For what reasons can my SSDI benefits be terminated?

If I am receiving Social Security disability is there a way they can stop paying me benefits?

Author Attorney Greg Reed:

Social Security disability benefits continue for as long as a person is disabled and an individual may receive benefits for many years. However, there are some circumstances under which Social Security may stop paying those benefits:

•    You reach retirement age (currently 66) and Social Security retirement payments take over
•   You commit a crime and are incarcerated or institutionalized
•   Your medical condition improves and you are no longer considered disabled
•   You return to work part-time and earn income over the Substantial Gainful Activity level (SGA)

Social Security disability benefits continue for as long as a person is disabled and an individual may receive benefits for many years. However, there are some circumstances under which Social Security may stop paying those benefits.

Though some circumstances cannot be prevented, being aware of the procedures and policies Social Security follows can prevent loss of much needed disability benefits.

Social Security routinely conducts continuing disability reviews to make sure a person who is receiving disability benefits is still disabled and qualified to receive those benefits. Social Security will notify you when they expect to conduct a review and it is very important that you cooperate fully. Provide all requested documents in a timely manner and alert your medical providers that they may also be contacted. Make sure you are following your doctor’s treatment recommendations.

Perhaps the most common reason SSDI payments are terminated is the beneficiary returns to work and earns more than SGA ($1,550 per month in 2024; $2,590 if individual is blind).

A person who is disabled can work part-time and still receive SSDI as long as they earn under $1,550 per month, but SGA is more than an income dollar amount. If Social Security determines you are working for several hours each week at a job non-disabled people normally are paid for, Social Security may conclude you are earning SGA, even though you are paid less than $1,550 per month.

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To understand this concept more fully, one needs to look at how SGA is defined and what activities are considered SGA.

“Substantial” refers to work that involves significant physical or mental activity. “Gainful” describes work that people are usually paid to do. Even volunteer work may be considered SGA if it is at the SGA level.

A job may be termed SGA if;

•    Wages that would be paid for the job are above SGA income level
•   More than a few hours per week are required at the job
•   The job requires abilities that indicate you are able to work at the SGA level
•   The “volunteer” work is for a business owned by a relative

Activities that are NOT considered SGA include:

•   Household tasks
•   Personal care
•    Going to school
•   Physical, occupational or mental therapy
•   Social activities

Although the above activities are not considered SGA, any of these activities may still be seen as evidence that you are no longer disabled and the information may be used to determine what jobs you may be able to perform.

If you are self-employed, determining SGA becomes more complex.

Social Security is aware that income is not necessarily a good way to measure how much a person is working. A self-employed person who runs a business or does contract work may work 60 hours per week and still earn below SGA. Social Security will employ a variety of tests depending on whether it is reviewing an applicant’s initial application or reviewing a person’s work activity after receiving benefits.

Significant Services Test.

If you are the owner of a business, your services are automatically considered significant, so if you are earning more than $1,550, your SSDI benefits will be terminated. If you have employees or business partners, your services are considered significant if you contribute more than half of the total time needed to manage the business each month or 46 hours or more. If you lease land to someone and help in the production of crops or raising livestock, or manage a farm, your services are considered significant.

Substantial Income.

Income from self-employment is considered substantial even when it is below $1,550 if (1) the income is similar to what you would earn before you became disabled; or (2) the income is similar to what a non-disabled person living in your community would make if self-employed in the same industry.

Comparability Test.

This test compares the work performed by a disabled person with that of a person who is not disabled. If the tasks are similar, Social Security will determine the work is SGA, even if earnings are less than SGA.

Social Security considers the following when applying this test:

•    Job skills required
•   Job duties
•   Work efficiency
•   Amount of time worked
•   Energy required for the job

Worth of Work Test.

This test measures the value of the job you do to the business; i.e., is it worth more than $1,550 per month, or is it worth more than $1,550 per month compared to what it would cost to hire someone to do the job.

If you start a business or begin contract or freelance work more than 24 months after receiving Social Security disability benefits, Social Security will use the Countable Income Test.

If you earn less than $1,550, benefits will continue; it doesn’t matter how many hours you work. If your income is greater than $1,550, benefits will cease unless you can prove your services are not significant. Social Security is not permitted to compare your work to the job you used to do or compare your work to that of others in your community or just what your work is worth.

Though Social Security disability benefits are approved only for people who are disabled and unable to work, it is possible to return to work on a part time basis and still receive disability benefits, provided you are earning under SGA.

The Social Security Administration initiated a “trial work period” which allows individuals to return to work for a specific period of time and still receive benefits. A person who is disabled can work up to a total of nine months in a 60-month consecutive period. You do not have to work nine months consecutively; gaps in the work period are allowed. A month will not count if you earn less than $1,110 gross income, or work less than 80 hours per month if self-employed.

When the trial work period ends, you enter a 36-month “extended period of eligibility” or EPE.

During this period your eligibility to receive SSDI is determined on a month to month basis. If you don’t earn SGA in a particular month, you will receive SSDI; if you earn over SGA, you won’t receive payment. The EPE period ends on the 37th month and payments will end the first month your income reaches $1,550 or more.

If your condition improves and you return to work, even part-time, it is your responsibility to notify Social Security immediately.

If you are earning SGA and receiving Social Security disability benefits at the same time, you will be required to pay back the benefits you received when you were no longer disabled.

•   You must alert Social Security if your medical condition has improved
•   If you are told you have received an overpayment, you can appeal the decision. Success would depend on proving you are still eligible, the amount of the overpayment, and how much of a burden it would be to repay.
•   If you are required to repay a large sum of money, it’s possible to arrange payment plans.

Be aware that if you are receiving payments from a long-term disability insurance plan, your SSDI may be affected.

Most LTD policies include an offset provision which requires a claimant to file for SSDI in addition to their insurance claim. Any insurance benefits a claimant receives will be reduced or “offset” by the amount of SSDI benefits they receive. For example, Mr. Jones receives $3,000 per month in LTD benefits and is then awarded $1,000 per month from Social Security. His LTD payments will be reduced accordingly to $2,000 per month. It may take several months before a claimant is approved for SSDI. If Mr. Jones receives LTD payments for several months, and Social Security later issues a lump sum back payment to Mr. Jones, his LTD company will also demand a percentage of that back payment.

Most SSDI benefits will continue as long as a person is disabled.

If your medical condition improves, do not jeopardize your financial stability by failing to contact the Social Security Administration. If you feel that your SSDI benefits have been terminated without just cause, it’s best to enlist the counsel of a qualified disability attorney.

Author: Attorney Greg Reed has been practicing law for 29 years. He is Superlawyers rated by Thomson Reuters and is Top AV Preeminent® and Client Champion Gold rated by Martindale Hubbell. Through his extensive litigation Mr. Reed obtained board certification from the Texas Board of Legal Specialization. Greg is admitted to practice in the United States District Court - all Texas Districts and the United States Court of Appeals-Fifth Circuit. Mr. Reed is a member of the Travis County Bar Association, Texas Trial Lawyers Association, past Director of the Capital Area Trial Lawyers Association, and an Associate member of the American Board of Trial Advocates. Mr. Reed and all the members of Bemis, Roach & Reed have been active participants in the Travis County Lawyer referral service.