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Social Security Benefits
If you are currently receiving Social Security benefits in the form of Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), it is important to know that your earnings from business ownership will have an affect on those benefits.
The Abilities Fund staff can provide you with information about this as you progress through the business planning process, but it is in your best interest to consult a benefits planning professional before starting your venture.
Below are some questions about Social Security Benefits that are frequently asked by our clients:
1) I receive SSI, am I allowed to have a checking account with more than $2000?
To maintain eligibility for SSI, an individual is not allowed to own assets valued greater than $2000 with the exception of a home, one vehicle and funds for burial. When starting a business, it may be necessary to utilize the Property Essential to Self-Support (PESS) work incentive. The PESS incentive allows an individual to possess business assets and capital without jeopardizing the individual’s eligibility to continue receiving SSI. For more information click here.
2) How will my SSI check be affected by self employment income?
SSI payments reduce in relation to the net monthly earnings of the business. Excluding the first $85 of income, the SSI payment is reduced by $.50 for every dollar of net earnings from the business. In other words, your monthly SSI payment will decrease as you begin making business sales.
Example: Jane receives her full SSI check of $564 in February. In March she starts a business that reports a net earning of $400 for the month. Her next check will be calculated as follows:
$564 – ($400-85) /2 or $564-157.5
As a result, Jane’s next SSI check will be for $406.50. This allows an individual to supplement their income until they are earning at a level that sufficiently replaces the previous benefit.
3) How does a PASS plan work for capitalizing a business?
A Plan for Achieving Self-Support (PASS) is NOT a savings account or grant program that can be used for pre-start up costs. Rather, it is a work incentive designed to keep net earnings down and the SSI payments at a level that supports the personal needs of the individual. A PASS plan allows business owners to set aside income and resources for a specific period of time, which can help you get the business off the ground.
Click here to visit the Rural Institute on Disabilities website and learn more.
4) What will happen to my SSDI payment when I start making money?
SSDI does not gradually reduce like SSI payments. You will continue to receive your full SSDI check as you begin to make money. Once you surpass Substantial Gainful Activity (SGA) defined for small business owners in 2006 as net earnings of $860 per month ($1450 for individuals who are blind) OR begin working over 80 hours per month, you will no longer qualify to receive SSDI payments.
Before this happens, however, each SSDI recipient is entitled to nine months of Trial Work Period. This means if you have not yet used the Trial Work Period, you can work more than 80 hours monthly and earn as much as you can for nine months while still receiving your SSDI check.
Once you have used your nine months of Trial Work Period, you can still receive your SSDI payment for any month that you fail to earn or work over the SGA threshold during a three year period of extended eligibility. If you have questions click here to learn more.
5) What about Section 8, Food Stamps and other programs? Who can help me understand this whole benefits puzzle?
The Social Security Administration has certified benefits counselors all over the country. To find a local benefits planning professional, talk to your Vocational Rehabilitation counselor or visit the Social Security Administrations website by clicking here.
6) Do I have to report my earnings to Social Security?
Yes. Without question, it is important to report any and all income. You will be responsible for paying back any funds that were paid to you in error if it is discovered that you have unreported earnings.
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