Owning and managing your own business is extremely satisfying. You get the benefit of setting your own schedule, working as much as you want, and seeing your dream grow. However, if you are injured and cannot work, you don’t have the support system of workers’ compensation available to employees of most companies in Pennsylvania.
You may need to rely on programs such as Social Security Disability Insurance (SSDI) from the federal government. You may wonder if self-employed workers can qualify for SSDI benefits in Pennsylvania. Let’s spend some time examining how the program works and what you may need to do to receive benefits.
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Can Entrepreneurs Qualify for Social Security Disability Insurance Benefits?
While wage earners at large companies pay Social Security taxes through withholding from their paycheck, this does not mean that an entrepreneur cannot qualify for Social Security Disability Insurance (SSDI) benefits if they are self-employed. Whether you are a small business owner or an independent contractor, you are still eligible for Social Security Disability payments.
This is because you pay Social Security taxes on a quarterly or annual basis when you submit a payment with your income tax return or your estimated taxes. Although you do not have SSDI deductions automatically withheld from your paycheck, you are just as entitled to disability benefits through the Social Security Act as those who are employed by another individual or company.
How You Can Qualify for SSDI Benefits as a Self-Employed Worker
Self-employed workers qualify for SSDI benefits by meeting the same employment requirements as those who work at larger businesses. You earn a work credit for a certain amount of income earned each year, up to four credits per year. For example, you would accrue one credit for every $1,640 earned during 2023, up to a maximum of 4 credits if you earn $6,560 during the year.
The number of credits needed to qualify for benefits depends on your age on the date of disability. The maximum requirement is 40 credits (i.e., ten years of employment) for those who retire at age 62 or older. Individuals in this age group generally must have earned at least twenty of these credits during the prior ten years immediately preceding their becoming disabled. If you suffer a disability at an extremely young age, you might need as few as six credits.
The number of units necessary to qualify for benefits depends on your age at disability and how much income is needed per credit, which changes every year. Therefore, determining whether you are eligible as a self-employed worker can get complicated. To understand your situation, schedule a meeting with a qualified Social Security Disability attorney for your specific questions about whether you qualify.
How Your Benefits Can Be Affected by Your Self-Employment Status
While you only need the minimum number of credits to qualify for Social Security disability, the amount of benefits you are entitled to receive is impacted by the amount of income you earn. Earnings from all jobs combined with any self-employment income will dictate your level of benefits. More substantial income declared on your tax returns means that your average indexed monthly earnings (AIME) will be higher.
As this amount rises, the benefits you receive when you qualify for Social Security disability also increase. There is an essential difference in the calculation of this amount if you are self-employed because your net profits determine your benefit level. In other words, the most relevant income when you own a business is your net profits. This is what you earn after your business expenses are deducted from your gross revenue.
Supplemental Security Income (SSI) – Another Benefit Option for the Self-Employed
If you have not qualified for SSDI benefits because you have inadequate credits as a self-employed applicant, you might still be eligible for Supplemental Security Income (SSI) benefits. This form of disability benefits is dependent on your income level rather than having completed a minimum amount of employment.
The amount of disability benefits paid through SSI is less substantial than those paid through SSDI. However, the process for determining if you are disabled is comparable under both programs.
How the Social Security Administration Determines if You Have a Disability
Prior to evaluating whether you have a disability, the Social Security Administration (SSA) will determine if you engage in substantial gainful activity (SGA). The amount of income used to calculate this amount is adjusted for factors such as the cost of living and inflation every year. For example, you must have a maximum income in 2023 of $1,470 for non-blind individuals and $2,460 for blind persons.
If you are an employee, the process of calculating SGA is much more complicated if you own a business. For claimants who are self-employed, the SSA will apply “The Three Tests.” The SSA examines all three tests before making a decision about whether you have met the SGA criteria. The tests will examine whether any of the following conditions exist:
- Your efforts furnish the business with significant services and generate $1,470 or greater per month.
- Your work is comparable to the work of individuals who are not disabled and engaged in an identical or similar business.
- Your work provides $1,470 per month in service in terms of its impact on the business or the amount the business saves in paying another employee to perform the tasks.
The process of applying these tests can be complicated by a number of factors. For example, qualifying might be slightly easier if you have been receiving SSDI benefits for more than two years prior to applying for SSI benefits. Similarly, certain expenses for the business that you do not actually pay can be deducted. This may provide a more accurate estimate of the value of your contribution to the business.
There are additional tests and criteria you may need to face, which can make the entire process confusing and frustrating. Our qualified Pennsylvania Social Security Disability attorneys are ready to help you learn more about how to handle your claim successfully. We can manage the complexities on your behalf to reduce your stress while you are trying to recover.
Speak With a Skilled Pennsylvania SSDI Benefits Lawyer Today
Facing a disability that keeps you from working can be worrying enough if you have workers’ compensation coverage. If you are self-employed and need to rely on Social Security Disability Insurance instead, you should seek out a trusted legal advisor to protect your rights and ensure you get the support you need.
If you suffer from a disability and you are self-employed, we can evaluate your circumstances during a free initial consultation to determine whether you qualify for SSDI or SSI benefits. Our experienced Pennsylvania Social Security disability lawyers at the law firm of Krasno Krasno & Onwudinjo work with our clients so we can help them navigate the claims process.
Contact us through our online form or call us toll-free at 877-299-0779 to learn how we can help. Schedule your free case evaluation with us and get started today.