Social Security Turns Eighty Years Old – A Discussion of SSI and SSDI

On August 14, 1935, President Franklin D. Roosevelt signed the Social Security Act, which among other things allows the Federal Government to provide financial assistance to people who because of disability are unable to work. Two of these are programs are Social Security Disability Insurance (SSDI) which is funded by social security tax revenue and Supplemental Security Income (SSI) which is funded by general tax revenue stream.

In order to receive SSDI or SSI, the Social Security Administration (SSA) must make a determination that you are disabled. To meet this standard you must show that (1) you cannot perform the work that you did before; (2) SSA decides that you cannot adjust to other work because of your medical condition(s); and (3) the disability has lasted or is expected to last for at least one year or to result in death. It is worth noting that Social Security Disability programs have different standards than other disability programs such as workers’ compensation insurance and short and long term disability insurance.

Should you meet SSA’s standard for disability, then the next question is whether you qualify for SSDI or SSI. This is determined by the number of earned Social Security Work Credits. These credits are based upon the total yearly wages or self-employment income with a maximum of four credits earned per year (one credit per quarter). In order to have “worked enough quarters” to qualify for SSDI it must be shown that a total of 40 credits with at least 20 of them earned in the past 10 years ending with the year of the disability have been earned. The amount of the SSDI benefits received is income based and calculated by your lifetime average earnings. There is no limit on the amount of resources you may have.

Even if you have not earned enough credits, there is still a chance that you can qualify for SSDI. The Social Security Act provides financial support for qualifying adults who were disabled before the age of 22. This is usually referred to “adult child’s benefit” because it is dependent upon the Social Security Earnings of the parent. The “adult child” is eligible if he (1) is over the age of 18 years old; (2) fits the SSA’s definition of disability; (3) said disability’s onset date was prior to his 22nd birthday; and (4) one of his parents receives Social Security Retirement Benefits. The adult child can collect a SSDI benefit once his parent collects Social Security Retirement Benefits. The amount of parent’s retirement benefit is not lowered or otherwise changed when this program is utilized. NOTE—even if the adult child is already receiving SSI or SSDI independent of his parent, it is important to check to see whether he can collect additional funds under his parent’s earning record which will which increase his monthly SSI or SSDI check.

If you have not earned enough credits then you may qualify for SSI. The amount of SSI benefits received is based upon financial need and income. To receive SSI, an individual must have less than $2,000 in countable resources (i.e. something that can be converted into cash and is not used for self-support). If you give away a resource or sell it for less than it is worth in order to reduce your resources below the SSI resource limit, you may be ineligible for SSI for up to 36 months. Additionally, if you receive a windfall or inheritance your ability to receive SSI may also be jeopardized. In the next blog post we will discuss what can be done to preserve your SSI benefits in the event you unexpectedly have resources that exceed the $2,000 limit.