I am a financial planner, had an infection in my spine in 2008. Left me disabled, I qualify for two of my own separate disability policies, including not being able to perform two of my daily activities. I have substantial pain, I have a pain pump implanted in me, and take tremendous amount of pain control medicine. My spine was fused, still have substantial issues with both the spine and sciatic nerve, plus additional complications.
The issue is, I have "trail" and "residual" income from my previous full time position I am required by FINRA rules that I speak with the few clients that I have left at least once a year (approximately 20). I netted after business expenses last year about $10,000. Going forward because I have reduced my rent expense by about $10,000 my net income will go up. I also pay for my health insurance(for myself, wife and 3 children) through a separate insurance agency that I am 50% owner, it shows no income.
I think I would qualify for the Social Security benefit, for the spine issue, pain, and complications. My doctor ask me on a regular basis why I have not applied, that there are patients that are in far less pain and other issues that are on Social Security disability.
The question is, I may qualify for disability, but my income from previous employment and very little new activity will it disqualify me based on my "residual" and "trail" income. Most of it is paid on a quarterly basis.
Thank you very much for your help.
Jerry

Hi Jerry,

That's a tough one to call. The Social Security Administration (SSA) will not even look at your medical condition unless they decide that you have stopped doing substantial gainful work. Substantial gainful work (SGA) is currently defined as average earnings of $1130 or more per month. In the case of self-employed individuals, SSA uses average monthly net earnings as a guide, although other factors are also considered (https://secure.ssa.gov/poms.nsf/lnx/0410510010). If SSA decides that your work and earnings are valued at more than $1130 per month, they would deny your claim regardless of the severity of your impairment(s).

When determining countable earnings, SSA does attempt to exclude income that is not actually earned (https://www.ssa.gov/OP_Home/rulings/di/03/SSR83-33-di-03.html). This can include exempting income that was earned prior to the onset of the person's disability, but received in subsequent months or years (e.g. back pay, royalties, renewal commissions, etc.). The problem in your case is that it sounds like your 'trail and residual' income is dependent on your performance of ongoing services, however minor they may seem. I'm guessing that SSA will not be willing to exclude this type of income as long as it hinges on your performance of any type of continuing services.

What's particularly problematic is that the exact amount of net self employment earnings aren't known until after the person's tax returns are filed. As a result, SSA generally must make their initial determination based on what you tell them you will be earning. This could result in them approving your claim for disability benefits, then going back and reversing the decision if your tax returns show that you ended up earning too much. In that case, they will ask you to repay any benefits that you previously received. Conversely, if you assume that your net earnings will be high enough to disqualify you from receiving benefits and fail to apply as a result, you can only claim disability benefits for a maximum of 12 months retroactively. So, failure to file could result in a loss of benefits.

I think your best bet is probably to go ahead and file for disability benefits. Be sure to fully explain the circumstances involved with your self employment earnings, and leave it up to Social Security to make their determination. If they disallow your claim on the basis of expected earnings that fail to materialize, the disallowance can be reopened. That would permit you to claim retroactive benefits that would otherwise be lost if you failed to apply timely. I would not advise understating your expected net earnings, since SSA will have access to the actual net earnings that you end up reporting on your future tax returns.

Best, Jerry