Determining SGA

To be considered disabled, SSI requires that an individual be unable to engage in SGA, due to a medically determined physical or mental impairment, which is expected to result in death, or which is expected to last for a continuous period of 12 months.

SGA is work that:

• Involves doing significant and productive physical or mental duties; and
• Is done, or intended, for pay or profit.

Note: A client who performs SGA is not considered disabled, even if a severe physical or mental impairment exists. However, the client may apply for the 250% Working Disabled Program.

When to Apply SGA Procedures

An SGA determination must only be made at the time the client applies for Medi-Cal disability (a DDSD referral is being initiated either at intake or continuing) and states that he/she:

• Is working, and
• Has gross earnings in excess of the allowable SGA amount.

Exception: SGA does not apply when determining eligibility for the 250% Working Disabled Program.

Presumptive Disability and SGA

An applicant who performs SGA is NOT considered disabled, even if a severe physical or mental impairment exists. This rule applies to individuals who might otherwise meet PD criteria.

ExampleExampleAn applicant with HIV meets the presumptive disability criteria. He is still working and earns $3,000 gross per month. He is not considered to be disabled under SGA. However, the next step is to explore eligibility for the 250% Working Disabled Program (WDP). This client’s earnings will meet the income limit for the 250% WDP and will be eligible for the program assuming that the other eligibility requirements have been met.

Retroactive Medi-Cal and SGA

SGA determinations also apply to requests for retroactive Medi-Cal. For example, a client applies for Medi-Cal on May 8th as a disabled individual with no other linkage. She requests a Non-MAGI determination and is no longer working. She has medical expenses in March and April and is requesting retroactive coverage. She was employed in the retroactive months. The EW must complete a SGA determination.

• If her net countable earnings exceed the corresponding SGA amount in each retro month, the retroactive application must be denied, and
• The current application would be processed. A DDSD referral packet for May and continuing must be initiated.

SGA Does Not Apply

SGA does not apply to:

• A Medi-Cal applicant who has received earned income within the month but is no longer working as a result of his/her disability.
  • ExampleExample

    A client comes in to apply on 3/4/18 and requests a Non-MAGI evaluation. He has medical expenses during the months of 1/18 and 2/18 and is requesting retro Medi-Cal for that time period. The client had been working but stopped on 2/28/18 due to a heart attack. He had gross earnings in excess of $1,180 (SGA in 2018) in both 1/18 and 2/18.

    The EW must apply SGA procedures when determining eligibility in 1/18. The client's net countable earnings exceed $1,180 in 1/18, therefore, retro for 1/18 must be denied. SGA does not apply to 2/18 because the client stopped working on 2/28/18. A DDSD packet and referral would be completed indicating an onset date of 2/18.

• Blind individuals or individuals who return to work after disability has been approved.

  • Exception: If an SGA determination was not done because the client alleged blindness, then DDSD determines that the client is disabled but not blind, an SGA determination must be made before Medi-Cal based on disability is approved.

• Working disabled individuals applying for the 250% Working Disabled Program.

Income In-Kind and SGA

For SGA determinations, Income In-Kind is considered earned income. Earned Income In-Kind includes the value of food, shelter, or other items provided instead of cash. If food, and/or shelter is not a condition of employment, the lesser value of either the chart value or current market value of these items will count as wages. This amount will be considered in the SGA determination.

ExampleExample

Procedures

Apply these procedures when Medi-Cal applicants allege disability and they are working and declare gross earned income over the SGA allowance:

Income In-Kind and SGA

1. Obtain the gross monthly earnings.
   1. Follow existing income rules if earnings are fluctuating or irregular.
   2. Do not count any unearned income when determining SGA.
   3. If earnings are from self-employment, deduct the business expenses prior to deducting any IRWE.
2. Give the client the “Work Activity Report” (MC 273) for completion to identify all possible Impairment-Related Work Expenses (IRWE) and work subsidies which may be deducted from gross earnings.
3. Complete the “SGA Worksheet” (MC 272) to determine the client's net countable earnings.

If...	Then the EW must...
Net countable earnings exceed the SGA allowance,	Deny Medi-Cal as a disabled person and issue the appropriate Notice of Action (NOA). Explore other program linkage or offer 250% Working Disabled Program.
Net countable earnings are less than the SGA allowance,	Send the DDSD packet including a copy of the MC 272 and indicate “NO SGA ISSUE” in Item #10 of the MC 221.
DDSD is pending and the client reports SGA, or an SGA issue has been clarified,	Send an MC 222 LA to inform DDSD of client’s employment along with a copy of the MC 272.
DDSD returns a disability packet to the EW as a “Z56” for an SGA determination (“Z56” means “other”, no determinations made such as withdrawal and failure to cooperate reasons),	Complete an SGA determination. Should the EW determine that the client is not performing SGA, a new MC 221 MUST be completed and resubmitted with a copy of the MC 272.

Impairment-Related Work Expenses

Conditions

IRWEs are certain expenses which are incurred and paid by a disabled client which enable him/her to work. IRWEs are an allowable deduction from earned income when determining SGA. Deductions are allowed when the following conditions exist: 

• The disabled client needs the item/service in order to work. (The need must be verified by a statement from the prescribing source, e.g., doctor, Vocational Rehabilitation counselor.)
• The cost is paid by the client and not reimbursed by another source. The cost must be paid in cash, including checks or money orders, and not in-kind. The cost must be verified.

  • Note: At the point of application, when Medi-Cal has not yet been approved, medical expenses (i.e., prescriptions) can be allowed as an IRWE deduction even if Medi-Cal will cover these expenses later.

• The expense must be comparable to the charge for the item/ service in the community.

MC 272

The MC 272 may be used to compute the client’s earnings and IRWE/Subsidy deductions as follows:

• Net earnings are at the level of current SGA amount or less: process the application in the usual manner.
• Net earnings are more than the current SGA amount per month: deny application as the client is engaging in SGA.
• Whenever the net countable earnings are less than the current SGA amount per month and the EW determines that there is no SGA issue, a copy of the MC 272 must be included in the disability packet. Item 10 of the MC 221 must indicate that there is “NO SGA ISSUE.”

MC 273

The MC 273 is given to the client to assist in determining if he/she has any impairment-related work expenses or work subsidies that can be deducted from gross earnings.

• Do not deny the application if the client chooses not to complete or return the MC 273.
• Determine SGA based on earnings and any IRWE that is verified.

Budgeting IRWE

IRWEs can be deducted from gross earnings to arrive at net countable earnings: 

If the net countable earnings are...	Then the EW must...
Under the SGA amount,	Continue processing the MC application (i.e., submit a disability packet to DDSD).
Over the SGA amount,	Deny the application and explore eligibility under other MC programs, i.e. 250% Working Disabled Program.

NOTE: For self-employment, IRWEs can be deducted from net income, if not already deducted from gross earnings as a business expense.

ExampleExampleThe SGA is $1,180, and the client earns $1,500 per month and has $200 worth of IRWEs for special transportation costs to go to work and for medications needed to control a seizure condition. In this example, the net countable earnings are $1,300 per month. As net countable earnings are $1,300 per month, the client is earning above the SGA limit.

Payment must be made after the client became disabled in order to allow the cost as a deduction. Payment is computed in the following ways:

Recurring Costs

The actual amount paid is allowed as a monthly deduction (i.e., the monthly payments for a wheelchair).

Non-Recurring Costs

If the full purchase price of an item or a non-recurring down payment has been paid, the expense may be prorated over a 12 month period beginning with the month of purchase.

ExampleExampleAn employed disabled individual purchases a new wheelchair for $1200 in December. She subsequently applies for Medi-Cal in March of the following year. The prorated monthly cost, $100, is allowed when determining SGA.

Before Work Started

Prorate the cost over a 12 month period; deduct only the balance of the 12 months while the client is working.
ExampleExampleClient paid $600 in January for an item. Work started in April. Prorate the cost over 12 months. IRWE applies to the balance of the 12 months of employment, or $50 per month for April through December.

After Work Ended

Deduct IRWE from the last month earned income is received.

Types of IRWE

Attendant Care

Attendant care is deductible if provided in a work setting or when assisting in preparation for and after work (i.e., bathing, dressing, meal preparation). The cost must be paid in cash, not in-kind. It requires verification of duties, amount of time spent, payment was made in cash, and that payment is made on a regular basis.

Attendant care is not deductible if the service is performed by a family member and the family member has not terminated or reduced his/her employment in order to provide attendant care services. Non-workday attendant care services or general homemaking services (shopping, cleaning, baby-sitting, etc.) are not allowable. Services performed by a family member for cash fee where the family member suffers no economic loss are not deductible.

Transportation Costs

The cost of a vehicle is not allowed, whether modified or not. Modifications that are not directly related to the impairment are not allowed. Medical and other transportation expenses are not allowed.
Structural or operational modifications to the vehicle are deductible if it is used to drive to work (or used to be driven to work), even if also used for non-work purposes. Mileage to and from work and the costs of a taxi or driver assistance are also allowable expenses.

Note: Use the current county mileage reimbursement rate for employees to compute the cost of mileage to and from work when the individual uses his/her own vehicle, unless actual costs are higher and can be verified.

Medical Devices

Allow the cost of any device used for a medical purpose (e.g., wheelchair, braces, hemodialysis equipment, pacemakers, respirators, traction equipment, braces for arm/leg/neck or back, etc.).

Prosthesis

Artificial hip and artificial replacement of an arm, leg or other part of the body are allowable. Any prosthetic device that is primarily for cosmetic purposes is not deductible.

Work-Related Equipment and Assistants

Any special work-related device (i.e., one-handed typewriters, typing aids, etc.), special tools (i.e., electronic visual aid, telecommunications devices, etc.), special assistants (such as an interpreter for the hearing impaired) may be allowed:

• If required due to the impairment and it is not paid for by another source, such as Vocational Rehabilitation,
• If the individual is self-employed, the cost of equipment previously deducted as a business expense cannot be allowed.

Residential Modifications

If the client is self-employed at home, any modifications to the home made to accommodate the impairment may be allowed unless previously deducted as a business expense.

If the client is employed outside of the home, only modifications to the exterior of the home to allow access to the street or to other transportation are allowed (i.e., ramps, exterior railings, pathways, etc.).

If the individual is self-employed at home, modifications made inside the home to accommodate the impairment are allowed (i.e., enlargement of a doorway leading into an office, etc.)

Drugs, Medical Services, Diagnostic Procedures, and Medical Supplies

Any items that are necessary to control the disabling condition are deductible. Regularly prescribed medical treatment or therapy that is necessary to control a disabling condition, such as anti-convulsant drugs or blood level monitoring, radiation treatment or chemotherapy, corrective surgery for spinal disorders, antidepressant medication, electroencephalograms, brain scans, etc. The physician’s fee relating to these services is deductible.

Non-Medical Appliances/Devices

In unusual circumstances, a non-medical appliance/device may be allowed if it is essential to control the disabling condition either at home or in the work place (i.e., an air cleaner for a client with a severe respiratory disease). The need must be verified by a physician.

Other Items and Services

Medical supplies of an expendable nature are deductible (i.e., incontinence pads, elastic stockings, catheters, etc.). The cost of a guide dog, including food, licenses, and veterinary services are allowed.

Work Subsidies

Work Subsidy is the monetary support an individual receives on the job which could result in more pay than the actual value of the service performed. An employer may subsidize the employee’s earnings by paying more wages than the reasonable value of the actual services performed. When this occurs, the excess will be regarded as a subsidy.

Subsidies are deducted from gross earnings to arrive at the net countable earnings for SGA eligibility determinations. Subsidies are not considered an earned income exemption for budget determinations, once a medical determination is made. These subsidies are considered unearned income.

Subsidies

• May involve giving the impaired worker the same pay but more supervision or fewer/simpler tasks than other non-impaired workers.
• May result in more pay than the actual work is worth. Workers in sheltered workshops or settings are generally subsidized.
• Are deducted from gross earnings to arrive at net countable earnings for SGA eligibility determinations but are not considered an earned income exemption for budget determinations, once a medical decision is made. They are considered unearned income.
• Must be verified by an employer. Contact to confirm a subsidy exists and determine the value of the subsidy.

ExampleExampleA working disabled individual earns $800 per month. The employer states that the actual value of the client's work is half the value of actual earnings. The clients earns $800 per month. As half the work is subsidized, $400 is considered the real value of work and the client is not engaging in SGA. The $800 is the non-exempt income for the EW to use when computing the client’s budget.

MC Budget

Deductions for IRWEs and work subsidies are only allowed when determining SGA. Do not apply IRWEs or deductions for work subsidies to the Medi-Cal budget once Medi-Cal has been approved.

Unsuccessful Work Attempt (UWA)

If a client is forced to stop working after returning to work for a short time, that work is generally considered an Unsuccessful Work Attempt (UWA). Earnings from that job will not be used to show an ability to do SGA.

All the following must be present for work to be considered UWA:

• There is a break in the client’s employment of 30 days or more, and
• Work lasted less than six months, and
• Work stopped due to client's impairments.

ExampleExample

Example of an SGA Determination

Thomas is employed despite his HIV condition. He earns $1,200 gross per month, effective January 1st. He is currently paying $800/month for medications. There are no other IRWEs.

Gross Earnings	$1,200
Less IRWE (cost of medication)	- 800
Net Earnings	$ 400

Since Thomas’ net earnings are less than the SGA amount of $860 per month, he is not meeting the requirements for SGA. The EW must include a copy of the MC 272 in the DDSD packet and indicate “No SGA Issue” on Item 10 of the MC 221.

Related Topics

MAGI MC and DDSD

DDSD Referral Required

Clients Alleging Disability