[nfb-talk] Fact Sheet Number 3:

[Kenneth Chrane]

Making Work Pay:  Removing the Earnings Penalty
for Blind Social Security Beneficiaries





Purpose:

            To amend Title II of the Social Security Act by mandating 
increases in the level of earnings allowed for blind individuals before 
applying a work penalty.



Background:

            By increasing the Social Security earnings limit in 1996, 
Congress gave seniors a powerful incentive to work.  Advocates stressed that 
seniors would continue to work, earn, and pay taxes since they could do so 
without fearing loss of income from Social Security.

            Today the need for a higher earnings limit for the blind is much 
more compelling because of an all or nothing penalty for exceeding the 
limit.  Nevertheless, the earnings limit for blind individuals has not been 
increased, though historically this limit was tied to the applicable limit 
for seniors.  In 2007, the earnings limit applicable to seniors is $34,400 
for an individual who reaches Full Retirement Age (FRA).  This limit is 
adjusted annually.  For blind individuals, gross earnings exceeding $1,500 
monthly ($18,000 annually) cause complete loss of benefits until attainment 
of FRA.  At that point, as is now the case for seniors, there is no earnings 
limit.  This existing inequity must be rectified.



Existing Law:

            Like "retirement age," "blindness" is specifically defined in 
the Social Security Act and can be readily determined.  By contrast, 
evaluating "disability" is far more subjective.  Although blindness is 
specifically defined, monthly benefits are not paid to all blind people, but 
only to those not working or whose work earnings are below an annually 
adjusted statutory earnings limit.  Personal wealth derived from all sources 
other than work is subject to no penalty at all.  However, excess income 
generated from work results in a total loss of cash benefits for blind 
beneficiaries.  Recognizing the negative impact of the earnings limit on 
seniors, Congress changed the law in 1996 and later eliminated their 
earnings limit altogether.  The present situation for blind people is 
identical to that which seniors faced prior to 1996.

            Examples:  For the blind who find employment, earnings almost 
never replace lost benefits once taxes and work expenses are paid. 
Therefore, few beneficiaries can truly afford to attempt significant work, 
and those who do often sacrifice income and the security of a monthly check. 
The following examples illustrate the penalty for working.

§         A single blind person with no dependents having annual cash 
benefits of roughly $11,700 or $978 per month (an average benefit), with no 
other income, receives this amount tax-free.  Gross pay to replace benefits 
must be approximately $20,000, taking into account taxes (not paid without 
working) and work expenses (such as commuting and buying work-appropriate 
clothing).  This is $2,000 above the amount blind people are allowed. 
Annual earnings less than $20,000 will result in an income loss.  While some 
will still choose to work, many will not because they cannot afford the lost 
income.

§         For a blind beneficiary with dependents, the situation is even 
worse.  With two dependents, the family's total benefit averages $17,500 
tax-free annually.  Therefore, earnings in excess of $18,000 (the annual 
earnings limit for blind persons), will not replace benefits.  Using 
conservative assumptions, including combined state and federal taxes of 
twenty-five percent of gross pay and childcare for two children at $500 per 
month, replacing $17,500 in benefits would require over $32,000 in gross 
pay.  When dependents are involved, the choice whether or not to work is 
profoundly restricted, and the amount necessary to replace combined family 
benefits vastly exceeds the blind person's earnings limit.

Need for Legislation:

            Steadily increasing the earnings limit for blind people over 
five years, thereby linking it to the limit applicable in the year of FRA, 
will allow blind people to work without facing an overwhelming financial 
penalty for their effort.  This would provide more than 100,000 blind 
beneficiaries with an effective work incentive.  In 2007 a blind individual's 
earnings cannot exceed a rigid monthly limit of $1,500.  Earnings exceeding 
this threshold result in immediate withdrawal of the entire sum paid to a 
primary beneficiary and dependents, following completion of a trial work 
period.  The economic risk occurring to a blind head of household negates 
any possible economic benefit.

            An increase in the earnings limit would be cost-beneficial. 
With an estimated seventy-four percent unemployment rate, an overwhelming 
majority of working-age blind people are already beneficiaries.  With the 
meaningful work incentive proposed here, many would become taxpayers as 
well.  Congress raised the earnings exemption for seniors, and Congress 
alone can raise the limit for the blind.  The chance to work, earn, and pay 
taxes is a constructive and valid goal for senior citizens and blind 
Americans alike.



Requested Action:

§         Congress should enact annual increases in the statutory earnings 
limit for blind individuals over five years, ultimately linking it to that 
applicable to individuals in the year they attain full retirement age.  The 
earnings limit should be increased according to the following schedule:

§         For 2008 $21,600

§         For 2009 $26,400

§         For 2010 $30,000

§         For 2011 $34,200

§         For 2012 the amount applicable to individuals who attain Full 
Retirement Age in that year.

§         Please support Blind Americans by sponsoring or cosponsoring the 
Blind Persons Earnings Fairness Act of 2007.

§         Please advise members of the National Federation of the Blind of 
your commitment to sponsor or cosponsor this legislation.



Contact Information:

James McCarthy, Director of Governmental Affairs
National Federation of the Blind, 1800 Johnson Street, Baltimore, Maryland 
21230

Email:  jmccarthy at nfb.org      Phone:  (410) 659-9314, extension 2240