How Are SSD Benefits Determined?

The way the Social Security Administration calculates Social Security Disability (SSD) payments depends on a claimant’s age, work history, and other factors. The process that SSA uses to determine your payment amount, as well as your eligibility, can be confusing, and that’s why many people seek help from an attorney with their SSDI claims.

John R. Colvin has over 20 years experience with helping people in the Tennessee Valley apply for SSDI benefits, so if you need assistance with your claim, contact our office today to find out what we can do for you: (931) 962-1044.

Social Security Work Credits

When you are working, you earn Social Security Work Credits, and those credits determine whether you qualify for SSDI benefits. For example, before 1978, workers received one credit for each three-month period in which they earned $50 in wages or were credited with at least $100 of self-employment income. The credits are now calculated on earnings per year, and, as of 2016, workers earn one credit for each year they earn at least $1,260 and can earn up to four credits if they made $5,040 or more.

For example, a claimant that is age 62 will need to have earned 20 credits in the 10 years immediately preceding their  disability and 40 credits, overall in order to qualify for SSDI payments.  So if you worked for 10 years before the onset of disability and earned the maximum of four credits per year, you would have 40 credits, enough to qualify for SSDI benefits.

The Social Security Administration allows some flexibility in this rule, because younger workers who became disabled before age 31 may not have been old enough to work 10 years before their disability:

  • Disability before age 24-A person who becomes disabled before the quarter in which he or she attained age 24, he or she must have six quarters of coverage in the 12 quarter period ending with the quarter in which the disability began. Therefore, the claimant may qualify for benefits if they earned six credits in the three years preceding their disability.

Disability between age 24 to 31- The claimant must have quarters of coverage equal to one-half the calendar quarters between age 21 and the time he or she became disabled.  For example, if you became disabled at age 29, you would need credit for 4 years of work (16 credits) out of the past 8 years (between ages 21 and 29).  Therefore, a claimant may qualify for benefits if he or she earned credits in one-half of the quarters elapsing in the period after the quarter of reaching age 21 and up to and including the quarter of becoming disabled.

At age 31 and beyond, workers are required to have an increasing number of credits to qualify for SSDI payments all of which must have been earned in the 10 years immediately before you became disabled, for example:

  • 20 credits for workers age 31 through 42
  • 26 credits for workers age 48
  • 34 credits for workers age 56.

As a general rule, once a claimant reaches age 42 and beyond, the minimum number of credits required to qualify for SSD benefits increases by two every two years until reaching the maximum requirement of 40 credits at age 62

Work credits are calculated differently when determining whether a surviving spouse or child qualifies for benefits. If the worker earned six credits in the three years preceding death, survivors may qualify for benefits.

Calculating SSDI Benefits

The SSA uses a formula to calculate your Average Indexed Monthly Earnings (AIME), and that figure determines your Primary Insurance Amount (PIA), which is what determines your actual payments. It’s a complex process that involves the application of a weighted curve that allows lower-income claimants to receive disability payments that are proportionately higher than disability payments to higher-income workers. To help people predict what their SSDI payments might be, the SSA website allows people to access their Social Security statement, which shows estimated retirement, disability, and survivors’ benefits.

Most SSD beneficiaries receive between $700 and $1,000 a month, and benefits are increased with each annual increase in the cost of living, which is determined by inflation. In years where inflation is flat, benefits will not increase.

Benefit Reductions

The SSA may reduce SSDI payments if you’re receiving other benefits, such as Workers’ Compensation, retirement benefits, or disability payments from another federal program, or a state or labor union plan. SSDI payments may be reduced if your total benefits amount to more than 80 percent of your average earnings preceding your disability, or your total benefits exceed your family’s total Social Security benefit.

Some Workers’ Compensation programs reduce payments made to recipients who are collecting SSDI, in which case SSDI payments would not be reduced.

If you are collecting SSDI and return to work, you may still be able to receive benefits, at least initially. When you first return to work, you enter the Trial Work Period (TWP) of nine months. During this time, you can continue to receive SSD payments, regardless of your employment income.

After the TWP, a 36-month period of extended eligibility begins. During that time, the SSA will award benefits in any month where the claimant does not exceed the Substantial Gainful Activity (SGA) threshold, which is a pre-determined monthly amount of income that one can earn, without a reduction in benefits. The SSA may terminate benefits for a claimant who exceeds the SGA, but benefits may be reinstated during the 36-month extended eligibility period, if the claimant’s income falls below the SGA.

Providing Clarity On How Disability is Calculated

Unfortunately, people sometimes lose their benefits because they weren’t aware of how the SSA determines ongoing eligibility. An experienced SSD attorney can help claimants understand the requirements for receiving SSDI benefits and explain how other factors like income and Workers’ Compensation may affect their payments.

If you need help pursuing your SSDI claim, or with getting your benefits reinstated, contact us today via our online form or at (931) 962-1044.

Licensed to Practice in Tennessee & Alabama