SSDI Benefits and Self-Employment

Some Michigan residents rely on Social Security Disability Insurance benefits in order to pay bills after becoming ill or injured and losing the ability to work. However, if an individual’s health improves, he or she may return to work. The Social Security Administration provides guides and additional resources to help beneficiaries return to the workforce, but things may be more complicated for individuals who are self-employed.

The Bureau of Labor Statistics indicates that approximately 10% of the United States workforce is self-employed. In 2015, there were 15 million self-employed individuals. The highest rates of self-employment occurred in older age groups. Among people over 64 years old, the unincorporated self-employment rate was 15.5%. In contrast, the rate of unincorporated self-employment among people between the ages of 25 and 34 was less than 5%. The BLS indicates that self-employment may be more common for older individuals who have enough capital and industry experience to start their own businesses.

One factor the SSA uses to determine if an individual qualifies for benefits is his or her “substantial gainful activity.” Individuals who return to work and resume earning an income may eventually become ineligible to continue receiving SSDI benefits if the work meets SGA requirements.

The SSA may use several tests to evaluate a self-employed individual’s work in terms of SGA requirements. For example, self-employment may count as SGA if a person’s average monthly earnings meet or exceed the current SGA level. Even if an individual does not earn enough income to meet the SGA number, the work may count as SGA if his or her contributions to the business are equivalent to those of a paid employee. Another SSA metric tests how an individual’s work compares to that of people without a disability who work in the same community and industry. The SSA rules for self-employment are different for individuals who are blind.