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  1. #1
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    Aug 2019
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    Default What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    I have a friend living on social security disability for a mental disorder and he's come up with an idea for an invention that I think could be useful to society and perhaps profitable for him. I'd like to help him go forth with developing it (prototype, provisional patent application etc) with the goal being to eventually get a licensing deal. Which could mean additional income for him if successful, but he's concerned about how that could affect his benefits and doesn't want to risk losing his social security (that he's depending on to live) over a pipe dream.

    Does anyone know how SSA treats cases like this? I've read there have been many successful inventions that were created by people with disabilities, but I don't know if they were living on social security at the time and how that worked for them.

    He's concerned that they will reduce his benefits, or cancel it altogether and use it against him (ie "he must not be disabled anymore if he's able to invent something and license it").

    I feel like it's kind of a catch-22, because I don't want him to do it if it's going to affect his ability to live on a daily basis, but at the same time I would like him to have a better life and perhaps this could help him get off social security one day. So I was just wondering if anyone could offer some advice.

    Being that a product can sell thousands one month and zero the next, how would that work with regards to his monthly benefit amounts? Would he have to report changes to his income every month?

    And what if it made enough money that he himself decided to stop his benefits because he didn't need it anymore, but then the product stops selling and he ends up needing his social security again later?

    ***I realize the odds are against inventors ever making any money from their inventions, but he just wants to be informed about how his social security would be affected if it does succeed.***

    Thanks

  2. #2
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    Jan 2006
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    Default Re: What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    Does he receive ssdi or ssi?

  3. #3
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    Oct 2006
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    Default Re: What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    Quote Quoting MikeD81
    View Post
    I have a friend living on social security disability for a mental disorder and he's come up with an idea for an invention that I think could be useful to society and perhaps profitable for him. I'd like to help him go forth with developing it (prototype, provisional patent application etc) with the goal being to eventually get a licensing deal. Which could mean additional income for him if successful, but he's concerned about how that could affect his benefits and doesn't want to risk losing his social security (that he's depending on to live) over a pipe dream.

    Does anyone know how SSA treats cases like this? I've read there have been many successful inventions that were created by people with disabilities, but I don't know if they were living on social security at the time and how that worked for them.

    He's concerned that they will reduce his benefits, or cancel it altogether and use it against him (ie "he must not be disabled anymore if he's able to invent something and license it").

    I feel like it's kind of a catch-22, because I don't want him to do it if it's going to affect his ability to live on a daily basis, but at the same time I would like him to have a better life and perhaps this could help him get off social security one day. So I was just wondering if anyone could offer some advice.

    Being that a product can sell thousands one month and zero the next, how would that work with regards to his monthly benefit amounts? Would he have to report changes to his income every month?

    And what if it made enough money that he himself decided to stop his benefits because he didn't need it anymore, but then the product stops selling and he ends up needing his social security again later?

    ***I realize the odds are against inventors ever making any money from their inventions, but he just wants to be informed about how his social security would be affected if it does succeed.***

    Thanks
    It won't be an issue unless he actually begins to make money from the idea.

  4. #4
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    Default Re: What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    Quote Quoting jk
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    Does he receive ssdi or ssi?
    ssi

    Quote Quoting llworking
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    It won't be an issue unless he actually begins to make money from the idea.
    What happens to his ssi if he does start making money from it?

  5. #5
    Join Date
    Nov 2009
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    829

    Default Re: What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    You should read the ssa.gov publication How Work Affects Your Benefits.

    Work income under $17,640 for 2019 has no effect at all. Above that depends on age.

  6. #6
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    Default Re: What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    Quote Quoting MikeD81
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    ssi



    What happens to his ssi if he does start making money from it?
    He will lose the SSI. It wouldn't matter as much for SSDI. However he would lose that as well if he made more than the monthly limit.

  7. #7
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    Default Re: What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    Not only will he lose his ssi due to the income once he surpasses the income limit, the amount he recieved will be impacted by his countable income until he surpassed his countable income limit.

    The more concerning issue issue is I believe it could cause him to be disqualified for ssi altogether. SSI is paid to those that are disabled and determined unable to work to earn an income. Inventing and patenting products is work. If he is capable of inventing and marketing products, he is in fact working. He may be re-evaluated and determined to not be disabled any longer.


    He is allowed to have earnings of up to $1870 per month *

    BUT

    an annual earned income of no more than $7550. Obviously that means he couldn’t have an income of $1870 every month and still qualify for benefits. $7550 averaged out over a year is $629 and change per month.

    * Income can come from sources other than earnings as well. Earnings are only one source of countable income. Your countable income is subtracted directly from your benefit amount.

    https://www.ssa.gov/ssi/text-income-ussi.htm

    Quote Quoting searcher99
    View Post
    You should read the ssa.gov publication How Work Affects Your Benefits.

    Work income under $17,640 for 2019 has no effect at all. Above that depends on age.
    Recipient is receiving SSI. The link you provided deals with regular social security benefits and neither SSI nor SSDI.

  8. #8
    Join Date
    Sep 2010
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    Default Re: What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    And don't forget the asset test in the SSI as well.

  9. #9
    Join Date
    Jan 2009
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    Default Re: What if Someone on Disability Invents a Product and Wants to Pursue Licensing It

    You don't explain how he will make money with this licensing deal. Would a company be paying him royalties for using his idea? And the royalties would be dependent upon how much the company sold? Or would he be running the company that manufactured and marketed this product?

    https://secure.ssa.gov/apps10/poms.nsf/lnx/0500820450

    If he collects royalties without running the business himself, then the income is unearned. If he is running the business, then the income is earned self-employment.

    Nearly all income sources affect SSI benefits. Some of the references given to you in previous posts are about the annual earnings test and how it affects retirement Social Security, not how it affects disability Social Security and disability SSI. Since the OP stated it is an SSI claim, then there are very few exclusions of income.



    He's concerned that they will reduce his benefits, or cancel it altogether and use it against him (ie "he must not be disabled anymore if he's able to invent something and license it").

    All by itself, being able to invent and license a product is not evidence that he is able to perform SGA, Substantial Gainful Activity. It may have taken him years and years of work to accomplish and may or may not make him any money. So it depends upon how much effort it takes and whether he gets active earned income from running the business or passive unearned income like royalties. Running a business does show the ability to work. It may not show the ability to perform SGA. Impossible to predict. But SSI benefits will be reduced if he makes any money. So that concern is valid.



    I feel like it's kind of a catch-22, because I don't want him to do it if it's going to affect his ability to live on a daily basis, but at the same time I would like him to have a better life and perhaps this could help him get off social security one day. So I was just wondering if anyone could offer some advice.

    If the goal is to get off of SSI (not Social Security which you said he is not receiving) someday, and he is beginning to make money at it and he wants to run his own business, then a Plan For Achieving Self-Support (PASS) might be an option. Be aware that a PASS has quite a bit more reporting responsibilities and more rules attached to it. Getting paltry amounts of unearned income will reduce his SSI on an ongoing basis. Getting large amounts of unearned income will stop the SSI, but then he has all the money from the royalties. Having some extra money often leads to a better life, at least temporarily. Is it sustainable over the long haul? Depends on how much income this invention generates to him.
    https://secure.ssa.gov/apps10/poms.nsf/lnx/0500870000

    It is difficult or impossible to get ahead when you are relying on public assistance like SSI. SSI is designed to be the safety net, the program that pays money when you have little or nothing else to live on. Getting ahead pretty much means giving up public assistance, SSI, so he no longer relies on government assistance and relies just on himself.



    Being that a product can sell thousands one month and zero the next, how would that work with regards to his monthly benefit amounts? Would he have to report changes to his income every month?

    If this was unearned income and being counted as royalties, then yes, he would have to report his income each month and he runs a good chance of continual overpayments because of the unexpected nature of his income. If he is running the business, then it is earned income, self-employment, and he would be asked to estimate his expected profit for the year. That number would be divided by 12 and used to compute his monthly SSI. If he earns over his estimate, then he is overpaid and owes SSI back. Strong likelihood that he will end up owing money back to SSI unless he can accurately predict his expected monthly income.



    And what if it made enough money that he himself decided to stop his benefits because he didn't need it anymore, but then the product stops selling and he ends up needing his social security again later?

    Well, his SSI benefits might stop regardless of what he thinks he needs. The resource limit for SSI is a paltry $2000, far below an amount that can sustain someone very long, so he could not amass much in savings and still be on SSI. But the income being received monthly would be reducing his SSI or stopping it entirely. If he is ineligible for SSI for 12 months due to excess resources or excess unearned income, and then wants to get back on SSI, he would have to file a new claim and go through the entire claims process again with zero guarantee that he would be approved again.

    You haven't indicated his age or his medical conditions. That might help in determining whether or not this is a good idea.

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