Social Security Disability Insurance (SSDI)
Social Security Disability Insurance (SSDI) is a federal program that provides payments to people with a medical condition that prevents them from working. The SSDI program is funded by payroll taxes and has strict qualification guidelines. The application process is usually long and complicated, and appeals are usually needed.
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Brandon Renfro, Ph.D., CFP®, RICP®, EA
Retirement and Social Security Expert
Brandon Renfro is a Retirement and Social Security Expert and financial planner. He focuses on helping clients create a secure financial future in retirement and co-owns Belonging Wealth Management. He is also a former finance professor and writes for several publications.Read More
- Published: March 3, 2023
- Updated: May 2, 2023
- 6 min read time
- This page features 11 Cited Research Articles
- Edited By
- SSDI provides financial assistance to people who can’t work because of a disability.
- Payroll taxes fund the federal SSDI program.
- SSDI requires proof of disability along with sufficient work credits.
What Is Social Security Disability Insurance?
Social Security Disability Insurance delivers monthly financial payments to people whose health won’t allow them to work. SSDI provides for those who contributed to the benefits pool through work and have a documented disability that lasts, or is expected to last, more than 12 months.
Disability benefits are funded by payroll taxes deducted from workers’ paychecks and matched by employers, plus employment taxes of self-employed people. If you apply for SSDI benefits and qualify for them, you receive monthly payments from the Social Security Administration once it approves your application.
The application process for SSDI can be complicated and take several months or even years. SSDI has a strict eligibility standard that the government follows closely. In fact, many applicants find their initial applications denied, forcing them to pursue benefits through an extensive appeals process.
How Is SSDI Funded?
Payroll taxes paid by both employers and workers fund Social Security Disability Insurance. According to the Social Security Administration, all workers pay a Social Security tax of 6.2% on their wages. Employers also pay 6.2% tax of every employee’s wages. People who are self-employed pay a 12.4% Social Security tax on their net earnings.
The Internal Revenue Service collects these payroll taxes and deposits them into Social Security trust funds that finance the SSDI program.
The government invests SSDI funds in special U.S. Treasury bonds, which carry the financial backing of the U.S. government.
How To Qualify for the SSDI Program
To qualify for the SSDI program, you must be a U.S. citizen or a legally admitted non-citizen. After that, you must meet a specific set of requirements, and you must be able to document your disability with medical records.
- You must have a mental or physical disability that the Social Security Administration recognizes as “severe.” Your disability must significantly limit your ability to do basic work activities for at least 12 months or will cause your death.
- You also must be incapable of performing any other work considered “substantial gainful activity.”
- You must have earned enough work credits, which depends on your age. Younger people usually need fewer work credits than those who are older. You must have been employed in five of the previous 10 years before your disability began.
- You must provide sufficient evidence of your disability. This evidence can include medical records, physician's reports, test results and other information that can establish a diagnosis.
By meeting these requirements, you can qualify for SSDI benefits. The amount of money you qualify for depends on your income and your work credits.
How Much Can You Qualify For?
The amount of money a person can qualify for through the Social Security Disability Insurance program depends on their previous earned income.
This amount is calculated by a formula that considers the amount of money a person has previously made and how much they paid into the Social Security system.
A person’s maximum monthly income through the SSDI program is set at $3,636 per month in 2023 for a single person. It can be higher for people with dependents. However, the average monthly benefit payment was $1,688 as of Dec. 2022, according to the National Council on Aging.
How Work Credits Are Determined
You gain a maximum of four credits per year based on your annual pay income. For 2023, one credit is given per every $1,640 earned from either self-employment or wage income. However, the amount needed for a work credit changes.
When you apply for SSDI benefits, the Social Security Administration examines how many work credits you have earned over the past 10 years. You can earn a maximum of 40 work credits during that time.
Aside from work credits, you must also have worked five of the past 10 years before becoming disabled. The number of years increases to six years if you are ages 24 to 31 when you become incapacitated and seven years if you are ages 22 to 23.
How To Apply for SSDI
If you’re disabled and want SSDI benefits, you must complete the Social Security Disability Insurance Application. The process can be lengthy and confusing, especially if you have a chronic condition or physical limitation that makes it difficult to work long term. That’s because you must document your condition, and you may need to gather medical paperwork from multiple doctors and other medical providers.
However, many gain benefits through the appeals process.
- Review the Adult Disability Checklist
- This simple list can help you determine if you are eligible for SSDI.
- Fill out the Disability Benefit Application
- You can fill this out online, by phone or in person at your local Social Security office.
- Fill out the Adult Disability Report
- This asks you to provide information about your current medical condition, work history and other relevant details about your disability.
- Complete the Authorization To Disclose Information Form
- This gives SSA access to your medical records and other vital documents. Complete it and send it or take it to the Social Security office.
The next step after filing your application can be the hardest — waiting. About 66% of people who file for SSDI claims are initially denied. Denials set the stage for the next steps in the process, which are appeals.
How To File an Appeal for SSDI
Filing an appeal for a declined SSDI application is straightforward. Although, there are four tiers of appeals. You must have patience with the process and have faith that in the end, you’ll get your benefits.
- When you receive a denial for your Social Security Disability Insurance (SSDI) claim, you can submit a written request to have your case examined again. This is called a “reconsideration.” You can request a reconsideration online, by mail or by telephone.
- Hearing by an Administrative Judge
- If you’re unhappy with the reconsideration outcome, your next appeal goes to an administrative judge. This hearing is before a judge not associated with the Social Security Administration. You or your representative can present evidence and call witnesses to testify on your behalf. You must request a hearing within 60 days of the date of the reconsideration notice.
- Appeals Council Review
- The Appeals Council considers petitions for review, but if it decides that the administrative judge was correct, it may reject the request. The Appeals Council also may choose to examine your case independently.
- Federal Court Review
- If you want to file a claim in a federal district court to continue your appeal, you have 60 days from the date of last appeal decision to make your filing.
If you win an appeal at any of the four levels, your benefits payments will be retroactive to the month after the protective filing date of your application. Your first SSDI payment will be a large lump sum, unless you elect to take payments over a six-month space. After the initial payment, your set payments will follow each month.
11 Cited Research Articles
- American Association of Retired People. (2022, December 20). How Are Social Security Benefits Calculated? Retrieved from https://www.aarp.org/retirement/social-security/info-2021/ssdi-benefit-calculation.html
- Bauer, B. (2022, March 16). SSI vs SSDI: The Differences, Benefits, and How To Apply. Retrieved from https://ncoa.org/article/ssi-vs-ssdi-what-are-these-benefits-how-they-differ
- Substance Abuse and Mental Health Services Administration. (2023, January). SSI/SSDI Post-Entitlement Events Guide. Retrieved from https://soarworks.samhsa.gov/article/ssissdi-post-entitlement-events-guide
- National Committee to Preserve Social Security & Medicare. (2022, October 13). Fast Facts About The Social Security Disability Program. Retrieved from https://www.ncpssm.org/documents/social-security-policy-papers/fast-facts-about-the-social-security-disability-program/
- Social Security Administration. (n.d.). Hearings And Appeals. Retrieved from https://www.ssa.gov/appeals/court_process.html
- Social Security Administration. (n.d.). Disability Benefits | How You Qualify. Retrieved from https://www.ssa.gov/benefits/disability/qualify.html
- Social Security Administration. (n.d.). Fact Sheet: Social Security Disability Insurance. Retrieved from https://www.ssa.gov/thirdparty/materials/pdfs/SSAFactSheet-SocialSecurityDisabilityInsurance.pdf
- Social Security Administration. (n.d.). Annual Statistical Report on the Social Security Disability Insurance Program, 2020. Retrieved from: https://www.ssa.gov/policy/docs/statcomps/di_asr/2020/sect04.html#table60
- Social Security Administration. (n.d.). The Faces and Facts of Disability. Retrieved from https://www.ssa.gov/disabilityfacts/facts.html
- Social Security Administration. (n.d.). Components of Trust Fund Income and Cost. Retrieved from https://www.ssa.gov/oact/progdata/financialItems.html
- New Jersey Health and Human Services. (n.d.). How to Apply Online For Social Security Disability Benefits. Retrieved from https://nj.gov/humanservices/ddd/documents/Documents%20for%20Web/HowtoApplyOnlineForSSDBenefits.pdf
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