In one of our previous posts we discussed how the Social Security Administration (“SSA”) evaluates eligibility for Social Security Disability Insurance benefits (“SSDI” or “disability benefits”) for self-employed applicants, and pointed out that it uses individuals differently than it does for those who work for an employer. In today’s post we will explore in a little more detail what those 3 tests are.
Substantial Gainful Activity (“SGA”)
You will remember that the first step in the SSA’s evaluation of disability benefits eligibility is a review of whether the individual is working enough to make the income level that they consider to be “substantial gainful activity” or “SGA.” The substantial gainful activity level changes every year, but according to the SSA, if you are able to work long enough or consistently enough to make this amount of money (or more) per month, your “earnings indicate that you are not totally and permanently work disabled.” As a result, disability benefits will be denied.
For employees, the calculation is simple. The SSA simply looks at the individual’s monthly earnings. The SGA level for 2018 is $1,180 per month.
For self-employed individuals, however, the SSA does not just look at their monthly earnings. This is because the SSA knows that what a self-employed person makes each month does not necessarily reflect how many hours he or she is actually working.
As a result, for self-employed individuals, the SSA uses 3 Tests: the “Significant Services and Income” test, the “Comparability” test, and the “Worth of Work” test. If the applicant makes more than $1,180 per month (for 2018) using any one of these tests, he will be considered to be working at SGA level and benefits will be denied.
The SSA’s 3 Tests.
- The Significant Services Test.
If you supply services that are significant to the operation of your business and you get substantial income from the business, it is very likely that the SSA will find you have met the SGA level, and benefits will be denied.
What does the SSA mean by “significant services”?
Essentially, if you operate a business (other than a farm) all by yourself, your services are considered significant.
Your services are also considered “significant” if you and at least one other person run the business and you supply more than half of the management time. In other words, if it takes 60 hours a month to manage your business and you manage it for 45 of those hours, your services are considered significant.
Your income will be considered “substantial” if your average income is more than $1,180 a month. Depending on certain factors, even if your income is less than $1,180 a month, it can still be considered substantial.
- Comparability Test.
If the SSA determines that you are not earning SGA level under test #1, it will move on to test # 2.
The comparability test compares the work you do with that of an unimpaired person in your community whose business is similar to yours. If the SSA determines that the work is comparable to that of others in the community, then the SSA will look at a number of factors, like hours worked, skills needed, etc. to determine if your work is considered to be SGA—regardless of your earnings.
- Worth of Work Test.
If your work is not SGA under test #2, the SSA will move on to test #3.
The Worth of Work test looks at the value of the work you do. If the work you do is worth at least $1,180 per month in its impact on your business, or if you would have to pay someone one at least $1,180 per month to do what you do, then the SSA will probably find that you have engaged in SGA.
Qualifying for Disability Benefits Isn’t Easy. We Can Help.
If you have questions or have been denied disability benefits, we can help. Our passion is helping people get the disability benefits they deserve. We have offices throughout Missouri. We also have offices in Kansas, Illinois and Oklahoma City, Oklahoma. We offer free consultations and we do not get paid unless you win your case. Call us at 855-727-8625 or contact us today to set up your free appointment.