If you live with a disability or need to care for a disabled loved one, you are not alone.about one A quarter of today’s 20-year-olds become disabled at retirement age. but, Only 35% of workers Having long-term disability insurance means that many people will be dependent on federal government disability benefits when disabled.
It’s important to understand how these benefits work so you can understand how to get the financial assistance you need to make ends meet should something unexpected happen to you or a loved one.
Let’s look at some of the different benefit options offered by the Social Security Administration (SSA), including how to qualify.
What is Social Security Disability Insurance (SSDI)?
Social Security Disability Insurance (SSDI) is a federal insurance program that provides financial assistance to long-term disabled individuals who are unable to work because of a medical condition.
If you meet the requirements, the program will issue monthly payments to you or certain family members. Your Social Security disability benefit amount is based on your lifetime earnings and is calculated using a formula that includes your average index monthly income and your primary insurance amount. Here’s a breakdown of what this all means.
Disability Claims Process
The first step in the disability claim process is to file an application with SSA.You can submit an application onlineby phone or by visiting your local Social Security office.
SSA will review your application to determine if you meet basic eligibility requirements, including having a serious medical condition that prevents you from working.
If your application is approved, your claim will proceed to the next stage, which includes a medical review to determine the severity of your condition. To do this, SSA will consider your medical records, your doctor’s opinion and any other relevant evidence.
If your condition is severe enough to meet the SSA definition of disability, your claim will be approved and you will begin receiving benefits. Depending on the case and date of onset of disability, you may also be eligible for retroactive payment.
Work Credits and Qualifications
Does your disability qualify? That depends.On the one hand, they only pay benefits all Disability. If you have a partial or short-term disability, you will not be eligible for SSDI benefits.
The Social Security Administration uses five questions to determine if your case meets its criteria.
- are you working? You must earn no more than $1,470 a month through 2023 to qualify for the program.
- Is your condition “serious”? It must stop you from doing basic activities like standing, walking, sitting, lifting weights, or remembering.
- Is your condition on their list? SSA maintains a list of eligibility requirements which can be found at: here. If not on the list, they will be assessed on a case-by-case basis.
- Can you do the job you were able to do before? Your disability must prevent you from doing a specific job.
- Can you do another job? We will assess your situation and skills to see if you are suitable for other types of work.
In addition to these conditions, the job credit system also determines your eligibility for benefits. You earn one credit for every $1,640 in earnings and are limited to a maximum of four credits per year. So, if you earned $6,560 a year, that would meet your quota for the year.
In most cases, you need 40 credits to qualify for benefits, which is equivalent to at least ten years of work. However, younger workers who become disabled before reaching this point may receive fewer credits.
Average Index Monthly Income (AIME)
Your disability benefits are determined by Average Indexed Monthly Earnings (AIME), which is calculated based on your earnings history. The higher your AIME, the higher your SSDI. Here’s how it works.
First, the SSA adjusts, or “indexes,” your earnings to match changes in your overall wage level while you work. They use up to 35 years of income to calculate the index.
They then took the years with the highest index earnings and divided the total amount by the number of months in those years. This will give you AIME.
Learn more about how AIME is calculated here.
Primary Insurance Amount (PIA)
If you’re thinking “Great, more acronyms!”, we hear you. Basically, now that SSA has calculated your AIME, it will use it to determine your PIA. In turn, this will determine your SSDI.
Confused? Don’t do this Basically, once the Social Security Administration knows your earnings history, it can use that number to determine what Social Security benefits you’ll be eligible for at your typical retirement age. This is based on three simple calculations.
Here’s how it will work in 2023:
- Get 90% of the first $1,115 in AIME
- Get 32% of the next $6,721 in AIME
- Earn 15% on AIME over $6,721
- add up the numbers
- This is your PIA
(FYI: The dollar amounts in these calculations are called “inflection points” and are updated annually with cost-of-living adjustments.)
SSI benefit calculation
There is another form of federal disability benefits: Supplemental Security Income (SSI) provides financial assistance based on your individual needs if you have limited income and are over 65, blind or disabled. Unlike SSDI, SSI eligibility is not based on your employment history or the amount of Social Security taxes you have paid.
Even if you qualify for SSI, your monthly benefit may be reduced after deducting your countable monthly income. The exact amount you pay will depend on your residential situation, such as whether you live alone, with a spouse or in a group home.
Some states supplement federal SSI payments with their own state funding programs, which can increase your overall benefit amount.
Are you covered?
Due to the urgency of financial assistance in the event of a sudden disability or the stringent eligibility requirements, some choose to purchase private disability insurance. Often, it’s easier to qualify for and pay out earlier than Social Security.
Some private employers offer disability insurance. But as with life insurance, sometimes it makes sense to buy your own disability insurance. If this interests you, start by getting a free quote from Haven Disability online.