The Braille Monitor                                                                                               April 1997

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Fact Sheet
Winning the Chance to Earn and Pay Taxes: How the Blind Person's Earnings Limit in the Social Security Act Must be Changed

BACKGROUND: The Social Security earnings limit, also known as the "retirement test," was recently changed by Congress. The new law, which first took effect in 1996, provides a 1997 earnings exemption threshold of $13,500 and specifies five more annual increases to reach an earnings exemption of $30,000 in the year 2002. In making the case for this change, advocates in Congress explained that senior citizens in greater numbers would now have the opportunity to work, earn, and pay taxes.

In spite of a law passed in 1977 creating a logical and identical earnings exemption threshold for blind people and retirees under Social Security, beneficiaries who are blind were singled out for exclusion from the new, mandatory raises in the earnings exemption. This means that a lower earnings limit for the blind--$12,000 as compared to $13,500--is now in effect. By 2002, when the exemption for seniors becomes $30,000, the lower limit created by Congress for the blind in 1996 will be less than half the amount allowed for seniors unless the law is changed. At that point a blind individual, age sixty-four, with earnings of approximately $14,400 will lose entitlement to any payment whatsoever from Social Security. But the same individual, upon becoming age 65, will be permitted to earn up to $30,000 before there is any effect upon eligibility for Social Security. This is clearly a counterproductive federal policy which speaks of work incentives for the blind but for seniors provides actual continuation of monthly cash benefits as a tangible incentive to work.

EXISTING LAW: Section 216(i) of the Social Security Act specifies what "blindness" means. The definition of blindness is clearly stated in medical terms. Therefore, blindness can be determined quite reliably on the basis of objective medical evidence. This unique feature of the Social Security Act makes blindness the only defined disability. All other disabilities are determined on the basis of an individual's "inability to engage in substantial gainful activity." This inability is actually hard to determine reliably in many cases.

Although blindness is precisely defined, monthly disability insurance benefits are not paid to all persons who are blind. Under the law benefits are only paid to those people who are blind and who do not have substantial earnings. Personal wealth not resulting from current work activity does not count as earnings and has no effect on eligibility. Only work is penalized. The amount of earnings considered to be "substantial" for working people who are blind is $1,000 per month ($12,000, annually). The procedure for adjusting this exempt amount for each year remains in effect under the law passed in 1977 but applies at present to the blind only, since increases in the exempt amount for seniors were mandated in 1996.

PROPOSED AMENDMENTS: Congress should restore work incentive equity for blind individuals by re-enacting the identical earnings exemption threshold for blind and senior citizen beneficiaries under Title II of the Social Security Act. Legislation to achieve this objective is being offered in the 105th Congress by Representative Barbara Kennelly. Mrs. Kennelly is the ranking minority member on the Subcommittee on Social Security in the House of Representatives, Committee on Ways and Means. Amendments to retain the identical exemption for blind people and seniors enjoyed broad bipartisan support during the last session of Congress but were blocked from consideration when the provision which raised the exemption limit for seniors was attached to the unamendable debt ceiling bill.

The National Federation of the Blind (along with every other organization having interests in the blindness field) strongly supports legislation to restore the identical exemption threshold for the blind and seniors. By creating an earnings limit that is lower for blind people than for seniors, the bill passed last year applies a harsh work disincentive policy to blind Americans.

NEED TO REMOVE WORK DISINCENTIVES: Mandating the adjustments in the earnings limit for blind people along with the adjustments for age sixty-five retirees will assure that an estimated 104,300 blind beneficiaries will receive a powerful work incentive. Most blind people could then not lose financially by working. The mandated earnings limit changes if made applicable to blind people would be cost- beneficial, since among those of working age 70 percent are currently unemployed or underemployed. Most of them are already beneficiaries. At present their earnings must not exceed a strict limit of $1,000 per month. When earnings exceed this exempt amount, the entire sum paid to a primary beneficiary and dependents is abruptly withdrawn after a trial work period.

When a blind person finds work, there is absolutely no assurance that earnings will replace the amount of lost disability benefits after taxes and work expenses are paid. Usually they do not. Therefore, few of the 104,300 beneficiaries can actually afford to attempt substantial work. Those who do will often sacrifice income and will certainly sacrifice the security they have from the automatic receipt of a monthly check. This group of beneficiaries--people of working age who are blind--must not be forgotten now that the earnings exemption has been raised for seniors. Just as with hundreds of thousands of seniors, their positive response to the higher amounts of earnings allowed will bring additional revenues into the Social Security trust funds. The chance to work, earn, and pay taxes is a constructive and valid goal for senior citizens and blind Americans alike.