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What Happens If You Start a Business While on Disability Benefits?

Although the Social Security Administration (SSA) does not prohibit you from starting a small business, such a move has implications for your disability benefits. Read on to find out how the SSA evaluates your eligibility for benefits as a self-employed person.

Substantial Gainful Activity 

The SSA uses the substantial gainful activity (SGA) benchmark to determine if you are adequately disabled to be eligible for benefits.

SGA is any type of work that earns you at least $1,180 per month for non-blind claimants (as of 2018) and at least $1,970 per month for blind claimants (as of 2018). If you are engaged in SGA, you may be ineligible for disability benefits.

The SSA uses four tests to assess whether you are engaging in SGA. These include the countable income test, the significant services and substantial income test, comparability test, and worth of work test.
Countable Income Test
If you have been receiving benefits for two years and decide to set up a business, the SSA will employ the countable income test to evaluate your SGA and determine whether or not you should continue to receive benefits.

Countable income is the income you earn from the significant services you deliver to your business on your own. This does not include any monetary or non-monetary help you receive from others.
Significant Services and Substantial Income Test
The SSA uses the significant services and substantial income test if you have been on disability for less than two years. The SSA will determine that your income is substantial if your countable income is more than $1,180 a month (as of 2018).

Even if you earn less than $1,180 a month, the SSA may determine that your income is substantial if this income affords you the same lifestyle you had before your disability or if your lifestyle is comparably similar to that of other non-disabled, self-employed people in your community.

When using this test, the SSA may easily determine that you are engaged in SGA, even if your business earns you less than $1,180 a month, making you ineligible for disability benefits.
Comparability Test 
The comparability test compares the work you do in your business to what a non-disabled person with a similar business in your community does.

If the SSA determines that in your business, you perform the same kind of work as a non-disabled person, you will be considered as engaging in SGA.
Worth-of-Work Test 
If the work you do for your business is evidentially worth more than $1,180 a month, the SSA may determine that you are engaging in SGA.

Trial Work Period 

If you start a business while on disability, the SSA will allow you to work in your business for a certain period without the risk of losing your benefits.

The trial work period, usually running a total of nine months over a duration of five years, will start when your business begins to earn a gross income of more than $850 a month or when you start to work more than 80 hours in your business.

During the trial period, you can earn more than $1,180 per month without losing your benefits. If at the end of the trial period you are still engaging in SGA, the SSA will determine that you are no longer disabled and your benefits will stop.

The regulations surrounding self-employment and disability benefits can be complex. Violation of any of the requirements could see the SSA terminate your benefits. Be sure to speak to a skilled SSD attorney to help you understand SSA guidelines for the self-employed.

If you are considering starting a business but are worried about your disability benefits, get in touch with the experienced attorneys at Bernstein & Bernstein for a free evaluation of your claim.

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