Social Security Disability Insurance – SSDI
Social Security Disability Insurance (SSDI) is one of the two disability programs offered by the Social Security Administration (SSA). SSDI is an insurance program that protects workers who become disabled and lose the ability to work from loss of income. All employees and employers must pay into the program through FICA taxes. To qualify for SSDI, an applicant must meet the work credit requirements for their age and needs to be able to prove that their condition prevents them making substantial gainful activity (SGA).
The SSA has restrictions for Social Security Disability Insurance (SSDI) where the applicant must have earned enough “work credits” to qualify. A work credit is awarded for every $1,220 earned by the applicant in a given year and no more than 4 credits can be awarded per year. To qualify for disability benefits, typically an applicant must have earned at least 20 work credits in the past 10 years (this varies depending on the applicant’s age). To learn more about how work credits affect qualification for SSDI, check out our article on Work Credits.
How much will I receive in monthly benefits?
The amount of benefits an applicant may receive for SSDI depends the applicant’s work history and income. The Social Security Administration (SSA) uses the work history and income to determine the Average Indexed Earnings (AIME) and Primary Insurance Amount (PIA). The AIME and PIA are used to calculate the monthly disability benefits and are described below:
Average Indexed Monthly Earnings (AIME)
The Social Security Administration will first determine the AIME before calculating the PIA. They will look over your lifetime earnings to account for the increase in general wages that occurred during the years you worked. The SSA will also index your wages over the past 35 years (if applicable) and will use the years with the highest indexed earnings; the earnings within those years are added up, and then divided by the total number of months within those years.
Primary Insurance Amount (PIA)
Once the AIME has been determined, the SSA will calculate the Primary Insurance Amount (PIA). The PIA is actually the base retirement benefits an individual would receive if they retire at the normal retirement age. However, the SSA views an applicant’s request for disability benefits as early retirement since they can no longer work due to their disabling condition. As a result, they will use the PIA when determining the amount of benefits one would receive.
There are three fixed percentages from the AIME that will be utilized when determining the “bend points” for the PIA. Bend points vary each year to depending on the national average wage index. For an applicant who applies for SSDI benefits in 2015, according to SSA regulations, their PIA would be the sum of:
1. 90% of the first $826 of their average indexed monthly earnings (AIME)
2. 32% of their average AIME over $826 and through $4,980
3. 15% of the average indexed monthly earnings over $4,980
The SSA rounds the amount to next lower multiple of $0.10.
Before you go to submit your application for SSDI benefits, you should inform your doctors and other medical specialists (who are knowledgeable of your disability) of your intentions to apply for disability benefits. It is important to collect all documentation and information relating to your disabling condition(s) to prove your disability will last longer than a year and prevents you from achieving substantial gainful activity (SGA). Missing any important documentation may result in a delay or wrongful denial of your disability application.
Back Due Pay
The Social Security Administration’s application process can take anywhere from three months to two years. Due to this fact, when you are approved for SSDI, the SSA will send you your monthly disability check as well as a check known as back-due pay or retroactive benefits. This one-time check is compensation for the time it took the SSA to get you approved for disability benefits from when you submitted your application. For example, if you are approved for $500 monthly disability benefits and it took 10 months for your case to be approved, you will receive a check for $5,000. Its good to remember that this is a one-time check and is not your monthly benefit check.
Date of Disability
For SSDI cases, the SSA will pay back-due benefits from when an applicant’s disability first begun. The SSDI application asks applicants when they believe their disability started. This is also called the alleged onset date (AOD). When an applicant is approved for benefits, a DDS medical examiner or an administrative law judge (ALJ) will give the applicant an established onset date (EOD). The EOD is the date the SSA considers as the date the disability actually began and will be the date used to calculate the back-due benefits.
An applicant applying for disability benefits who needs assistance with the application process may find help through a disability advocate or attorney. There is a fee associated with representation but only if the applicant is awarded benefits. The SSA governs the fee structure and pays qualified disability advocates and attorneys directly. The SSA limits the fee to 25% of the back-due benefits with a maximum of $6,000. If the applicant loses the case, there are no fees involved.