LAW FIRM BLOG
Concurrent Social Security Disability and Work
June 04, 2020
It is possible to work and also file for Social Security disability benefits, though this is a tricky matter. One is permitted to work while their application is pending. But the amounts one is allowed to earn is limited and any work you do must not be of the type or volume that will disqualify you for benefits. Note that each individual’s situation, however, is unique.
The Social Security Administration (SSA) has two types of disability benefits, Social Security Disability Insurance (SSDI), which is determined by work history and how much you paid in employment taxes for the last several years, and Supplemental Security Income (SSI), a program for people who are age 65, blind, or disabled, and who have limited work history, income and resources. Each program has its own financial eligibility thresholds. Generally, the definition of disability under the Social Security Act is the inability to engage in “Substantial Gainful Activity” (SGA) for at least a 12 month period due to a medically determinable impairment. The impairment can be mental or physical or a combination of both. To qualify for benefits, your condition must limit your ability to do basic activities such as lifting, walking or remembering. Specifically, if you can engage in what the SSA calls SGA, you won’t be eligible for SSDI or SSI.
The SSA annually sets a monthly dollar amount of earnings which it considers SGA. This is the amount an individual is allowed to earn per month and still be entitled to a benefit under the SSDI or SSI program. The SGA amount is adjusted each year according to the national price/wage index. In 2020, you can not earn more than $1,260 (or $2,110, if blind) per month to be considered for disability benefits. If you are making more than that amount, the SSA presumes that you must not be disabled (in their words, that you “are able to engage in competitive employment”). In deciding whether you are doing SGA, the SSA does not count any income you obtain from non-work sources, such as interest, investments, or gifts. The rules differ for business owners, since their monthly income may not reflect the work effort they put into their business.
Consistent earnings over that amount will prevent you from being eligible to collect benefits even if your severe medical condition otherwise meets the medical criteria for disability. This is true even if you are working despite incredible pain or fatigue. Nor does it matter if you have a documented medical condition that has caused you to earn substantially less each month or caused you to change from full to part-time work.
While the SSA looks at your wage and type of work, more than your hours worked, hourly limits also come into play. The more you work and earn, the less chance of getting approved. Even earning the amount limit for a few months may bring work ability issues into question. This work activity becomes a question of fact for a claims examiner or Administrative Law Judge (ALJ) as to the true capability of a claimant. While one has the ability to make a number of arguments in favor of disability and limited working potential, Social Security Disability officers and ALJs have significant discretion in this area and eliminate applicants who are able to earn a living, however modest, despite their disabling conditions.
Because the SSA focuses on the individual’s ability to engage in work activity at a certain earning level, individuals who are filing for disability benefits under the SSDI or SSI program should know that if they apply while they are working and earning an SGA-level income ($1,260), their case will receive a fast “technical denial,” without a medical review. When this type of denial occurs, their case will not have been transferred to the state disability processing agency (disability determination services, the agency that makes decisions on claims for the SSA) and also will not have been assigned to a disability examiner. This means that the applicant's medical records will not even be gathered and evaluated, simply because the applicant's level of earnings made their claim ineligible for non-medical reasons.
So I Should Quit My Job?
Although you may think you need to quit your job to qualify for disability benefits (perhaps because you learn SGA will disqualify you if you are working), this is not the case. In fact, if you quit your job during your application process, you need to prove to the SSA that this decision was due to your disability having worsened to the point where you had to stop working (that is, performing the SGA) and not so that you could lower your income to qualify for benefits.
If you work and have a disability, and you spend money on job-related activities or impairment-related work expenses, the SSA might be able to subtract the amount from your monthly income. For example, because of your medical condition, you may need to take a taxicab, paratransit, special bus, or other type of transportation to get to work instead of public transportation. Other expenses could include special medical equipment you have to purchase, copayments for prescriptions, counseling services, a personal attendant or job coach, a wheelchair, or any specialized work equipment. Thus, if you have extra work expenses, your earnings could be substantially higher than SGA before they affect your benefits.
What If You Are Self-Employed Or Own Your Own Business?
If you are a small business owner or otherwise self-employed, the SSA uses different rules to decide if you are engaged in SGA. Running a business includes any kind of self-employment, including providing services, like a bookkeeper, carpenter, gardener, or handyman; engaging in contract or consulting work (freelancing); farming; and being a landlord. The SSA recognizes that whether a small business’s net profit is over $1,260 per month isn’t always a good indicator of whether the business owner is engaged in SGA. If you are self-employed (and you aren’t applying for disability for blindness), the SSA will try to look more closely at what you're doing for the company. The SSA will apply what it calls “The Three Tests” to determine if your business activity is SGA.
Your business activity will be considered SGA if you:
• provide significant services to the business and receive a substantial income from it (the SSA has specific guidelines for defining “significant” and “substantial”), or
• perform work that’s comparable to the work of persons without disability in your community engaged in the same or similar businesses, or
• perform work that’s worth $1,260 per month in terms of its value to the business or what it saves you from having to pay an employee to do the work.
Impairment-Related Work Expenses and any Unincurred Business Expenses
If you are self-employed, in addition to judging your contribution to the company, the SSA will deduct “Impairment-Related Work Expenses” (IRWEs) and “Unincurred Business Expenses” (UBEs) from your net earnings. UBEs are expenses that you don’t pay for—that is, contributions made by others. For example, a friend may volunteer at your business for free or you may receive no cost equipment through a vocational training program. IRWEs are costs you pay for certain items or services, such as medical devices you need to work. After subtracting the value of these subsidies and impairment-related work expenses from your net earnings, the SSA will compare them to the SGA amount.
If you are self-employed, the SSA will use either the “Countable Income Test” or the “Three Tests” to determine whether your work is considered SGA and if you are eligible to receive benefits. The test the SSA uses depends on when you start your business and why your work is being reviewed. (Note that the SSA does not use these tests for blind SSDI recipients; the $2,110 blind SGA limit is used instead).
The Countable Income Test
If you’ve received Social Security disability benefits for more than 24 months and you begin to run a small business or do freelance work, the SSA will use your “Countable Income” to determine if the work you do for your small business is SGA. If the SSA determines that your contribution to the business is SGA, it will find that you are no longer disabled.
If your countable income is more than $1,260 a month (in 2020), your self-employment will be considered SGA and you will no longer be eligible for benefits, unless you can show you are not providing significant services to your business. If you are not providing significant services, you can make over the SGA amount.
Countable income. Countable income is that portion of your salary or profits that you earn from your business based on your own productivity. To determine your countable income, the SSA will deduct the following from your net earnings:
• the value of any significant amount of unpaid help given to you by your spouse, children, or other people
• impairment-related work expenses
• unincurred business expenses paid for you by someone else or by an agency, and
• for farms only: soil bank payments (if counted as farm income).
Significant services. The SSA defines significant services differently based on the type of business you own.
• One-person businesses.
If you are the only person who works for your business, your services are considered to be significant. This is because, without your work, the business would not exist.
• Businesses with more than one person working for them.
If you own a business and have one or more employees, or you co-own a business with someone else, your services are significant if:
• you provide more than half the total time needed to manage the business, or
• you supply more than 45 hours per month of management services, regardless of how many hours of management time the company needs
. Farm landlords. If you are a farm landlord, your services are significant if you materially participate in the production or management of crops or livestock.
The Three Tests
When you first apply for SSDI, or if you have been receiving benefits for less than 24 months, the SSA will use the “Three Tests” to determine whether your self-employment work is SGA.
The three tests are:
• the significant services and substantial income test,
• the comparability test, and
• the worth of work test.
If any one of these tests shows that the work you do for your small business is SGA, you will be ineligible for benefits.
Also, if you lose benefits due to SGA but are still in your re-entitlement period, the SSA will also use the three tests to see if your benefits should be restarted.
Let's look at the first test.
Significant Services and Substantial Income Test
The SSA will consider your work to be SGA if you provide "significant" services to your business (as discussed above) and you receive “substantial” income from your business. Here, the way the SSA considers whether your income is substantial is more complicated than simply determining if your countable income is above the SGA amount.
Substantial income. The income from your business is substantial if:
• your countable income (as calculated above) averages more than $1,260 a month (for 2020), or
• your countable income doesn’t average more $1,260 a month but the livelihood you get from your business is:
• comparable to what it was before you became disabled, or
• comparable to that of self-employed people in your community who are not disabled and who run the same kind of business you do (as their means of livelihood).
Because your income from your small business is likely to fluctuate, the SSA will use your average income (based on a set period of time and divided by the number of months in that time period).
This test makes it more difficult for you to work and receive disability benefits than with the countable income test. Unlike with that test (above), even if your countable income is less than $1,260 a month, the SSA can still find that your work is SGA if you earn about as much as you did before becoming disabled (and your business was your sole means of income before you became disabled) or your business income is the same as other unimpaired people in your community who do the same kind of work.
If Social Security finds you are not performing SGA under the Significant Services and Substantial Income Test, the agency will then consider whether your work is SGA under the Comparability Test and Worth of Work Test.
If the work activity you do in your small business is comparable to what an unimpaired person in your community does who has the same kind of business, the SSA will consider your work to be SGA (regardless of how much you earn from the business). Here are the factors used to make the comparison:
• the hours you work
• your energy output
• your efficiency
• your skills
• your duties, and
• your responsibilities.
This is different from the substantial income test above in that that test compares the livelihood you make from the business against that of self-employed members of your community. This test compares your work activity with the work activity of self-employed members of your community.
Worth of Work Test
Even if your work activity isn’t comparable to that of individuals in your community, the SSA will consider the work you do for your small business to be SGA if what you do for the business:
• is clearly worth more than $1,260 a month in terms of its value to the business, or
• is clearly worth more than $1,260 a month when compared to what it would cost you to pay someone else to perform your duties.
Earning Less Than SGA
Earning less than the SGA requirements will not automatically qualify you for benefits, though. If it is determined that you can actually work more hours than you are currently and that affects your SGA status, you could be denied for benefits.
While the SSA will not automatically deny you because you are working if you are earning less than the SGA amount, if you are able to work a significant amount of time, even if you are earning less than the SGA amount, the SSA will take this into consideration when deciding if you are disabled. For instance, you could work 25 hours per week making $9 per hour and your monthly income would be $967, under the SGA limit. But when the SSA sees that you are able to work 25 hours per week, the agency will take this into account to determine if you are disabled and may use that as evidence that you can work, even if you earn under $1,260 per week (unless you have a medical condition that automatically qualifies for disability benefits, such as statutory blindness, esophageal cancer, ALS, or an organ transplant).
Therefore, making a low wage does not necessarily establish you are unable to work, and if you are working under those limits, the SSA will also look at the nature of work you do and the circumstances under which you performed it to make sure that you are eligible to receive benefits. For instance, you could hold a volunteer position that requires a lot of physical activity, and the SSA would determine that even if your wages aren’t over the limit, you are able to work. The SSA can even consider criminal activities as SGA if they represent substantial work for which someone would ordinarily be paid (but the agency will not consider hobbies or school attendance to be SGA).
Similarly, high earnings don’t necessarily mean the disability claimant was doing SGA, if he or she was working under special conditions. Claimants can argue that their income would have been lower but for the fact that the claimant:
• required special assistance from other employees in performing the work
• was allowed to work irregular hours or take frequent rest breaks
• was provided with special equipment or assigned work especially suited to his or her impairment
• was able to work only because of specially arranged circumstances (for example, other people helped the claimant get to and from work)
• was permitted to work at a lower standard of productivity or efficiency than other employees, and/or
• was given the opportunity to work despite his or her impairment because of a family relationship, past association with the employer, or the employer’s concern for the claimant's welfare.
Income Limits For SSI
If you receive SSI, you cannot have significant income or other assets, as this is a need-based program. Your disability payment will be reduced if you have any kind of income, including work income. The amount you can work and income limit is based on the “Federal Benefit Rate” (FBR). The FBR is both the SSI income limit and the maximum federal amount you can be paid for SSI benefits each month. For 2020, the FBR is $783, if single and $1,175, if a married couple. (The FBR increases annually if there is a Social Security cost-of-living adjustment.)
To qualify for SSI, your countable monthly income cannot exceed the FBR. However, the SSA counts only some of your income when it determines whether it is over the limit. (This is called the “Earned Income Exclusion.” Also, the SSA ignores some types of income altogether, for instance, if you are earning money from work, less than half of your monthly earnings are counted toward the income limit, so you can technically make more than $783 (or $1,175) per month.
Earned Income Exclusion
For 2020, if an individual only has income from work, he or she can earn up to $1,655 per month and still be eligible for a very small SSI benefit. This is because the SSA allows you to deduct part of your earnings from being counted toward SSI.
Here’s an example: An individual earning $1,650 per month from work can subtract $65 of earned income, subtract another $20 for earned or unearned income, and then subtract half of the remainder. This works out to $782.50 of countable income. This number is slightly lower than the federal benefit rate ($783), so the individual would be entitled to an SSI payment of $0.50.
Here’s another example with less income. An individual earning $825 per month from work would have $370 of countable income. This number is substantially lower than the FBR ($783), so the individual would be entitled to an SSI payment of $413.
The State Supplement
Most all states add money to the monthly federal SSI payment; this is called a state supplement. This means that the allowed income level, as well as the SSI payments, are higher than the federal maximums in those states. States often vary the amount of the supplement depending on whether you are single or married and on whether you live in a nursing home, assisted living, or independently. These payments range from $10 to $400 per month and unless you live in a state without a state supplement, it might be difficult for you to estimate whether your income falls under the SSI FBR limit.
Effects of Family Members’ Income
Likewise, marriage can have a strong effect on your financial eligibility for SSI. SSI considers your entire household’s income and resources, not just the claimant’s. Even if only one member of a couple is medically eligible for disability benefits, both spouses’ incomes are considered to be part of the applicant’s countable income. However, only part of a spouse’s income is “deemed” to be available for your use. (Note that the SSI benefit amount for a married couple is approximately one and a half times the individual benefit amount, not twice the amount.)
Different Income Limits for New SSI Applicants
When Social Security first considers your eligibility for SSI, there is a lower limit for earned income: the SGA. While the SSI income limit always applies, it determines whether you are financially eligible for SSI, while the SGA limit helps determine whether you are too disabled to earn much income and, therefore, are medically eligible for SSI.
If an SSI applicant has monthly earnings of $1,260 or more in 2020, he or she is considered to be engaging in SGA and won’t be considered disabled. However, after receiving SSI benefits for a month or more, the SGA no longer applies. Instead, SSI’s general income limit applies, and part of SSI recipients’ work income isn’t counted toward the SSI income limit. An SSI recipient can work and make more than $1,260 without losing disability benefits (under Section 1619 of the Social Security Act), as long as the recipient is still considered disabled. Continuing SSI recipients are bound by the SSI limit discussed above (currently $1,650)—for recipients who live in a state that doesn’t pay an SSI state supplement. But remember, an SSI recipient’s countable income will be deducted from his or her SSI payment, meaning that those who work will receive an SSI payment that's less than the full amount.
SGA Limit for Blind Persons
Blind SSDI applicants are allowed to make up to $2,110 per month (in 2020) and still be considered disabled, but this SGA limit does not apply to blind SSI applicants or recipients.
The upper income limit for SSI applicants—about $1,650 per month—does apply to blind SSI applicants and recipients. But many blind applicants and recipients have significant “Blind Work Expenses” (BWE), which can be deducted from their countable income to lower it so that it doesn’t lower their SSI payment as much. Examples of BWE include the cost of visual and sensory aids, service animals, and the cost of special transportation to and from work.
What Counts as Income for the SSI Disability Limit?
What does the SSA counts as income for purposes of the SSI program? Certainly it includes income from the work you do, but also passive incomes such as rent you receive, dividends and interest from stocks and bonds you own and gifts from relatives. The SSA also counts the value of free items, such as a room provided by a relative at no charge to you, as income. But in addition, to encourage you to work and to account for some expenses, the SSA allows you to exclude some money from your countable income. Specifically, the SSA counts the following as income.
• “Earned Income.” Money you earn as a result of performing work.
• “Unearned Income.” Payments you receive from such sources as Social Security, veterans benefits, a pension, alimony, or child support.
• “In-kind Income.” Any type of free shelter or food benefits you are receiving from a nongovernmental source. For example, if you are allowed to live room and board free with your parents, this will be considered in-kind income.
• “Deemed Income.” A portion of income earned by other people in your household (like your spouse). It is assumed that a portion of this money will go towards your care.
What Income Is Excluded From the SSI Income Limit?
The SSA does not count the following income and benefits when calculating your income level:
• $20 per month of income other than wages (unearned income)
• $65 per month of wages (earned income) and one-half of wages (earned income) over $65
• wages that go toward special impairment-related work expenses (IRWE) for disabled persons or blind persons (BWE)
• the first $30 of infrequent or irregularly received earned income in a quarter
• the first $60 of infrequent or irregularly received unearned income in a quarter
• medical care
• reimbursement of expenses from a social services agency
• food stamps, and
• housing or home energy assistance
Income Limits For SSDI
A disabled (non-blind) person applying for or receiving SSDI cannot earn more than $1,260 per month by working without losing benefits. However, person collecting SSDI can have any amount of unearned income from investments, interest, or a spouse's income, or any amount of assets, unlike the low-income disability program, SSI.
The amount of backpay you receive, if approved, is based on the date the SSA decides you became disabled (your “Onset Date”). They often choose the date you last worked, so if you are working during the time you applied, it’s difficult to guess what day they might choose. You may get more or less backpay depending on the date.
If you go back to work while applying and then stop again, there is a possibility the SSA will change your onset date to the last day of this new work attempt. If your onset date changes to a later date, this means you may get less backpay. Therefore, in some cases, working for just a few weeks could result in a significantly lower amount.