Can Self-Employed People Get SSDI Benefits?

A growing percentage of people work for themselves. The Bureau of Labor Statistics (BLS) reports that there are more than 15 million self-employed people in the United States. If a self-employed person becomes unable to work due to an injury, illness, or disability, it could put a serious financial burden on their family. This raises an important question: Can a self-employed individual qualify for SSDI benefits? The answer is ‘yes’—but only if they earned enough work credits. In this article, you will find a more comprehensive overview of key things to know about self-employment and SSDI claims.

Self-Employed People Pay Social Security Taxes (Eligible for Benefits)

Social Security Disability Insurance (SSDI) coverage is based on work history. Not everyone is covered by SSDI. You have to pay a sufficient amount of taxes into the system in order to be eligible to qualify for SSDI benefits. Where you work does not matter. You can work for a major corporation, a small business, a non-profit organization, or even for yourself as a self-employed sole proprietor.

As a self-employed person, you are required to pay Social Security taxes. Most likely, you will be required to submit a form called a Schedule SE at tax time. As noted by the Internal Revenue Service (IRS), this form is used to calculate self-employment taxes. Both Social Security taxes and Medicare taxes are paid through the Schedule SE self-employment tax. In 2021, the self-employment tax rate is 15.3 percent for the first $142,800 in earnings. The Social Security Administration (SSA) will use your Schedule SE to determine future benefits, including SSDI eligibility.

What to Know About SSDI and Work Credit Requirements

Working for one month—whether for a major corporation or as a self-employed individual—is generally not enough to qualify for SSDI benefits. Instead, you need to have earned sufficient work credits to be covered under the SSDI program. You may also hear work credits referred to simply as Social Security credits.

How many work credits you need depends on your current age. You can earn up to four work credits per year. If you work full-time as a self-employed person, there is a good chance that you will qualify for SSDI coverage. Of course, you will still need to provide comprehensive medical documents, records, and information that proves that you are disabled.

SSDI Benefits are Calculated Based on Average Indexed Monthly Earnings (AIME)

Work credits determine your technical eligibility for Social Security disability, but they do not determine how much you will get. Likewise, your disability status will determine your eligibility and not the value of your benefits. The SSA calculates SSDI benefits based on an applicant’s Average Indexed Monthly Earnings (AIME). The greater your earnings as a self-employment individual, the more you likely paid in Social Security taxes. As such, you are generally entitled to a greater SSDI benefit—up to a maximum statutory cap. If you have any specific questions about self-employment and SSDI benefits, need help filing, or require support with a request for reconsideration for Social Security disability, an experienced Social Security disability attorney can help.