Social Security Disability Insurance

At the end of 2011, there were 10.6 million Americans collecting SSDI, up from 7.2 million in 2002.[1] The share of the U.S. population receiving SSDI benefits has risen rapidly over the past two decades, from 2.2 percent of adults age 25 to 64 in 1985 to 4.1 percent in 2005.[2] According to David Autor and Mark Duggan, aging and changes to the overall health of the U.S. population have had a small effect at most on SSDI usage.[2]

In a 2006 analysis, Autor and Duggan state that the most significant factor in the growth of SSDI usage has been the loosening of the screening process that took place in 1984 following the signing of an SSDI reform act into law; this directed the Social Security Administration to relax screening of mental illness, place more weight on applicants' reported pain and discomfort, consider multiple non-severe ailments to be disabling, and give more credence to medical evidence provided by the applicant's doctor. These changes had the effect of increasing the number of new SSDI awards and shifting their composition towards claimants with low-mortality disorders such as mental illness and back pain.

According to Autor and Duggan, a second factor in increased SSDI usage was the rising value of SSDI benefits relative to what recipients would have earned from employment. According to this report, a low-income older male SSDI recipient in 1984 would have received from benefits about 68% of the income he would have earned by working; by 2004, due to increasing income inequality, the same man would have received from SSDI benefits 86% of what he would have earned through employment.[2]

Autor and Duggan argue that because the definition of disability adopted in 1984 is quite broad, the SSDI program often functions in practice as an insurance program for unemployable people.[2] Other researchers, however, do not agree with Autor and Duggan's explanation for the increase in Americans getting social security disability. The Center on Budget and Policy Priorities has found demographic factors such as population growth, aging of the baby boom generation, growth in women's labor force participation, and the increase in Social Security's full retirement age from 65 to 66 to be the primary factors in higher rates of SSDI program usage.[3]

In December 2014, the SSDI program insured approximately 10.9 million beneficiaries including disabled workers and their spouses and children.[4]

In April 2019, the Social Security Trustees reported that under current law, "the DI Trust Fund reserves [will] become depleted in 2052 and the OASI Trust Fund reserves [will] become depleted in 2034".[5]

The amount that each recipient receives monthly is based upon an average of past earnings. The calculation is based on the average indexed monthly earnings (AIME) which is used to calculate the primary insurance amount (PIA). In 2017, the average monthly disability payment was $1171, and the maximum monthly benefit was $2,687.[9]

According to the Social Security Administration (SSA)

• they have a physical or mental condition that prevents them from engaging in any "substantial gainful activity" ("SGA"), and
• the condition is expected to last at least 12 months or result in death, and
• they are under the age of 65, and
• generally, they have accumulated 20 social security credits in the last 10 years prior to the onset of disability (normally four credits per full or partial year); one additional credit is required for every year by which the worker's age exceeds 42.[10][11]

The work requirement is waived for applicants who can prove that they became disabled at or before the age of 22, as these individuals may be allowed to collect on their parent's or parents' work credits. The parent(s) experience no loss of benefits.

Medical evidence is signs, symptoms and laboratory findings and is required to document the claim. Symptoms, such as pain, are considered but must be reasonably expected to come from a medically determinable impairment which the claimant is diagnosed to have. The decision is based on a sequential evaluation of medical evidence. The sequence for adults is:

1. Is the claimant performing a substantial gainful activity? If yes, deny. If no, continue to next sequence.

2. Is the claimant's impairment severe? If no, deny. If yes, continue to next sequence.

3. Does the impairment meet or equal the severity of impairments in the Listing of Impairments?[12] If yes, allow the claim. If no, continue to next sequence.

4. Is the claimant able to perform past work? If yes, deny. If no continue to next sequence.

5. Is the claimant able to perform any work in the economy? If yes, deny. If no allow the claim.

Medical evidence that demonstrates the applicant's inability to work is required. The DDS or ALJ may also require the applicant to visit a third-party physician for medical documentation, often to supplement the evidence treating sources do not supply. The applicant may meet a SSA medical listing for their condition. If their condition does not meet the requirements of a listing, their residual functional capacity is considered, along with their age, past relevant work, and education, in determining their ability to perform either their past work, or other work generally available in the national economy.

Determination of a residual functional capacity—made in the fourth step in the sequential evaluation process—often constitutes the bulk of the SSDI application and appeal process. A residual functional capacity is assessed in accordance with Title 20 of the Code of Federal Regulations, part 404, section 1545[13] by a disability determination service (DDS) or, on appeal, by an administrative law judge (ALJ), and is generally based upon the opinions of treating and examining physicians, if available.

Residual functional capacity (RFC) is classified according to the five exertional levels of work defined in the Dictionary of Occupational Titles, which are: Sedentary, Light, Medium, Heavy, and Very Heavy. If the residual functional capacity of an individual equals the previous work performed, the claim is denied on the basis that the individual can return to former work. If the residual functional capacity is less than former work then the RFC is applied against a vocational grid that considers the individual's age, education and transferability of formerly learned and used skills. The vocational grid directs an allowance or denial of benefits.

Applicants may hire a lawyer or non-attorney representative to help them apply or appeal. There are two primary types of organizations: companies with trained specialists experienced in handling SSDI applications and appeals in some or any local community across the country and law firms which specialize in disability-related cases.

Most SSDI applicants—about 90 percent according to the SSA—have a disability representative for their appeal. An August 2010 report by the Office of Inspector General for the Social Security Administration indicated that many people submitting an initial disability application for SSDI might benefit from using a third-party disability representative when they first apply for benefits. It indicated that having a disability representative earlier in the process significantly improves the chances of those with four major types of disabilities getting approved for SSDI.[14]

The fee that a representative can charge for SSDI representation is set by law. Currently, under the SSA's fee agreement approval process, it is 25 percent of the retroactive dollar amount awarded, not to exceed $6,000. Some representatives may charge fees for costs related to the claim, such as photocopy and medical record collection expenses. If an SSDI applicant is approved quickly and does not receive a retroactive award, the SSA must review and approve the fee a representative will charge the individual. Disability representatives do not charge a fee if they are unsuccessful in obtaining a claimant's disability benefit.

Representatives may decline to represent you if, after reviewing your situation, they do not believe you are likely to meet the requirements for SSDI. Most representatives will provide this screening at no cost to you. Typical reasons individuals do not meet the requirements are: their disability is not severe enough or the applicant does not have a sufficient work history (and did not pay enough into FICA - the Federal Insurance Contributions Act).

The amount of time it takes for an application to be approved or denied varies, depending on the level of the process at which the award is made. In 2009, there were 2,816,244 applications for SSDI.[15] As of March 31, 2007, the number of pending applications (or "backlog") was 1,463,153.[16]

The Social Security Administration estimates that the initial benefits application will take 90 to 120 days, but in practice filings can take up to eight months to complete. The appeals process for denied filings can likewise take 90 days to well over a year to get a hearing, depending on caseloads.[17] At the initial application level the claim actually takes as long as it takes to get medical treating sources to respond with sufficient medical evidence to document the disability claim.

In an attempt to speed up the application process, beginning in August 2006, the SSA implemented changes to the application process in the six-state New England region, on a trial basis. On December 1, 2007, the SSA implemented the program nationwide.[18]

Nationwide statistics provided by the SSA in 2005 stated that 39 percent of all SSDI applications are approved at the state level by Disability Determination Services (DDS) (including determinations made at both the initial and, in non-prototype states, reconsideration steps).[21][22]

For each step, the approval and appeal rates appear to be the following:

Generally, the person qualifying for benefits is determined to be capable of managing their own financial affairs, and the benefits are disbursed directly to them. In the case of persons who have a diagnosed mental impairment which interferes with their ability to manage their own finances, the Social Security Administration may require that the person assign someone to be their representative payee. This person will receive the benefits on behalf of the disabled individual, and disburse them directly to payers such as landlords, or to the disabled person, while providing money management assistance (help with purchasing items, limiting spending money, etc.). The representative payee often does not charge a fee for this service, especially if it's a friend or relative. Social service agencies who are assigned as payee are NOT prohibited from charging a fee, although the maximum fee is set by Social Security. The fee is the same for ALL recipients, except it can be larger for those with severe substance abuse problems (Social Security determines when a higher fee can be charged, not the representative payee.) Some states and counties have representative payee agencies (also called substitute payee programs) which receive the benefits on behalf of the disabled person's social worker, and disburse the benefits per the social worker's instructions. A payee can be very helpful in the instance of homeless individuals who need assistance paying down debts (like utility bills) and saving for housing.

• Social Security provides a regular monthly payment that supplements any current disability benefits already received. It also provides annual cost of living increases. A portion of these benefits may be tax free.
• Regardless of a person's age, after receiving SSDI benefits for 24 months, they are eligible for Medicare, including Part A (hospital benefits), Part B (medical benefits), and Part D (drug benefits). The date of Medicare eligibility is measured from the date of eligibility for SSDI (generally 6 months after the start of disability), not the date when the first SSDI payment was received.
• If a person receives Social Security disability benefits, any COBRA benefits may also be extended from 18 to 29 months.[23]
• Social Security disability entitlement "freezes" Social Security earnings records during a person's period of disability so that reduced earnings during a period of disability will not have an adverse effect on retirement benefits. The resulting benefits computation may raise, but will not lower, future Social Security retirement benefits.[24]
• A person receiving Social Security Disability Insurance may have a dependent (child, adopted child, or, in some cases, a stepchild or grandchild) eligible for Social Security benefits. This child must be under age 18 or under age 19 if in elementary or secondary school full-time.
• A person receiving Social Security Disability Insurance may have a spouse eligible for Social Security benefits. The spouse, if not personally receiving SSDI because of his or her own disabling condition, must be 62 or older or caring for a child of the wage earner who is younger than age 16 or disabled.
• Benefits can be paid on the record of a disabled, retired or deceased parent to an unmarried child of any age if the child became disabled before the age of 22.
• Social Security will provide a person opportunities to return to work while still paying them disability benefits.
• Since 1984 a portion of social security benefits are taxable, usually levied when a person has another source of income often from a separate pension/disability fund or from a spouse. State income tax laws generally exclude all social security benefits from taxable income. If social security disability and other public benefits provide more than 1/2 of an adult's cost of living, that person is not considered a dependent for establishing head of household filing status by a caregiver, although in practice, many taxpayers claim disability benefit recipient relatives. Private disability insurance income is taxable if the original premiums for the benefit were paid by the employer; if they were paid by the individual, they are not taxable. If both paid the premiums, they are taxable in the same proportion. Five states (California, New York, New Jersey, Rhode Island, and Hawaii) have mandatory state disability programs, but the structure of the programs vary widely. Tax treatment of California's program is especially complex, as California's program pre-dates the Social Security Act, resulting in numerous tax-law special rules.

• Social Security Disability Starter Kit
• B.E.S.T The Benefit Eligibility Screening Tool
• Social Security and the "D" in OASDI: The History of a Federal Program Insuring Earners Against Disability

• Disability Programs; Social Security Administration
• Press release on new Social Security Disability determination process
• 2011 Red Book "A Summary Guide To Employment Support For Persons With Disabilities Under The Social Security Disability Insurance and Supplemental Security Income Programs"
• Social Security Administration Listing of Impairments
• Social Security Disability Research & Information
• SSDI Research Guide