How Is My Monthly Benefit Amount Determined Under SSDI?
The amount you receive under Social Security Disability Insurance is based on the amount you paid into the system.
To qualify for benefits under Social Security Disability Insurance (SSDI), you must have earned enough work credits prior to becoming disabled. So the first question is, “Do you qualify?” And the second question is, “What would your monthly benefit amount be?” The two questions are related, but separate. If you do not have enough work credits, you will not qualify for benefits, no matter how severe your medical conditions may be. You may qualify for benefits under the Supplemental Security Income (SSI) program, but this program has strict income and resource limitations.
Do you have enough work credits to be eligible for SSDI benefits?
Social Security only considers the 10 year period immediately preceding the date you became disabled when determining whether you have enough work credits to qualify for SSDI benefits. And, within that ten year period, you must have worked five years. But, more specifically, everything Social Security does is based on calendar quarters. January, February and March are the first quarter of a given calendar year. April, May, June represent the second quarter, etc. So, you generally must have earned 20 work credits in the 40 quarters (10 years) immediately preceding the date you became disabled in order to have sufficient work history to be eligible for SSDI benefits.
To earn one quarter of coverage in 2015, you need to have earned (and paid taxes on) $1,220 in gross wages. Therefore, to earn the full 4 quarters of coverage in 2015, you need to have earned $4,880 in total wages. It is important to note that these earnings do not have to be earned in a specific quarter.
Rather, you can get the full four quarters of coverage as long as you have earned $4,880 in the course of the entire calendar year. Basically, the first $1,220 of earned income – no matter when in the year it is earned– will “check the box” for the first quarter, and the second $1,220 of earned income will “check the box” for the second quarter, etc. So, if you earn at least $4,880 in wages in a given calendar year, you will “check the box” for each quarter in that calendar year. And if you “check the box” in 20 of the 40 quarters immediately preceding your disability, you will have enough quarters of coverage to receive Social Security Disability Insurance benefits.
So, a good rule of thumb is that if you have worked 5 of the previous 10 years immediately preceding your disability, you will have sufficient quarters of coverage and, therefore, be eligible to receive Social Security Disability Insurance (SSDI) benefits. You still need to meet the medical definition of being disabled, but at least you do have coverage! It is important to understand that any earnings you generated prior to this ten year period are not used in your disability benefit formula – they do not count! So if you worked 20 years in a row, but have not worked in the last 10 years, you will not be eligible for SSDI benefits – again, no matter how severe your medical conditions may be.
The rules are different under Social Security’s retirement program – their formula takes into account your entire earnings history. But, under the SSDI program rules, only the last 10 years prior to your disability onset count.
The amount of your monthly disability benefit amount is based on how much you paid into the SSDI program.
To determine your monthly benefit amount, Social Security uses a complex formula that is based on your earnings history. The average monthly benefit amount in 2015 is $1,165 per month, with a range of a few hundred dollars per month on the low end and the maximum benefit amount of $2,663 per month on the high end.
There are 3 ways you can find out your monthly benefit amount:
- Create an account on Social Security Administration’s website.
- Visit your local Social Security Field Office and request a copy of your earnings statement, which will indicate your monthly benefit under the disability program as well as the retirement program.
- Contact Social Security Administration’s customer service at (800) 772-1213 and request your monthly benefit amount under the disability program.
Social Security’s complex disability benefit amount formula.
Social Security uses a complex formula that is based on two important variables: your Average Indexed Monthly Earnings (AIME) and your Primary Insurance Amount (PIA). Your AIME takes up to 35 years of your working years and indexes those earnings based on prevailing wages in the years in which those earnings were generated. Basically it adjusts your income for the level of inflation to standardize your earnings over time.
SSA then uses the years in which you reported the highest indexed earnings, adds those earnings together and then divides the earnings by the number of months it took to generate those earnings. For example, if your highest indexed earning years were $40,000 in 2009, $45,000 in 2010 and $50,000 in 2011, SSA would sum up those earnings (for a total of $135,000) and then divide by 36 months, to arrive at Average Indexed Monthly Earnings of $3,750 per month. So this is where a strong earnings history comes into play in determining your monthly benefit amount under the SSDI program. The higher your highest earnings, the higher your AIME, which is the primary input to the PIA formula.
The Primary Insurance Amount (PIA)
The Primary Insurance Amount (PIA) simply takes your AIME and multiplies it by three separate “bend points.” So for all Average Indexed Monthly Earnings up to $826, SSA takes 90% of these earnings. For earnings between $826 and $4,980, it takes 32% of these earnings. For earnings above $4,980, it takes 15 percent of these earnings. The sum of these three calculations is your Primary Insurance Amount, more commonly referred to as your PIA.
Using the above example, with an AIME of $3,750 per month, your PIA would be: 90% of $826 plus 32% of $2,924, or $1,670 per month. This would be your monthly benefit if you are found to be medically disabled! This amount would be increased by the Cost of Living Adjustment (COLA) that every Social Security beneficiary receives annually to reflect the level of inflation. This ensures your purchasing power is maintained even in the face of inflation.
How much disability “back pay” would I receive?
In addition to the ongoing monthly benefit amount based on your AIME and PIA, as described above, you would also receive back pay, which is designed to cover any past due benefits you are owed to get you “caught up” to the current month. For example, if your Date of Entitlement (DENT) to benefits is January 1, 2014, and you are found to be disabled on March 1, 2015, Social Security would owe you 14 months of back pay.
Using the above monthly benefit amount of $1,670 per month, Social Security would owe you $23,380 in retroactive payments. This amount is paid in one lump-sum. You would also begin to receive your monthly benefit amount of $1,670 per month on an ongoing basis, assuming you continue to meet all eligibility requirements.
What is my family maximum SSDI benefit?
There are limited benefits payable to family members of disabled workers. Specifically, spouses and children may be eligible for benefits. The most a family can receive is 85% of the above AIME calculation, however this amount cannot exceed 150% of the PIA calculation. Using the above example, the family maximum would be 150% of $1,670, or $2,505 because 85% of the AIME ($3,187) would exceed this amount, so it is capped at 150% of the PIA. In this case, the disabled worker would receive $1,670 and the family members would be eligible to receive $835 per month in total.
There are three types of eligible children: (1) minor child under age 18; (2) child enrolled in high school under age 19; (3) adult disabled before the age of 22. To be eligible for family benefits, a spouse needs to have: (1) a child under age 16 or a disabled child in his or her care, or (2) be at least 62 years old. A divorced spouse would be eligible under the same rules if the marriage had lasted greater than 10 years.
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