When you apply for Social Security Administration (SSA) disability benefits, your eligibility depends on whether you meet the following criteria:
- You have a physical or mental impairment that is expected to last at least 12 months.
- Your medical condition prevents you from carrying out ‘substantial gainful activity’ (SGA) during that time.
As disability lawyers, we often have to explain to clients how their present income and activity levels can ultimately determine whether their claim is approved or denied. In this blog, we clarify how ‘substantial gainful activity’ is defined by the SSA and how it can affect your eligibility for benefits.
How Does the SSA Define Substantial Gainful Activity?
For individual disability applicants in 2022, the SSA defines ‘substantial gainful activity’ as earning more than $1,350 per month. (Blind applicants have a higher threshold of $2,260.) This amount, which is updated annually to reflect inflation, helps the SSA determine whether you’re really in need of the financial support that disability payments can provide.
Most people assume that SGA only refers to how much they make at work. The truth is that employment income is only part of it, and even unpaid work can put you past the threshold. Understanding how this works requires a closer look at what activity the SSA considers “substantial and gainful.”
- Substantial: Substantial work activity means that you undertake a significant amount of physical or mental activity. This can be the case even if you don’t work full-time or you don’t make as much money as you did before the onset of your disability.
- Gainful: Gainful work activity produces an income. However, even if you’re only doing that work on a volunteer basis, it may be deemed gainful if it’s a position that usually involves payment. Stuffing envelopes likely wouldn’t qualify, but managing marketing for a nonprofit probably will.
Let’s look at an example of how the SSA might apply the SGA standard.
Sarah filed for disability due to back pain after a spinal cord injury. Before its onset, she was a full-time executive assistant at a Trenton marketing agency. By the time she applied for disability, she had reduced her role to answering phones at the front desk 15 hours a week, at a wage of $15 per hour. In this position, she earned around $900 per month, which is beneath the SGA limit of $1,350 in 2022.
In addition to her work at the marketing agency, Sarah spent 10 hours a week helping out her friend at the latter’s store, making gift baskets, and answering customer calls. Although she did it strictly on a volunteer basis, the SSA concluded that this was work that normally involved remuneration and that its value, combined with her income at the agency, amounted to SGA. Sarah’s application for disability benefits was therefore declined.
What is Not Regarded as Substantial Gainful Activity?
The SSA doesn’t usually consider activities like the following to be substantial gainful activities:
- Acts of self-care, such as bathing, washing your hair, and getting dressed.
- Attending school
- Social activities
- Undergoing mental, occupational, or physical therapy
However, just because the SSA doesn’t treat these activities as SGA for initial eligibility purposes does not mean that they don’t affect your disability claim at all. If it appears that you can do some activities without functional limitations, the agency may question whether you are disabled enough to need financial assistance.
Does the SSA Count All Income When Making an SGA Determination?
The SSA usually considers all of your income when determining whether you are carrying out substantial gainful activity, but there are exceptions. For example, if you are applying for Supplemental Security Income (SSI) and you are still working, a portion of your income will be excluded from the SGA calculation. These income exclusions are:
- The first $20 of your unearned income
- The first $65 of any income you earn as well as half the remaining amount over $65
- The first $30 every quarter of income you receive on an intermittent and irregular basis
- Funds you save under the PASS program, which is intended to help you become self-supporting
If you have impairment-related work expenses, such as special transportation or an assistant to help you get ready for work each day, the SSA may deduct them from your monthly earnings, keeping your income under the SGA threshold.
Note: Some employers pay disabled employees more than the regular market value for their labor. One common example is a dedicated and supportive workshop for those with mental disabilities. The SSA treats the additional value as a subsidy and won’t take it into account when assessing whether or not your work is SGA.
Self-Employment and SGA
When you work for someone else, the cutoff amount for SGA determination is $1,350 per month in 2022. For self-employed individuals, Social Security recognizes that income is not necessarily a good indicator of how much they are working. Freelance work, contract work, and other jobs you do for a business you own are all examples of self-employment.
In the case of self-employment, the SSA will assess whether the work you do is substantial gainful activity by using either the “Countable Income Test” or the “Three Tests.” Which one it uses in your case will depend on whether you are applying for the first time or already receiving monthly benefits.
The Three Tests
If you are applying for Social Security Disability Insurance (SSDI) or SSI, or you have been receiving SSDI payments for no longer than 24 months, the SSA will use one of three tests to determine whether your self-employment income constitutes substantial gainful activity.
The Significant Services and Substantial Income Test
SGA occurs when you earn substantial income from your business by providing significant services.
Your business type determines whether your services are significant. For example, your services are automatically considered significant if you are the sole owner of/worker for your business. When you earn more than $1,350 in monthly income from self-employment, it is considered substantial; in some cases, it may be found substantial even if you make less, especially if it was similar to what you made before the onset of your disability.
The Comparability Test
If you’re not performing significant services or earning a substantial income, Social Security will conduct the next two tests.
A comparability test compares your work with that of an unimpaired individual whose business is similar to yours. Areas of comparison are your duties, job skills used, efficiency, and the amount of time and energy spent working. Your work would be considered gainful employment if Social Security determined that it was comparable.
Worth of Work Test
This test measures the value of what you do for your company. Generally, your work is considered SGA if the value of what you do exceeds the monthly income limit of $1,350 or if your work is worth more than what you would pay an employee to do it.
Countable Income Test
When you start your own business or start doing contract or freelance work more than 24 months after receiving benefits, the Social Security Administration will use the countable income test to determine whether your work is SGA.
The first thing the SSA does is calculate your countable income. Regardless of how much you work, your benefits will not be terminated if your countable income is less than $1,350 a month. Your benefits will cease if your countable income is more than $1,350 per month unless you can prove you didn’t perform significant services for your business. No matter how much money you make, your benefits won’t be terminated if you can prove that your services are not significant.
The Trial Work Period
Your disability benefits won’t be terminated immediately if you work for yourself at the SGA level. You have nine months in which you can earn more than $970, or even more than what is considered SGA, and not have your disability benefits reduced. It is important to let the SSA know if you determine that you are no longer disabled during this time.
Is Volunteer Work Considered SGA?
Your volunteer work can still be considered substantial gainful activity by the SSA, even if you aren’t paid for it. Below are some volunteer-related scenarios that can be interpreted as an ability to work at the SGA level.
- You volunteer at a business owned by a family member.
- There are physical or mental requirements for the volunteer work that suggest you could perform substantial gainful activity.
- Your volunteer hours amount to more than a few per week.
- If you were receiving a wage, your income would be above the SGA level.
There are some volunteer programs, covered by the Domestic Volunteer Service Act of 1973, that are never treated as outlets for substantial gainful activity. They include the University Year for ACTION Active Corps of Executives.
Was Your Claim Denied for SGA Reasons? Get a Free Consultation From a Disability Lawyer
If you are currently working for yourself or someone else and thinking about applying for disability benefits, you should speak to an experienced SSD lawyer who can help you determine whether your book meets the SSA standard for substantial gainful activity. They can also help you submit your application and, if necessary, appeal a denial.
The success of your Social Security disability case may depend on the experience and expertise of your lawyer. At Bross & Frankel, PA, you will receive legal assistance from attorneys who are dedicated to representing people with disabilities. Our firm handles all stages of your case, from applications all the way up to an appeal to the United States federal courts. Our dedicated and compassionate team will be there for you every step of the way. To schedule your free consultation, call 856-210-3345 or contact us online.
Rich Frankel is the managing partner of Bross & Frankel. He is a member of the New Jersey and Pennsylvania bars. He has focused exclusively on disability and social security benefits since 2005.
Mr. Frankel joined what is now Bross & Frankel after having watched his father struggle with disability, fighting a lengthy illness. Mr. Frankel founded the firm’s veteran’s law practice and substantially grew the social security disability practice, focusing Bross & Frankel’s ability to fight for all of the disability benefits available to his clients.
Mr. Frankel additionally fights for clients in court, obtaining frequent victories in Social Security appeals and against insurance companies in Federal court.