Many people use the terms Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) interchangeably. However, they are actually two different federal programs. Both SSDI and SSI are managed by the Social Security Administration (SSA) and provide assistance to people with disabilities. Although the medical requirements for disability eligibility are the same under SSDI and SSI programs, the way these programs are funded differs. Summarized below are the key differences between these two programs.
Social Security Disability Insurance (SSDI)
Social Security Disability Insurance (SSDI) is an insurance program funded by the Social Security taxes (called “FICA”) paid by employed individuals. Thus, the SSDI program is based on a person’s work experience and is not a welfare program.
Disability benefits are payable to blind or disabled workers, widow(er)s, or adults disabled since childhood, who are otherwise eligible. A disabled person qualifies for SSDI if they are under age 65 and have a significant physical or mental condition that is expected to last for at least twelve months or is expected to result in death.
Individuals must also have earned sufficient work credits to be “insured” for Social Security purposes. One can earn a maximum of four quarters each year. The number of work credits needed for disability benefits depends on the age when the individual became disabled. Generally you need 20 credits earned in the last ten years. Individuals under age 31 when he or she became disabled may qualify with fewer credits.
A disabled person may work and receive SSDI if they are earning less than the amount considered to be the substantial gainful activity (SGA) level. The monthly SGA amount for individuals with disabilities, other than blindness, is $1,000. For blind individuals, the monthly SGA amount is $1,640. The SSA defines substantial gainful activity as work that involves significant physical or mental activities or a combination of both. For work activity to be substantial, it does not need to be performed on a full-time basis. Work activity performed on a part-time basis or work that pays less than one’s regular employment or which has less responsibility may also be substantial gainful activity.
The amount of monthly disability benefits depends upon the worker’s Social Security earnings record. Generally speaking, the higher an individual’s earnings have been and the longer he or she has earned them, the higher the SSDI check will be. The amount one receives may also be reduced by certain other benefits, such as workers compensation or other state or local benefits. However, an individuals’ other sources of income such as dividends from stocks or interest from savings, etc, do not reduce the amount of SSDI payments.
There is a five month waiting period from the onset date of disability under SSDI. This means that an individual will not be paid any benefits until the end of the fifth month after the day the individual became disabled under the Social Security rules. Payments will continue until the individual dies, reaches retirement age at which time SSDI becomes Social Security Retirement Benefits or is able to work again. If an individual is able to work again, SSDI will provide “work incentives” to ease the transition back to work with continued monetary benefits and health care coverage.
If you qualify for SSDI benefits, you also qualify for Medicare.
Supplemental Security Income (SSI)
Supplemental Security Income (SSI) is a need-based welfare program funded by general tax revenues. SSI is based on an individual’s financial need and not on an individual’s work history. Benefits are paid to people who meet the Social Security disability rules and whose income and assets are below the eligibility levels. The SSI program was set up to help the blind, disabled and elderly (over age 65) with little or no income by providing them with a monthly check to pay for food and shelter.
One of the requirements to receive SSI is that the individual’s income must be below certain limits. Income is money received such as wages, Social Security benefits, bank interest, dividends, veteran’s benefits and pensions. Income also includes such things as food and shelter. If an individual is receiving SSDI, he or she may also receive SSI if his or her SSDI check is below the required income level.
The amount of income an individual can receive may vary based on the state in which the individual lives, his/her living arrangement, the number of people living in the residence, and the type of income. Social Security does not count all of an individual’s income when determining eligibility for SSI. SSI disregards the first $20 per month of any income, the first $64 a month earned from working and half the amount of $65, food stamps, shelter received from private nonprofit organizations and most home energy assistance.
If an individual is married, his or her spouse’s income and assets may be included in the determination for benefits. If an individual is younger than age 18, his or her parent’s income and assets may also be included. For individuals who are disabled but work, SSA does not count wages used to pay for items or services that help him or her work.
An individual is eligible for SSI benefits if his or her assets are below $2,000. A married couple is eligible if they have combined assets below $3,000 (whether the spouse is eligible for SSI or not). For a child applicant with one parent living in the household the asset limit is $4,000. Where a child applicant has two parents living in the household, the asset limit is $5,000.
Assets include real estate, bank accounts, cash, stocks and bonds. In determining eligibility, SSA does not count the individual’s primary home, life insurance policies with a face value of $1,500 or less, a vehicle, regardless of its value if it is used for transportation for the individual or immediate family member, burial plots for the individual and members of his or her immediate family, and up to $1,500 in burial funds for the individual and his or her spouse. Conditional benefits may be paid if a substantial portion of the assets are considered non-liquid, i.e. resources that cannot be sold within 20 working days, if they agree to sell the resources at their current market value within a specified period and repay the money after the non-liquid property is sold.
The amount of SSI benefits an individual can receive varies up to the maximum federal benefit rate, which may be supplemented by the State or decreased by countable income and assets. The maximum federal benefit rate is $674 for an individual and $1,011 for a couple (for 2011) to help meet the costs of basic needs of food and shelter. If the individual’s total countable income is greater than the SSI maximum payment levels, he or she cannot get SSI. Thus, the more countable income an individual has, the lower his or her SSI benefit will be.
Individuals who receive SSI are usually eligible to receive monthly food stamps, energy assistance, and section 8 housing. They may also be eligible for Medicaid and supplemental income from the State through its State Supplemental Program. For example, the Commonwealth of Massachusetts increases the cash assistance by $114 for disabled individuals living independently, making the total SSI benefit $788 per month.
SSI benefits will continue for as long as the individual is disabled. If medical improvement of the individual’s condition is possible, his or her case may be review periodically to determine if he or she is still disabled. If the individual has enough credits from his of her work history to receive Social Security retirement benefits, he or she must apply for early retirement benefits at age 62. If the monthly early retirement benefit amount is less than the SSI monthly amount, the individual will receive enough SSI benefits to exceed that monthly SSI amount by $20. When an individual turns 65, his or her SSI benefits will be based on age and not subject to a disability determination.
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Tags: disability benefits, Disability planning, elder law attorney, social security, Social Security Disability Insurance, SSDI, SSI, Supplemental Security Income
