Four Ways to Reduce Income Counted Toward Substantial Gainful Activity

January 10,2017
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A significant factor in determining whether you qualify for benefits is whether you are earning or are capable of earning a minimum amount of money every month, known as performing “substantial gainful activity”. You can reduce income counted toward substantial gainful activity in a number of ways.

Substantial gainful activity is the ability to engage in competitive employment in the national economy.  People who earn more than this limited amount for three or more months in a row can expect to have difficulty convincing an administrative law judge that they are unable to perform substantial gainful activity. In 2017, the limit is $1,170 per month for people who are not blind. It is $1,950 per month for people who are blind.

The most common ways to reduce income counted toward this are deductions of sick and vacation pay, subsidies, and impairment-related work expenses.  Additionally, Social Security Administration’s policies for averaging your monthly income can have a significant effect on the overall finding.

Even if your earnings exist below the limit listed for substantial gainful activity, you may still want to mention to your attorney any factor below that applies to your situation in case the attorney will need to include it in defending another part of your claim.

#1 Sick Pay and Vacation Pay

If you want to reduce income counted toward substantial gainful activity, sick pay and vacation pay can provide an employee with income when the employee is not working for a time. Many jobs pay at least some wages while the employee is too ill to work. A person may also use vacation time to maintain income when unable to work because of health problems.

When making a substantial gainful activity determination, an administrative law judge should focus on payment for work actually performed during the months in question.  You earn sick pay and vacation pay before you become disabled.  So your Social Security disability attorney may be able to successfully argue that the SSA should not count this income as part of your monthly earnings when determining whether you are capable of performing substantial gainful activity.

Bonuses, however, are included as earnings when evaluating whether the work performed constitutes substantial gainful activity.

#2 Subsidies

“Subsidies” are the difference between the value of the work or services you provide and the amount of pay you receive. If you receive a premium, that is, more than your work is worth, you may be receiving a subsidy.

Common indicators of a subsidy include:

  • Work at a premium rate for a family member or friend.
  • Receiving substantial or unusual help from others in performing the work.
  • Receiving significant work accommodations that are not offered to other workers.
  • Engagement in a government-sponsored job training or other employment program.

If you receive a subsidy, the judge should consider only the part of your pay that an ordinary employee might earn for performing the same work.

#3 Impairment-Related Work Expenses

Expenses for certain items related to your impairments that make it possible for you to work may be deducted from your total earnings. Examples include medical devices and equipment, prosthetic limbs, and some attendant care services.  Normal drug costs or medical service costs are not deductible from your monthly income unless you need them to control your disabling condition and allow you to work.

Another major limitation is based on who pays for these types of expenses.  The Social Security Administration will not deduct income-related work expenses from your monthly earnings totals if any source reimburses them (such as insurance or a social welfare program).  Insurance co-pays you make could be included as a deductible expense. Other limitations may apply as well when you are trying to reduce income counted toward substantial gainful activity.

Due to the complexity of the impairment-related expense rules, you should speak with your Social Security disability attorney regarding the medication and devices you regularly use and the amount you pay out of your own pocket for them.

#4 Income Averaging

The Social Security Administration is supposed to average your total earnings over the time worked unless there is a reason not to do so.  The reason they must average your earnings is to make sure that no short period of improvement or abnormally high payment makes too significant of a change to the overall trend of your work history.  Similarly, periods of time when you are completely unable to work should be factored into the evaluation.

There are circumstances where the administration should not average your monthly earnings.  Distinct periods of work and unemployment, significant changes in the work involved due to your impairments, or an annual change in the substantial gainful activity levels from one year to the next are all factors that could justify not averaging your monthly work income across a longer period of time.

Learn More About How to Reduce Income Counted Toward Substantial Gainful Activity

Work with your Social Security disability attorney to help him or her understand your work history before you stopped working or significantly reduced you hours.  Even if your earnings are a little above the monthly substantial gainful activity limits, your Social Security disability attorney may be able to reduce the income counted toward substantial gainful activity and defend the longest reasonable period of disability.

If you are thinking of applying for Social Security disability benefits or your initial application has been denied, call the Hermann Law Group at 914-286-3030 for a no cost, no obligation evaluation of your case.