Important: We updated this article in July 2023 to make sure all info below is current and correct. If you’re self-employed, you probably love setting your own hours and rates. But it’s not always easy — and it can definitely feel like no one’s got your back when things go wrong. You certainly don’t get paid sick days, for example, and you’re likely buying your own health insurance on the exchange. You’re saving up to retire without an employer-sponsored 401k, and you’re paying that extra self-insurance tax each year, to boot.
While self-employed individuals don’t have the same benefits as salaried or hourly employees, you can qualify for disability benefits. To learn which benefits program you might qualify for if you become unable to work for health reasons, keep reading…
Understanding SSDI vs. SSI
When we talk about federal disability programs, all the terms people use can be deeply confusing — but stick with us. First, we’ll specifically talk about whether self-employed workers can qualify for Social Security disability insurance (SSDI) benefits. Then, we’ll talk about how you qualify for Supplemental Security Income (SSI) benefits, which only helps people with very low income. While many people say “disability benefits” instead of SSI or SSDI, they are two completely different federal programs. The reason people often mix up the two is because the SSA manages both federal disability assistance programs.
Here’s how to remember the difference: SSDI is, basically, an early retirement benefits access option from the Social Security Administration. You’re asking the SSA’s permission to withdraw your money you’ve already paid into the Social Security fund through FICA taxes. SSI benefits, on the other hand, are what most people consider closer to the word “welfare.” While the SSA also administers these benefits, the payments don’t come out of the Social Security trust fund. Instead, SSI benefits come from the General Treasury fund, meaning they have zero impact on Social Security payouts for anyone.
The qualifying criteria make up another major difference between Social Security disability (SSD or SSDI) and Supplemental Security Income (SSI). SSDI’s available to anyone with 40 Social Security work credits (20 within the last 10 years) — which includes self-employed people. SSI benefits only go to low-income individuals with little or no work history who would otherwise qualify for SSDI. People who apply for SSI must own less than $2,000 in available assets and earn less than $1,470 per month.
How Self-Employed Individuals Qualify for SSDI
People who work and pay into the Social Security fund through FICA tax withholdings every pay period may qualify for SSDI. That includes self-employed workers who pay self-employment taxes to the federal government. First, know that SSDI is only available to people whose disabilities prevent them from working for at least 12 months. Second, you must receive medical treatment for your condition in order to qualify for SSDI.
The amount in SSDI benefits you may qualify for depends on how long you worked and your highest average paychecks. If you qualify for SSDI, your spouse and any eligible children can also apply to receive those benefits.
If you’re self-employed, pay FICA taxes on your own paychecks and have 40 work credits, then you may qualify for SSDI. In addition, you must earn 20 of those work credits within the last decade. That’s why we usually say “worked 5 out of the last 10 years full-time,” since that equals 20 work credits. Self-employed people earn Social Security work credits just like individuals working for outside employers do, provided you pay FICA taxes.
How the SSA Evaluates Self-Employed SSDI Applicants
The SSA considers your activities and their value to your business when measuring your substantial gainful activity while you’re self-employed. The SSA does not consider your income alone. That’s because how much you actually earn could include other income besides wages, such as capital investments and profit sharing agreements.
The SSA applies certain tests to determine whether or not you’ve engaged in SGA as a self-employed worker. These tests usually compare you with other local nondisabled employees working in the same job sector to determine if you qualify. Some things the SSA may review to assess your work activity’s eligibility may include:
- How many hours you usually work
- Your skill set (and proficiency level for each skill)
- Your energy output and efficiency
- Typical job duties and/or responsibilities
How Self-Employed Applicants May Qualify for Expert Claim Help By Phone
If you’re considering filing for benefits as a self-employed worker, talk to a Social Security attorney first. That’s because having a lawyer file your application makes you 3x more likely to get benefits. What’s more, these attorneys always work on contingency and offer free phone calls to answer your questions. This means you’ll pay a lawyer $0 for legal assistance if you don’t win. And if you do win, then you’ll only pay one small fee.
Want to talk to a local SSDI claims expert for free about your claim? Click the button below now to start your free online benefits quiz and see if you may qualify:
Laura Schaefer is the author of The Teashop Girls, The Secret Ingredient, and Littler Women: A Modern Retelling. She is also an active co-author or ghostwriter of several nonfiction books on personal and business development. Laura currently lives in Windermere, Florida with her husband and daughter and works with clients all over the world. Visit her online at lauraschaeferwriter.com and linkedin.com.