Medicare. But, first, Sierra, are there any questions in the Chat about NESE.
>> CIARA LADROMA: This is Ciara. Would you be able to spotlight me, Molly?
>> MOLLY SULLIVAN: Sure. Let me give that a go. There you go.
>> CIARA LADROMA: Thank you. So, we do have some questions, and we will start with:  Is it important to report NESE every month, even when the Net Profit stays the same, or approximately the same?
>> MOLLY SULLIVAN: Great question. I am going to give a short answer because we are going to have an entire Webinar about reporting Self‑Employment Earnings, which reporting NESE for SSDI and a separate one for reporting for SSI. In short, what I would say is, Social Security doesn't want people who are receiving SSDI or SSI to be reporting NESE monthly.
The high‑level explanation is that want an estimate of what you expect, and then if things change, your estimate changes, you can let them know, but ultimately, they will want your tax return at the end. A copy of your business, not personal. Your business tax return, the end of the next year, so that they can see what your actual NESE ended up being. So, generally, no, you wouldn't be reporting monthly your NESE.
>> CIARA LADROMA: Thank you. The next question is, is NESE effected if someone has an employee or plans to hire?
>> MOLLY SULLIVAN: Yes, that is greet. Yes. So, let's unpack that. So, if you have a business and you have an employee, the money you spend paying that employee is a Business Expense, right?
And, remember, Business Expenses, we subtract that from business profits ‑‑ I am sorry, from Business Revenue.
So, having an employee will lower your Net Profit.
And let me just give an example. Let's take Jana, for example. So, January Nahas, in the second six months of the year, $3,000 in Business Revenue, and $500 in Business Expenses. Which brings her to $2,500 of Net Profit.
Let's say Jana is, like, no way can I handle all of this. This is way too much work for me. I need help. So, I am going to bring on an employee, or maybe I will have a contractor, but let's go with an employee.
I have to pay that employee, so, let's say Jana pays that employee $1,000 a month. Her expenses just went from $500 a month, to $1,500 a month, right? Her expenses just went up because she got this employee. So, now, to figure out her Net Profit, the first step in the NESE calculation, we take her $3,000 of Business Revenue, and now we subtract $1,500 of Business Expenses. So, her Net Profit is only $1,500 when we do that. So, it reduces her Net Profit. That is what happens when you start paying people to help you run your business. It eats up part of your Net Profit. That is kind of how it works, so, hopefully that answers the question.
>> CIARA LADROMA: Thank you. This is Ciara speaking again. We have just a couple more questions.
>> MOLLY SULLIVAN: Great.
>> CIARA LADROMA: Will you be adjusting the needs for NESE for new businesses?
>> MOLLY SULLIVAN: That is something we will tackle when we talk more about reporting the Social Security. What is true is when you begin working what you need to report for SSI versus SSDI is different. 
A general answer ‑‑ I don't have time to go into that in this particular Webinar ‑‑ but what I would say is that in general it is unbelievably helpful, incredibly helpful for anybody who receives a disability benefit to project what they anticipate their Business Revenue and Business Expenses will be in that first year of business. And I fully understand that is very difficult to do. 
It is important to do that for multiple reasons, not just being a business start‑up. That is just a good thing to do as a part of business planning and starting a business. But it is something that is helpful to estimate for the sake of communicating to Social Security what your plans look like, what your thinking is going to happen. Knowing that things can go in different directions.
You are not nailed to an expectation that it will unfold exactly the way you want, but it is helpful to be able to communicate what you estimate. So, anybody starting the path of self‑employment and about to start to get self‑employment income, it is ideal to estimate Business Revenue, Business Expenses, and their format. Is there anymore, Ciara?
>> CIARA LADROMA: There is just a question in regard to the example with Jana in populating the NESE.
>> MOLLY SULLIVAN: Okay.
>> CIARA LADROMA: So, if Jana earned $1,500 Net Profit per month from January through June, wouldn't January through June NESE be $1,500 times 6 months times 0.9235?
>> MOLLY SULLIVAN: Oh, I am sorry. I may not have worded that clearly enough. The number on the slide are meant to reflect her monthly.
What is happening each month. So, what is happening January, February, March, April, May and June. So, it is just a simplified ‑‑ just know this is a simplified example. She is actually in theory, has the exact same revenue and exact same expenses each month, January, February, March, April, May and June. In reality most businesses don't have the exact same revenue and Business Expenses. I fully recognize that, but it is for the sake of getting you a simple example to get things rolling in your brain. Okay. Is there one more, Ciara?
>> CIARA LADROMA: I can go ahead and save these. But these note, if we are not able to answer your questions live, we are more than happy to reach out to you. Message me your email and contact information, or we will also be dropping our contact information toward the end of the presentation, so you can feel free to reach out to us.
>> MOLLY SULLIVAN: Great. Perfect. I want to make sure we have enough time to cover what is often kind of considered the meat of this Webinar.
Okay. Let us move on and look at how this NESE effects SSDI. I am going to start by sort of giving you some high‑level information, then we will dig into some specifics. We will drill down.
So, when it comes to work the general rule with SSDI is that the person receiving the benefit will either get the entire monthly SSDI amount, or they won't get any of the monthly SSDI amount.
It is referred to as and all or nothing benefit. So, the key question is, how does Social Security decide if a person, when they are working, will get all their SSDI or none of their SSDI? It is really important to understand so that you can financially plan, and make sure that your SSDI isn't going to suddenly stop when you don't expect it to. 
In general, Social Security comparing the person's washing activity to what is called the Substantial Gainful Activity Guideline. It is a mouthful. So, we call it SGA. For a person with statutory blindness, the SGA guideline is $2,460 a month. This amount generally goes up every year. Not always. It is tied to the national wage index, so it depends on what happening to that. It doesn't go down though. So, knowing there is a SGA guideline that will be compared, what happens is person's accountable NESE is above that guideline, they would not be due the SSDI.
If the person's countable NESE is below the guideline, they will do the SSDI. Now, there are special work rules that are called Work Incentives. They will allow a person in some situations to actually get the SSDI or keep eligibility status even when their NESE is above the SGA guideline.
So, those exceptions include the trial work periods, and a few SGA deductions that can reduce a person's countable NESE below SGA.
Okay, so deep breath. I will dig into a few rules for you here.
On the next slide I will walk you through the three phases of these work rules to give you a little more detail, to give you a little more meet.
Before I switch the slide, I just want to say that these rules can feel a little overwhelming, so, if you are someone what is receiving benefits, I want to reiterate, it is super helpful to get connected with a Benefit Planner to talk through how it all applies to your situation. 
So, as I share this next bit of information with you, please just try to take in the understanding of the basics, the basic gist of it, okay?
When you are trying to grasp all the weeds and understand all the details, it can become a little overwhelming, so try to look at the bigger picture, and know that you can reach out for help. Okay!
So, let's look at more detailed information about the SSDI Work Incentives.
So, the first step in understanding the SSDI Work Incentives is to know that the SSDI benefit has three phases of work rules.
When a person becomes eligible for SSDI, they start off in the first phase of work rules, boom, right into the first phase.
The first phase is called the Trial Work Period. We call it TWP for short. A lot of acronyms. I will try not to confuse you with acronyms. 
Now the first phase is the most supportive of the three phases. During the first phase the person receiving the SSDI will keep the SSDI no matter how high the earnings go.
So, think of it this way. A person could have $10,000 of Net Earnings from Self‑Employment in a month, and still be due their SSDI if they are in the Trial Work Period. What is great about the Trial Work Period is that the SGA limit, guideline, it doesn't apply during this first phase, so you keep your SSDI no matter how high your earnings go. 
No, this first phase doesn't last forever. A person's Trial Work Period, the first phase, it will end when they have had 9 months that exceed the Trial Work Threshold. Now, that Trial Work Threshold, when they are self‑employment, is $1,050 of monthly NESE, or doing 80 or more hours of work in the business. In other words, if I had $1,200 of NESE and 80 hours of work, I will use the trial work fund. It is okay to use the trial work fund, but it is helpful to keep track of when you use them so you know when they are going to end and you are going to move into the second phase.
And partly why that is so helpful to keep track of it is that Social Security ‑‑ the vast majority of the time, is not keeping track of it. They are generally looking back at months or years of work you did, then deciding if you have used trial work months.
So be proactive in managing a SSDI work benefit, it is really helpful to track whether you are using your trial work months on your own. All right? So, that is the first phase.
What about the next phase? So, the next phase, Phase 2, is officially what we call the Extended Period of Eligibility, or EPE for short. During the second phase there is some support, but it is not as supportive as the first phase. During this phase the Social Security looks to see if the person's work is above or below the SGA guideline.
If the person's countable NESE is below the SGA guideline, then they will likely be due their SSDI for that month.
If a person's countable NESE is above the SGA guideline, then they wouldn't be due their SSDI for the month.
What is unique about this second phase ‑‑ and what is supportive about it, is that if a person does have NESE above the SGA guideline their benefit is rescinded, but it is not terminated.
What that mean is that the person can get the benefits early restarted if their earnings drop below the SGA. So they still have an open claim during this second phase, even when their benefit is suspended because of SGA work.
What is important is that a person during this second phase understands that they wouldn't be due their SSDI in months that their NESE is above SGA, so you have to financially plan for that.
Now this second phase, this Extended Period of Eligibility, it lasts for exactly 36 months. So, as soon as your Trial Work Period ends, this Extended Period of Eligibility begins, and it lasts 36 months.
Okay? So that is the second phase. The key thing it is a financial decision. Will my NESE be so high it will cause my SSDI to be suspended, and if so, is it at least enough to replace my SSDI, so it is really great to do financial planning around that. To do that, when you are self‑employment, that is another reason why it is really helpful to do monthly ‑‑ sorry, to do an estimate of what you expect in expenses in the first year, then the second year, but it is also so helpful to track your actuals each month.
Okay, so second phase we just tackled. So, let's look at the third phase, and then let's look at the third phase and I will share a few more details with you.
So, in the third phase which technically doesn't really have a name. We will just call it post EPE. So, in this third phase Social Security is going to continue looking to see whether the NESE is above or below SGA. The SGA guideline. If the person's NESE continues to be below SGA then generally their SSDI will simply continue. But if a person's work reaches SGA level, then during Phase 3 Social Security will stop the benefits, and it actually closes the claim. It terminates it. 
So, in Phase 3 it is really important to make a conscious choice as to whether I am okay with having my earnings not only cause my SSDI to be 0, but for my claim to close. And some people are comfortable with that. They feel like I have got so much promise and opportunity with my business, in most cases it is a job, that I feel confident I am going to continue to have earnings coming in that replace my SSDI so I don't need that cash benefit, and I will have didn't income, so I am okay with my claim closing. 
If somebody is not feeling confident, they will have consistent income coming in, or that they will be able to sustain doing the level of work for the SGA it can sometimes be helpful to take things a little more slow and grow the business with a little more stability until the income is where it should be.
If the person in Phase 3 does end up doing SGA‑level work and the SSDI claim closes, terminates, it is possible for a person to get that benefit back. It is. Social Security, Congress, actually, even created a Special Work Incentive called Expedited Reinstatement. That provides a quicker way to get it restarted and in the expedited reinstatement period you can get the SSDI benefits while you are waiting to be Social Security eligible.
I realize this is a lot to take in. The goal is not to be an expert, but to build your understanding. So, ideally at this point you recognize that with SSDI there are three phases of work rules. They start out supportive, and then they get a little less supportive as you move along.
And if you are someone receiving SSDI and is currently employed ‑‑ either wage or self‑employed, or you plan to start working, I encourage you to use the resources that I shared earlier, to find a Benefit Planner, to help you understand what these phases mean for you and how these rules apply to your situation given your work goals. All right.
I have just a little more information that I want to share with you. But let's look at Jana.
Let's do one more example of Jana and the work rules, and then we will share a little more information about the SGA decision.
Okay, for the sake of example, let's say Jana has not used any of her Trial Work Period months before she starts her business. She has all nine of these trial work months available for her to use.
Now, earlier we are calculated that she was going to have $1,385 of NESE each month, January through June. Then she is going to have $2,038 of NESE each month from July through December.
So, those earnings are listed in the table on this slide, January through June.
Those monthly NESEs are listed on the first row, and July through December earnings are in the second row. So, let's think about her using these phases of work rules.
Starting with the first row, when she begins her business, her monthly NESE is going to be above the Trial Work Threshold for this year. And you learned in the previous slide, or the one before that, that $1,050 of NESE in a given month this year would cause her to out a Trial Work Period.
So, given that January through June she has $1,385 of earnings, she is going to use a trial work month in each of those six months. There are up to nine trial work months, so she has three more trial work months available to her when we move into July. Now in July, looking at the second row, you will see that Jana has $2,308 of NESE.
Now, that is still over the Trial Work Threshold of $1,050. So, she is going to use a trial work fund in July, August and September. In those three months. She will use up her last free trial work months. I want to remind you in the months she is receiving her trial work months, she is receiving her SSDI. That is the cool thing about the Trial Work Period. She will have her NESE and her SSDI in all of those first nine months.
In October she is moved into the second phase of the Trial Work Period. In the second phase Social Security will see if her work is SGA. They do that primarily by comparing her monthly countable NESE to the SGA guideline. As a reminder, this year that is $1,470 a month.
Given Jana is earning $2,308 in NESE, it is entirely possible that Social Security will find she is doing SGA work. And if that is what they find, remember, any month during phase two that she is doing SGA work, she is not due her SSDI in those months, but her claim is still open. The claim is open, so she still has the benefit there to get back if her earnings drop.
Now I want to dig in a few minutes on this SGA decision. When it comes to Social Security making the SGA decision, which is what happens starting in October, once she is in that Phase 2, they are going to start trying to decide, is this SGA? When've when me do that, they could reduce her countable NESE by using a couple of Work Incentives, so I want to walk you through what those are.
So, when it comes to making an SGA decision Social Security is going to look at a person's countable NESE.
You have been hearing me use that term, right? You are probably wondering, what does that even mean? Well, a countable NESE, is a person's NESE, minus two deductions.
Now, these two deductions don't apply to everybody, but if they apply, they could be helpful, so I like to make you aware of it.
The first deduction is called an Impairment‑Related Work Expense, or IRWE, for short. The expense comes out of their pocket, not reimbursed that allows a person to work. Medical expenses are an example of an IRWE, the cost of medications. There are other potential examples, as well.
Let's say Jana needs weekly acupuncture to manage her pain so that she can work. She pays $75 per acupuncture session, so over the course of the month she has $300 she is paying out of her pocket, not reimbursed, that is helping her manage her impairment so that she can work.
So that could likely be an Impairment‑Related Work Expense. It could be a deduction to lower her countable NESE. And Social Security agrees, if they do, then they will deduct it before they decide if she is doing SGA.
The second deduction is called Unincurred Business Expenses. This is a Business Expense that the person, the business owner, doesn't have to pay for.
So, let's say, for example, Jana gets $600 a month in free bookkeeping services from her uncle, who is a professional bookkeeper. So, that is $600 that reflects the value of this free service she is getting.
Now, she would normally have to pay for a bookkeep, but she isn't. She is getting it for free. It is an Unincurred Business Expense.
The $1,408 is below the current SGA guideline of $1,470. So, Social Security would likely find that Jana, with these deductions, is actually not doing SGA, and she would be due her SSDI. So, again, these deductions don't apply to everybody, but I would like to share them, because if they do apply, it could be helpful.
It is also possible that if the deductions do apply, they may not be a big enough amount to bring countable earnings below SGA, but, again, it is just so important that people at least know they exist.  So, if they are useful, they can be used.
Now the final SGA Work Incentive I want to share with you is called the Grace Period. It is just this one‑time sort of Work Incentive. It gets used the first time the person does countable work, the first time the person's countable earnings are above the SGA guidelines. Because of the Grace Period, if that happens, the person gets to even their benefit for three months.
And once that is used up, it is gone. You don't get to get it back. Just like the Trial Work Period. Each of the phases. Once you are done with them, you move on. The only way you get any of the phases back, to get any of the phases back, the benefit, the claim has to terminate and close, you have to reapply, and then you start over and you get a new set of phases.
The other situation I wanted to share is Social Security may compare the person's relationship with SGA. They always begin with looking at countable NESE, but in some situations, for example, if a person used up their Grace Period, they will compare to see if a person's work is comparable to someone not doing SGA‑level work.
Okay. So, you can find an explanation of all these Work Incentives, these work rules, in a Social Security publication. And I encourage you to take a look at it if you are wanting to know more about these work rules and build your knowledge. The publication that Social Security has is called the Social Security Red Book. It has a description of all the Work Incentives and work rules I have shared with you here. Now, I know this is a lot of information. This is not really to have you be an expert but just to get you the gist of things. The goal is to get with a Benefit Planner to sort through things.
But I have a final slide to share briefly a little information about Medicare, and then close it out with a few questions before we wrap.
Okay, I have some good news. This is the easiest information in the world for me to share and for you to learn. Let me give you a little context, first.
Since our focus is about Medicare for this Webinar, for People with Disabilities, I am just going to address how work affects people who get Medicare based on their entitlement to SSDI.
I am happy to report the general work rule is simple and straightforward. At this point in the game, we need that.
So, a person that gets Medicare based on SSDI will continue to get Medicare as long as they meet the Social Security work requirement disability. That means if a person earns so much, so long as their SSDI stops they can continue to get Medicare as long as they have not medically improved, as long as the person continues to have a disability.
There are actually two Work Incentives that make this possible. The first is called continuation of Medicare coverage. When that is all used up, a second Medicare Work Incentive can kick in called Medicare for People with Disabilities who work.
And that has no timing. So when you put those two together, if a person earns so much they are no longer getting SSDI, they can continue to keep Medicare as long as they continue to have a disability.
And you can read about both of those Medicare Work Incentives in the Red Book, the Social Security Red Book that Ciara shares with you. 
So, in summary, before I open it up for final questions, you learned a little about the basics of eligibility for SSDI and Medicare.
You leashed how NESE is calculated.
You learned about the three phases of the SSDI work rules, and how NESE affects SSDI in each of those phases.
And you learned that Medicare can continue, even if the SSDI benefit stops due to work.
Lastly, you learned about Benefits Planning which I encouraged a couple times that folks reach out that are receiving benefits.
With that, Ciara, I would love to open it up for questions for maybe a minute or two, and then we will turn it over to the NDI team.
>> CIARA LADROMA: Thank you, Molly. This is Ciara speaking. Some of the questions we received are more individual‑based, and we would love to tackle those and talk with you about them. So, I will just go ahead and drop your information into the Chat and then you will hear from us. But for the sake of time, you can pass it back to NDI.
>> MOLLY SULLIVAN: Great. Thank you for bringing it up, Ciara. I did want to say I am more than happy to help and talk through questions if folks have them, that we couldn't address during our time together. So, Ciara will drop my contact information, my email in the Chat Box. Please feel free to reach out to me and I am more than happy to find a time to connect with you and talk through some of your questions.
So, with that, I would love to turn it over to Caroline at the National Disability Institute so she can share a bit about upcoming events and resources. So, Caroline?
>> CAROLINE BOLAS: Thank you so much, Molly. Let me make sure I am spotlighted.
Okay. That was a wonderful presentation. Just to answer the question, yes, about one to two weeks, the recording of today and all the slides will be on our website, so you will be able to access it and review it. It is the sort of thing I know it often helps to go back. As Molly said, please do submit those questions so we can get you those answers, as well.
But very quickly, we have two upcoming events. The first is August 2, Preparing for Accessing Capital presented by Community Business Partnerships presented from 2:00 to 3:30 Eastern Time to make sure you are ready to get everything in order if you are looking to actually apply for a loan, from a CDFI, a bank, or otherwise access capital to grow your business.
And we will be happy to have GHA back again on August 16, 2:00 to 3:00 p.m. Eastern Time again, Starting Small with My Big Goals and in addition to GHA, we will hear from two founders about their experiences, so that will be another great presentation. Next slide, please.
And just want to say we are definitely wanting to support you if you are an aspiring entrepreneur or growing your business. Please contact us at our website which is disabilitysmallbusiness.org. And we can also provide you with one‑to‑one support. So, please contact our community navigator, Ruth Chavez. Her email is on the screen, as well. And the links are coming into the Chat, as well. So you can look at those.
If you are interested in joining a learning community, looking at key financial health issues, we just finished recruiting to our September cohort, but we do have a wait list, and we are hoping to do another cohort in the future, so, again, please email me, which is Caroline Bolas at cbolas@ndi‑inc.org and we have more information at our streaming channel at disabilityowned.com. And often we want learning at our own pace. If there is a Webinar you could not get to but want to join it, you can go to the Vermont Small Business Digital Ready Program where you can access information on small business training and business coaching where they have frequent opportunities.
And lastly, hopefully on our Small Business Mailing List is how you found out about us today. But if not, we would love for you to join our Mailing List to get information for all the programs.
And with that, I know we are out of time. This is our wonderful Small Business Team, Nikki Powis, and Ruth Chavez and Caroline Bolas and Alexis Jones. I want to take the time to thank you all for the amazing presentation, breaking down what is a complex subject, to make it much more understandable. We will provide you an email with all the links in the Chat, the PowerPoints and the recording, in about two to three weeks. They will be on our website. So thank you, everybody and have a great rest of your day.
>> MOLLY SULLIVAN: Thank you, Caroline, and thank you, everybody, for joining. Take care.
 
       (Session was concluded at 2:32 p.m. CT)
                                                       
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