What Is Substantial Gainful Activity (SGA)?

Navigating the Social Security Disability Insurance (SSDI) process requires understanding a complex set of rules and definitions used by the Social Security Administration (SSA). One of the most critical concepts is “substantial gainful activity,” or SGA. Whether you are applying for disability benefits or are already receiving them, your work activity and earnings can have a significant impact on your eligibility. This article explains what SGA is, how the SSA evaluates it, and what it means for your SSDI claim.

Understanding Substantial Gainful Activity (SGA)

The SSA uses a five-step sequential evaluation process to determine if an individual qualifies for disability benefits. The very first step asks: “Is the claimant engaging in substantial gainful activity?” If the answer is yes, the claim is typically denied, regardless of the person’s medical condition or functional capacity.

The SSA defines substantial gainful activity using two key components:

1. Substantial Work: This involves performing significant physical or mental activities. The SSA considers even part-time work to be “substantial” if the duties are significant. 
2. Gainful Work: This is work performed for pay or profit. The activity is considered “gainful” if it is the kind of work usually done for compensation, whether or not a profit is actually made. 

In short, SGA is work activity that is both substantial and gainful.

SGA and Its Impact on Disability Benefits

For an initial application, engaging in SGA is an immediate barrier to obtaining disability eligibility. The SSA’s position is that if an individual can perform work at the SGA level, they are not considered disabled under the Social Security Act. This is why the agency reviews work activity before it even considers the severity of your medical condition.

It is important to note that not all work activity qualifies as SGA. The SSA may disregard earnings from a work attempt that was unsuccessful due to the person’s medical condition. An “unsuccessful work attempt” (UWA) is a period of work that ends or is reduced below the SGA level after a short time (usually six months or less) because of the individual’s impairment.

Earnings Limits and SSA Guidelines

The most common way the SSA evaluates SGA is by looking at your monthly earnings. The agency sets an annual income threshold, and earning over that amount is generally considered evidence of SGA.

These figures are based on your gross monthly earnings, not your take-home pay and typically change annually. However, the SSA may deduct certain impairment-related work expenses (IRWEs) from your earnings when calculating your income for SGA purposes. An IRWE is an out-of-pocket expense for an item or service that you need to be able to work.

If you are self-employed, the SSA rules are more complex. The agency will look not just at your income but also at factors like the hours you devote to the business and the nature of your duties to determine if your work activity is substantial and gainful.

Work Activity Rules for SSDI Recipients

The rules for work activity are different for individuals who are already receiving SSDI benefits. The SSA provides work incentives to encourage beneficiaries to test their ability to return to work without immediately losing their benefits.

The primary work incentive is the Trial Work Period (TWP). During a TWP, you can test your ability to work for at least nine months (not necessarily consecutive) within a 60-month period. During these nine months, you can earn any amount of income and still receive your full disability benefits. 

Once you have completed your nine trial work months, you enter an Extended Period of Eligibility (EPE), which lasts for 36 consecutive months. During the EPE, you will continue to receive benefits for any month your earnings are not at the SGA level. If your earnings exceed the SGA income threshold, your benefits will cease.

How to Maintain Benefits While Working

Understanding these complex SSA rules is important for anyone receiving SSDI who wishes to attempt to work. The interplay between the TWP, the EPE, and the SGA earnings limit determines how long you can continue to receive payments.

Careful tracking of monthly income is necessary. It is also helpful to keep detailed records of any impairment-related work expenses, as these can reduce your countable income and potentially keep you below the SGA threshold. Reporting all work and earnings to the SSA in a timely manner is a requirement for all beneficiaries. Failure to report work activity can lead to overpayments, which you will be required to pay back.

Get Guidance on SSDI and SGA Rules

The regulations surrounding substantial gainful activity, work incentives, and disability eligibility are detailed and can be challenging to apply to an individual situation. How your employment status, income, and functional capacity are viewed by the SSA can significantly affect your benefit determination. If you have questions about how your part-time or full-time work could affect your SSDI claim or benefits, the attorneys at Chermol & Fishman may be able to help. Contact us by calling at 1-888-774-7243 for a review of your case.

Frequently Asked Questions (FAQs)

What is considered substantial gainful activity by the SSA?

Substantial gainful activity (SGA) is work that involves significant physical or mental duties and is performed for pay or profit. The SSA generally uses a monthly earnings limit to determine if an individual’s work activity is SGA. 

How do earnings affect SSDI eligibility?

During the initial application process, earning more than the SGA amount will typically lead to a denial of the claim. For those already receiving benefits, earning over the SGA limit after the Trial Work Period has ended will cause benefits to stop.

Does part-time work count as SGA?

Yes, part-time work can be considered SGA. The SSA’s determination is based primarily on the amount you earn, not the number of hours you work. If your earnings from part-time employment exceed the monthly SGA income threshold, the SSA will likely consider it to be substantial gainful activity.

How is SGA calculated for disability benefits?

SGA is calculated based on your gross monthly earnings. However, the SSA allows certain deductions, such as impairment-related work expenses (IRWEs), which can lower your “countable” income. For self-employed individuals, the calculation is more complex and involves evaluating the work itself, not just the income.

Can I maintain my disability benefits while engaging in SGA?

Generally, no. By definition, being able to perform SGA means you are not considered disabled under SSA rules. However, the Trial Work Period allows beneficiaries to earn unlimited income for nine months without losing benefits. After the TWP, benefits are suspended for any month that earnings are over the SGA level.