Social Security Disability Insurance – SSDI

    If you experienced a significant physical or mental condition that prevents you from doing your job, you may qualify for Social Security Disability Insurance (SSDI) benefits. SSDI is a government program funded by payroll taxes for people who no longer can work because of an injury that is expected to affect them at least one year or is expected to result in death.

    In 2011, about 8.5 million Americans received $132 billion in disability payments. The average payout was $1,111 per month.

    While those numbers sound large, a central piece of Social Security Disability Insurance is surprisingly small: only 38 percent of first-time applicants are approved for benefits. The reasons are usually because of insufficient proof of disability or inaccurate information in filling out the necessary forms.

    It’s for that reason that many people who apply for SSDI benefits turn to a consultant or advocate to help them in the application process. If you believe you are a candidate for SSDI, it may be beneficial to contact someone with experience with the program before submitting the necessary paperwork.

    The SSDI program started in 1956, and 150,000 workers enrolled the first year, mostly because benefits were restricted to people 50 or older. Over time, the government opened the door for more people to qualify, and as Baby Boomers and women swelled the ranks of the working population the number of people needing disability benefits rose dramatically.

    Fast Fact:

    Enrollment in the SSDI program reached 1 million adults in 1966, nearly tripled to 2.8 million by 1977 and tripled again to 9 million by the end of 2011.

    Do You Qualify for SSDI?

    To qualify for SSDI benefits, you must fulfill two criteria: You must have worked a specified amount of time in jobs covered by Social Security, and you must have a medical condition that meets the Social Security Administration’s definition of disabled.

    If you have worked jobs covered by Social Security, there is a table that will tell you approximately how long you must have worked to satisfy the first condition. This is known as the “duration of work” test. There also is a “recent work” test required to receive benefits.

    Meeting the second half of the qualifying criteria – having a disabling condition so severe you can’t work – is, by far, more difficult.

    Medical Conditions for SSDI

    The Social Security Administration has a narrow definition for disabled, and the conditions are judged by state agencies known as Disability Determination Services.

    The principle conditions that must be met to receive benefits include:
    • Unable to do the same work you did before you became disabled
    • Unable to do other jobs
    • Having a disability that is expected to last more than a year or lead to death

    SSDI pays only for total disability. There are no SSDI benefits for partial or short-term disability.

    The Social Security Administration reviews your initial application to see if it meets the basic requirements, then sends it to your state’s Disability Determination Services (DDS) office. The office investigates and determines whether the medical evidence supports the disability claim. It considers evidence from doctors, hospitals, clinics or institutions that answer questions about your medical history, tests, treatments and your ability to do work-related activities like walking, sitting, lifting and remembering instructions.

    After reviewing the evidence, the state agency decides if you qualify. If your claim is approved, you will be notified by letter, which will show the amount of benefits and when the payments will start. If you are denied, the letter will explain why and tell you how to appeal the decision. Again, 62 percent of first-time applicants are denied.

    How to Apply for SSDI

    Applying for SSDI benefits can be done online, in person at your local Social Security office or over the phone. The application process is tedious and can be painstaking if you – or your advocate – aren’t well-organized. If you have a medical condition that is severe enough to keep you from working for a year or longer, start the process as soon as you stop working.

    Step-by-Step Application Process for SSDI Benefits
    1. The first step is to gather personal and medical information relevant to your situation. To start the application, you need to collect: dates of marriages and divorces; names and birthdates for minor children and spouse; military service discharge information for all periods of active duty (form DD 214); W-2 forms from the last year or your IRS 1040 with Schedule C and SE if you’re self-employed; checking and savings account numbers, including your bank’s 9-digit routing number if you want your benefit checks to be direct deposited.
    2. The next step is to compile a “disability report” that includes: treatment information with names, addresses and phone numbers for doctors, hospitals and clinics you’ve visited; names of medicines you’re taking and who prescribed them; dates for medical tests and who sent you for the tests; a list of jobs you had in the 15 years before you became unable to work; information about insurance or workers’ compensation claims you filed; and the name of someone Social Security can contact who knows about your medical condition.
    3. When you have compiled all of your personal and “disability report” information, you can go online and fill out the disability benefit application and disability report. You also must complete the form for Authorization to Disclose Information to the Social Security Administration (SSA Form-827) that gives Social Security permission to look at your personal and medical records.
    There is more paperwork you can submit that will increase your chances of being approved, such as:
    • Information on the mental and physical requirements of your job.
    • How your condition limits or prevents you from performing the duties your job requires.
    • A written report that goes over any details you think will support your case.

    Again, this can be an overwhelming process if you are not well-organized or do not have an advocate. Do not be discouraged. Take your time, and be diligent.

    Specifics of Receiving SSDI Benefits

    SSDI benefits are meant to replace a portion of a worker’s annual salary. The more you earned, the higher your benefit, up to a certain limit.

    If you are approved for SSDI benefits, you receive a monthly check. The Social Security Administration calculates your monthly benefits by using a complicated formula that takes into account your age when you became disabled, how long you worked and your average amount of earnings during your working years.

    Benefits are paid out in monthly checks that range from just under $1,000 for those who were making less than $20,000 a year to slightly more than $2,400 for those who were making more than $107,000 a year. The average monthly check is about $1,111.

    The amount you receive also is affected by the number of “credits” you earned during your employment. Workers can receive up to four “credits” a year, based on earnings. In 2013, for example, workers receive one credit for every $1,160 earned. The amount changes every year, and the credits you earn remain on your Social Security record even if you change jobs or no longer work. Depending on your age, there is a minimum number of credits needed to receive SSDI benefits, but no maximum.

    SSDI benefits, like retirement benefits, are adjusted for inflation so that the value of the benefit is maintained over time. Eligible family members can receive benefits based on your work record. A spouse or child could receive as much as 50 percent of your monthly benefit. After you receive SSDI benefits for two years, you become eligible for Medicare.

    Continuing Eligibility for Disability Benefits

    In most cases, you will collect benefits as long as you are disabled. There are two common circumstances that could result in you losing benefits: Your health improves to the point where you are no longer disabled, or you begin to earn $1,040 or more per month ($1,740 or more for blind individuals).

    The review process for determining whether you are still disabled is divided into three categories: expected to improve; could improve; and not expected to improve. If your medical condition is expected to improve, your case will be reviewed six to 18 months after benefits start. If it’s possible you could improve, the review will happen no sooner than three years after you start receiving benefits. If you are not expected to improve, it is no sooner than seven years. If SSA is going to review your medical condition, they will notify you by mail.

    If you are receiving SSDI benefits, you can still work, as long as you follow certain rules. The primary rule is that you can’t make more than $1,040 in a month ($1,740 or more per month for those who are blind). The Social Security Administration regards $1,040 a month as “Substantial Gainful Activity” or SGA. If you are engaged in SGA, the Social Security Administration no longer considers you disabled and you will lose SSDI benefits.

    When you first start working, you have a nine-month trial period during which you will receive full SSDI benefits, regardless of how much money you make, as long as you report your work activity to Social Security. After the nine months – which can be spread over time — you enter the “extended period of eligibility” or EPE, which can protect your SSDI benefits for another 36 consecutive months.

    During the EPE, your gross earnings can’t exceed $1,040 a month. If you exceed SGA in any of those 36 months, you enter a “grace period” during which you receive that month’s SSDI check and two more months. However, because you are earning above the SGA, you will lose your benefits after the grace period. If your disability causes you to stop working or you go back to earning less than $1,040 per month, your benefit checks will start again.

    At the end of the 36-month EPE, you can continue to work and receive benefits until you work a month at the SGA level or are no longer disabled.

    Appeals and Legal Advocates

    Do not be discouraged if you have to appeal your claim for SSDI benefits. You are in the majority. Only 38 percent of first-time applications are approved, meaning 62 percent are denied. The appeals process requires great attention to detail and deadlines. The rules and procedures governing SSDI can be very complicated and confusing. Having an advocate, someone who can help you deal with the paperwork and deadlines involved in the process, is not required, but can be very helpful.

    There are four levels in the appeals process: reconsideration; hearing; appeals council; and federal court. It is a step-by-step process, meaning you begin with reconsideration and only move on to the next level (hearing) if your appeal is denied. If you win your appeal at any step along the way, you will begin receiving benefits.

    You can handle your own Social Security appeal or choose a lawyer or friend to help. That person is called a representative and can’t collect a fee from you without first getting written approval from Social Security.

    SSDI vs. SSI

    If you have not worked enough to qualify for Social Security Disability Insurance (SSDI), you may qualify for Supplemental Security Income (SSI), a federal program to assist those who are disabled, blind or aged and who are not working and have not worked for a long time.

    The medical requirements for SSI are the same as they are for SSDI, meaning you have to have a significant mental or physical condition that prevents you from working.

    The major differences between SSDI and SSI are:
    • SSI is a need-based program for people with limited income and resources. SSDI is a program based on your work history.
    • The monthly benefit for SSI is based on need and tops out at $710. SSDI monthly benefits are based on how much you worked and how much money you made.
    • You can only apply for SSI over the phone or in person at your local Social Security office. You can apply for SSDI online, over the phone or in person at the local Social Security office.
    • In most states, SSI beneficiaries also qualify for Medicaid. SSDI beneficiaries receive Medicare benefits after receiving two years of disability payments.

    The approval rates for SSI and SSDI are roughly the same – about 65 percent of first-time applications are denied – which makes the appeals process very important. The appeals process for SSI is identical to SSDI.

    Bill Fay

    Bill Fay is a journalism veteran with a nearly four-decade career in reporting and writing for daily newspapers, magazines and public officials. His focus at Debt.org is on frugal living, veterans' finances, retirement and tax advice. Bill can be reached at bfay@debt.org.

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