Focus - Self-Employment

Focus – Self Employment

What is Self-employment?

Self-employment, as defined by the U. S. Department of Labor, means working for profit or fees in one's own business. ¹ People in non-metropolitan areas report self-employment at a slightly higher rate than their urban counterparts. In 2000, the Bureau of Labor Statistics in the U. S. Department of Labor reported that approximately 86% of farmers, ranchers, and agricultural managers were self-employed. ²

Being self-employed typically means being able to work with risks and uncertainty, factors familiar to farmers and ranchers. While the farmer or rancher has control over his/her work, and can pursue what is enjoyable and satisfying, he/she is also faced with long hours, little free time, fluctuating income, and stress. Added to the day-to-day farming or ranching operations are the fiscal and business responsibilities, such as business planning, product marketing and sales, record management, and tax reporting.

Impact of Disability

Farming and ranching are hazardous occupations. When a farmer or rancher experiences a disability, whether through an injury or health condition, the agricultural operation may easily be affected. The impact of the disability may require operational changes that accommodate the farmer or rancher's limitations. New, different, or adapted equipment may be needed to complete tasks. An alternative enterprise might be considered in order for the farmer or rancher to remain employed in agriculture. Being in farming before a disability occurs has advantages because tasks can be identified that need accommodations. Sometimes, however, an individual has worked outside agriculture but has an agricultural background and sees farming or ranching as a way to return to a gainful occupation.

In some instances, the disability may have affected the individual's ability to support him/herself. Financing accommodations can be problematic if earnings are affected or are nonexistent. The Social Security Administration (SSA) has two benefit programs for people who have disabilities and are unable to be financially self-sufficient. The programs are Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). SSDI is an insurance program based on payments an individual has made to the SSA Trust Fund. The SSI program provides monthly cash benefits based on economic need and disability.

Resources and Services to Remain in Production Agriculture

When people with a disability want to begin or continue working in agriculture, public services and resources are available to them. The state-operated vocational rehabilitation (VR) program can offer counseling, training/education and rehabilitation technology, among other services, to help the farmer or rancher work in production agriculture. The 1998 Reauthorization of the federal Rehabilitation Act specifically included self-employment as an acceptable work goal and employment outcome. This has led to increased resources and training of VR staff on self-employment. A 2002 study done by the Montana Research and Training Center on Rural Rehabilitation describes numerous state VR programs' services related to self-employment. ³

Another resource for farmers and ranchers who receive SSA benefits are the SSA Employment Support Programs. These work incentives, as they are frequently called, help people receiving SSDI or SSI transition back to being financially self- supporting.

The Employment Support Programs or work incentives may be used to:

help build capital for business or employment needs (e.g., vans, lifts, computer, utility vehicles, etc.),
retain medical insurance until able to buy independently, and
increase personal income and quality of life.

The following are abbreviated descriptions of the more frequently used work incentives administered by SSA.

Plan for Achieving Self Support (PASS)

SSI-only* benefit that allows the recipient to set money aside from the SSI check for a specifically defined work goal (e.g., to purchase a utility vehicle to reduce physical exertion while working). The recipient will receive their standard SSI payment plus the money they are setting aside to help reach their work goal.

Property Essential to Self Support (PESS)

SSI-only* benefit that allows the exclusion of resources, such as business equipment, property, and unlimited cash in a small business account. The SSI payment will not be affected by these resources.

Impairment Related Work Expense (IRWE)

Both SSI and SSDI recipients may exclude expenses directly related to the disability (e.g., attendant care, medical devices) that enable them to work and not have their cash benefit affected.

1619b

SSI-only* benefit that allows Medicaid to continue beyond the limit for a cash payment but with an upper limit determined by each state.

Unincurred business expense
SSDI only* benefit that allows business support at no cost to recipient, such as VR-purchased equipment.

Ticket To Work (TTW)

Legislation through the Ticket to Work and Work Incentives Improvement Act that allows recipients to have expedited reinstatement to benefits (should they unsuccessfully attempt work), exclusion from medical reviews and access to Medicaid buy-in programs.

* It should be noted that SSDI beneficiaries might be able to set aside money for a PASS plan to the point of receiving SSI and therefore retaining eligibility for PASS and other benefits.

Making it Work: Understanding the Interrelationship Between Self-employment and Disability Programs

When the farmer/rancher believes he/she can attempt to return to gainful work and is willing to lose the SSA benefits, the work incentive programs will provide safeguards along the way to help reach his/her work goal. It is critical that the farmer/rancher understand what effect working would have on benefits and how the various incentives will interact with one another. SSDI and SSI have different sets of policies and laws that are affected by wage and self-employment earnings.

As an example, SSDI considers a person gainfully employed after their earnings reach $800 per month. Therefore, following a trial work period, benefits would cease. SSI, on the other hand, has a graduated formula for reducing the SSI cash benefit until it reaches zero.

To ensure that embarking on the selfemployment path does not prematurely affect the disability benefits, the farmer or rancher should have a benefits analysis, develop a business plan, and create a system to report earnings to SSA.

The Employment Support Programs work in such a way as to modify the rules until a person reaches their work goal. A thorough benefits analysis will show the effect of self-employment earnings on benefits. SSA has awarded contracts and trained professionals in each state to provide beneficiaries with benefits analysis. ⁴ The contracted services are with Benefits Planning Assistance and Outreach (BPAO) projects.

Whether the farmer is a beginning farmer or one who wants to continue farming, developing a business plan, will provide for a systematic, somewhat predictable plan for the future of the operation. Even though the individual is operating an established farm, a business plan is frequently required by VR and always required by the SSA if he/she is requesting financial assistance through their programs. SSA and VR are like investors in the business. They will be providing resources and funding to start or help the operation move to the next self-sustaining level. A business plan will also help the farmer/rancher (1) prepare for increased income and how and when it will affect SSA benefits, (2) provide for planned acquisition of equipment, and (3) strategize for the growth of the business and the eventual loss of benefits.

Resources that provide technical assistance in writing a business plan are available through a variety of sources. The Cooperative Extension Service in each state has extensive information on farm management, business planning and feasibility, market analysis and strategies, and risk management. ⁵

Sixty-three Small Business Development Centers (SBDC) in the U.S. and territories provide assistance in business plan development, marketing strategies, and financing. ⁶ To underline the importance of business planning, the SSA has even stated that when the PASS incentive is used for self-employment, the SSA recipient should consider including a request for money for development of a business plan. ⁷ A business plan coupled with a benefits analysis that reflects projected self-employment earnings should provide assurances that SSA benefits will not be interrupted prior to when planned.

Another critical factor in being able to use the employment support programs of the SSA successfully is the ability to consistently monitor self-employment earnings, follow the SSA reporting procedures, and adhere to the business plan. Achieving this requires the diligence of the individual and an adequate user-friendly reporting mechanism.

Summary

Self-employment is a way of life for a majority of farmers and ranchers. Being self-sufficient is highly valued in the agricultural culture. Having a disability in and of itself, should not prevent the individual from entering or remaining in production agriculture. Using the available resources described in this article in a systematic and well-organized manner should lead to successful employment. In addition, when both the state VR program and the SSA administration successfully help the farmer or rancher attain gainful employment, everyone wins. The farmer has meaningful and productive employment. VR is reimbursed by SSA for returning the recipient to work and SSA reduces its expenditures on disability benefits and receives self-employment taxes from the rehabilitated farmer or rancher.

BACK: Client Story: Incident Makes Kentucky Farmer Think Twice About Safety

NEXT: State Project Feature – New York AgrAbility Project

In This Issue
Section 1: Client Story – Back to the Future: Farming Again Section 2: Focus – Self-employment Section 3: State Project Feature – New York AgrAbility Project	Section 4: References and Resources Section 5: Contacts