Social Security Disability Insurance (SSDI)

What Is Social Security Disability Insurance (SSDI)?

Social Security Disability Insurance (SSDI) is a federal income benefits program that provides financial assistance to Americans with disabilities. In general, according to the Social Security Administration (SSA), benefits are paid to those who are not able to work for a year or longer as a result of a disability. Payments are provided monthly to those who qualify.

SSDI is an earned benefit, meaning that in order to qualify, you must have previously paid into the program and have accumulated enough credits to be eligible. Credits are dependent on work history. As SSDI is a type of disability insurance, eligibility is also based on the SSA’s medical criteria and determined through an application process.

Understanding Social Security Disability Insurance (SSDI)

SSDI is a Social Security program for people who are unable to work due to a disability. Applicants must meet a strict definition of disability in order to qualify: their medical condition must be expected to last at least one year or result in death. SSDI is not for partial disability or short-term disability.

SSDI is funded from employment income tax. Contributions are calculated as a percentage of employment income and deducted from all employees’ paychecks under the Federal Insurance Contributions Act (FICA), in all jobs covered by Social Security, or paid by self-employed people on their net earnings under the Self-Employed Contributions Act (SECA).

As such, qualification for SSDI is also based on work history, and the amount received is based on lifetime average earnings in employment covered by Social Security. Applicants must have worked for a certain duration in jobs covered by Social Security; the calculation is based on the number of calendar quarters worked and the age at which the disability began.

Recipients must also be US citizens or have lawful alien status if they were not born in the US.

SSDI payments may be affected (likely, reduced) if an individual or their family is also receiving other government benefits, such as public disability benefits, some pensions, or worker’s compensation. The SSA has online benefit calculators that can help to determine the amount that an individual is likely to receive. SSDI beneficiaries are also automatically enrolled in Medicare Parts A and B after two years of receiving benefits.

Whether or not SSDI benefits are taxable depends on your income.

History of SSDI

Social Security began in the 1930s as part of Franklin Roosevelt’s New Deal reforms, but initially began only with a retirement benefits program, with disability and medical coverage following in the 1950s and 60s. In the 1950s, the Disability Insurance Trust Fund (DI) was established to collect funds under the Federal Insurance Contributions Act (FICA) and Self-Employed Contributions Act (SECA), from which SSDI payments are made.

SSDI Application Process

The application process comprises the following general steps:

• The applicant gathers the required documentation and information for the application. The SSA has a checklist on their website that can assist with this process. 
• The applicant completes and submits their application. 
• The SSA reviews the application to ensure that the work and disability requirements are met. If there are any questions, the SSA will contact the applicant to request additional information or documents.
• The application is processed and sent to the applicant’s state Disability Determination Services office. 
• The state agency determines whether the application is successful. The applicant receives a letter in the mail regarding the decision.

The decision can be appealed in writing within 60 days of receiving the decision.

The SSA recommends applying for disability benefits as soon as you become disabled. This is especially important because if an SSDI application is approved, most beneficiaries (with the exception of those with ALS) must wait five months to receive their first payment. As a result, the first payment would be made in the sixth full month after the date that the disability began according to the application.

Qualifying for SSDI

In general, in order to qualify for SSDI, you must meet the following criteria:

• You are unable to work and engage in Substantial Gainful Activity (SGA) due to your medical situation.
• You are not able to conduct the type of work you did before, or you are not able to do any other type of work as a result of your disability. 
• Your condition has had or is expected to have a duration of at least 12 months, or to result in death.

Note that there are special considerations and slightly different eligibility criteria for people who are blind, widows or widowers of workers, children with disabilities, and veterans.

In line with the above, the state agency makes its decision using these five questions, moving through them in consecutive order:

1. Are you working? If yes, and you make, on average, over a certain monthly figure, in general, you will not be considered to have a disability. The amount changes annually and is also referred to as Substantial Gainful Activity (SGA). If not, or you make less than the SGA threshold, then the agency moves to evaluation step two.
   
2. Is your medical condition “severe”? Under the SSA’s definition, to have a disability, your ability to do basic work activities must be significantly limited for at least 12 months. These include walking, sitting, standing, lifting, and remembering. If not, you won’t be considered to have a disability. If your condition is considered severe under these criteria, the agency moves to evaluation step three. 
3. Does your medical condition meet or medically equal a listing? The SSA uses a listing of medical conditions that has been created in consultation with medical experts. These conditions are considered severe enough to prevent someone from being able to carry out work activities. The state uses this list to determine if you have a disability by confirming if your condition meets or is equal in severity and duration to a listing and its criteria. If this is not the case, the state continues on to step four of the evaluation.
4. Can you do the work you did before? This stage of the evaluation determines whether you are able to continue on with any of your past work, given your medical situation. If your medical situation does not prevent this, the state will determine that you do not have a disability that qualifies for SSDI. If your medical situation does interfere with the ability to carry out past work activities, the evaluation moves to step five. 
5. Can you do any other type of work? At the final stage of the evaluation, the state considers whether you are able to carry out other types of work, based on age, education, past work experience, and skills. If they find you are able to do other work, you will not qualify for SSDI. If they find that you are not able to do other work, you will be considered to have a qualifying disability.

SSDI Payments Schedule

Payments are made the month after for which the benefits are due; for example, the benefit due for January 2022 would be paid in February 2022. Since June 1997, benefits are paid monthly on the second, third, or fourth Wednesday of the month, depending on the beneficiary’s day of birth: 

• 1st to 10th day of birth: paid on second Wednesday of the month
• 11th to 20th day of birth: paid on third Wednesday of the month
• 21st to 31st day of birth: paid on fourth Wednesday of the month

If the Wednesday on which the payment is scheduled is a federal legal holiday, the payment will be made on the first preceding non-holiday day.

The day of birth used to determine the payment schedule is that of the person whose Social Security number is associated with the benefit program. If multiple people are receiving payments associated with a single claim, for instance, in the case of dependents of insured people who are disabled, they will share the same payment day.

Prior to June 1997, payments were provided on the 3rd of each month, so beneficiaries of SSDI who received payments at that point in time remain on the same payment schedule.

Special Considerations

SSDI is a federal program offering benefits only for long-term disability under a strict list of defined medical conditions. Some states (namely, California, Hawaii, New Jersey, New York, and Rhode Island) offer state-funded temporary benefits for short-term disability; their eligibility guidelines and administration criteria differ by state.

Many employers offer private disability insurance as part of their benefits package, usually through commercial insurance brokers. These also may allow coverage for partial disability but may require a health evaluation before initial sign up that will usually lead to higher premiums or denial of coverage if a medical condition is determined.

It is possible to benefit from SSDI while also insured under a private plan; however, receiving SSDI payments may reduce the monthly benefit from the private insurer. Receiving private benefits does not impact your qualification for or benefit amount from SSDI, however.