Jonathan Peterson - Social Security For Dummies

Here’s an example: Levan hasn’t been a model breadwinner. But lately, the single father has started to hunker down, taking a job as a desk clerk in a resort hotel and bringing in steady money for the first time in his life. When he dies in a hang-gliding accident at age 33, Levan has built up seven work credits over the last two years. That wouldn’t normally be enough to gain a survivor’s benefit. But under Levan’s “currently insured status” with the SSA, his young son qualifies for a survivor’s benefit. Given his limited earnings history, however, the benefit is modest.

Disability can be devastating to an individual or family’s finances. Social Security offers different benefits for disability. The benefits are complex, with sometimes-ambiguous rules for qualifying and many requirements that are distinct from other areas of Social Security.

This section offers an extremely brief overview of Social Security Disability Insurance (SSDI). Turn to Chapter 11for a detailed examination of this important and complex area, including information on how the SSA defines disability and the medical evidence applicants need in order to make a claim.

If you’re disabled, you may apply for SSDI benefits or for a separate program called Supplemental Security Income (see the next section), which targets the needy.

The SSA also runs a special federal program for miners who suffer from black lung disease. For more information on the Federal Black Lung Program, you can download the publication available online at www.dol.gov/owcp/dcmwc/regs/compliance/cm-6.pdf or go to www.dol.gov/owcp/dcmwc/ .

As in other Social Security protections, dependent family members of a disabled worker may also qualify for help if they meet certain requirements. Social Security disability benefits may go to

Disabled workers: To qualify, an individual must have built up the necessary number of credits, through covered work, and must meet a standard of having worked recently.

Spouses of disabled workers: To qualify, a disabled worker’s spouse must be caring for a child under 16 or a disabled child of any age, or be at least 62 years old.

Children of disabled workers: To qualify, a child must fall into one of the following categories:Under 18, unmarried, and attending school full timeUp to 19 years old and unmarried, if he or she is attending school full time but hasn’t yet graduated from high schoolAdult and disabled but younger than 22These standards also apply to stepchildren and possibly grandchildren.

Qualifying for SSDI isn’t easy. The SSA says that to get benefits, a person has to be completely disabled — unable to work — or suffering from a condition that may end in death. Disability benefits potentially continue until full retirement age, at which time they’re switched to retirement benefits.

SSDI payment levels are based on average lifetime earnings. Individuals can qualify with a lower number of credits than is typical for retirement benefits:

Workers younger than 24: You need six credits earned in the three years before the onset of disability. As with other Social Security benefits, you can earn up to four credits per year for covered work.

Workers ages 24 to 31: You need to have worked in Social Security–covered employment 50 percent of the time between age 21 and the onset of the disability.

Workers ages 31 and up: The credit requirements steadily increase. At 31, you’re expected to have built up 20 credits, and this moves up to 40 credits for applicants ages 41 and older. Also, applicants generally are expected to have earned 20 credits within the ten years before the onset of disability.

If you meet the strict qualifications for disability insurance, you may receive a benefit that is 100 percent of your primary insurance amount, which is the same as the retirement benefit you qualify for at full retirement age. Significantly, a worker’s disability benefit is not reduced for age (after all, job-related disability takes place before you retire).

The average monthly benefit for a disabled worker is a bit over $1,255, but if you’re disabled with above-average earnings, your benefit is higher. A worker’s disability benefit switches automatically to a retirement benefit when the worker reaches full retirement age. The payment level doesn’t change.

When a worker qualifies for SSDI, benefits may also go to other family members. Not only does the breadwinner get income, but payments may also be made to a dependent child and spouse. The child’s benefit may be 50 percent of the breadwinner’s amount (as long as the child is younger than 18, or up to 19 if still in high school and unmarried). A dependent spouse without a child may qualify for 50 percent of the disabled worker’s benefit if the spouse has reached full retirement age. If the spouse is younger, the benefit becomes available at 62. If the spouse is caring for the disabled worker’s child, the dependent spouse benefit of 50 percent is available at any age. When multiple Social Security benefits are flowing into one household, they may be reduced by the family maximum (see Chapter 10).

Supplemental Security Income (SSI) targets the neediest Americans — specifically, those who are 65 or older, blind, or disabled — with cash payments to help them survive. Its benefits are designed to pay for life’s necessities: food, clothing, and shelter. SSI also has child disability benefits for children under 18.

The SSA runs SSI, but SSI isn’t considered a Social Security benefit. Instead, it’s a cash assistance or welfare program that you qualify for based on financial need. This is a big difference from basic Social Security benefits, including SSDI (see the preceding section).

You contribute to the basic Social Security programs, including SSDI, through the payroll tax, and then you qualify for benefits you’ve earned through work credits that add up over time.

SSI, on the other hand, is financed by general tax dollars. People don’t need to build up work credits or demonstrate a work history to qualify. They just have to demonstrate an extreme level of need. The rules on income and assets are strict, however. To get SSI in most states, people must earn below the federal payment standard of $783 per month for an individual and $1,175 per month for a couple (as of 2020). Assets (the things people own, such as cash or property other than your home) generally can’t exceed $2,000 in value for an individual and $3,000 for a couple.

Social Security is social insurance for people of all income levels. SSI is an assistance program for people with very little income.

Chapter 3

IN THIS CHAPTER

Recognizing that when you claim affects what you get

Considering your life expectancy