The Sequential Evaluation Process

Step 1: Substantial Gainful Activity

To be substantial gainful activity, work must be both “substantial” and “gainful.” “Substantial work activity. . . involves doing significant physical or mental activities.” Work may not be substantial when:

• You are unable “to do ordinary or simple tasks satisfactorily without more supervision or assistance than is usually given other people doing similar work.”
• You are doing work “that involves minimal duties that make little or no demands” on you and that are of “little or no use” to your employer or to the operation of a self-employed business.

SSA defines gainful activity broadly: “Work activity is gainful if it is the kind of work usually done for pay or profit, whether or not a profit is realized.” Nevertheless, when you are an employee of someone else, whether work is “gainful” is usually determined by looking only at your earnings.

But if you are self-employed, SSA looks carefully at a your work activity and its value to the business, even if you are working at a loss (as so many unimpaired self-employed people do from time to time). SSA also does not want to let employed claimants slip past this step if they are in a position to control the timing or amount of their income (e.g., when claimants are working for relatives).

Work is evaluated “without regard to legality.” Thus, illegal activity may be substantial gainful activity.

Whether you are employed by someone else or self-employed, SSA allows deduction from earnings for what it calls “impairment–related work expenses,” which are usually payments you make for drugs or medical treatment for the disabling impairment but may also include payments for some transportation costs, vehicle modification, attendant care services, residential modification,etc. However, the work expense rules must be reviewed carefully before making a deduction because some expenses you wouldn’t expect are included (such as payment for treatment for the disabling impairment that you have to pay whether you work or not) and some expenses that you might expect to qualify are excluded (such as payment for health insurance).

In determining if work is substantial gainful activity, SSA averages income according to rules that consider the nature of the work, the period of time worked, and whether the SGA level changed during the time the claimant worked.

The SGA level, which was $300 per month during all of the 1980s and $500 per month from 1990 until July 1999, when it was raised to $700, is becoming considerably more generous than it used to be because of cost-of-living increases that have been applied beginning with the year 2001. For example, for the year 2010, average countable earnings of more than $1,000 per month show that work was substantial gainful activity.

You can find the SGA amount for the current year on the Internet at www.ssa.gov/cola/.

Step 2: The Severity Step

At step two of the sequential evaluation process, SSA determines whether you have a “severe” impairment. This step was intended to weed out frivolous cases involving either (1) no medically determinable impairments or (2) slight medically determinable impairments that impose only minor limitations on ability to work. Virtually any reduction in residual functional capacity (what you can still do even with your impairments) satisfies the requirement that there be a severe medically determinable impairment. As such, medically determinable impairments are divided into two categories:

1. slight impairments that are referred to in SSA’s peculiar lingo as “nonsevere” impairments and
2. all other impairments that are, therefore, “severe.”

Even subjective symptoms, as long as they arise from a medically determinable impairment, must be considered in assessing whether an impairment, or group of impairments, reduces your ability to do basic work activity. If an adjudicator is “unable to determine clearly” the effect of an impairment on your ability to do basic work activities, the adjudicator is directed to proceed with the next steps of the sequential evaluation process. Thus, close cases are to be decided in favor of finding an impairment to be severe.

On the other hand, “[n]o symptom or combination of symptoms can be the basis for a finding of disability, no matter how genuine the individual’s complaints may appear to be, unless there are medical signs and laboratory findings demonstrating the existence of a medically determinable physical or mental impairment.” That is, when there is no “medically determinable impairment,” you may be found not disabled at this step of the sequential evaluation process. Nevertheless, as a rule, if a doctor has enough information to make a legitimate diagnosis, you have a medically determinable impairment. When there is a controversy over which diagnosis is correct, if medical signs or laboratory findings show any abnormality, the claimant has a medically determinable impairment even if the doctors do not agree on which diagnosis is best.

The Duration Requirement

Unless your impairment is expected to result in death, it must have lasted or be expected to last for a continuous period of 12 months. The duration requirement is not usually a problem for impairments that wax and wane or have short periods of remission but have active periods sufficient to preclude engaging in substantial gainful activity on a sustained basis. However, the regulation specifically prohibits tacking together unrelated severe impairments to meet the duration requirement.

Denials based on the duration requirement usually occur in those cases where, at the time of the decision, the duration requirement is not met and the impairment is the sort that is likely to improve within 12 months. For those impairments that may or may not improve before the duration requirement is met, sometimes a state agency decision maker will delay a case just to see if you continue to be disabled. Because of the slow progress of the administrative process, the 12 months usually have passed by the time you actually attend a hearing, thus permitting an accurate retrospective evaluation.

Once the twelve-month duration requirement is met, you may ask for a finding of a closed period of disability in the situation where your condition has improved to the degree that you are able to return to work.

Step 3: Listing of Impairments

In order to be found disabled at step 3 of the sequential evaluation process, your medical signs, findings, and symptoms must meet or “medically equal” one of the set of medical signs, findings and symptoms found in the Listing of Impairments. The Listing of Impairments is a set of medical criteria for disability found in the Social Security disability regulations.