Applying for Disability When You Are Self Employed

August 25,2016
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If you are self employed and have developed a condition that restricts your ability to work, our Hudson Valley disability lawyers want you to know that you may be eligible for Social Security disability benefits.  You may also be able to continue your business on a limited basis.  The Social Security Administration determines that you are disabled if you are unable to engage in substantial gainful activity because of a physical or mental condition.  If you are able to do some work but your earnings or the value of your services to your business do not exceed the average monthly earnings threshold used by the Social Security Administration to measure substantial gainful activity, then you may be disabled.

If you were working for someone else and drawing a paycheck, the Social Security Administration would look at your monthly earnings as a base to determine whether or not your efforts amount to substantial gainful activity or SGA.  For self employed individuals, the Social Security Administration (SSA) applies the following three special tests to determine whether or not you are engaged in SGA:

TEST 1.  Significant Services and Income.  Are you rendering significant services to the business and is your average monthly earnings in excess of the minimum SGA threshold in effect at the time.  For 2016, the amount is $1,130.00 a month.  If the answer to both of these questions is yes, then you are not eligible for disability.  If the answer to either of these questions is no then SSA will go to the next test.

If you are the sole owner of your business and have no employees, any work that you do is automatically considered significant by the Social Security Administration.  If you are a co-owner of the business or if you have employees, your efforts will be considered significant if they amount to more than half of the time needed to manage the business or  if you manage the company for at least 46 hours per month.

TEST 2.  Comparable Work.  Is the work that you are performing comparable to the work of persons without disability in your community engaged in the same or a similar business?   If yes then you are engaged in SGA and do not qualify regardless of your earnings.

This test looks at the work that you are able to do.  It is not a test of the quality of the work or the value of the work to the business.  If you are a plumber and are performing the same duties with the same level of skill and efficiency as other plumbers in the community and are able to work comparable hours as other plumbers, then the SSA may determine that you are not disabled.  If your work is not comparable to other plumbers then the SSA will go on to the next test.

TEST 3Worth of Work.  Is the work that you perform worth more than the threshold SGA earnings in terms of its value to the business or would you need to pay someone else more than the threshold monthly earnings to do the work that you are doing.  If the answer to either of these questions is yes, then you do not qualify for benefits.  If the answer to both questions is no, they you are not engaged in substantial gainful activity and may qualify for benefits.

This test looks at the value of the work that you actually perform.  It is not based on the value of the work that you performed for the business before your injury.  If it takes you twice as long to do a job, then that job may have considerably less value to the business than it would have if performed by someone who is healthy.

The second part of this test requires a determination of how much you would have to pay someone to do the work that you are doing, at the same pace and with the same quality.  This is not based on what it would cost you to hire someone with the skill and efficiency that you had before your injury.  The issue is how much it cost you to hire someone to do the same work that you are currently doing.

Self employed workers pay into the Social Security fund and are entitled to the same disability benefits as workers who draw a paycheck.  The application process is complicated and may take longer than you would hope but if you are not able to work you should qualify for benefits.  Don’t be discouraged!


Tips for Success

  1. Talk to an attorney. You do have a right to benefits if you become disabled but you have the burden of proving that you are disabled.


  1. Well meaning efforts to go into the office may be viewed as evidence that you are not disabled. Showing up when you are not able to actually do the work may not be a good idea.


  1. Follow your doctor’s recovery and treatment recommendations. If your doctor says stay home, stay home!


  1. Consider hiring someone do some of the work rather than pushing yourself to do more than you should. The fact that the doctor says that you have an impairment or condition that may qualify you for disability does not mean that the SSA will consider you disabled if you put your health at greater risk and prove that you are able to work.


  1. Hire an experienced attorney! I am repeating this tip because these cases have special requirements.  Applying for disability when you are self employed can be complicated.  Success depends upon proper presentation of the facts.  The Hudson Valley disability lawyers at the Hermann Law Group have years of successfully representing clients in these types of cases and will help you get the benefits that you are entitled to.


Call the Hermann Law Group at 914-286-3030 to schedule your free case evaluation today.