The Social Security Administration operates two disability benefits programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Because these disability benefit programs provide financial assistance to people who cannot work, how does working as a self-employed individual affect a person’s ability to apply for SSDI or SSI?
Although self-employment can complicate applying for Social Security disability benefits, it does not affect a person’s right to seek benefits. However, self-employed workers who become disabled and unable to continue working may need experienced legal guidance to understand their rights and obligations when applying for or receiving Social Security disability benefits.
Contact Disability Advocates Group today for a free initial case evaluation to learn more about applying for Social Security disability benefits as a self-employed individual in Los Angeles.
Can Self-Employed Workers Qualify for SSDI or SSI?
Due to the qualification requirements for SSDI and SSI, self-employment does not automatically preclude an individual from applying for Social Security disability benefits. Many self-employed individuals mistakenly believe that because they work for themselves rather than for a company, they cannot obtain SSDI or SSI.
SSDI provides disability benefits to working individuals who become disabled and cannot continue working. As a result, qualifying for SSDI requires an applicant to establish a work history that shows they’ve paid taxes into the Social Security system, which funds SSDI benefits. SSI provides financial assistance to low-income individuals with disabilities. Qualifying for SSI requires meeting income and asset thresholds. Thus, self-employed individuals can theoretically meet the requirements for SSDI or SSI.
How the SSA Evaluates Self-Employment for Disability Benefits
When a self-employed individual applies for Social Security disability benefits, the Social Security Administration will first examine whether the individual still performs substantial gainful activity. The SSA defines substantial gainful activity as performing work for pay or profit, earning more than a specific amount of monthly income from such work. Thus, the SSA will consider whether an applicant continues to engage in self-employment that earns them more than the threshold for substantial gainful activity.
The SSA also evaluates self-employed applicants’ SSDI or SSI eligibility using tests. For SSI, the SSA uses the countable income test to determine whether an applicant earns income above the threshold for SSI eligibility. The countable income test includes any money or in-kind resources a person receives to pay for basic needs like shelter and food. The SSA may count a self-employed applicant’s income from their work or business activities.
For SSDI, the SSA may use three tests to determine whether an applicant’s self-employed work qualifies as substantial gainful activity:
- Significant Services Test – Under this test, the SSA examines whether a self-employed applicant provides significant services to their business. An applicant who operates their business alone automatically provides significant services. However, an applicant with business partners or employees may provide significant services to their business if they contribute more than half the time needed to manage the business or work on it for 45 hours or more per month. If an applicant provides significant services, the SSA will evaluate their income from the business to see if they meet the substantial gainful activity threshold.
- Comparability Test – This test evaluates whether an applicant performs work equivalent to the work done by an unimpaired individual in similar circumstances. Applicants who perform such work will meet the substantial gainful activity threshold regardless of their earnings.
- Worth of Work Test – Similar to the comparability test, this test evaluates the value of an applicant’s work activity by factors such as the number of hours worked, their skills, and their duties. The test examines whether an applicant performs work comparable to that performed by an unimpaired person or whether the value of the applicant’s work exceeds the substantial gainful activity threshold.
Reporting Self-Employment Income and Activities
Self-employed individuals who apply for Social Security disability benefits should honestly and accurately report their income and activities on their application. Misstating income or work activity may give the SSA grounds to deny an application. Furthermore, underreporting income may result in an applicant failing to meet the work history requirement for SSDI benefits. Self-employed applicants seeking SSDI should ensure that their tax records accurately reflect their payment of self-employment taxes, which constitute self-employed individuals’ contributions to the Social Security system.
Challenges Faced by Self-Employed Applicants
Some of the challenges and obstacles faced by self-employed people who apply for SSDI or SSI include:
- Difficulties Proving Inability to Do Past Work – Claims reviewers may take a more skeptical approach to a self-employed applicant’s claim of an inability to work, as reviewers may view the individual’s ability and willingness to start and operate a business or find work as indicative of their ability to earn income despite their disability.
- Gaps or Inconsistencies in Documentation – Self-employed individuals may have a more challenging time proving they have sufficient work history to qualify for SSDI if records do not show that they’ve paid the required Social Security taxes.
- Delays Due to Additional Scrutiny or Requests for Further Documentation – Applications filed by self-employed individuals may take longer to process as claims reviewers scrutinize an applicant’s records or request additional documentation for verification.
Can You Work While Receiving Benefits
The SSA imposes strict rules on working while receiving SSDI or SSI benefits. SSDI recipients generally cannot work while receiving benefits. However, the SSA operates a return-to-work program that allows SSDI recipients to try returning to the workforce while continuing their benefits during the trial period. For SSI, earned income, including income from a self-employed individual’s business, can reduce the amount of a recipient’s monthly benefit.
Contact Our Firm Today to Discuss Your Rights as a Self-Employed Worker
If you’ve become disabled and cannot continue working as a self-employed individual in Los Angeles, you may have the right to obtain disability benefits from the Social Security Administration. Contact Disability Advocates Group today for a free, no-obligation consultation with a Social Security disability attorney to learn more about applying for disability benefits with a history of self-employment.
