Disabled workers who can’t afford to purchase disability insurance from a private company may be eligible for Social Security disability insurance (SSDI).
If you become disabled and lose your ability to work, you’ll need money to help pay for your medical care, your day-to-day expenses, and to simply give yourself a comfortable standard of living. Some people purchase disability insurance, which roughly replaces your take-home pay during the time you’re disabled or until the end of a predefined benefit period. But disabled workers who can’t afford to purchase disability insurance from a private company may be eligible for Social Security disability insurance (SSDI).
Benefits under SSDI are paid monthly, in cash, for the duration of your disability and may be eligible for automatic increases tied to the cost of living. They do not cost any more than what workers already paid in to the Social Security Administration, which is funded by payroll taxes known as FICA. As of June 2018, the average monthly Social Security disability insurance benefit is $1,198.44.
Social Security also pays disability insurance benefits to the spouse and children of a disabled worker, which are on average $337.23 and $368.78, respectively.
While SSDI is free, it’s also notoriously difficult to qualify for. According to the federal government’s own statistics, only about one-third of applicants are approved. Additionally, benefit amounts are affected by the number of years you had been working before becoming disabled, meaning that younger disabled people may be offered lower benefits than older applicants. Still, SSDI may be the only way for low-income people to continue putting food on the table after a disability.
Read on to learn more about Social Security disability insurance:
Qualifying for Social Security disability insurance
How to apply for SSDI
Appealing a denial for SSDI benefits
Long-term disability insurance
Both American citizens and legal residents are eligible to receive SSDI. To qualify for SSDI, you need to prove to the Social Security Administration that you have a disability that may least for at least one year. In most cases, you’ll also need to show that you’ve been working for a number of years, and that you’re no longer earning income above a certain threshold because of your disability.
Disability insurance is meant to replace your income when you become disabled.
Social Security disability insurance determines your eligibility for benefits by looking at how many years you’ve worked and how much you earned during that time, which the administration measures by using a credit system.
You earn one credit each time you make a certain amount of earnings, up to four times per year, and you keep your credits even if you lose your job, get a different job, or have a salary change. You also keep the credits you’ve accumulated in previous years even if the government increases the amount of earnings required per credit.
As of January 2018, you receive one credit for every $1,320 you earn in 2018 , but you still earn credits for previous years if your earnings in a given year met or exceeded that year’s minimum amount per credit.
How many credits you need to qualify depends on how old you are when you become disabled. From age 31 to 42, the minimum amount of credits you need to qualify is 20, meaning that prior to becoming disabled, you worked for at least five years. The number of credits you need increases by 1 each year after age 42 until finally reaching 40 credits to qualify at age 62 and up. If you’re younger than 31, you may be able to qualify with fewer credits.
The government uses a five-point process to determine whether you meet the SSDI definition of disability, a measure of how severe your condition is in relation to your eligibility for benefits.
Disability insurance replaces your income when you can’t work, but it’s possible to continue working and still receive benefits. Under SSDI, if you’re already unable to work at the time you apply, you’ll automatically move on to the next part of the process.
If you are still earning an income, you have to earn less than the monthly earnings limit to qualify for benefits. In 2018, the monthly earnings limit for SSDI recipients is $1,180 per month for nonblind people and $1,970 per month for blind people. If you earn more than this amount, your application may be denied.
Additionally, you must report any changes in your work activity after you start receiving disability benefits, including new income, new work-related expenses, or starting a new job. Some changes may affect your benefit amount.
Your disability must be so severe that it inhibits your ability to perform substantial gainful activity (SGA) for at least one year. Substantial gainful activity means any physical and mental action you need to do for your job.
The administration lists a number of medical conditions that inhibit substantial gainful activity. If your disability is on the list, then you are eligible to receive SSDI benefits.
However, if your condition is not on the list, then the administration will determine whether or not it equals a listed condition in severity.
If your disability is not a listed condition but might be severe enough to qualify for SSDI benefits, the administration will check whether the condition prevents you from continuing to work. If it doesn’t, then you don’t qualify for benefits, but if it does, then you move on to the last step in the process.
If your disability isn’t listed, but it is severe enough to prevent you from doing your previous job, then the last hurdle is whether you can do other types of work. Using factors like your work experience and skills, the administration will approve your application if you can perform enough substantial gainful activity to work another job, even if the job is paid considerably less than your last one.
Worried you won’t be able to qualify? Policygenius can help you find a long-term disability insurance carrier that won’t deny your application, and a policy that won’t clean out your bank account while still providing the protection your income when you become disabled.
Social Security disability insurance pays you a cash benefit every month. The benefit amount is calculated using the following factors:
Your average income for the entire time you’ve been in the workforce, adjusted for inflation. The calculation is called your average indexed monthly earnings , or AIME.
Your primary insurance amount (PIA), which is the sum of certain percentages of your AIME at three different thresholds. These thresholds are adjusted by the government every year.
The family maximum, which ranges from 150% to 188% of your PIA for retired-worker families and from 100% to 150% of your PIA for disabled-worker families.
As of June 2018, the average monthly Social Security disability insurance benefit is $1,198.44. The average for men is $1,321.60 and for women it is $1,071.64.
Receiving workers’ compensation benefits or public disability benefits (a similar federal- and state-level social disability program) may offset your SSDI benefit amount, although you’ll never receive less than your total Social Security benefits before the reduction. The offset will be removed either after you turn 65 or the workers’ comp and public disability benefits end.
Members of your immediate family are also eligible to receive disability benefits when you become disabled, even if they’re otherwise healthy and able to perform substantial gainful activity. The following family members are eligible:
Spouse, including one you’re divorced from
Child, healthy or disabled
Disabled child between the age of 18 and 22
Each qualifying family member can receive a cash benefit up to 50% of your SSDI benefit amount, up to the maximum family amount described above. In June 2018, a family with a male disabled worker, a young spouse, and one or more children received $2065.69 on average. When the disabled worker is female, the average was $1,723.14.
If you’re a widow, widower, or surviving divorced spouse, you’ll also be eligible for SSDI benefits if you became disabled either before or within seven years after the death of your spouse. You must be between ages 50 and 60 and meet the definition of disability, which is described above.
If you qualify for SSDI, you’ll also qualify for Supplemental Security Income (SSI) if you’re aged 65 and older, blind, or disabled, and have limited income or resources. As of 2018, the maximum monthly federal SSI amounts are:
$750 for individuals
$1,125 for an individual with an eligible spouse
$376 for an essential person living with the eligible individual
Your state may also supplement these SSI benefits.
To apply for Social Security disability insurance, you can go online to https://www.ssa.gov/applyforbenefits/, call a toll-free telephone service at 1-800-772-1213, or visit your local Social Security office.
Before applying, you must fill out the SSA’s Disability Report for adults. This form is lengthy because it goes into deep detail about you and your family, your disability, your employment history, and your general health and treatments you’re undergoing. You’ll also need the following documents, as applicable:
Identification: birth certificate, proof of U.S. citizenship, lawful alien status, U.S. military discharge papers (if you served before 1968);
Employment history: tax returns, W-2 forms, or pay stubs
Documents related to receiving temporary or permanent workers’ compensation or similar benefits, including award letters and settlement agreements
The SSA will ask you dozens of questions, some of which you may have already answered on your Disability Report submission. These may include:
Your name, gender, date and place of birth, Social Security number, citizenship status, military service status
The names, dates of birth, Social Security numbers of any of your current or former spouses, as well as when you got married or divorced
Whether you have any dependents, including both children or dependent parents
Whether you’ve received other federal benefits, including worker’s compensation and black-lung benefits, or receive money from a pension or annuity
Your employment history, including wages earned in the last 40 years and wages you expect to earn
Most people’s claims for SSDI are rejected. You may be denied benefits because of one of the following reasons:
Your disability was not severe enough or isn’t expected to last 12 months
You can perform your usual work or another type of work
You failed to provide sufficient medical documentation or follow your doctors’ orders
Your impairment was caused by drug addiction or alcoholism
However, your initial rejection can be appealed. According to the SSA’s most recent data, an average of just 23% of initial applications for Social Security disability insurance benefits are accepted, with an additional 2% of applicants being approved after reconsideration and another 9% after a hearing from an administrative law judge. The final acceptance rate over 10 years has averaged 34%.
There are four levels of appeal:
Another qualified person at the SSA will review all the evidence and any new evidence you submitted.
You’ll have to go to court and argue your case before an administrative law judge. You’ll be able to bring any witnesses, including medical and vocational experts, as well as a representative to question the witnesses. The representative can be anyone you want, including a lawyer or friend.
If you’re unable to attend the hearing in person, you may be allowed to attend via video conference or reschedule it for another date.
The SSA maintains an objective appeals council that will determine whether the judge’s decision was correct. It may either make its own decision or ask the judge to review the application again.
If you’re denied at the other levels of appeal, you may file a lawsuit in a federal district court. The SSA may help you file the lawsuit if necessary.
Ticket to Work is a free program that helps recipients of SSDI and SSI find free employment services. This program is designed to reduce your reliance on SSDI and SSI benefits help you transition back into the workforce. Ticket to Work offers such services as:
Maintaining employment and achieving success
Note that once you demonstrate that you’re healthy enough to go back to work, your Social Security disability insurance benefits will cease. However, the SSA offers a work incentive called the trial work period during which you can test your ability to return to work even if you’re still disabled. During the trial work period, which lasts at least nine months, you’ll continue to receive your full SSDI benefits regardless of your income.
If you’re worried about being rejected for SSDI, or if you don’t feel that the benefit amount is high enough to maintain your standard of living and pay your bills, be sure to get long-term disability insurance (LTDI). Long-term disability insurance is a product sold by insurance companies, not the federal government, but it pays out a much larger monthly benefit amount when you become disabled.
Premiums for LTDI coverage average out to around 1% to 3% of your salary, but your benefits replace 60% of your pretax income. (Private disability insurance benefits are not taxed if you paid the premiums with your after-tax wages.) It’s also much easier to qualify for LTDI and to customize your policy to meet your needs.
Another advantage of LTDI is that you can receive partial disability benefits. Depending on the terms of the policy – you may have to purchase additional coverage – such residual benefits may be paid at a benefit rate tied to the degree of your lost earnings or responsibilities. Social Security disability insurance does not consider a partial disability to be eligible for benefits.
Long-term disability insurance is especially important if you’re in a high-income career, not only because you’re used to a standard of living, which the low benefit amounts of SSDI simply cannot maintain, but also because you probably have expensive financial obligations like paying off your med school or law school loans.
For example, a 30-year-old male who needs $5,000 per month in benefits if he becomes disabled – meaning that his current salary is approximately $96,000 per year – can expect to pay a little over $1,000 per year if he chooses a long-term disability insurance policy with the most advantageous and cost-effective terms.
If you become disabled, your long-term disability insurance carrier may require you to also apply for Social Security disability insurance at the same time you file a claim for LTDI benefits. That’s because your policy has a social benefits offset rider, which lets the insurer reduce your LTDI benefits by the amount you receive in Social Security disability benefits.
However, the upside to the rider is that you may be getting a discount on your LTDI coverage. As a rough example, if you purchase $5,000 per month in coverage, you’ll pay the same amount you would for $4,000 in coverage in the expectation that you’ll receive $1,000 in SSDI benefits. If you get denied SSDI benefits, you still get the $5,000 coverage, but potentially at a lower premium cost. Talk to your insurer about how the social benefits offset rider can affect your coverage.