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 2021, SGA is defined as earning $1,310 or more a month from working, or $2,190 for blind people.
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 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 helps 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.
Juan filed for disability due to Type 2 diabetes and high blood pressure. Prior to the onset of his medical condition, Juan worked full-time as a salesman at a local hardware store. When he applied for disability, however, he reduced his hours to 15 per week. He was paid an hourly wage of $10 per hour for his work at the store and so earned about $600 per month, which was well below the $1,310 SGA limit in 2021. In addition to his work at the hardware store, Juan worked 10 hours per week, without pay, at his son’s company answering the telephone and doing odd jobs. Even though Juan 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.
Here are some examples of what the SSA usually doesn’t consider as substantial gainful activity:
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.
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.
Here are some volunteer situations that might indicate to the SSA that you can work at the SGA level.
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:
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:
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:
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.
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.
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.
1 | 2