Social Security SGA: sheltered and subsidized EXPLAINED

To qualify for Social Security disability benefits you have to show that your disabilities prevent you from being able to work. In general, you have to show that you are unable to perform a substantial gainful activity (SGA).

However, there are exceptions to this general rule, including Subsidized Wages or Sheltered Work environments.

Social Security can only consider the money you earn in deciding if your work is a substantial gainful activity. Anything over the “reasonable value” of your work, may be a subsidy. Social Security cannot consider a subsidy, basically a “gift,” as earnings in determining if the work is a substantial gainful activity.

So, how does sheltered and subsidized work play into this analysis?

A subsidy is any compensation over the fair value of your work.  This often happens if you work for a family member or if you work through an agency like Goodwill.

If you are paid for a 40 hour week but you only work 25 hours, you have a 15 hour subsidy.  Another possibility is if the value of your work is $8.00 an hour, but you are paid $10.00 an hour (a $2.00 an hour subsidy).

If you subtract the subsidy, and your gross income is below the SGA amount, you might still be able to keep your Social Security benefits.

For example, if you are working for a an agency which receives state or federal funding to provide assistance, training or employment for individuals with disabilities, you may be working at a sheltered work environment and your wages may be subsidized.

I have also had many cases where an individual is given a job by a friend or family member and told to, “Watch the phones and take messages.” This may be both a sheltered work environment with subsidized earnings.

Another common example is in the military when a soldier becomes disabled. I have done a number of cases where the soldier was still receiving full pay in the military but whose duties were greatly reduced or eliminated due to disability. Sometimes, the soldier is part of the Warrior Transition Unit (WTU). Social Security will frequently consider this a sheltered work environment and allow the disability case to continue even though the earnings would otherwise be SGA.

Here are the regulations on this topic  (20 CFR 404.1574):

(2) We consider only the amounts you earn. When we decide whether your earnings show that you have done substantial gainful activity, we do not consider any income that is not directly related to your productivity.

  • When your earnings exceed the reasonable value of the work you perform, we consider only that part of your pay which you actually earn.
  • If your earnings are being subsidized, we do not consider the amount of the subsidy when we determine if your earnings show that you have done substantial gainful activity.
  • We consider your work to be subsidized if the true value of your work, when compared with the same or similar work done by unimpaired persons, is less than the actual amount of earnings paid to you for your work.
  • For example, when a person with a serious impairment does simple tasks under close and continuous supervision, our determination of whether that person has done substantial gainful activity will not be based only on the amount of the wages paid.
  • We will first determine whether the person received a subsidy; that is, we will determine whether the person was being paid more than the reasonable value of the actual services performed.
  • We will then subtract the value of the subsidy from the person’s gross earnings to determine the earnings we will use to determine if he or she has done substantial gainful activity.

(3) If you are working in a sheltered or special environment. If you are working in a sheltered workshop, you may or may not be earning the amounts you are being paid.

  • The fact that the sheltered workshop or similar facility is operating at a loss or is receiving some charitable contributions or governmental aid does not establish that you are not earning all you are being paid.
  • Since persons in military service being treated for severe impairments usually continue to receive full pay, we evaluate work activity in a therapy program or while on limited duty by comparing it with similar work in the civilian work force or on the basis of reasonable worth of the work, rather than on the actual amount of the earnings.