Running a business can be difficult, particularly for those dealing with a disability. But, with the right approach to business ownership, you’re well-equipped to get the most value out of your disability benefits.
Are You Eligible for Disability Benefits If You Own a Business?
Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits are available to those dealing with disabilities, regardless of whether they own a company. But, the amounts you can receive via SSDI and SSI programs can change if you start a business.
In 2021, you cannot receive disability benefits if you earn more than $1,310 per month ($2,190 per month for the blind) in substantial gainful activity (SGA). The Social Security Administration (SSA) defines SGA as any work that allows someone with a disability to earn over a certain amount each month. The amount of income considered SGA changes annually. So, if you are dealing with a disability and plan to start a business, you should track this amount closely.
SSA also uses various tests to determine if any self-employment income qualifies as SGA. These include:
- Significant Services: If you own a one-person business, SSA classifies all of the services you provide as “significant.” Comparatively, if you own a business and have at least one employee on staff or co-own your company with someone else, SSA may classify your services as significant. It will do so if you invest more than half the time required to manage your business or provide more than 45 hours per month of management services.
- Countable Income: Countable income refers to the amount of money you earn based on your productivity. During the countable income test, SSA deducts impairment-related work expenses, the value of unpaid help given to a spouse, child, or others, and other costs from the money you earn as part of your everyday business operations.
- Worth of Work: SSA considers the work you perform as part of its worth of work test. It looks at whether your work is worth more than $1,310 a month relative to your company’s value or worth more than $1,310 a month in contrast to what it would cost you to pay someone else to complete it.
If you qualify for disability benefits, submit your application carefully. Be thorough and get answers to any questions you have about the application in advance. Take the same approach if you need to submit a disability claim to a private insurance company, too. That way, you’ll put yourself in a great position to be properly compensated for your claim.
What Financial Situations Can Affect My Disability Benefits As a Business Owner?
SSA will examine several financial situations that may affect your income as a business owner, including:
- You get married. SSA evaluates the combined income and assets of a married couple relative to disability benefits.
- Your spouse already receives disability benefits. In an instance where you are married and your spouse already receives disability benefits, you and your spouse may only be eligible for a limited amount based on your combined income and assets.
- You don’t pay rent. If you live with a friend or relative but don’t pay rent, SSA may view your living situation as a financial resource, which can affect your eligibility for disability benefits.
- You own real estate. SSA assesses each real estate investment separately. As such, your real estate investments can be classified as sources of earned or unearned income.
It is also important to note that receiving an inheritance does not affect your eligibility for disability benefits. This is because SSA classifies an inheritance as unearned income.
How to Maximize Your Income While on Disability
Your goals: earn as much as you can for your business and optimize your disability benefits. Here are tips to help you maximize your income while on disability:
- Learn As Much As Possible About Disability Benefits: Devote the time, energy, and resources necessary to learn about disability benefits. This allows you to discover how disability benefits change after age 50 and other factors that can alter your eligibility. Also, keep track of healthcare legislation and watch for any changes to disability benefits regulations.
- Make the Right Investments: SSA won’t penalize you if you invest in exchange-traded funds (ETFs), real estate investment trusts (REITs), and myriad securities. Review a variety of investment options to identify passive income sources. It can be beneficial to meet with a financial advisor who can help you weigh the pros and cons of different investment options and select ones that align with your expectations.
- Take Advantage of Free Perks: Along with SSA benefits, anyone with a disability can get over-the-counter medications, park passes, books, and other perks free of charge. In fact, partnering with an attorney can help you stay in the loop about financial resources available to those dealing with a disability.
Lastly, don’t forget to do everything in your power to make your business a success. You can do things like make your website accessible to new audiences like yourself and promote your brand via Facebook, LinkedIn, and other social media. Over time, you’ll be able to earn your desired income. In the long run, you’ll be able to reap the benefits of being a successful business owner.
Author Info: Noah Rue is a writer, a digital nomad, and a graduate of the lessons of life (primary) and also the University of Idaho. These days, Noah teaches English as a second language in lovely Puerto Vallarta, Mexico, and moonlights as a content strategist for an American-based marketing company.