Have you ever been itching to get back to work at the end of a week or two’s vacation? While some people never want to go back to work when vacation time is over, many others want to get back at it.
These individuals are motivated to get back into the rhythm of working for reasons such as they enjoy their job, they miss their co-workers, they need to get away from their kids to maintain their sanity, or a variety of other reasons.
Someone who is raring to go back to the office is also very likely to want to return to work as soon as possible if they become disabled. And a percentage of those folks want to work and collect disability benefits simultaneously. Can they do that?
The answer may surprise you. Let’s look at that question through three lenses:
- Working while receiving social security disability benefits
- Working while collecting short-term disability benefits
- Working while collecting long-term disability benefits
We’ll also check out the impact of the gig economy and working while on disability.
Qualifying to receive Social Security Disability Insurance (SSDI) benefits from the Social Security Administration (SSA) isn’t easy. It’s not uncommon for the processing of an application to take six months, or more, before getting a decision. The SSA is not known for moving quickly or being easy to work with. As you probably know, there’s a lot of red tape working with any government agency; the SSA is no exception.
Based on this, you would think that working part-time while collecting SSDI benefits would be a definite “no-no.” But, surprisingly, that’s not the case. The SSA wants you to work, so the amount of benefits they have to pay out is reduced. So yes, you can work while on social security disability.
But, there are, of course, some rules and regulations that Uncle Sam has imposed for you to continue to receive payment if you’re working while collecting SSDI benefits. Let’s take a look at how this works.
You need to know three things about collecting Social Security disability benefits while working: the trial work period, the extended period of eligibility, and work expenses related to your disability payment.
The trial work period
The trial work period allows you to test your ability to work for at least nine months. You’ll receive your full SSDI benefits during this period, regardless of how much you’re earning, as long as you play by the rules and report your work to the SSA, and you continue to have a disability.
In 2022, a trial work month is any month your total earnings are over $970. If you’re self-employed, you have a trial work month when you earn more than $970 (after business expenses) or work more than 80 hours in your own business. The trial work period continues until you have used nine cumulative trial work months within a 60-month period.
The extended period of eligibility
After your trial work period, you have 36 months during which you can work and still receive benefits for any month your earnings aren’t “substantial.” In 2022, the SSA considers monthly earning over $1,350 ($2,260 if you’re blind) to be substantial. No new application or disability decision is needed to receive an SSDI benefit during this period.
If you work and have a disability, you may need certain items or services to assist you. For example, because of your medical condition, you may need to take a taxi, paratransit, special bus, or another type of transportation to get to work instead of using public transportation. Also, you may need to pay for counseling services.
The SSA states they “may” be able to deduct these expenses from your monthly earnings before they decide if you’re still eligible for benefits.
Insurance companies that sell disability insurance policies aren’t known to be soft touches when it comes to qualifying for a disability insurance policy. Still, they are fair, and they do allow you to earn an income while you’re collecting short or long-term disability benefits.
These benefits are claimed under the partial disability definition (defined as not completely disabled but unable to perform at full physical capacity for work) and are called residual disability benefits.
The residual disability benefit for partial disability may pay the full amount of benefits you’d receive if you were totally disabled for a limited time, after which you’ll receive a percentage based on your earnings from work. The calculation of that percentage is performed by the insurance company and factors in the loss of responsibilities, income, and time, and pays out to replace those losses.
To elaborate on the three ways that insurers measure a partial disability:
- Loss of responsibilities: when you can work, but you aren’t able to accomplish the duties that make up 20% or more of your work.
- Loss of time: when you can perform all of your duties, but you can’t perform them for more than 75% to 80% of the time you previously spent doing them.
- Loss of income: when you experience at least a 15% to 20% loss of income because of illness or injury.
You may qualify for total disability benefits if your illness or injury progresses to the point that you become unable to continue working at your job.
[ Related: Total & Permanent Disability ]
The gig economy (offering your services via a tech-enabled marketplace) has had a significant impact on people’s ability to earn money while they’re considered disabled by the SSA or private companies issuing disability income insurance policies.
Let’s use Gina as an example.
Gina is an accountant, and before becoming disabled, she worked for a firm that required her to report to the office every day where she would meet with clients.
After being seriously injured in a motor vehicle accident, Gina qualified for long-term disability benefits because she could no longer physically go to her office and perform her duties, and her firm would not let her work virtually.
However, being the industrious type, Gina decided to spend part of her day freelancing as a virtual personal assistant. She was able to spend about 4 hours per day working and replaced right at 50% of her income, something she wouldn’t have been able to do if she couldn’t have used digital platforms like Zoom and Trello.
As a result of working on a limited basis, Gina qualified for residual disability benefits.
As you can see, there are a lot of twists and turns when it comes to working and collecting disability income benefits. If you’re trying to collect SSDI and you’re having difficulty, your best ally may be an attorney experienced in that area.
If you’ve purchased disability insurance from a private insurer and are laboring to understand what your policy does or doesn’t pay if you’re working, the agent or agency you bought your policy through will be able to help. They can review your policy with you and can often act as a liaison with the insurance company if needed.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.