Finance

How Does SSDI Work? A Guide to Social Security Disability

Someone born in 2000 has about a 1 in 4 chance of becoming disabled before they reach their full retirement age of 67. For a worker who becomes disabled during their working years, Social Security Disability Insurance (SSDI) is a lifeline.

As with Social Security retirement benefits, Social Security disability benefits are available only to workers who have earned work credits and paid payroll taxes. In some cases, spouses and dependent children can collect either type of benefit based on the insured person’s work record.

The SSDI application process is notoriously difficult. People who qualify for benefits must adhere to a number of strict rules, particularly when it comes to working. In this article, we’ll explain how SSDI works and answer some commonly asked questions about disability benefits.

Who Qualifies for SSDI Benefits?

Eligibility for Social Security Disability Insurance is based on two criteria: whether you have a medical diagnosis that meets Social Security’s definition of a disability and your work history.

Medical Diagnosis

You’ll need to be diagnosed with a physical or mental health condition that will render you unable to work for at least a year or is likely to result in death. Social Security’s Blue Book includes an extensive list of conditions that meet the minimum threshold for disability.

But having one or more of the listed conditions doesn’t mean you’ll automatically qualify for disability benefits. Likewise, if your condition isn’t listed, you still may qualify if your medical diagnosis meets Social Security’s disability criteria.

Work History

To collect Social Security, including disability benefits, you’ll typically need 40 work credits. In 2023, you’ll need $1,640 of earnings in a quarter to earn one work credit. You can’t earn more than four credits in any given year.

Younger workers who have paid Social Security taxes can qualify with fewer credits if they become disabled, though. You’ll also need to meet a recent work test, meaning you earned work credits in the period immediately before you became disabled. For example, if you’re 31 or older, you’ll need to have worked in five of the 10 years before you developed a disability.

How Do I Apply for SSDI?

You can apply for Social Security disability online, in person at your local office or by calling 1-800-772-1213 (TTY: 1-800-325-0778).

Along with identifying documents like your birth certificate (or proof of citizenship or lawful alien status if you weren’t born in the U.S.), be prepared to present W-2s or self-employment tax records, medical evidence and documentation related to any temporary or permanent workers’ compensation-type benefits you’ve received.

SSDI benefits have a five-month waiting period. You can’t apply until the sixth month after you became disabled, known in Social Security parlance as your onset date. On top of that, in 2021, it took an average of five months to process an SSDI application, but many states have a longer backlog.

Don’t delay your application just because you don’t have all the documents you need. Social Security staff will help you locate them.

Do I Need an Attorney to Apply for SSDI?

No, but you should seriously consider consulting with an attorney, considering that about two-thirds of initial SSDI applications are denied.

Attorneys who represent SSDI applicants work on contingency, which means they get paid only if you win your case. Charging upfront fees to represent someone in a disability claim is illegal.

If your application is approved, your attorney’s fees are capped at whichever is less: 25% of your first payment (which includes a lump sum back payment for benefits beginning on the sixth month after the onset date) or $6,000.

What if My Application Is Denied?

If your first application for disability benefits is denied, you have four opportunities to appeal. You typically have a 60-day window to take your case to the next level after your claim is rejected.

  • Ask for reconsideration: You’ll start by requesting a review of your initial application from your local Disability Determination Services, a state-level Social Security office that handles disability claims. During this time, you can submit additional evidence, such as medical records, to bolster your claim.
  • Request a hearing with an administrative law judge: If your claim is denied, you can request a hearing before an administrative law judge.
  • Take it to an Appeals Council: If a judge rejects your claim, the next step is to take your case to SSA’s Appeals Council.
  • Appeal in federal court: If an Appeals Council panel denies your claim, your final option is to challenge the decision in U.S. District Court.

How Are Disability Payments Calculated?

The Social Security Administration calculates your SSDI benefit as if you’ve already reached full retirement age, which is 67 for anyone born in 1960 or later. The maximum SSDI benefit is the same as the maximum monthly benefit for someone retiring at full retirement age: $3,627 in 2023.

But the average SSDI benefit is substantially lower. In 2023, the average SSDI beneficiary will receive just $1,483 per month versus $1,827 for the average retired worker.

Disability benefits are typically lower than retirement benefits because Social Security uses your average total yearly wages to calculate your benefit. Wages tend to increase over time. Because disabled workers often miss out on their higher-earning years, their average income tends to be lower.

Pro Tip

After 24 months of receiving SSDI payments, you’ll typically qualify for Medicare regardless of your age.

Is Working While Collecting SSDI Allowed?

You can work while collecting SSDI, but the limits are strict. Social Security disability benefits stop if you engage in what’s known as substantial gainful activity, defined in 2023 as earning more than $1,470 in a month if you’re not blind or $2,460 if you’re blind.

However, you’re allowed a nine-month trial work period during which you can test a job without jeopardizing your SSDI eligibility. You can take your trial work period months consecutively or spread them out over seven years. During any trial work period month, you can earn any amount without affecting your benefits, but you must report your earnings to Social Security. In 2023, any month in which you earn at least $1,050 counts as a trial work month.

What’s the Difference Between SSDI vs. SSI?

Supplemental Security Insurance (SSI) is available to people who have a disability or are 65 and older, but eligibility is restricted to those with limited income and resources. Unlike SSDI recipients, SSI recipients aren’t required to have earned work credits. The maximum monthly SSI benefit for individuals is just $914 in 2023.

Other Frequently Asked Questions (FAQ)

What Happens to SSDI Benefits When You Reach Retirement Age?

Does Social Security Recognize Partial Disability?

No. While workers’ compensation programs and the Veterans Administration pay benefits for partial disability, you must meet Social Security’s criteria for total disability to receive benefits through SSDI.

Can You Collect Your Spouse’s or Ex’s SSDI?

As with Social Security retirement benefits, you may be eligible for spousal benefits if your current or former spouse receives SSDI monthly benefits. The maximum you can receive is 50% of your spouse’s primary insurance amount — and only if it’s higher than your own Social Security benefit.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]


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