SSI policy takes gross earned income minus the cost of participating in the employer’s cafeteria plan then applies allowable deductions to calculate gross wages. SSI defines a “cafeteria plan” as:

A…written benefit plan maintained by the employer for the benefit of its employees, where all participants are employees, and each participant has the opportunity to select two or more benefits consisting of cash and qualified benefits.

A cafeteria plan can include the following for the employee as well as the employee’s spouse and dependents:

• Health, dental, life, vision insurance
• Flexible spending accounts
• Dependent care assistance plans
• Legal service plan.
• Certain stock bonus plans under section 401(k)(2) of the Internal Revenue Code (IRC) [but not 401(k)(1) plans]

If the employer gives an employee a certain amount of money to pay for a cafeteria plan, make sure that amount is added to gross wages before subtracting the costs of any chosen benefits.

SSI policy specifically excludes these benefits from being considered as part of a cafeteria plan:

• Qualified employee discount
• Educational assistance program
• Qualified transportation provided by the employer
• Scholarship and fellowship grants
• Deferred compensation plans, such as stock options, profit sharing or deferred compensation arrangement
• Salary reduction agreement This is a plan or arrangement (whether evidenced by a written instrument or otherwise) whereby payment will be made by an employer, on behalf of an employee or his or her beneficiary, under or to an 403(b) annuity contract

Example: Cirroc is receiving $250 of SSDI and is on Medicare Parts A, B and D. Dept. of Rehabilitative Services helped him get an accounting degree and he now works for XEROX. He gets paid monthly and provided 60 days of pay stubs.

Gross wage $2960; Federal tax $335.82; state tax $102.00; Dental/Vision $18.85; Retirement $147.30; OASDI tax $183.02; Liberty Life $32.95; Aetna Healthfund $474.00

Gross wage $2960; Federal tax $335.82; state tax $102.00; Dental/Vision $18.85; Retirement $147.30; OASDI tax $183.02; Liberty Life $32.95; Aetna Healthfund $474.00

Cirroc has the following deductions for his cafeteria plan choices: $18.85 (Dental/Vision), $32.95 (Liberty Life), and $474.00 (Aetna Healthfund) for a total of $525.80.

Cirroc’s wages are $2960 – $525.80 = $2434.20. This is the amount from which the deductions listed in the article SSI-Criteria State Order of Deductions for Earned Income will be subtracted.