Federal Minimum Wage to Increase on July 24, 2009

The minimum wage for non-exempt employees in South Dakota is scheduled to increase from $6.55 per hour to $7.25 per hour on July 24, 2009. For individuals who earn or are close to the current minimum wage of $6.55 per hour, this change presents a wonderful opportunity to increase monthly income. At the same time, there are some issues for you to be aware of if you have a disability and are receiving benefits from the Social Security Administration (SSA), receiving food stamps or other public-funded support programs. The increase in minimum wage may have an impact on these benefits, depending on your current monthly income and the type of supports or services you receive.

Generally, an increase in wages is good news; however it is important to understand how this increase may impact your benefits. In most cases, an increase in income can be managed so that you are able to maintain benefits while you need them. We encourage you to anticipate this increase and understand how it might impact your situation.

Below are some actions to consider regarding the increase in minimum wage:

• Calculate the wage increase prior to the adjustment taking place
• Report changes in your income to SSA
• Meet with a Benefits Specialist to review your situation
• Utilize the SSA work incentives such as Impairment Related Work Expense (IRWE) and Subsidy

Tips Box: The Impairment-Related Work Expense (IRWE) allows you to deduct reasonable costs of certain items and services required by your impairment to enable you to work.

For people who are receiving Supplemental Security Income (SSI), the change in minimum wage will impact your benefit payment amount the month after you report it. The major adjustment will most likely take place on the October 1, 2009 SSI payment. Remember, you are allowed to keep your wages, but SSA will adjust the benefit payment amount depending on how much you are paid. And because the adjustment in minimum wage takes place at the end of July, you will only have one week of higher wages in that month. However, in August you will have a significant increase in wages that will have an impact on your October SSI
payment amount.

If you are receiving Title II benefits (SSDI), the situation with a minimum wage hike is much different. Again, it is important to report what you earned in the month. This is significant because in the SSI program you report what you are paid in the month, while in the Title II program you report your hours worked at a certain wage during the month. The other difference is in the Title II program you either get a benefit payment or you do not, depending on your situation and your work history. While in the Title II program and working, you are in different periods or stages of the program (Trial Work Period/Extended Period of Eligibility) depending on your earnings and how long you have participated in the program.

If you are participating in the Title II program and you earn less than $700 per month both before and after the increase in minimum wage and you continue to have a disability, you will continue to receive the same benefit payment amount. In some cases, the minimum wage hike could increase wages enough to demonstrate a trial work month ($700 in 2009) for a person in the Trial Work Period (TWP). It could also demonstrate Substantial Gainful Activity (SGA) for an individual who has completed the TWP and is in the Extended Period of Eligibility (EPE). Again, we encourage you to become familiar with how the Title II program works so that you know what stage of the program you are in and when it is appropriate to utilize SSA’s work incentives. You can also meet with a Benefits Specialist to assist you in this process. Resource information for a Benefits Specialist is on the back page of this newsletter.

Tips Box: BPQY – Benefits Planning Query can be obtained from SSA and provides a snapshot of your benefits and work history as it is stored in SSA’s electronic records.

Tips Box: You can review information on the TWP in the September 2004 Tips newsletter.
Remember a trial work month is $700 in 2009.