Impairment-Related Work Expenses in the SGA Test

Impairment-Related Work Expenses (IRWE) are out-of-pocket costs for disability-related items and services that you need in order to work. Under 20 CFR 404.1576, the Social Security Administration (SSA) deducts approved IRWE amounts from your gross monthly earnings before applying the substantial gainful activity (SGA) test at Step 1 of the disability evaluation process.

For individuals applying for Social Security Disability Insurance (SSDI), working part-time can create anxiety about exceeding earnings caps. Many claimants incur heavy medical expenses simply to manage pain, travel to an office, or operate equipment on the job. By subtracting these necessary disability expenses from gross pay, federal regulations ensure that claimants are evaluated on their true countable earnings rather than inflated gross figures.

How IRWE Affects the SGA Calculation at Step 1

Under 20 CFR 404.1520, SSA evaluates disability through a five-step sequential evaluation process. Step 1 asks whether you are currently performing substantial gainful activity. If your countable monthly pay exceeds statutory limits, SSA finds you not disabled without reviewing your medical records.

For 2026, the monthly SGA threshold is $1,690 for non-blind individuals and $2,830 for individuals who meet the statutory definition of blindness. In 2025, these thresholds were $1,620 for non-blind claimants and $2,700 for blind claimants.

Under 20 CFR 404.1574(b)(1), adjudicators do not simply compare your gross paycheck to these caps. Instead, SSA calculates your countable earnings by subtracting allowable IRWE amounts. If deducting these expenses drops your average monthly income at or below the SGA threshold, your claim passes Step 1 and moves forward to medical evaluation.

The Five Mandatory Criteria for an IRWE

To qualify as an Impairment-Related Work Expense under 20 CFR 404.1576, an expenditure must satisfy five strict regulatory requirements. If an expense fails even one requirement, SSA will not deduct it from your gross wages.

First, the item or service must enable you to work. There must be a direct functional connection between the expense and your ability to perform employment tasks or travel to your job.

Second, you must have a severe physical or mental impairment. Under 20 CFR 404.1576(b)(2), the expense must be directly linked to an impairment that meets SSA severity criteria.

Third, you must pay the expense out of pocket. Under 20 CFR 404.1576(b)(3), you cannot deduct costs reimbursed by private health insurance, Medicare, Medicaid, worker compensation, or an employer. Only expenses you personally pay qualify.

Fourth, the payment must be made in a month in which you worked. Under 20 CFR 404.1576(b)(4), expenses paid during months without work activity cannot be deducted, though special allocation rules apply to one-time purchases.

Fifth, the cost must be reasonable. Under 20 CFR 404.1576(b)(5), the expense cannot exceed the standard prevailing cost for that item or service in your community.

Qualifying Categories of Work Expenses

Federal regulations and Social Security Ruling (SSR) 84-26 recognize several major categories of deductible expenses. Adjudicators evaluate each item against established policy guidelines in POMS DI 10520.001.

Attendant Care Services

Under 20 CFR 404.1576(c)(1), payments to an attendant who helps you get ready for work, travel to work, or perform work duties qualify as an IRWE. This includes physical assistance with bathing, dressing, transferring, or taking medications before leaving for your job.

However, SSA limits this deduction strictly to work-related care. If an attendant spends two hours helping you prepare for work and six hours managing household chores, only the two work-related hours qualify. In addition, payments made to a family member are rarely approved unless the family member suffered an economic loss to provide the service.

Medical Devices and Durable Medical Equipment

Under 20 CFR 404.1576(c)(2), out-of-pocket costs for durable medical equipment and assistive devices are fully deductible. Examples include wheelchairs, walkers, prosthetics, braces, specialized tactile keyboards, and oxygen concentrators used while working.

Both ongoing maintenance costs and purchase expenses qualify. If you purchase an expensive device, SSA allows you to deduct the cost across multiple working months or allocate it against a single month under 20 CFR 404.1576(e).

Prescription Drugs and Medical Treatments

Under 20 CFR 404.1576(c)(5), copayments for prescription medications and routine medical treatments that control your disabling symptoms qualify as IRWE deductions. For example, copayments for anti-seizure medication, pain medications, chemotherapy, or physical therapy sessions that allow you to maintain functional capacity are deductible.

The treatments must be prescribed by a licensed physician and directly manage the condition that affects your work capacity. Cosmetic procedures or general wellness vitamins do not qualify.

Specialized Transportation

Transportation is one of the most common yet closely scrutinized IRWE categories. Under 20 CFR 404.1576(c)(6), standard commuting expenses, such as basic gasoline, highway tolls, bus passes, or train tickets, are not deductible because unimpaired workers also pay them.

To deduct transportation, you must prove that your impairment prevents you from using ordinary public transit or driving an unmodified car. Qualifying expenses include the cost of modifying a vehicle with hand controls or a wheelchair lift. In addition, fares paid for specialized door-to-door paratransit services qualify if verified by medical evidence.

A Worked Calculation for 2026

To see how an IRWE functions in practice, consider a non-blind applicant who earns gross wages from part-time work in 2026.

Suppose the claimant earns $1,900 gross pay in a month during 2026. Because the non-blind SGA threshold for 2026 is $1,690, this earnings level initially appears to exceed substantial gainful activity, which would trigger a Step 1 denial.

However, the worker has severe multiple sclerosis and incurs regular out-of-pocket medical expenses each month. The worker pays $150 in prescription copayments for disease-modifying therapies and $200 per month for specialized wheelchair paratransit to reach the office. Both costs are paid out of pocket without insurance reimbursement.

SSA verifies these costs under 20 CFR 404.1576 and subtracts the combined $350 IRWE total from gross wages:

$1,900 gross pay minus $350 IRWE equals $1,550 in countable earnings.

Because $1,550 is below the 2026 non-blind SGA cap of $1,690, the claimant passes Step 1. The claim proceeds to Step 2 for medical evaluation rather than being terminated on earnings alone.

Non-Qualifying Expenses: What SSA Disallows

Claimants often assume that any expense associated with their illness is deductible. SSA adjudicators enforce strict limitations under POMS DI 10520.025.

Common non-qualifying expenses include health insurance premiums, deductibles for non-work-related medical care, general clothing, ordinary groceries, and routine exercise equipment. Even if an exercise bike was recommended by a doctor, it is not an IRWE unless it is used directly as part of a formal work-related therapy program.

Additionally, services or equipment provided free of charge by a state vocational rehabilitation agency or covered by Medicaid cannot be claimed as an IRWE. If you did not spend your own money, no deduction is allowed.

Documenting and Submitting IRWE Claims

The claimant carries the burden of proving that an expense qualifies under 20 CFR 404.1512. Unsubstantiated claims are routinely rejected by SSA claims representatives.

When filing an initial disability application or reporting work activity, claimants should document expenses on Form SSA-821 (Work Activity Report - Employee) or Form SSA-820 (Work Activity Report - Self-Employed Person). You should clearly list each item, explain its medical necessity, and demonstrate how it enables you to work.

You must provide physical documentation for every claimed expense. Acceptable evidence includes itemized pharmacy receipts showing copays, cancelled checks, credit card statements, billing invoices from paratransit providers, and a signed statement from your physician explaining why the device, medication, or service is essential for your employment.

Limits on This Guidance

This article covers Impairment-Related Work Expenses applied to the Step 1 substantial gainful activity test for initial SSDI eligibility under Title II. Separate rules govern Blind Work Expenses (BWE) under Supplemental Security Income (Title XVI) and post-entitlement programs such as the Ticket to Work under 20 CFR 404.1592, which fall outside the scope of this article.

Frequently Asked Questions

What is an Impairment-Related Work Expense?

An Impairment-Related Work Expense (IRWE) is an out-of-pocket cost for a medical item or service you require to work. Under 20 CFR 404.1576, SSA deducts these expenses from gross earnings before measuring substantial gainful activity.

Can regular commuting gas or bus fares be deducted as an IRWE?

No. Standard commuting expenses that unimpaired workers pay cannot be deducted. Under 20 CFR 404.1576(c)(6), transportation is deductible only if it requires specialized modifications or specialized paratransit due to your impairment.

Can health insurance reimburse an IRWE?

No. Under 20 CFR 404.1576(b)(3), an expense is deductible only if you pay it out of pocket without reimbursement from health insurance, Medicare, Medicaid, or an employer.

Disclaimer: This article is general information, not legal advice. Social Security rules and dollar amounts change, and the figures here reflect 2026. For advice about your own situation, consult a qualified representative or contact SSA directly.