Generally, the disability program is for people whose impairments make them unable to work on a full-time basis. Someone cannot be considered disabled if they are working at or above the level of what is known as Substantial Gainful Activity, or “SGA.” For wage workers, there is a bright-line amount of income that disqualifies someone from disability. The SGA amount is evaluated every year for an increase due to inflation / cost of living adjustment, and usually goes up a little every year:
SGA 2021: $1,310 per month
SGA 2022: $1,350 per month
Qualifying for Disability Benefits Can Be Complicated if You're Self-Employed
However, the “SGA” analysis is much more complicated for self-employed workers, requiring a consideration of Social Security Ruling (SSR) 83-34 and 20 CFR § 404.1575. Under these rules, Social Security will look beyond the amount of income to determine whether someone has engaged in the “SGA” which would disqualify them from disability. They explain, “self-employment income alone is not a reliable factor in determining SGA, since it is influenced not only be the individual’s services but also by such things as market conditions, capital investments, the services of other people, and agreements on distribution of profits.”
If you are self-employed and applying for disability benefits, the Social Security Administration will generally consider “your activities and their value to your business,” including your “hours, skills, energy output, efficiency, duties, and responsibilities” and compare you with unimpaired individuals in the same or a similar business. If the value of your work exceeds the wage worker SGA amount, the work activity would be considered disqualifying.
Self-Employed People May Need to Provide Tax Returns and Other Financial Documentation
Social Security will consider financial information related to gross income and business expenses, so be prepared to provide these figures if you are self-employed and applying for disability. Figures from before the alleged period of disability could also be relevant, as Social Security may compare your self-employment activity before you allege to have become disabled with your activity after your alleged disability onset date. A decision maker would almost certainly want to see tax returns when considering whether a Social Security claimant’s self-employment activity constitutes SGA.
If a claimant had unpaid help from friends or family members while engaging in self-employment, the value of this unpaid help should be considered like a business expense. Impairment-related work expenses (“IRWE”) should also be considered like business expenses, even if they are not directly related to the business. Examples of these IRWE could include things like an ergonomic chair necessary to reduce back pain while performing seated work, devices to help a visually-impaired individual read work-related materials, or possibly even the costs associated with caring for a support animal necessary for the management of work-related stress. Social Security does not provide an exhaustive list of possible IRWE, so giving this issue some thought could be valuable. Those working with disabilities likely spend more on IRWE than they realize.
Are the Rules That Govern Disability for Self-Employed People Outdated?
SSR 83-34 even says that, “meeting the community standard of living will be a sufficient basis for finding [SGA].” This may have been included decades ago to prevent people like subsistence farmers in impoverished rural areas from getting disability upon the development of health problems that do not really change their level of productivity or lifestyle. However, this now seems anachronistic, unfair, and unnecessary. The standard five-step disability evaluation process already provides that someone without a severe medical impairment is not eligible for disability. Fortunately, this portion of the SSR seems to now be merely a relic of a different time; I have never actually seen this provision applied.
SSR 83-34 is otherwise outdated, as well. (The 83 part of the label means it was issued in 1983.) Dealing with outdated guidance is not uncommon in Social Security cases. In fact, during the hearings that take place for disability determinations, Social Security always pays a “vocational expert” to testify. This “expert” is ready to tell the judge that jobs are available preparing documents for microfilming, using a typewriter to address envelopes, or using pneumatic tubes to route mail through an office building. Of course, none of these jobs exist any longer, but the “vocational experts” are citing to job descriptions in the Dictionary of Occupational Titles Social Security uses, which features many entries which haven’t been updated in well over 40 years. (It has not been updated at all since 1993, well before widespread use of the internet and cell phones.)
A good portion of SSR 83-34 is devoted to “farm landlords,” and I have never had a fact pattern like this arise in my practice. However, it is relatively common for one of my disability clients to be engaging in some self-employment activity while seeking disability. Often, this is because the clients have impairments that wax, wane, and flare up intermittently to make them unable to work. This prevents working on a regular and continuing basis and thus justifies disability. But participation in what is now known as the “gig economy” allows them to perform some work when they are able to and generate income for necessities like food and shelter, which most people must still pay for while the (often lengthy) disability adjudication process is ongoing.
If someone seeking disability is doing a little bit of self-employment when they can, but is able to stay home whenever their impairments make them unable to work, this doesn’t seem inconsistent with disability at all. For example, someone may have an autoimmune disease which regularly flares up and prevents performance of a regular work schedule. If that person drives Uber on good days to generate some income while waiting on a disability determination, this self-employment activity shouldn’t necessarily undermine a disability claim.
I have had disabled clients who team up with another person with disabilities to deliver food through a service like Grub Hub. For example, one person may be unable to drive because of a visual impairment but remains capable of getting in and out of a car and running food up to a house. This person could team up with someone who is able to drive but has musculoskeletal impairments which make them unable to repeatedly get in and out of the car and walk into the restaurant to get the delivery order. This kind of work activity should not undermine a disability claim and could actually be something which could be described at a hearing to help the judge understand the relevant impairments.
Our Social Security Attorneys Are Here to Help
If you have been self-employed and disabilities make you unable to continue with this on a regular basis, you can consult a Keller & Keller Social Security attorney. We can provide guidance about how a decision maker would consider your self-employment activity so you can make the best decisions for yourself. Because the guidance provided to judges is outdated, we can present a judge with a reasonable proposal about how your more modern self-employment should be considered now. This way, we can convince the judge that your self-employment activity is not inconsistent with disability. You may have taken a “DIY” approach to your work for years, but we would highly encourage you to seek counsel in connection with a disability claim.