Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) both have strict financial criteria and limitations to determine eligibility for benefits. In the case of how passive income can affect your Social Security disability benefits, it is important to understand how income is factored into these two forms of governmental assistance. 
Key Terms:
Social Security Disability Insurance (SSDI):
A government program that provides disability benefits to individuals who have accumulated the necessary work credits through his/her employment and need financial assistance due to his/her long-term disability.
Supplemental Security Income (SSI):
A government program that provides supplemental income to individuals with limited income who are disabled, blind, elderly, or otherwise unable to work, regardless of their work history.
Substantial Gainful Activity (SGA):
Substantial Gainful Activity, or SGA, refers to the maximum monthly income an individual can earn outside of their disability payments without losing access to their existing SSDI or SSI benefits. It is crucial to know the SGA limits as earning above the SGA limit can result in the loss of your Social Security disability benefits.
Earned Income:
This form of income comes from wages, salaries, tips, commissions, or self-employment earnings. Earned income comes from active participation in work or a business. Rental income, investment dividends, interest, or royalties, are not counted as earned income.
How Passive Income Affects Social Security Disability Insurance (SSDI)
SSDI relies on earned income and Substantial Gainful Activity (SGA) to determine your eligibility for receiving benefits. In short, SSDI benefits are determined by your actual work effort and the accumulation of work credits over your occupational career.
Passive income is not equivalent to earned income and will not count toward your SSDI eligibility. Theoretically, you could earn a significant amount from rental income, investment dividends, interest, or royalties, and still receive Social Security Disability Insurance.
However, if SSA finds significant work involved in managing these assets or forms of passive income, it will count as earned income. Also, if this involvement shifts your passive income to earned income, it can push you over the SGA limit. If you are over the SGA limit, you may be at risk of losing your SSDI benefits.
How Passive Income Affects Supplemental Security Income (SSI)
Unlike SSDI, which is determined by the accumulation of work credits and your ability to work, Supplemental Security Income (SSI) is a needs-based program that determines your eligibility based on your current financial situation.
In the case of SSI, passive income, including rental income, investment dividends, interest, or royalties, will count toward your current financial situation and determine your SSI eligibility. Supplemental Security Income has strict income-driven eligibility requirements that factor in earned and passive income types.
You will be ineligible for SSI benefits if you earn too much passive income.
Passive Income Can Affect Your Eligibility For Social Security Disability Benefits.
If you receive SSDI or are applying for SSDI, passive income will usually not affect your eligibility or push you over the Substantial Gainful Activity (SGA) limit as long as you do not actively and significantly participate in managing this passive income. The process of actively managing passive income has the potential to shift it into earned income.
If you receive SSI or are applying for SSI, passive income will affect your eligibility for this program, as SSI is a needs-based program based on your current financial situation. If you are currently receiving State assistance, their guidelines are typically a good indicator of whether your passive income will be an issue with SSI. Nonetheless, if you are receiving some type of passive income, it is wise to contact SSA directly or an attorney who understands SSA disability programs to determine how this income might affect your disability benefits.
Our Legal Team Of Social Security Disability Benefit Advocates Are Here To Help
If you are appealing your denial for SSI or SSDI, need help with the process, and are concerned with whether your passive income situation will affect your eligibility, please contact the Michael Armstrong Law legal team using the buttons below.