One of the basic requirements for Social Security or SSI disability is that your medical condition must be serious enough to prevent you from doing more than an insignificant amount of work for at least 12 months. Social Security usually uses the "substantial gainful activity" (SGA) level to determine what is too much work. In 2013, SGA is defined as earning $1,040 or more a month from working. (The SGA threshold usually increases each year.)
If the Social Security Administration (SSA) determines you are working at the SGA level, you are ineligible for benefits. If you are already getting Social Security disability benefits (not SSI) and you begin working above the SGA level, your benefits could be ceased (but only after a trial work period).
Substantial Gainful Activity as Defined by the SSA
Substantial gainful activity is more than a number. For instance, volunteer work, criminal activity, and running a small business can all be considered substantial gainful activity even if you're not making any money. To understand how this works, it help to look at when the SSA labels work activity “substantial and gainful.”
Substantial. Substantial work activity means that you are doing significant physical or mental activities. Work can be substantial even if you can only work part-time, or even if you don’t do as much or get paid as much as you did before you became disabled.
Gainful. A gainful activity is one that you get paid to do. However, even if you don’t get paid, the SSA may conclude that your work is gainful if it is an activity that people usually get paid to do.
Here is an example of a case where the SSA might conclude that the disability applicant working at the SGA level.
The applicant filed for disability due to Type 2 diabetes and high blood pressure. Prior to the onset of his medical condition, the applicant worked full-time as a salesman at a local hardware store. When he applied for disability, however, he reduced his hours to 15 a week. He was paid an hourly wage of $10 an hour for his work at the store and so earned about $600 a month, which was well below the $1,040 limit. In addition to his work at the hardware store, the applicant worked 10 hours a week, without pay, at his son’s company answering the telephone and doing odd jobs. Even though the applicant was not paid, the SSA concluded that the work he did for his son was of the kind a person was normally paid to do. The SSA decided that the value of the work he did for his son combined with his part-time work for the hardware store demonstrated SGA. Accordingly, he was ineligible for disability benefits.
What Is Not Considered SGA
Here are some examples of what the SSA usually doesn’t consider as substantial gainful activity:
- things you do to take care of yourself
- household chores
- physical, occupational, or mental therapy
- going to school, and
- involvement in social activities.
It is important to know that, although these activities won't demonstrate SGA for the purposes of initial eligibility, the SSA may still consider them as evidence of whether or not you are disabled. If you have the ability to do some activities outside of work without functional limitations, Social Security can use this information in deciding what your work abilities are.
Volunteer Work and SGA
Even if you don’t get paid for your work, the SSA can still conclude that your volunteerism is substantial gainful activity or that your volunteer work shows that you have the ability to work at the SGA level.
Examples of Volunteer Work That Is SGA
Here are some volunteer situations that might indicate to the SSA that you can work at the SGA level.
- Your wages would be above the SGA level if you were paid for what you do.
- You spend more than a few hours a week volunteering.
- The volunteer work has physical or mental requirements that suggest you could work at the SGA level.
- Your volunteer work is for a business that is owned by a family member.
The Domestic Volunteer Service Act
Volunteer work for programs that are covered under the Domestic Volunteer Service Act of 1973 is never considered SGA. Here is a list of the covered programs:
- Volunteers in Service to America
- University Year for ACTION
- Special Volunteer Programs
- Retired Senior Volunteer Program
- Foster Grandparent Program
- Service Corps of Retired Executives, and
- Active Corps of Executives.
In some cases, the SSA will not count all of your income towards determining whether you are working at the SGA level.
If you apply for SSI and you are making some income from work, the SSA will exclude a portion of your income when determining whether your work is SGA. The SSA will exclude:
- the first $20 of unearned income
- the first $65 of earned income plus half of the remaining amount of earned income over $65
- the first $30 each quarter of income received on an irregular basis, and
- money you save under a plan for achieving self-support (PASS) program.
Impairment-Related Work Expenses (IRWE)
Impairment-related work expenses (IRWEs) are the costs you incur for special services or equipment that are related to your disability and are necessary for you to work. If you have paid IRWEs, the SSA may deduct the cost from your earnings. This can help keep your income under the SGA level. Here are some examples of items that the SSA may consider to be IRWEs:
- the cost of paying for specialized transportation to and from work
- the cost of hiring someone to help you get ready for work in the morning
- the cost of hiring a non-impaired person to do a part of your job you can't do because of your disability, and
- the cost of training needed to learn how to use impairment-related specialized equipment needed for your work (for example, learning how to use a page turner or other typing device.)
To have IRWEs deducted from your earnings, you cannot receive reimbursement for them (for instance, by a vocational rehab program). You also cannot get IRWE deductions for payments for services needed on behalf of other people (for example, childcare.) Costs for IRWEs must also be paid in cash and not, for example, by an exchange of services.
If your employer pays you more than the actual value of your labor because of your disability, the SSA will consider the amount over the actual value a "subsidy." For example, a sheltered workshop where people with mental disabilities work usually subsidizes workers pay. The SSA will not include the subsidy amount when determining whether your work is SGA. There are multiple factors the SSA uses to determine whether earnings include a subsidy and to determine the approximate value of the subsidy. You can learn more about subsidized employment in this SSA ruling.
Passive Income versus Earned Income
SGA relates only to money you earn from working. Passive income, such as that from investments or retirement funds are not considered SGA. However, passive income may affect eligibility for Supplemental Security income (SSI). For more information, see Nolo's article on SSI income limits.
SGA and Self-Employment
If you are working for yourself -- doing contract work, odd jobs, freelancing, or running a small business, the SSA will assess whether your work is SGA using either the “Countable Income Test” or the “Three Tests.” Which test the SSA uses depends on when your business was started and why the SSA is reviewing your work activity. We'll discuss this on the next page in the second half of this article, on self-employment and SGA.
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