Only if her earnings exceed the limits.
That is a good way to put it. I will also add that if earnings are going to significantly exceed the limits then its a bad idea to take early SS benefits. That locks one into the lower rate for the long haul, and there is no point in doing that if the benefits are going to be significantly reduced by employment.To repeat the distinction. The reduction of benefits involves earnings from employment (or self employment) and the taxability of benefits involves income from all sources.
I am getting the impression that the OP is exploring his wife collecting early retirement to help bring in more income to help cover the cost of her insurance. She has less than two years until she qualifies for medicare. Perhaps a better analysis to make is how healthy is she? Has she had a full physical lately? If she is very healthy then maybe a high deductible policy with an HSA would be better than what she has now? Or perhaps a Bronze level policy on the Obamacare exchange? Some very healthy people might even gamble with no insurance for the under two years she has left until she qualifies for medicare. Yes, there is a tax penalty for not having insurance but for people in that age bracket there are not many who wouldn't qualify for the affordability exemption based on the cost of insurance when you are in your sixties.
Some unhealthy people have even chosen to divorce and then "live in sin" so that one of them qualifies for subsidies on the Obamacare exchange.
The point I am making is that a cost analysis needs to be done...and decisions made based on that cost analysis. So many people pay for high cost insurance that do not really need it...there are less expensive alternatives. Yes, those alternatives come with a risk if something disastrous happens, but that is where someone's actual health comes into play.

