Unearned Income Misconception and SSDI Benefits

For people who receive regular Social Security Disability Insurance (SSDI) payments, understanding how the Social Security Administration (SSA) calculates their benefits can be confusing and frustrating. This is especially true if SSDI recipients have any earned or unearned income that factors into the payments.

Due to the confusion surrounding SSDI payment calculation, there is often a misconception that if recipients have any outside income, they will lose their SSDI benefits. However, this is not true for excluded unearned income.

Misconception Explained

When it comes to receiving SSDI assistance from the government, there are many rules and requirements recipients must keep track of in order to maintain their eligibility. This has led to confusion about how much earned and unearned income recipients may collect before their SSDI payment amounts or eligibility is threatened. Knowing the difference between earned and unearned income, in particular, can help SSDI recipients understand how they can keep and develop some assets while still receiving their SSDI benefits.

Earned and Unearned Income

According to the SSA website, earned income is any income gained from wages, salary or self-employment. For SSDI recipients, earned income is limited to a specific substantial gainful activity (SGA) amount after a recipient completes the program's trial work and extended eligibility periods. Unearned income is all other income, including gifts, interest, inheritances, pension payments, disability insurance benefits and veterans payments. For SSDI recipients, unearned income is unlimited and only some forms reduce SSDI payments.

Excluded Income

Outside of workers' compensation, some other state disability benefits and government pensions, all other unearned income will not reduce SSDI payments. So, if SSDI recipients earn money from selling items or from interest gained on investments, this unearned income is excluded from calculation of their SSDI payments. As opposed to Supplemental Security Income (SSI) beneficiaries, building wealth is not an issue for SSDI recipients, because these benefits are not income-based. Additionally, there are no restrictions on savings or assets.

Maintaining Eligibility

It is important that people who receive SSDI know about the misconceptions surrounding earned and unearned income, and which type of income actually affects benefit amounts and SSDI eligibility. Even SSDI recipients who collect unearned income should still report the source and amount of all unearned income, regardless of whether it is excluded from their benefit payments.

If you are currently an SSDI recipient and have further questions about your assets or other unearned income and how this impacts your SSDI benefits, contact a local Social Security Disability benefits attorney to discuss your legal rights and options.