Calculating Ssdi: Covered Earnings
If you are eligible for SSDI benefits, the amount you receive each month will be based on your average lifetime earnings before your disability began. This is the only factor that determines your benefit amount, although it may be reduced if you’re receiving disability payments from other sources . In other words, your SSDI benefit amount is not based on how severe your disability is, and unlike SSI, you cannot be denied SSDI because you have too much unearned income or too many resources .
Your past earnings must be covered under the Social Security program in order to count towards the amount of SSDI benefits you will receive. “Covered earnings” are wages you have received from jobs that have paid into Social Security. If you have received a paycheck that had money withheld for “Social Security taxes” or “FICA,” the wages you made at that job are covered earnings and will count toward calculating your benefit amount. Most wages are covered earnings.
Your SSDI payment will be based on your average covered earnings over a period of years, known as your average indexed monthly earnings . A formula is then applied to your AIME to calculate your primary insurance amount the basic figure the SSA uses in setting your actual benefit amount.
For example, someone in their fifties who made $100,000 for the past few years might expect a disability payment of $2,500 per month. Someone in their fifties who made $60,000 per year might expect a disability payment of $2,000 per month.
Want To Know How Much Ssdi Pays Here’s How Social Security Calculates Your Ssdi Benefits
By Melissa Linebaugh, Contributing Author
How much your SSDI benefit will be is based on your “covered earnings”the wages that you paid Social Security taxes onprior to becoming disabled.
What is SSDI? Social Security Disability Insurance is the federal insurance program that provides benefits to qualified workers who can no longer work. To be eligible, you must be insured under the program and you must meet the Social Security Administration’s definition of disabled. SSI payments, on the other hand, aren’t based on past earnings.
Your SSDI benefits may be reduced if you get disability payments from other sources, such as workers’ comp, but regular income won’t affect your SSDI payment amount.
What Is Social Security
Social Security is the blanket name for several federal benefit programs that tens of millions of Americans depend on for a monthly stipend. The Social Security Administration pays benefits to eligible seniors, their dependents and survivors and people with certain medical conditions. Though there is some overlap between these groups, the support programs intended for each are separately administered and each has its own eligibility requirements.
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Cost Of Living Adjustment For Disability Benefits
Every year everyone’s Social Security benefits are recalculated to adjust to the increasing cost of living. How much of an increase depends on the annual COLA amount for SSDI, which is determined by increases in the Consumer Price Index .
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Child Tax Credit: December End
Some families received another form of stimulus aid when the IRS in July deposited the first of six monthly cash payments into bank accounts of parents who qualify for the Child Tax Credit . Families on average received $423 in their first CTC payment, according to an analysis of Census data from the left-leaning advocacy group Economic Security Project.
Eligible families received up to $1,800 in cash through December, with the money parceled out in equal installments over the six months from July through December. The aid was due to the expanded CTC, which is part of President Joe Biden’s American Rescue Plan.
Families who qualify received $300 per month for each child under 6 and $250 for children between 6 to 17 years old. Several families that spoke to CBS MoneyWatch said the extra money would go toward child care, back-to-school supplies and other essentials.
While progressives and some Democrats urged lawmakers to continue the enhanced CTC, it appears stalled at the moment. That means families won’t receive a CTC payment in January or beyond.
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What Is The Standard For Disability
Who is considered “disabled” for SSI or SSDI benefits?
To receive benefits under either program, you must meet the SSA’s definition of disability. The term disability means that you are unable to engage in substantial gainful activity because of:
- A medically determinable physical or a mental impairment
- Which has lasted or is expected to last for at least 12 months or is expected to result in death.
This standard for disability is described in the below paragraphs.
Disability for adults
In deciding whether you meet the disability requirement, SSA uses a five-step analysis:
Step one: are you working?
If you are working and performing a substantial gainful activity, then you are considered able to work. You are therefore not disabled. The SGA limit is $1,310 per month. If you earn more than $1,310 per month, you are probably not eligible, unless there are special cases. For example, you have intensive job coaching to help you work or you work at a sheltered workshop. If you are not earning significant income, proceed to step two.
Step two: do you have a severe impairment?
You must have a problem which significantly limits your ability to perform basic work activities. The impairment must be expected to last for 12 months or end in death. If you have a severe impairment, proceed to step three.
Step three: does your medical condition match one of SSAs listed impairments?
- Medical findings,
- Signs, and
- Symptoms that must be found for your condition to meet the listing.
What Is Minimum And Maximum Salary For Ssdi
Related
According to the Social Security Administration, Social Security Disability Insurance is a federal entitlement program that provides income and other assistance to eligible workers who become disabled and are unable to perform their regular job duties. Eligibility is based on being legally recognized as disabled by the Social Security Administration and having enough earnings on record. There is also a limit to any income being received unless the recipient qualifies for special work incentives.
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Working While You Receive Ssi Or Ssdi Benefits
If you want to try to go back to work while you are on SSDI or SSI, it is important to try to plan ahead. You will not automatically lose your disability benefits if you go back to work. SSA has special rules called work incentives. They allow you to keep all or part of your benefits while you try out your ability to work. SSAs rules concerning work, however, are complex and can be confusing. There are agencies in Illinois that can help you plan and determine how work earnings may affect your benefits. For agencies that can help you, see the directory of agencies on SSAs website. Note: Be sure to let SSA know if you start a job or leave a job. For SSI you must also report any changes in your monthly income, your assets, or your living situation. Changes can affect the amount of your benefit. Reporting right away will help you avoid any overpayment problems with SSA. Keep a record of any change that you report. Then you can show that you made a timely report even if SSA later claims it never received it.
Working and SSDI benefits
After the Trial Work Period ends, there is a 36 months where you can’t get a SSDI monthly payment if you earn more than $1,310. This period is called the “Extended Period of Eligibility.” During these 36 continuous months, you can receive your full SSDI check for any month that:
- Your earnings fall below $1,310,
- You lose your job, or
- You become unable to continue to do your job.
Working and SSI
Examples:
Expedited reinstatement for SSDI or SSI
How Is My Social Security Disability Payment Determined
Your SSDI payout is determined by your lifetime earnings average. If you are qualified for Social Security Impairment Insurance , the amount you receive each month will be determined by your average lifetime earnings prior to the onset of your disability. It is not based on the severity of your condition or your income. Your award may be higher or lower than what you expect based on the number used as a benchmark for calculating it.
Your SSDI payment is calculated using a formula that takes into account your full salary history when you were working and earning wages. This includes any periods of time during which you did not work but still earned wages. Your payment will be reduced by any benefits you received under the Social Security Act prior to your eligibility for SSDI. For example, if you collected Social Security Retirement Benefits before becoming disabled, those payments will reduce your SSDI benefit amount.
Your SSDI payment will be reduced even if you stopped working before reaching retirement age. If your last job was in another country, we use a statistical method called “indexing” to determine your pay rate. Indexing assumes that like workers in their field experience similar levels of unemployment. So if like workers in your field were able to collect Social Security while they were unable to work, then you should also be able to collect.
We index your pay to the national average wage curve for your gender and year of birth.
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How Much Ssdi Benefits Will You Get
The SSA will use a complicated formula to calculate your benefits. Since benefits depend on total disability, your SSDI benefits will be 100% of what you qualify to receive.
Any income youve paid into Social Security taxes is covered earnings. The average covered earnings over a specific time is your average indexed monthly earnings . The SSA will use your AIME to calculate your primary insurance amount . This number will determine your benefits.
Your yearly Social Security statement will show your covered earnings. You can also use the SSAs online calculator to see what your benefits will be. You can also have a local Social Security office or SSDI lawyer help you estimate your benefits.
Are You Currently Working
If you are working and earning more than a certain amount, you will not qualify. You must not be engaging in substantial gainful activity .
In 2020, the limit for SGA is $1,260 per month. This number changes each year, so check with a Social Security Disability lawyer to be sure. If you are not making SGA, youll move on to the next question.
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The Basics Of Social Security’s Minimum Benefit
Social Security’s special minimum benefit offers an alternative way for recipients to calculate their benefits. The idea is to offer a higher number to certain low-income participants than the traditional benefit formula would produce, resulting in bigger monthly checks.
A worker has to have at least 11 years of earnings to qualify for the special minimum benefit, with a minimum amount earned each year. That minimum gets changed every year based on inflation. For 2019, a person would have to earn at least $14,805 to get credit for the year for special minimum benefit purposes.
If you have a long enough work history, then you’re entitled to minimum benefits under Social Security. The longer you’ve worked, the higher your minimum benefit will be, as this table of benefits for 2019 shows.
|
Years of Coverage |
|---|
|
$872.50 |
Data source: Social Security Administration.
As with regular benefits, the special minimum benefit is based on taking payments at full retirement age. Claim earlier, and the amount of those payments can get reduced.
What Are The Maximum Payouts For Ssdi
For 2022, the absolute top payout a recipient could get from SSDI is $3,345 per month, up from $3,148 in 2021. However, as payouts are based on earnings, only high-income individuals qualify for the top SSDI payout. Qualifying spouses and children receive, at a minimum, the same as eligible disabled recipients, up to a maximum of 150% of the disabled persons payout amount.
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Eligibility For Disability And Working
An applicant for disability benefits through the Social Security disability insurance or SSI programs must be making less than $1,310 per month to qualify for benefits. . Anyone working above those limits is considered to be doing “substantial gainful activity” .
However, people who are currently receiving SSDI who attempt to return to work can make more during a trial work program. A month counts as a trial work period month when an SSDI recipient makes more than $940 per month .
For people who are receiving SSI, the new federal income limit for SSI is $794 per month, but complicated rules govern what income is countable and what income is not. Over half of the income made by an SSI recipient is not counted toward the limit, so you can actually receive SSI until you make up to $1,672 per month . However, any income received between $0 and $1,672 will reduce the monthly benefit. In some states that make extra payments to SSI recipients, the income limit for SSI recipients may be higher.
The income exclusion amount for students receiving SSI is now $1,930 per month .
Applying For Social Security Disability Benefits
In order to apply, youll need to have earned enough work credits. Generally, you need 40 work credits, but younger workers may need less. For example, workers who become disabled before age 24 only need six work credits in the last three years leading up to their disability in order to be eligible to apply. Workers aged 31 and older must have at least 20 credits in the 10-year period immediately before becoming disabled. Those between age 24 and 31 may qualify if they have credit for working half the time between age 21 and when they became disabled.
In 2021, one work credit equals $1,470. You can earn up to four work credits per year if you earn $5,880 or more. In 2022, one work credit will equal $1,510, and for four credits you need to earn $6,040.
If youve earned enough work credits, you can apply for disability benefits as long as you also meet the following criteria:
- You are age 18 or older
- You are not currently receiving Social Security benefits
- You are unable to work because of a medical condition that is expected to last at least one year or result in death
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Ssdi Disability Benefits Payments
SSDI is reserved for disabled workers with sufficient work credits who paid into the Federal disability program as a portion of their FICA taxes. This contrasts with the SSI program discussed above. SSI is a needs-based program for disabled individuals who do not have sufficient work credits to apply for SSDI.
Monthly SSDI payments differ based on a recipients previous earnings record. But, the COLA adjustment applies evenly to SSDI payments. This just means that any increase applies to your existing monthly payment amount. This change is reflected in the first monthly payment amount of the new year.
The estimated average Social Security disability benefit for a disabled worker receiving Social Security Disability Insurance is $1,259 per month, according to the latest figures from the Social Security Administration . These benefits are based on average lifetime earnings, not on household income or how severe an individuals disability is.
What Is The Minimum Social Security Benefit
The minimum Social Security benefit provision is an alternative benefit that increases benefits paid to low-income individuals.
Where the regular Social Security benefit formula bases the benefit amount on an individuals lifetime earnings, the minimum Social Security benefit formula is based on the number of years a person has worked with earnings at or above a certain threshold.
The benefit amounts are still calculated through both formulas, but with the minimum Social Security benefit provision, the higher of the two benefits is the amount provided to qualified individuals.
In 2019, there were 64 million Social Security recipients about 32,092 of them qualified for the minimum benefit. While its not a provision that impacts most people qualifying for Social Security, its still an important concept to understand if you want to broaden your full understanding of how the system works.
To start, lets break down how benefits are normally calculated. Then, we can jump into the specific formula used for workers who fall under the minimum Social Security benefit provision umbrella.
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Ssi Reform Would Boost Incomes For Seniors And Disabled People
Eighty-six years ago last month, President Franklin D. Roosevelt signed the Social Security Act into law. Upon giving life to Americas most cherished safety net program, Roosevelt :
We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness.
To better fulfill this decades-old promise, policymakers should turn their attention to a related program: Supplemental Security Income . SSI is meant to help low-income seniors and people with disabilities who receive little support from Social Security. Although SSI is a crucial anti-poverty program, its current benefits are inadequate, and many of its eligibility provisions are outdated. To address these problems, President Joe Biden should call on Congress to pass the SSI Restoration Act during the upcoming budget reconciliation process.
President Joe Biden should call on Congress to pass the SSI Restoration Act during the upcoming budget reconciliation process.