If you are disabled, you may be eligible for Social Security Disability Insurance (SSDI/SSD) benefits. If you are approved for Social Security disability income, the monthly benefit is based on average earnings over your lifetime prior to the onset of the disability.
The payments you receive aren’t based upon severity of the disability or how much money you make now. Most people who receive SSDI earn between USD 700 to a maximum of more than USD 2600 each month. According to SSA, the average SSDI recipient earns USD 1166 in 2016. If you receive disability payments from a state disability fund or workman’s comp, the payment you receive from SSA may be less.
SSDI Payment Calculation
SSA calculates SSDI benefits based upon previous income upon which you paid Social Security taxes. This amount is referred to as your covered earnings. SSA then averages covered earnings from a number of years to derive an average indexed monthly earnings figure (AIME).
SSA then uses a proprietary formula to compute <i>primary insurance amount</i> (PIA), or the base amount used to establish the level of your SSDI benefits. The formula uses “bend points,” adjusted every year, to calculate the amount:
In 2016, the first USD 856 of AIME is added to PIA; 32 percent of AIME (USD 856 – 5157) plus 15 percent of AIME (greater than USD 5157) is used to compute PIA.
Check your SSA Statement at least once each year to verify accuracy. If you aren’t receiving Social Security now, SSA mails a paper statement each year if you’re at least 60 years of age and each five years if you’re less than 60 years old. Review your earnings statement on the Social Security Website. If you have not done so already, sign up for Social Security My Account to view “My Statement.”
SSA’s online benefits calculators can help you determine what level of SSDI or retirement income benefits you may qualify for. Contact your local SSA field office or contact Social Security Administration’s general information number at 1-800- to learn more.
Social Security Disability Income and Other Disability Insurance
You may have a private or employer-subsidized long-term disability insurance policy from a private insurance company. These benefits don’t directly affect the amount you receive in SSDI benefits. However, workers’ comp or short-term state disability benefits (from Rhode Island, New Jersey, New York, California and Hawaii) might impact the amount of SSDI you receive.
That’s because you can’t receive an amount that’s greater than 80 percent of the average earnings amount you received before your disability from SSDI. If that happens, the SSDI benefit is reduced. However, Veterans Administration (VA) benefits or Supplemental Security Income (SSI) won’t cause you to earn less in most cases.
Social Security Disability Insurance and Backpay
If you qualify for SSDI, Social Security considers when you became disabled and pays your benefits on a retroactive basis. You receive a backpay lump sum that is based upon the SSDI monthly benefit calculated for you. The time from your SSDI application date to approval represents the shortest backpay period. If SSA declares you were disabled before that date, the date of onset is used to calculate the backpay lump sum.
Your SSA field office will ask to meet with you and/or your representative after SSDI is approved. The representative will review how much your monthly benefit is and how much backpay you will receive. Because the SSDI process is lengthy, almost every approved applicant receives backpay from the program. If your backpay is substantial, you will pay taxes on a portion of these earnings. Consult a tax adviser if you’re in doubt about your situation.
Social Security Disability Insurance and Legal Representative Fees
Importantly, if you hired a Social Security lawyer or law firm to represent you during the SSDI application process, the law firm collects its contingency percentage from the larger lump sum payment—not your monthly SSDI benefit.
Your lawyer may charge SSA up to USD 6000 for representing your interests during the SSDI application process. Before retaining an attorney, get your lawyer’s terms in writing. If you’re passed along to a paralegal and manage to win your case without any help from the attorney, SSA will pay the lawyer of record what he or she asks.