Disability Insurance in the US: 2024

What is Disability Insurance?

Disability insurance is a form of financial protection that provides income replacement to individuals who are unable to work due to a disabling illness or injury. This type of insurance is crucial for maintaining financial stability during periods when a person is unable to earn an income, ensuring that they can cover essential expenses such as housing, food, and medical costs.

The significance of disability insurance lies in its ability to safeguard individuals and their families from the financial devastation that can result from an unexpected disability. Without this protection, many people would struggle to meet their basic needs, leading to potential long-term financial hardship. Disability insurance acts as a safety net, allowing individuals to focus on recovery without the added stress of financial insecurity.

New SSI Rules in 2024

Category	Description
Substantial Gainful Activity (SGA)	The SGA amount for persons with disabilities other than blindness is $1,550 per month in 2024. For persons who are blind, the amount of earnings that indicate SGA is $2,590 per month in 2024.
Trial Work Period (TWP) Months	The monthly earnings amount used to determine if a month counts as a TWP month is $1,110 per month in 2024.
Federal Benefit Rate (FBR)	For 2024, the Supplemental Security Income (SSI) FBR is $943 per month for an eligible individual and $1,415 per month for an eligible couple.
Student Earned-Income Exclusion (SEIE)	For 2024, the amount of earnings that will have no effect on eligibility or benefits for SSI beneficiaries who are students under age 22 is $9,230 a year, with a monthly exclusion limit of $2,290.
Medicare Part A Hospital Insurance	For 2024, the monthly Medicare Part A Hospital Insurance base premium is $505, and the 45% reduced premium is $278.
Medicare Part B Supplementary Medical Insurance	For 2024, the Part B Supplementary Medical Insurance monthly base premium is $174.70 (or higher depending on your income). Social Security will inform you of the exact amount for 2024.
Medicaid While Working	For 2024, the Medicaid While Working State Threshold Amounts for persons with disabilities have been increased. The 2024 amounts for each state can be found at SSI Only Employment Supports online.

Data Retrieved From: https://www.ssa.gov/

Distinction Between Public and Private Disability Insurance Options

In the United States, disability insurance is available through both public programs and private insurance providers. Understanding the differences between these options is essential for determining the best coverage for individual needs.

Public Disability Insurance:
- Social Security Disability Insurance (SSDI):
  - Eligibility: SSDI is a federal program administered by the Social Security Administration (SSA) that provides benefits to individuals who have a significant work history and have paid Social Security taxes. To qualify, applicants must demonstrate that they have a severe disability that prevents them from engaging in any substantial gainful activity (SGA) and that their condition is expected to last at least 12 months or result in death.
  - Benefits: SSDI provides monthly payments based on the individual’s lifetime average earnings before their disability began. Additionally, after receiving SSDI benefits for two years, recipients are automatically enrolled in Medicare, providing access to healthcare coverage.
- Supplemental Security Income (SSI):
  - Eligibility: SSI is also administered by the SSA but differs from SSDI in that it is designed for individuals with limited income and resources, regardless of their work history. SSI benefits are available to disabled individuals, blind individuals, and those aged 65 or older who meet the financial criteria.
  - Benefits: SSI provides monthly payments intended to help cover basic needs such as food, clothing, and shelter. Unlike SSDI, SSI benefits are not based on prior work or contributions to Social Security. SSI recipients may also qualify for Medicaid, which provides essential healthcare coverage.
Private Disability Insurance:
- Eligibility and Coverage:
  - Private disability insurance policies are offered by insurance companies and can be purchased individually or through employer-sponsored plans. These policies vary widely in terms of coverage, eligibility, and cost. Unlike public programs, private disability insurance often offers more flexibility in defining what constitutes a disability.
- Benefits:
  - Private disability insurance typically provides a percentage of the policyholder’s income, often ranging from 50% to 80%, depending on the policy. The terms of coverage, such as the duration of benefit payments and the waiting period before benefits begin, are determined by the specifics of the policy. Private insurance may also offer the option to customize coverage based on individual needs and preferences.

The Likelihood of Disability

The need for disability insurance is underscored by the fact that disabilities are more common than many people realize. According to statistics from the Social Security Administration, a 20-year-old worker has a 1-in-4 chance of becoming disabled before reaching full retirement age. This startling statistic highlights the importance of planning for the possibility of a disability and ensuring that adequate financial protections are in place.

‘Pro-Tip’

Document Severance Agreements: Always document severance agreements in writing, clearly outlining the terms and conditions. This helps prevent misunderstandings and provides legal protection for both parties.

Key Terms and Definitions

Disability Insurance

Disability insurance is a form of insurance designed to protect individuals from the financial impact of losing income due to a disabling illness or injury. Its primary purpose is to provide income replacement, ensuring that policyholders can continue to meet their financial obligations, such as paying for housing, food, and medical expenses, even when they are unable to work. Disability insurance serves as a crucial safety net, helping individuals maintain their standard of living and financial stability during periods of disability.

Types of Disability Insurance:

Short-Term Disability Insurance: Provides benefits for a limited period, typically ranging from a few weeks to a year, depending on the policy. It is designed to cover temporary disabilities.
Long-Term Disability Insurance: Offers benefits for an extended period, often until the policyholder reaches retirement age or can return to work. It is intended to cover more severe or long-lasting disabilities.

Social Security Disability Insurance (SSDI)

Social Security Disability Insurance (SSDI) is a federal program administered by the Social Security Administration (SSA) that provides financial assistance to individuals who have worked and paid Social Security taxes but are now unable to work due to a severe disability. SSDI is a crucial component of the U.S. social safety net, offering essential income support to individuals who meet specific eligibility criteria.

Eligibility Criteria: To qualify for SSDI, applicants must meet the following requirements:

Work History: Applicants must have a significant work history, meaning they have worked in jobs covered by Social Security and earned a sufficient number of work credits. Generally, individuals need to have worked for at least five out of the last ten years before becoming disabled. Younger workers may qualify with fewer credits.
Medical Condition: The applicant’s medical condition must meet the SSA’s strict definition of disability. This means the condition must be severe enough to prevent the individual from performing any substantial gainful activity (SGA) and must be expected to last at least 12 months or result in death.

Benefits: SSDI provides monthly payments to eligible individuals based on their average lifetime earnings before their disability. These benefits can also extend to certain family members, such as spouses and children, under specific conditions. Additionally, SSDI recipients are automatically eligible for Medicare coverage after receiving benefits for two years.

Application Process: Applying for SSDI involves submitting detailed medical and work history information to the SSA, which then forwards the case to a state Disability Determination Services (DDS) office for evaluation. If approved, the applicant typically receives their first benefit after a five-month waiting period.

Supplemental Security Income (SSI)

Supplemental Security Income (SSI) is a federal assistance program also administered by the Social Security Administration (SSA), but unlike SSDI, it is designed to help individuals with limited income and resources who are disabled, blind, or aged 65 or older. SSI provides essential financial support to those who do not qualify for SSDI due to insufficient work history or who have never worked.

Eligibility Criteria: SSI eligibility is based on financial need rather than work history. To qualify, applicants must meet the following requirements:

Income and Resources: Applicants must have limited income and resources. The SSA has specific thresholds for both, and these limits can vary slightly depending on individual circumstances, such as living arrangements.
Medical Condition: Like SSDI, SSI applicants must have a disability that meets the SSA’s definition, which includes severe physical or mental impairments expected to last at least 12 months or result in death. Alternatively, applicants can qualify based on age (65 or older) or blindness.

Benefits: SSI provides monthly payments intended to help cover basic needs such as food, clothing, and shelter. The amount of the benefit varies depending on the applicant’s income, living situation, and the state in which they reside. Unlike SSDI, SSI benefits are not based on previous earnings. SSI recipients may also qualify for Medicaid, a state and federal program that helps with medical costs.

Application Process: The application process for SSI is similar to that of SSDI, requiring the submission of detailed information about the applicant’s income, resources, and medical condition. Applications can be submitted online, by phone, or in person at a local SSA office.

Private Disability Insurance

Private disability insurance is offered by insurance companies and can be purchased individually or through employer-sponsored plans. Unlike public programs like SSDI and SSI, private disability insurance policies can be tailored to meet the specific needs and preferences of the policyholder, providing more flexibility in terms of coverage options, definitions of disability, and benefit amounts.

Coverage Options:

Short-Term Disability Insurance: Typically provides coverage for a period ranging from a few weeks to a year. It is designed to replace a portion of the policyholder’s income during temporary periods of disability.
Long-Term Disability Insurance: Offers coverage for more extended periods, often until the policyholder reaches retirement age or is able to return to work. It is intended for more severe or long-lasting disabilities.

Differences from Public Programs:

Definition of Disability: Private disability insurance policies often have more lenient definitions of disability compared to SSDI. For example, some private policies may only require that the policyholder is unable to continue working in their current occupation, whereas SSDI requires that the individual cannot perform any substantial gainful activity.
Benefit Flexibility: Private disability insurance allows policyholders to choose the percentage of income replacement, the duration of benefits, and the length of the elimination period (the waiting period before benefits begin). This flexibility enables individuals to customize their coverage based on their financial needs and risk tolerance.
Premium Costs: The cost of premiums for private disability insurance varies based on several factors, including the strictness of the disability definition, the benefit amount, the length of the benefit period, and the policyholder’s health and occupation. Generally, policies with more favorable terms for the policyholder have higher premiums.

Real-World Considerations: Individuals should carefully evaluate their financial situation, job stability, and health when selecting a private disability insurance policy. For example, high-income professionals with specialized skills may prefer a policy with a broader definition of disability and longer benefit periods, while others may opt for lower-cost plans with stricter conditions.

Disability Determination Services (DDS)

Disability Determination Services (DDS) is a state-level agency responsible for evaluating claims for Social Security Disability Insurance (SSDI) and making the initial decisions on whether applicants meet the medical criteria for disability benefits. After an individual submits an SSDI application to the Social Security Administration (SSA), the SSA reviews the non-medical eligibility criteria (such as work history and income). If these criteria are met, the application is forwarded to the DDS office in the applicant’s state for a medical evaluation.

Key Functions of DDS:

Medical Evidence Review: DDS reviews medical records, test results, and other relevant documentation from the applicant’s healthcare providers to determine if the disability meets the SSA’s strict definition of disability.
Consultative Examinations: If the evidence provided is insufficient or unclear, DDS may request additional medical examinations, known as consultative exams, which are conducted by independent medical professionals.
Decision Making: Based on the evidence, DDS decides whether the applicant is disabled according to SSA’s criteria. This decision includes whether the applicant’s condition prevents them from performing substantial gainful activity (SGA) and whether the condition is expected to last at least 12 months or result in death.

If DDS denies the claim, the applicant has the right to appeal the decision, and the case may go through several levels of appeal, including reconsideration, hearing by an administrative law judge, and review by the Appeals Council.

Substantial Gainful Activity (SGA)

Substantial Gainful Activity (SGA) is a key concept used by the Social Security Administration (SSA) to determine whether an individual is considered disabled and therefore eligible for Social Security Disability Insurance (SSDI) benefits. SGA refers to a level of work activity and earnings that demonstrate an individual’s ability to engage in significant physical or mental tasks for which they are compensated.

Income Thresholds:

SGA Levels: Each year, the SSA sets specific income thresholds that define what constitutes SGA. As of 2024, the SGA limit is $1,550 per month for non-blind individuals and $2,590 per month for blind individuals. If an individual earns more than these amounts from work, they are generally considered capable of substantial gainful activity and are therefore not eligible for SSDI benefits.
Impact on Eligibility: The concept of SGA is crucial in the initial and ongoing determination of SSDI eligibility. If an individual’s earnings exceed the SGA limit, their application for SSDI benefits may be denied, or their existing benefits may be discontinued.

Exceptions and Considerations: In some cases, special work incentives allow SSDI recipients to attempt to return to work without immediately losing benefits, even if their earnings exceed the SGA limit. These incentives include the Trial Work Period (TWP) and the Extended Period of Eligibility (EPE), which provide additional support for individuals transitioning back into the workforce.

Data Retrieved From: https://www-origin.ssa.gov/

Work Credits

Work credits are units of measurement used by the Social Security Administration (SSA) to determine eligibility for Social Security benefits, including Social Security Disability Insurance (SSDI). Individuals earn work credits based on their total yearly earnings from work covered by Social Security. The number of work credits needed to qualify for SSDI depends on the applicant’s age at the time of disability onset.

How Work Credits Are Earned:

Earning Work Credits: In 2024, individuals earn one work credit for every $1,730 in wages or self-employment income, up to a maximum of four credits per year. The amount needed to earn a work credit typically increases slightly each year to account for inflation.
Credit Requirements: The number of work credits required to qualify for SSDI varies based on age. Generally, an individual needs 40 credits (equivalent to 10 years of work), with 20 of those credits earned in the 10 years immediately preceding the disability. However, younger workers may qualify with fewer credits due to their shorter work history.

Significance for SSDI Eligibility: Work credits are a fundamental component of SSDI eligibility. Without sufficient credits, an individual cannot qualify for SSDI benefits, regardless of the severity of their disability. This requirement ensures that SSDI benefits are reserved for individuals who have a substantial work history and have contributed to the Social Security system through payroll taxes.

Trial Work Period (TWP)

The Trial Work Period (TWP) is a provision under Social Security Disability Insurance (SSDI) that allows beneficiaries to test their ability to return to work without immediately losing their disability benefits. The TWP is designed to encourage individuals receiving SSDI to re-enter the workforce without the risk of losing their financial safety net.

Key Features of the TWP:

Duration: The TWP lasts for nine months, which do not need to be consecutive but must occur within a rolling 60-month (five-year) period.
Earnings Threshold: In 2024, any month in which the beneficiary earns more than $1,110 (before taxes) counts as a trial work month. There is no limit on the amount of earnings during the TWP, meaning beneficiaries can earn any amount without affecting their SSDI benefits.
Continuation of Benefits: During the nine-month TWP, beneficiaries continue to receive full SSDI benefits regardless of how much they earn, as long as they report their work activity to the SSA.

The TWP provides a critical opportunity for SSDI recipients to explore re-entering the workforce without the immediate fear of losing their disability benefits. After the TWP ends, beneficiaries enter the Extended Period of Eligibility (EPE), where different rules apply.

Extended Period of Eligibility (EPE)

The Extended Period of Eligibility (EPE) follows the Trial Work Period (TWP) and provides an additional 36-month period during which SSDI recipients can continue to work and potentially receive benefits. The EPE is designed to further support the transition back to work while offering continued protection for those whose disability may prevent sustained employment.

Key Features of the EPE:

Earnings Threshold: During the EPE, SSDI recipients can continue to receive benefits for any month in which their earnings do not exceed the Substantial Gainful Activity (SGA) level. As of 2024, the SGA limit is $1,550 per month for non-blind individuals and $2,590 per month for blind individuals.
Benefit Suspension and Reinstatement: If the beneficiary’s earnings exceed the SGA limit in any month during the EPE, SSDI benefits are suspended for that month. However, if earnings drop below the SGA level in a subsequent month, benefits can be reinstated without the need for a new application.
End of the EPE: After the 36-month EPE, SSDI benefits generally end if the individual continues to earn above the SGA limit. However, individuals may still be eligible for other work incentives or benefits, depending on their circumstances.

The EPE is an essential component of the SSDI program, providing a safety net for beneficiaries as they attempt to return to the workforce and achieve greater financial independence.

Compassionate Allowances

The Compassionate Allowances (CAL) initiative is a program by the Social Security Administration (SSA) that fast-tracks the processing of SSDI and Supplemental Security Income (SSI) applications for individuals with certain severe medical conditions. These conditions are so serious that they clearly meet the SSA’s disability criteria, allowing for expedited approval of benefits.

Key Features of the CAL Initiative:

Qualifying Conditions: The SSA maintains a list of conditions that qualify for Compassionate Allowances. These include certain cancers, rare diseases, and other severe medical conditions that are typically terminal or significantly disabling.
Expedited Processing: Applications flagged under the CAL initiative receive priority processing, often resulting in a decision within weeks rather than the months typically required for standard SSDI and SSI claims.
No Special Application Needed: Applicants do not need to take any special steps to be considered for a Compassionate Allowance. The SSA automatically identifies qualifying cases based on the medical information provided in the application.

The Compassionate Allowances initiative ensures that individuals with the most severe disabilities receive the financial assistance they need as quickly as possible.

Quick Disability Determinations

Quick Disability Determinations (QDD) is a process used by the Social Security Administration (SSA) to fast-track the evaluation of SSDI and SSI claims that have a high likelihood of approval based on the information provided in the application. This process leverages technology to identify claims where the medical evidence strongly supports a finding of disability.

Key Features of the QDD Process:

Computer Screening: The SSA uses sophisticated computer algorithms to screen initial applications and identify cases where the evidence indicates a high probability of approval. Factors considered include the severity of the medical condition, the consistency of the evidence, and the applicant’s work history.
Expedited Decision: Claims identified through the QDD process are prioritized for quick review by Disability Determination Services (DDS). These cases can often be decided in a matter of days or weeks, significantly faster than the standard processing time.
No Additional Steps Required: Like the Compassionate Allowances initiative, applicants do not need to request QDD. The process is automatic based on the data provided in the application.

The QDD process helps reduce wait times for applicants with clear-cut cases, ensuring that those who are most likely to qualify for benefits receive them without unnecessary delays.

Family Benefits

Social Security Disability Insurance (SSDI) not only provides financial support to individuals with disabilities but also extends certain benefits to their family members. These family benefits are intended to help ease the financial burden on households where the primary wage earner can no longer work due to disability.

Eligible Family Members:

Spouses: A spouse may be eligible for benefits if they are aged 62 or older, or at any age if they are caring for a child of the disabled worker who is under age 16 or disabled themselves.
Children: Unmarried children of the disabled worker may qualify for benefits if they are under age 18 (or under age 19 if still in high school). Disabled adult children may also receive benefits if their disability began before age 22.
Ex-Spouses: In some cases, a divorced spouse can qualify for benefits based on the disabled worker’s record if the marriage lasted at least 10 years, the ex-spouse is unmarried, and they are aged 62 or older.

Amount of Family Benefits: Family members can receive a monthly benefit amount up to 50% of the disabled worker’s SSDI benefit. However, there is a limit to the total amount of benefits that can be paid to a family on one worker’s earnings record, known as the “family maximum.” This limit is typically between 150% and 180% of the worker’s SSDI benefit.

Impact on the Worker’s Benefit: The benefits paid to family members do not reduce the amount of the disabled worker’s own SSDI benefit. The worker continues to receive their full benefit, while eligible family members receive additional payments.

‘Pro-Tip’

Communicate Clearly and Transparently: Maintain clear and transparent communication with employees regarding their final paycheck and severance pay. Provide detailed explanations and answer any questions they may have.

Eligibility Criteria

Understanding the eligibility criteria for disability insurance is crucial for determining whether you or your loved ones qualify for benefits. This section provides detailed information on the eligibility requirements for Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and private disability insurance, including special considerations and the specific tests used to evaluate eligibility.

SSDI Eligibility

Social Security Disability Insurance (SSDI) provides benefits to individuals who have a significant work history and have become unable to work due to a severe disability. The eligibility for SSDI is based on two primary criteria: work history and the severity of the medical condition.

Work History:
- Work Credits: To qualify for SSDI, individuals must have earned a sufficient number of work credits, which are accumulated based on their earnings from jobs covered by Social Security. Generally, a person needs 40 credits, with 20 of them earned in the last 10 years ending with the year the disability began. However, younger workers may qualify with fewer credits (see “Earnings Tests for SSDI” below for more details).
- Recent Work Test and Duration of Work Test: The SSA uses these two tests to assess whether an applicant’s work history meets the necessary requirements for SSDI eligibility.
Medical Condition:
- Severe Disability Requirement: The SSA defines disability as the inability to engage in any substantial gainful activity (SGA) due to a medically determinable physical or mental impairment. The impairment must be severe enough to prevent the individual from performing any work that they previously did or any other work that exists in the national economy.
- Duration Requirement: The disability must be expected to last for at least 12 months or result in death.

Special Considerations:

Blindness: Individuals who are legally blind have special rules for SSDI eligibility. While they must still have a sufficient work history, the earnings threshold for substantial gainful activity (SGA) is higher for blind individuals than for those who are not blind. In 2024, the SGA limit for blind individuals is $2,590 per month, compared to $1,550 for non-blind individuals.
Younger Workers: SSDI has special rules for younger workers who may not have had the opportunity to accumulate many work credits due to their age. For instance, individuals who become disabled before age 24 may qualify with as few as six credits earned within three years prior to the onset of disability.

SSI Eligibility

Supplemental Security Income (SSI) is a needs-based program designed to assist individuals with limited income and resources who are disabled, blind, or aged 65 or older. Unlike SSDI, SSI eligibility does not depend on an applicant’s work history but rather on their financial situation and the severity of their disability.

Income Limits:
- SSI is available to individuals with very low income. The SSA considers all sources of income, including wages, Social Security benefits, pensions, and other cash assistance. The income limits for SSI eligibility are strict, and in 2024, the federal benefit rate (FBR) is $943 per month for an individual and $1,415 for a couple. Some states supplement the federal SSI payment with additional benefits.
Resource Limits:
- To qualify for SSI, individuals must have limited resources. The resource limit for SSI eligibility is $2,000 for an individual and $3,000 for a couple. Resources include cash, bank accounts, stocks, and other assets that can be converted to cash. However, certain items, like the individual’s home and a vehicle, are not counted toward these limits.
Medical Condition:
- As with SSDI, applicants must have a medically determinable physical or mental impairment that is severe enough to prevent them from engaging in any substantial gainful activity. The condition must be expected to last at least 12 months or result in death.
Age Considerations:
- SSI is also available to individuals aged 65 or older who meet the income and resource requirements, even if they are not disabled.

Earnings Tests for SSDI

To qualify for Social Security Disability Insurance (SSDI), applicants must pass two key tests related to their work history: the recent work test and the duration of work test. These tests help the SSA determine whether the applicant has worked long enough and recently enough under Social Security to be eligible for benefits.

Recent Work Test:
- The recent work test is based on the age at which the applicant becomes disabled. The SSA requires that individuals have worked for a specific period in the years leading up to their disability.
- Under Age 24: Applicants must have earned at least six work credits in the three years prior to becoming disabled.
- Age 24 to 31: Applicants must have worked for half the time between age 21 and the age at which they became disabled. For example, if an individual became disabled at age 27, they would need to have worked for three years (or 12 work credits) out of the six years between age 21 and 27.
- Age 31 or Older: Generally, individuals must have worked for at least five of the 10 years prior to becoming disabled, which equates to 20 work credits.
Duration of Work Test:
- The duration of work test assesses whether the applicant has worked long enough over their lifetime to qualify for SSDI. The number of work credits required depends on the age at which the disability occurs.
- Example Requirements:
  - Before age 28: 1.5 years of work (six credits)
  - Age 30: 2 years of work (eight credits)
  - Age 34: 3 years of work (12 credits)
  - Age 42: 5 years of work (20 credits)
  - Age 50: 7 years of work (28 credits)
  - Age 60: 9.5 years of work (38 credits)

These earnings tests ensure that SSDI benefits are provided to individuals who have a strong attachment to the workforce and have contributed to the Social Security system.

Private Disability Insurance Eligibility

Private disability insurance is a flexible option that individuals can purchase to protect themselves against the financial impact of a disability. Unlike public programs like SSDI and SSI, private disability insurance policies are offered by insurance companies and can vary significantly in terms of eligibility requirements, coverage, and definitions of disability.

Varying Definitions of Disability:
- Own Occupation: Some private disability insurance policies define disability as the inability to perform the duties of the occupation the policyholder was engaged in before the disability. This is known as “own occupation” coverage and is typically more comprehensive.
- Any Occupation: Other policies may define disability as the inability to perform any occupation for which the policyholder is reasonably suited by education, training, or experience. This is a stricter definition and may result in lower premiums but reduced coverage.
Medical Underwriting:
- Private insurers often require applicants to undergo medical underwriting, which involves evaluating the applicant’s medical history and current health status. Insurers may ask for medical records, conduct interviews, or require a physical examination as part of the application process. Pre-existing conditions may lead to higher premiums or exclusions from coverage.
Employment Status:
- Many private disability insurance policies are available through employer-sponsored plans, but individuals can also purchase policies independently. Employer-sponsored plans may have group rates and standardized coverage, while individual policies offer customization but can be more expensive.
Income Considerations:
- Private disability insurance typically replaces a percentage of the policyholder’s income, usually between 50% and 80%. Applicants will need to provide proof of income, such as tax returns or pay stubs, to determine the benefit amount.
Waiting Periods and Benefit Periods:
- Private disability policies often include a waiting period (elimination period) before benefits begin, ranging from 30 days to several months. The benefit period, or the length of time benefits are paid, can also vary from a few years to until retirement age, depending on the policy.

‘Pro-Tip’

Review and Update Policies Regularly: Regularly review and update your company’s severance and final paycheck policies to ensure they comply with current laws and reflect best practices.

Application Process

The application process for disability insurance can be complex, involving multiple steps and detailed documentation. Understanding the procedures for applying for Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and private disability insurance is essential for ensuring a smooth application experience. This section outlines the steps involved in each process, the necessary documentation, and what to do if a claim is denied.

How to Apply for SSDI

Applying for Social Security Disability Insurance (SSDI) involves several steps that can be completed online, by phone, or in person at a local Social Security office. Here’s how to navigate the process:

Online Application:
- The Social Security Administration (SSA) provides an online application portal where you can complete the entire SSDI application process from the comfort of your home. This is often the most convenient and fastest method.
- To start the online application, visit the SSA’s official website (www.ssa.gov) and navigate to the “Apply for Disability” section. You will be guided through a series of questions about your medical condition, work history, and personal information.
Phone Application:
- You can also apply for SSDI by calling the SSA’s toll-free number at 1-800-772-1213. A representative will assist you in completing your application over the phone. This option is useful if you have questions or need help understanding the process.
- If you are deaf or hard of hearing, you can use the TTY number 1-800-325-0778.
In-Person Application:
- If you prefer to apply in person, you can visit your local Social Security office. It’s advisable to call ahead and make an appointment to reduce waiting times. The SSA website provides a locator tool to find the nearest office.

Information Required for the Application: To ensure a smooth application process, gather the following information before starting your SSDI application:

Personal Information:
- Your Social Security number.
- Birth certificate or proof of birth.
- Names, addresses, and phone numbers of doctors, hospitals, and clinics that treated you, along with the dates of treatment.
- Information about your spouse and children, if applicable.
Medical Records:
- Detailed medical records, including diagnoses, treatment plans, and results of tests and exams.
- Names and dosages of all medications you are taking.
- Statements from your doctors about your medical condition and how it affects your ability to work.
Work History:
- A detailed list of jobs you’ve held in the past 15 years, including job titles, employment dates, and duties.
- Your most recent W-2 form or federal tax return if you’re self-employed.

The Importance of Applying as Soon as a Disability Develops: It’s crucial to apply for SSDI as soon as you become disabled. The application process can take several months, and there is a mandatory five-month waiting period before benefits begin, meaning your first payment will be made in the sixth month after your disability onset date. Applying early ensures that you receive benefits as soon as possible and helps avoid financial strain during the initial months of your disability.

How to Apply for SSI

Supplemental Security Income (SSI) is designed for individuals with limited income and resources who are disabled, blind, or aged 65 or older. The application process for SSI is similar to that for SSDI but focuses on financial need rather than work history.

Adults:
- Online Application: You can apply for SSI online if you are also applying for SSDI. The SSA allows you to complete both applications simultaneously through their online portal.
- Phone Application: You can apply by calling the SSA’s toll-free number (1-800-772-1213) and speaking with a representative who will guide you through the process.
- In-Person Application: Visit your local Social Security office to apply in person. It’s recommended to make an appointment to expedite the process.
Children:
- Start the Application Online: While you can begin the SSI application process for a child online, you must complete the application either by phone or in person. The initial online form helps the SSA determine whether your child’s condition qualifies for SSI.
- Phone or In-Person Follow-Up: After completing the online portion, you will need to schedule an appointment with the SSA to finish the application. This step involves providing detailed information about your child’s medical condition and your household’s income and resources.

Information Required for the Application: The SSI application requires comprehensive information, including:

Personal Information:
- Social Security numbers for all household members.
- Proof of U.S. citizenship or eligible non-citizen status.
- Bank account statements, life insurance policies, and records of other assets.
Medical Records (for disabled applicants):
- Detailed medical documentation of the disability, including diagnoses, treatment history, and the impact of the condition on daily activities.
Financial Information:
- Proof of income, such as pay stubs, Social Security benefits statements, and other income sources.
- Records of household expenses, including rent or mortgage, utilities, and food costs.

Private Disability Insurance Application

Applying for private disability insurance typically involves several steps, including selecting a policy, undergoing medical underwriting, and providing employment details. The process can vary depending on whether you are applying for an individual policy or through an employer-sponsored plan.

Selecting a Policy:
- Employer-Sponsored Plans: Many employers offer group disability insurance as part of their benefits package. These plans often have simplified application processes, and some may not require medical underwriting.
- Individual Policies: If you are purchasing an individual policy, you’ll need to research different insurance providers and choose a policy that fits your needs. Individual policies offer more customization but can be more expensive.
Medical Underwriting:
- Medical History Review: Private insurers often require a detailed review of your medical history, including past illnesses, surgeries, and ongoing treatments. You may need to provide medical records or undergo a physical examination.
- Lifestyle Factors: Insurers may also consider factors such as smoking status, alcohol use, and hobbies that could impact your risk profile.
- Occupation and Income Details: You will need to provide information about your current occupation, income, and work duties. This helps determine the level of coverage and premium rates.
Approval Process:
- After submitting your application, the insurance company will assess your eligibility based on the information provided. The underwriting process can take several weeks, depending on the complexity of your medical history.
- Once approved, you will receive a policy outlining the terms and conditions of your coverage, including the benefit amount, waiting period, and benefit period.

Appealing Denied Claims

If your application for SSDI, SSI, or private disability insurance is denied, you have the right to appeal the decision. The appeals process varies depending on the type of insurance but generally involves multiple levels of review.

SSDI and SSI Appeals:
- Reconsideration: The first step in the appeals process for SSDI and SSI is to request a reconsideration of your claim. During reconsideration, a different SSA representative will review your application and any new evidence you provide.
- Hearing by an Administrative Law Judge (ALJ): If your claim is denied after reconsideration, you can request a hearing before an ALJ. This hearing allows you to present your case in person, provide additional evidence, and bring witnesses to support your claim.
- Appeals Council Review: If the ALJ denies your claim, you can request a review by the SSA’s Appeals Council. The council will review the ALJ’s decision and may either uphold it, overturn it, or send the case back for further review.
- Federal Court Review: As a final step, if the Appeals Council denies your claim, you can file a lawsuit in federal court to seek a reversal of the decision.
Private Disability Insurance Appeals:
- Internal Appeal: Most private insurance companies require you to file an internal appeal before taking any external legal action. During this process, you can submit additional medical evidence, request a review of the insurer’s decision, and argue your case.
- External Review: If the internal appeal is denied, some states allow for an external review by an independent third party, which can result in a reversal of the insurance company’s decision.
- Legal Action: If all appeals fail, you may have the option to file a lawsuit against the insurance company. Legal action can be costly and time-consuming, so it is usually considered a last resort.

Expedited Reinstatement

Expedited Reinstatement (EXR) is a provision under the SSDI program that allows individuals who previously received SSDI benefits to have their benefits reinstated quickly if their disability returns or worsens after they have returned to work. This process helps protect beneficiaries who attempt to re-enter the workforce but find that they cannot continue working due to their disability.

Eligibility for Expedited Reinstatement:
- To qualify for EXR, you must have stopped receiving SSDI benefits because you returned to work and earned above the Substantial Gainful Activity (SGA) level.
- You must request reinstatement within five years of the last month you received SSDI benefits.
- Your disability must be the same as or related to the condition that originally qualified you for SSDI benefits.
How to Request Expedited Reinstatement:
- Contact the SSA by phone or visit your local Social Security office to request EXR. You will need to provide medical evidence showing that your disability has returned or worsened to the point where you can no longer work at the SGA level.
- The SSA will review your request and may grant you provisional benefits for up to six months while your application is being processed. These benefits include monthly SSDI payments and Medicare coverage.
Decision on Reinstatement:
- If your EXR request is approved, your full SSDI benefits will be reinstated without the need to file a new application. If your request is denied, you can appeal the decision using the SSDI appeals process.

‘Pro-Tip’

Train Managers and HR Staff: Train managers and HR staff on the legal requirements and best practices for handling severance pay and final paychecks. This ensures consistent and compliant handling of employee terminations.

Benefits and Payments

Disability insurance provides critical financial support to individuals who are unable to work due to a disabling condition. Understanding the benefits and payment structures of Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and private disability insurance is essential for beneficiaries to manage their finances effectively. This section details how payments are calculated, the waiting periods involved, and additional benefits such as Medicare, Medicaid, and family benefits.

SSDI Benefits

Social Security Disability Insurance (SSDI) provides monthly payments to individuals who are unable to work due to a severe disability. The amount of the monthly payment is based on the beneficiary’s lifetime average earnings covered by Social Security. This is often referred to as the “primary insurance amount” (PIA).

Calculation of Benefits:
- The SSA calculates SSDI benefits using a complex formula that considers the worker’s indexed monthly earnings over their working lifetime. Higher lifetime earnings result in higher SSDI benefits, but there is a cap on the maximum benefit amount.
- The average SSDI benefit in 2023 is approximately $1,483 per month, but individual benefits can range from a few hundred dollars to over $3,600 per month, depending on earnings history.

5-Month Waiting Period:

SSDI benefits are not paid immediately upon approval. There is a mandatory five-month waiting period from the onset of the disability before benefits begin. This means that the first SSDI payment is typically made in the sixth month after the disability began. For example, if your disability started on January 1, your first SSDI payment would be for the month of June, payable in July.

Information on Medicare Coverage:

Eligibility: After receiving SSDI benefits for 24 months, beneficiaries are automatically eligible for Medicare, the federal health insurance program. This 24-month period begins with the first month you are eligible for SSDI, not when you first receive your payment.
Parts of Medicare:
- Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care. Part A is typically premium-free for SSDI recipients.
- Part B (Medical Insurance): Covers outpatient care, doctor’s services, preventive services, and some home health care. Part B requires a monthly premium.
Special Rules for Conditions Like ALS:
- Individuals diagnosed with amyotrophic lateral sclerosis (ALS) are eligible for Medicare immediately after being approved for SSDI, with no waiting period.

SSI Benefits

Supplemental Security Income (SSI) provides monthly payments to individuals who are disabled, blind, or aged 65 or older, with limited income and resources. Unlike SSDI, SSI benefits are not based on the individual’s work history but rather on financial need.

Federal Benefit Rate (FBR):
- The base amount of SSI benefits is set by the federal government and is known as the Federal Benefit Rate (FBR). In 2024, the FBR is $943 per month for an individual and $1,415 per month for a couple.
- The actual payment amount may vary depending on other income sources and the state of residence, as some states provide additional supplements to the federal SSI payment.

Additional Benefits:

Medicaid Eligibility:
- In most states, individuals who qualify for SSI automatically qualify for Medicaid, a joint federal and state program that provides health insurance to low-income individuals. Medicaid covers a broad range of medical services, including doctor visits, hospital stays, prescription drugs, and long-term care.
State Supplements:
- Some states offer additional payments to SSI recipients, which are added to the federal SSI benefit. The amount and availability of these supplements vary by state.

Private Disability Insurance Benefits

Private disability insurance provides income replacement to policyholders who are unable to work due to a disability. These benefits are typically more flexible than public programs like SSDI and can be tailored to the policyholder’s specific needs.

Income Replacement:
- Private disability insurance generally replaces a percentage of the policyholder’s pre-disability income, often ranging from 50% to 80%. The exact percentage and benefit amount are determined by the policy terms and the policyholder’s income at the time of purchase.

Benefit Periods:

Short-Term Disability Insurance:
- Covers a portion of the policyholder’s income for a short duration, typically from a few weeks to one year, depending on the policy. Short-term disability benefits are intended to cover temporary disabilities.
Long-Term Disability Insurance:
- Provides benefits for a more extended period, potentially until the policyholder reaches retirement age or is able to return to work. Long-term disability insurance is designed for more severe or long-lasting disabilities.

Elimination Periods:

Waiting Period Before Benefits Begin:
- Private disability insurance policies usually have an elimination period, which is the amount of time the policyholder must wait after becoming disabled before they start receiving benefits. Common elimination periods range from 30 to 180 days. Longer elimination periods typically result in lower premiums.

Medicare and Medicaid

Eligibility for Medicare After Receiving SSDI Benefits:

After 24 months of receiving SSDI benefits, beneficiaries automatically qualify for Medicare. This ensures that individuals with disabilities have access to healthcare coverage, including hospital and medical services.
Part A and Part B Coverage:
- Medicare Part A is typically premium-free for SSDI recipients, while Part B requires a monthly premium. Beneficiaries can also choose to enroll in Medicare Part D (prescription drug coverage) and Medicare Advantage plans (Part C) for additional benefits.

Relationship Between SSI and Medicaid:

In most states, qualifying for SSI benefits automatically entitles the recipient to Medicaid coverage. Medicaid provides comprehensive health coverage, including long-term care services that are not covered by Medicare.
Medicaid as a Supplement to Medicare:
- For individuals eligible for both SSI and Medicare, Medicaid can act as a secondary payer, covering costs that Medicare does not, such as Medicare premiums, co-payments, and services not covered by Medicare.

Family Benefits

SSDI benefits are not limited to the disabled worker; certain family members may also qualify for benefits based on the worker’s earnings record. These benefits help support the household’s financial needs when the primary earner is unable to work due to disability.

Spouses:
- A spouse may qualify for benefits if they are aged 62 or older. If the spouse is caring for a child under age 16 or a disabled child, they may qualify for benefits at any age.
Children:
- Unmarried children under age 18 (or under 19 if still in high school) can receive benefits. In some cases, benefits are available for adult children who became disabled before age 22.
Divorced Spouses:
- A divorced spouse may be eligible for benefits if the marriage lasted at least 10 years, they are aged 62 or older, and they are not currently married. The benefits paid to a divorced spouse do not affect the amount of benefits paid to the worker or their current family.

Amount of Family Benefits:

Family members can receive up to 50% of the disabled worker’s SSDI benefit. However, there is a family maximum, which typically ranges between 150% and 180% of the worker’s SSDI benefit. If the total amount payable to the family exceeds this limit, each person’s benefit will be reduced proportionally.

Payment Schedules

Details on When SSDI and SSI Payments Are Disbursed Each Month:

SSDI Payments:
- SSDI benefits are typically paid monthly, with the payment date determined by the beneficiary’s date of birth:
  - Birth Date 1st-10th: Payments are made on the second Wednesday of each month.
  - Birth Date 11th-20th: Payments are made on the third Wednesday of each month.
  - Birth Date 21st-31st: Payments are made on the fourth Wednesday of each month.
- Payments are made for the previous month. For example, a payment received in August is for the month of July.
SSI Payments:
- SSI benefits are paid on the first of each month. If the first falls on a weekend or federal holiday, payments are made on the business day before.
- Unlike SSDI, SSI payments are intended to meet immediate needs and are generally disbursed at the beginning of the month.

‘Pro-Tip’

Work and Disability

Returning to work after a period of disability can be both a hopeful and challenging experience. For individuals receiving Social Security Disability Insurance (SSDI) or private disability insurance, understanding the rules and incentives related to work is crucial to ensuring that they can re-enter the workforce without jeopardizing their benefits. This section provides a detailed overview of the work-related provisions for SSDI and private disability insurance, including special programs designed to support the transition back to work.

Returning to Work with SSDI

The Social Security Administration (SSA) offers several work incentives to SSDI beneficiaries, encouraging them to return to work without immediately losing their benefits. These incentives are designed to provide a safety net while individuals test their ability to work.

Trial Work Period (TWP):
- The Trial Work Period allows SSDI beneficiaries to work for at least nine months while still receiving their full SSDI benefits, regardless of how much they earn. The nine months do not need to be consecutive but must occur within a rolling 60-month period.
- For 2024, any month in which you earn more than $1,110 (before taxes) counts as a trial work month. There is no limit on earnings during the TWP, meaning you can earn as much as possible without affecting your SSDI benefits during these months.
Extended Period of Eligibility (EPE):
- After completing the TWP, beneficiaries enter the Extended Period of Eligibility, which lasts for 36 months. During this period, you can continue to work and receive SSDI benefits for any month your earnings do not exceed the Substantial Gainful Activity (SGA) level. In 2024, the SGA limit is $1,550 per month for non-blind individuals and $2,590 per month for blind individuals.
- If your earnings exceed the SGA limit in any month during the EPE, your SSDI benefits will be suspended for that month. However, if your earnings drop below the SGA level in a subsequent month, your benefits can be reinstated without a new application.
Expedited Reinstatement (EXR):
- If your benefits have stopped because you have been working above the SGA level and you find that you can no longer work due to your disability, you may be eligible for Expedited Reinstatement. This allows you to have your SSDI benefits reinstated quickly without having to file a new application. You can receive provisional benefits for up to six months while the SSA reviews your case.

Reporting Work Activity

Accurately reporting your work activity is essential to avoid penalties and ensure that you receive the correct amount of SSDI benefits. The SSA requires beneficiaries to report any changes in their work status, income, or job duties as soon as they occur.

What to Report:
- Start or Stop of Work: Inform the SSA immediately if you start or stop working. This includes part-time, full-time, or self-employment work.
- Changes in Income: Report any changes in your earnings, including raises, bonuses, or reductions in pay. If your income fluctuates, report it monthly to avoid overpayments or underpayments.
- Changes in Job Duties: If your job duties change in a way that affects your ability to work or the amount you can earn, you need to report these changes as well.
How to Report:
- You can report your work activity by contacting the SSA by phone, visiting a local SSA office, or using your my Social Security account online. Reporting promptly helps ensure that your benefits are adjusted correctly and that you avoid overpayments, which can lead to penalties or the need to repay benefits.

Failure to report work activity accurately can result in overpayments, which you may be required to repay, or underpayments, which could delay your benefits. In some cases, intentional failure to report income changes can lead to penalties or loss of benefits.

Work Incentives and Special Rules

The SSA offers several work incentives that allow SSDI recipients to return to work without the immediate loss of benefits. These incentives are designed to reduce the financial risk of attempting to rejoin the workforce.

Impairment-Related Work Expenses (IRWE):
- If you have expenses related to your disability that are necessary for you to work, such as the cost of assistive devices, personal care assistance, or transportation, you can deduct these expenses from your earnings when the SSA determines whether your work is SGA. This allows you to earn more without losing your benefits.
Subsidies and Special Conditions:
- If your employer provides special conditions or assistance, such as reduced duties, extra supervision, or job coaching, these may be considered a subsidy. The SSA may deduct the value of these subsidies from your earnings when determining if your work exceeds the SGA level.
Unsuccessful Work Attempt (UWA):
- If you attempt to return to work but are unable to continue due to your disability, the SSA may not count the work as SGA if it lasted six months or less and you had to stop working because of your disability. This provision helps protect your SSDI benefits if your return to work does not succeed.

These work incentives are designed to help SSDI recipients test their ability to work and achieve greater independence without the fear of immediately losing their financial safety net.

Private Disability Insurance Work Rules

Private disability insurance policies vary in how they handle the return to work, but most include specific provisions that affect benefit payments if the policyholder resumes employment.

Partial Disability Benefits:
- Some private disability insurance policies offer partial disability benefits, which provide a portion of the full benefit amount if you return to work at a reduced capacity. This means you can receive some income from your job and still receive a reduced benefit from your insurance policy.
Residual Disability Benefits:
- Similar to partial disability benefits, residual disability benefits are paid if you are able to work but experience a significant reduction in earnings due to your disability. The amount of the benefit is usually calculated based on the percentage of income lost.
Income Replacement and Offsets:
- If you return to work, your private disability insurance benefits may be reduced by the amount you earn from your job. This is known as an offset. The insurance company will typically calculate your total income (earnings plus benefits) and adjust the benefit amount so that your total income does not exceed a certain percentage of your pre-disability income.
Recurrent Disability Provisions:
- Some policies include a recurrent disability provision, which allows you to resume receiving full benefits if your disability recurs after returning to work, without requiring a new elimination period (waiting period before benefits start). This provision is particularly beneficial if your disability is likely to flare up or worsen after a period of improvement.

Understanding your private disability insurance policy’s specific rules and provisions is critical when planning to return to work, as it directly impacts your benefit payments and financial planning.

The Ticket to Work Program

The Ticket to Work program is a voluntary program offered by the Social Security Administration (SSA) that provides free services to SSDI and SSI beneficiaries who want to return to work or increase their earnings. The program is designed to help individuals with disabilities achieve greater independence and financial security through employment.

Eligibility:
- The Ticket to Work program is available to SSDI and SSI beneficiaries aged 18 to 64 who are interested in returning to work or improving their employment situation. Participation in the program is entirely voluntary and does not affect your SSDI or SSI benefits.
Services Offered:
- Employment Networks (ENs): ENs are organizations that provide a range of employment services, including job placement, career counseling, vocational training, and job coaching. Beneficiaries can choose an EN that suits their needs and goals.
- Vocational Rehabilitation (VR) Services: State VR agencies offer services to help individuals prepare for, find, and retain employment. Services may include education and training, assistive technology, and workplace accommodations.
- Work Incentives Planning and Assistance (WIPA): WIPA projects provide SSDI and SSI beneficiaries with information about how work and earnings affect their benefits, helping them make informed decisions about returning to work.
Benefits of Participation:
- Protection from Medical Continuing Disability Reviews (CDRs): While you are participating in the Ticket to Work program and making progress towards your work goals, you are not subject to medical CDRs, which are periodic reviews to determine if you still qualify for disability benefits based on your medical condition.
- Work Incentives: The program provides access to SSA work incentives, such as the Trial Work Period (TWP) and Extended Period of Eligibility (EPE), which allow you to test your ability to work without losing benefits.
How to Get Started:
- To participate in the Ticket to Work program, you can contact the Ticket to Work Help Line at 1-866-968-7842 (TTY 1-866-833-2967) or visit the program’s website at www.choosework.ssa.gov. You can select an Employment Network (EN) or work with your state Vocational Rehabilitation (VR) agency to start receiving services.

The Ticket to Work program empowers SSDI and SSI beneficiaries to pursue employment opportunities without the immediate risk of losing their benefits, offering a path to greater self-sufficiency and financial independence.

‘Pro-Tip’

Special Considerations

Disability insurance programs, both public and private, have specific provisions and benefits tailored to meet the needs of individuals with unique circumstances. This section covers special rules and considerations for SSDI recipients who are blind or have low vision, children with disabilities, disabled adult children, surviving spouses with disabilities, and the factors influencing the cost of private disability insurance.

Blindness or Low Vision

Individuals who are legally blind or have low vision face unique challenges that are recognized by the Social Security Administration (SSA). As a result, there are special rules and higher income limits for SSDI recipients who are blind.

Higher Income Limits:
- The SSA defines substantial gainful activity (SGA) as a level of work that earns more than a certain amount per month. For most disabled individuals, the SGA limit in 2024 is $1,550 per month. However, for individuals who are legally blind, the SGA limit is significantly higher—$2,590 per month in 2024. This higher threshold reflects the additional challenges faced by blind individuals in finding and maintaining employment.
Specific Eligibility Criteria:
- Legal Blindness: The SSA defines legal blindness as having a central visual acuity of 20/200 or less in the better eye with the use of a correcting lens, or a visual field limitation in the better eye such that the widest diameter of the visual field subtends an angle no greater than 20 degrees.
- Non-Blind Individuals with Low Vision: Individuals who do not meet the SSA’s definition of blindness but have significant vision impairments may still qualify for SSDI under the general disability rules if their condition severely limits their ability to work.
Work Incentives for Blind Individuals:
- Trial Work Period (TWP): Blind SSDI recipients can participate in the Trial Work Period (TWP) without losing benefits, just like other SSDI recipients.
- Impairment-Related Work Expenses (IRWE): Blind individuals can deduct certain impairment-related work expenses from their earnings when calculating whether their income exceeds the SGA limit. These expenses can include the cost of special transportation, guide dogs, and other work-related aids.

Children with Disabilities

Children with disabilities may be eligible for benefits through both Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). The eligibility criteria and benefits available differ based on the program and the child’s circumstances.

SSI Benefits for Children:
- Eligibility Criteria: SSI provides benefits to children under age 18 who have a medically determinable physical or mental impairment that results in marked and severe functional limitations and is expected to last at least 12 months or result in death. Additionally, the child’s household must meet strict income and resource limits to qualify for SSI.
- Benefit Amount: The amount of SSI benefits a child receives depends on the family’s income and resources, with the federal benefit rate for an individual set at $943 per month in 2024. Some states provide additional supplements to this federal amount.
SSDI Benefits for Children:
- Dependent Child Benefits: A child may receive SSDI benefits if a parent is receiving SSDI benefits, is retired, or is deceased. These benefits are available to unmarried children under age 18, or under age 19 if still in high school. In some cases, a disabled adult child may also qualify for benefits on a parent’s record (see Disabled Adult Child Benefits below).

Disabled Adult Child (DAC) Benefits

Disabled Adult Child (DAC) benefits are available to adults who have a disability that began before age 22 and whose parent is either deceased, receiving SSDI benefits, or retired and receiving Social Security retirement benefits. These benefits are crucial for adults with lifelong disabilities who may never have had the opportunity to work and earn their own Social Security benefits.

Eligibility Criteria:
- Age of Onset: The disability must have started before the individual turned 22. The SSA uses the same strict criteria for determining disability in adults as it does for other SSDI beneficiaries.
- Parental Work Record: The disabled adult child can receive benefits based on the work record of a parent who is deceased, receiving SSDI, or retired. The parent must have earned sufficient work credits to qualify for Social Security benefits.
- Unmarried Status: The disabled adult child must be unmarried to receive DAC benefits. However, there are exceptions, such as if the individual marries another disabled adult child.
Benefit Amount:
- The benefit amount is typically equal to 50% of the parent’s SSDI or retirement benefit while the parent is alive. If the parent is deceased, the benefit amount can increase to 75% of the parent’s benefit. These benefits are subject to family maximum limits, which cap the total amount payable to the family on a single worker’s record.

Surviving Spouses with Disabilities

Social Security provides benefits to surviving spouses, including divorced spouses, who meet certain disability criteria. These benefits help ensure financial security for individuals who have lost a spouse and are unable to work due to their own disability.

Eligibility Criteria:
- Surviving Spouses: A surviving spouse may be eligible for benefits if they are between the ages of 50 and 60 and have a disability that meets the SSA’s definition. The disability must have started before or within seven years of the worker’s death.
- Divorced Spouses: A divorced spouse can qualify for survivor benefits if the marriage lasted at least 10 years, the divorced spouse is not remarried, and they are between the ages of 50 and 60 with a qualifying disability.
- Caregiving Spouses: A surviving spouse of any age may be eligible for benefits if they are caring for the deceased worker’s child who is under age 16 or disabled.
Benefit Amount:
- The amount of the benefit is based on the deceased spouse’s earnings record. Typically, the surviving spouse or divorced spouse can receive 71.5% of the deceased worker’s benefit if they are disabled and claim benefits before full retirement age.
- If the surviving spouse waits until full retirement age, they may receive 100% of the deceased worker’s benefit amount.

Cost of Private Disability Insurance

Private disability insurance is an important option for individuals seeking additional coverage beyond public programs like SSDI. The cost of private disability insurance can vary widely based on several factors, including the policy’s features, the length of the benefit period, and the elimination period.

Policy Features:
- Coverage Type: Policies that offer “own occupation” coverage, where benefits are paid if the policyholder cannot perform the specific job they were trained for, typically cost more than “any occupation” policies, which pay only if the policyholder cannot work in any job for which they are reasonably suited.
- Benefit Amount: The higher the percentage of income replaced by the policy, the higher the premium. For example, a policy that replaces 80% of the policyholder’s income will cost more than one that replaces 50%.
Benefit Period:
- Short-Term vs. Long-Term Disability: Short-term disability policies cover a portion of the policyholder’s income for a limited time, usually a few weeks to a year, and are generally less expensive. Long-term disability policies, which can provide benefits for several years or until retirement age, are more costly due to the extended coverage period.
- Maximum Benefit Period: Policies that pay benefits until the policyholder reaches age 65 or retirement age are more expensive than those with shorter benefit periods, such as two, five, or ten years.
Elimination Period:
- Waiting Period: The elimination period, or the waiting period before benefits begin, significantly impacts the cost of the policy. Policies with shorter elimination periods (e.g., 30 days) are more expensive than those with longer periods (e.g., 90 or 180 days).
- Affordability: Choosing a longer elimination period can lower the premium cost but requires the policyholder to cover their expenses during the waiting period.
Policyholder’s Age, Health, and Occupation:
- Age: Younger individuals typically pay lower premiums, as they are considered less likely to become disabled.
- Health: Applicants in good health without pre-existing conditions generally qualify for lower premiums. Those with a history of medical issues may face higher costs or exclusions from coverage.
- Occupation: Jobs that are considered high-risk or physically demanding may result in higher premiums, as the likelihood of disability is greater.

‘Pro-Tip’

Reporting and Maintaining Benefits

Maintaining your Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits requires keeping the Social Security Administration (SSA) informed of any changes that could affect your eligibility or payment amount. Accurately reporting these changes is essential to avoid overpayments, underpayments, or penalties. This section provides an overview of what needs to be reported, how to report changes, and how other payments can impact your SSDI benefits.

What to Report

To ensure that you continue to receive the correct amount of benefits, you must report various changes to the SSA. These changes can affect your eligibility for benefits or the amount you receive each month.

Changes in Work Status:
- Start or Stop of Work: If you start or stop working, you must inform the SSA immediately. This includes full-time, part-time, and self-employment work. The SSA needs to know if you begin earning income that could impact your eligibility for SSDI or SSI benefits.
- Change in Job Duties or Hours: If your job duties change significantly, such as moving from a physically demanding role to a less strenuous one, or if your work hours increase or decrease, these changes must also be reported.
Changes in Income:
- Wages or Self-Employment Income: Report any changes in your earned income, including raises, bonuses, or reductions in pay. If your income fluctuates, it is important to report these changes monthly.
- Other Income Sources: Inform the SSA if you begin receiving other types of income, such as pensions, workers’ compensation, unemployment benefits, or any other form of regular payment.
Changes in Personal Circumstances:
- Change in Living Situation: If you move to a new address, start living with a new person (such as a spouse or roommate), or change your living arrangements in any way, these changes must be reported. This is particularly important for SSI recipients, as living arrangements can impact benefit amounts.
- Change in Marital Status: Report if you get married, divorced, or if your marriage is annulled. Marital status changes can affect eligibility for certain benefits, such as spousal or survivor benefits.
- Change in Household Income or Resources: For SSI recipients, any changes in household income or resources, including cash, bank accounts, or assets, must be reported. SSI benefits are means-tested, so changes in your financial situation can affect your eligibility or payment amount.
Change in Health Status:
- Improvement in Medical Condition: If there is a significant improvement in your medical condition that allows you to work or perform more substantial activities, you must report this to the SSA. This could trigger a review of your disability status.

How to Report Changes

The SSA provides several methods for reporting changes to your work status, income, or personal circumstances. It’s important to choose the method that is most convenient for you and to include all required documentation to support the changes you are reporting.

Reporting Changes by Phone:
- SSA Toll-Free Number: You can report changes by calling the SSA’s toll-free number at 1-800-772-1213. A representative will assist you in updating your information. If you are deaf or hard of hearing, you can use the TTY number 1-800-325-0778.
- Information to Provide: Be prepared to provide your Social Security number, details of the change you are reporting, and any relevant dates or amounts. The representative may ask follow-up questions to ensure all necessary information is recorded.
Reporting Changes Online:
- my Social Security Account: You can report changes online by logging into your my Social Security account at www.ssa.gov. This secure portal allows you to update your work status, income, and other personal information directly.
- Online Reporting Tools: The SSA offers specific online tools for reporting wages and income. For example, the “SSI Wage Reporting” tool allows SSI recipients to report their earnings each month.
Reporting Changes by Mail:
- Written Notice: If you prefer to report changes by mail, you can send a written notice to your local Social Security office. Include your full name, Social Security number, and detailed information about the change. Be sure to sign and date the letter.
- Required Documentation: When reporting changes by mail, include copies of any supporting documentation, such as pay stubs, tax returns, or medical records. Do not send original documents, as the SSA may not return them.
In-Person Reporting:
- Local SSA Office: You can also report changes in person at your local Social Security office. It’s advisable to call ahead and make an appointment to reduce waiting times. Bring all necessary documentation with you to the appointment.

Impact of Other Payments

Receiving other forms of government benefits can impact your SSDI payments. Understanding how these interactions work is essential to avoid surprises in your monthly benefits.

Workers’ Compensation:
- Reduction in SSDI Benefits: If you receive workers’ compensation or other public disability benefits (such as state or local government disability benefits), your SSDI benefits may be reduced. The total amount you receive from SSDI and these other benefits combined cannot exceed 80% of your average current earnings before you became disabled.
- Offset Calculation: The SSA will calculate the offset by reducing your SSDI benefit so that your total monthly disability income (from all sources) does not exceed 80% of your pre-disability earnings. This is known as the workers’ compensation offset.
Public Disability Benefits:
- Interaction with SSDI: Similar to workers’ compensation, other public disability benefits (such as state disability payments) can also reduce your SSDI benefits. The SSA applies the same 80% rule to these benefits.
- Exemptions: Some benefits do not affect your SSDI payments, such as Veterans Administration (VA) benefits, private disability insurance benefits, and needs-based benefits like SSI.
Unemployment Benefits:
- Impact on SSDI: Receiving unemployment benefits may affect your eligibility for SSDI, as unemployment benefits are typically available to individuals who are able to work, whereas SSDI is for those who are unable to work due to a disability. However, receiving both benefits is not automatically disqualifying, but it may raise questions about your ability to work.
Pension and Retirement Benefits:
- Government Pensions: If you receive a pension from a job where you did not pay Social Security taxes (such as some state or local government jobs), your SSDI benefits may be reduced under the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO) rules.
- Private Pensions: Private pensions or retirement savings do not typically affect your SSDI benefits, as they are not considered public disability benefits.

‘Pro-Tip’

Additional Resources and Programs

For individuals with disabilities, understanding the various resources and programs available can significantly enhance their financial stability and access to necessary services. This section provides a detailed overview of several key programs, including Achieving a Better Life Experience (ABLE) accounts, the interaction between workers’ compensation and disability benefits, the Federal Employees’ Compensation Act (FECA), and other essential disability resources.

Achieving a Better Life Experience (ABLE) Account

Achieving a Better Life Experience (ABLE) accounts are tax-advantaged savings accounts designed to help individuals with disabilities and their families save for disability-related expenses without jeopardizing eligibility for means-tested government benefits like Supplemental Security Income (SSI) and Medicaid.

Eligibility for ABLE Accounts:
- Age of Onset: To qualify for an ABLE account, the individual must have a significant disability that began before age 26. If the individual meets this requirement and is receiving SSDI or SSI, they are automatically eligible to establish an ABLE account.
- Certification: Individuals who are not receiving SSDI or SSI but meet the age of onset requirement can still qualify by obtaining a certification from a licensed physician that they have a significant disability.
Benefits of ABLE Accounts:
- Tax Advantages: Contributions to an ABLE account grow tax-free, and withdrawals are also tax-free if used for qualified disability-related expenses. These expenses include, but are not limited to, education, housing, transportation, healthcare, and assistive technology.
- Impact on SSI: The first $100,000 in an ABLE account is excluded from the SSI resource limit. If the account balance exceeds $100,000, SSI benefits may be suspended, but Medicaid eligibility remains unaffected.
- Annual Contribution Limits: The annual contribution limit for ABLE accounts is tied to the federal gift tax exclusion, which is $17,000 in 2024. Contributions can be made by the account holder, family, friends, or other third parties.
Qualified Disability Expenses:
- Examples: ABLE funds can be used for a wide range of expenses related to the individual’s disability, including medical and dental care, education, employment training, housing, and basic living expenses. The flexibility of these accounts makes them a valuable tool for managing the costs associated with living with a disability.

Workers’ Compensation and Disability Insurance

Workers’ compensation is a state-mandated insurance program that provides benefits to employees who suffer work-related injuries or illnesses. When a person is eligible for both workers’ compensation and Social Security Disability Insurance (SSDI), the interaction between these benefits can affect the amount of SSDI payments received.

Workers’ Compensation Overview:
- Benefits Provided: Workers’ compensation typically covers medical expenses, rehabilitation costs, and a portion of lost wages for employees injured on the job. The amount and duration of benefits vary by state.
- Lump-Sum Settlements: Some workers’ compensation claims result in a lump-sum settlement rather than ongoing payments. How this settlement is structured can affect SSDI benefits.
Impact on SSDI Payments:
- SSDI Offset: The Social Security Administration (SSA) reduces SSDI payments if the combined amount of workers’ compensation and SSDI exceeds 80% of the worker’s average current earnings before the disability. This is known as the “workers’ compensation offset.”
- Calculating the Offset: The SSA calculates the offset by reducing the SSDI benefit so that the total amount received from workers’ compensation and SSDI does not exceed 80% of the worker’s pre-disability income. This reduction ensures that the combined benefits do not result in an income higher than what the individual earned while working.
- State-Specific Rules: The rules governing the interaction between workers’ compensation and SSDI vary by state, and some states have their own specific regulations regarding how these benefits are coordinated.

Federal Employees’ Compensation Act (FECA)

The Federal Employees’ Compensation Act (FECA) is a federal law that provides workers’ compensation benefits to civilian employees of the federal government who are injured or become ill due to their job. Administered by the Office of Workers’ Compensation Programs (OWCP) under the U.S. Department of Labor, FECA offers a comprehensive benefits package similar to state workers’ compensation programs but specifically for federal employees.

Eligibility for FECA:
- Federal Employees: FECA covers all civilian federal employees, including those working for executive branch agencies, the U.S. Postal Service, and certain other federal entities. Eligibility is determined based on whether the injury or illness is work-related.
- Work-Related Injuries and Illnesses: FECA covers injuries sustained on the job, as well as occupational diseases that develop due to work conditions. It also provides benefits for the survivors of employees who die due to work-related injuries or illnesses.
Benefits Provided by FECA:
- Medical Benefits: FECA pays for all necessary medical treatment related to the work injury or illness, including doctor visits, hospital stays, surgery, prescription medications, and physical therapy.
- Wage Replacement: FECA provides wage replacement benefits if the employee is unable to work due to their injury or illness. These benefits typically replace a percentage of the employee’s pre-injury wages and are tax-free.
- Permanent Disability Benefits: If the injury or illness results in a permanent impairment, FECA provides a schedule award for the loss of use of specific body parts or functions. This compensation is based on the severity of the impairment.
- Survivor Benefits: In the event of a work-related death, FECA provides survivor benefits to the employee’s dependents, including a percentage of the employee’s salary and coverage for funeral expenses.
Interaction with SSDI and Other Benefits:
- FECA benefits are generally not subject to offset by SSDI, meaning that federal employees can receive both FECA and SSDI benefits simultaneously without a reduction in their SSDI payments. However, there are coordination rules in place to prevent “double-dipping” from multiple federal benefits programs.

Other Disability Resources

For individuals with disabilities, navigating the various programs and resources available can be complex. Below are key resources that offer guidance, support, and additional benefits for people with disabilities:

The Red Book:
- What It Is: The SSA’s “Red Book” is a comprehensive guide to employment supports available to SSDI and SSI beneficiaries who want to work. It explains how working affects benefits and details various work incentives designed to encourage beneficiaries to achieve greater financial independence.
- Access: The Red Book is available online at ssa.gov/redbook. It is updated annually to reflect changes in policy and benefit amounts.
Disability Determination Services (DDS):
- Role of DDS: DDS offices are state agencies responsible for making disability determinations for SSDI and SSI applications. They evaluate medical evidence and decide whether applicants meet the SSA’s definition of disability.
- Contact Information: To find your local DDS office, visit the SSA’s website or contact your state’s Social Security office for assistance.
Work Incentives Planning and Assistance (WIPA):
- What It Is: WIPA projects provide SSDI and SSI beneficiaries with free counseling and information about how work affects their benefits. WIPA counselors can help beneficiaries understand work incentives, plan for employment, and navigate the complexities of returning to work.
- Access: You can locate a WIPA project in your area by visiting the SSA’s Work Site at choosework.ssa.gov.
Plan to Achieve Self-Support (PASS):
- Overview: PASS is a work incentive program that allows SSI recipients to set aside income and resources to achieve a specific work goal, such as starting a business or paying for education. Funds set aside in a PASS do not count towards SSI income and resource limits.
- More Information: Details about PASS can be found on the SSA’s website or by speaking with a PASS specialist at your local Social Security office.

‘Pro-Tip’

FAQ: Frequently Asked Questions

What is the difference between SSDI and SSI?

SSDI (Social Security Disability Insurance) is a federal program that provides benefits to individuals who have worked and paid Social Security taxes but are now unable to work due to a disability. Eligibility is based on work history and the severity of the disability.
SSI (Supplemental Security Income) is a needs-based program that provides benefits to individuals who are disabled, blind, or aged 65 or older and have limited income and resources. SSI is not based on work history but rather on financial need.

How do I apply for SSDI or SSI benefits?

SSDI Application: You can apply for SSDI online through the SSA website, by phone at 1-800-772-1213, or in person at your local Social Security office. Be prepared to provide medical records, work history, and personal details.
SSI Application: You can start the SSI application process online, but the final application must be completed either by phone or in person at a Social Security office. For children, the application process involves additional steps.

What is a Trial Work Period (TWP) and how does it work?

The Trial Work Period (TWP) allows SSDI recipients to test their ability to work for at least nine months while still receiving full benefits, regardless of how much they earn. The TWP is designed to encourage beneficiaries to attempt returning to work without risking their SSDI benefits immediately. In 2024, any month in which you earn more than $1,110 counts as a trial work month.

How do other payments, like workers’ compensation, affect my SSDI benefits?

Workers’ compensation and other public disability benefits can reduce your SSDI payments. If the total amount of workers’ compensation and SSDI benefits exceeds 80% of your average earnings before you became disabled, your SSDI benefits may be reduced. This is known as the “workers’ compensation offset.”

What is an ABLE account, and how does it work with SSI?

ABLE (Achieving a Better Life Experience) accounts are tax-advantaged savings accounts for individuals with disabilities. They allow you to save for disability-related expenses without affecting your eligibility for SSI and Medicaid. The first $100,000 in an ABLE account is excluded from SSI resource limits, and funds can be used for qualified expenses such as education, housing, and medical care.

Can I receive both SSDI and private disability insurance benefits?

Yes, you can receive both SSDI and private disability insurance benefits simultaneously. However, private disability insurance policies may offset benefits by the amount you receive from SSDI. The exact terms depend on your insurance policy, so it’s important to review your policy details.

What are Disabled Adult Child (DAC) benefits?

Disabled Adult Child (DAC) benefits are available to adults with disabilities that began before age 22. These benefits are based on a parent’s work record if the parent is deceased, receiving SSDI, or retired. DAC benefits provide financial support for individuals who have never been able to work due to their disability.

What should I do if my SSDI or SSI claim is denied?

If your SSDI or SSI claim is denied, you have the right to appeal the decision. The appeals process typically involves four levels: reconsideration, hearing by an administrative law judge (ALJ), review by the Appeals Council, and filing a lawsuit in federal court if necessary. It’s important to file your appeal within the deadline provided in your denial notice.

How does the Ticket to Work program help SSDI and SSI beneficiaries?

The Ticket to Work program offers free services to SSDI and SSI beneficiaries who want to return to work or increase their earnings. It provides access to employment networks, vocational rehabilitation services, and other resources to help you find and maintain employment while protecting your benefits.

What is the Federal Employees’ Compensation Act (FECA)?

FECA provides workers’ compensation benefits to federal employees who are injured or become ill due to their job. Benefits include medical care, wage replacement, and compensation for permanent disabilities. FECA benefits are generally not subject to offset by SSDI, allowing federal employees to receive both benefits.

How often do I need to report changes to the SSA, and what should I report?

You must report changes to the SSA as soon as they occur. This includes changes in work status, income, living situation, marital status, and health condition. Prompt reporting ensures that your benefits are accurate and helps avoid overpayments, underpayments, and penalties.

What is the process for reinstating SSDI benefits if I return to work but cannot continue due to my disability?

If you return to work but are unable to continue due to your disability, you may be eligible for Expedited Reinstatement (EXR) of SSDI benefits. EXR allows you to have your benefits reinstated quickly without filing a new application, and you may receive provisional benefits while your case is being reviewed.

Disclaimer: The content provided on this webpage is for informational purposes only and is not intended to be a substitute for professional advice. While we strive to ensure the accuracy and timeliness of the information presented here, the details may change over time or vary in different jurisdictions. Therefore, we do not guarantee the completeness, reliability, or absolute accuracy of this information. The information on this page should not be used as a basis for making legal, financial, or any other key decisions. We strongly advise consulting with a qualified professional or expert in the relevant field for specific advice, guidance, or services. By using this webpage, you acknowledge that the information is offered “as is” and that we are not liable for any errors, omissions, or inaccuracies in the content, nor for any actions taken based on the information provided. We shall not be held liable for any direct, indirect, incidental, consequential, or punitive damages arising out of your access to, use of, or reliance on any content on this page.

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Disability Insurance in the US: 2024

What is Disability Insurance?

New SSI Rules in 2024

Distinction Between Public and Private Disability Insurance Options

The Likelihood of Disability

Key Terms and Definitions

Disability Insurance

Social Security Disability Insurance (SSDI)

Supplemental Security Income (SSI)

Private Disability Insurance

Disability Determination Services (DDS)

Substantial Gainful Activity (SGA)

Work Credits

Trial Work Period (TWP)

Extended Period of Eligibility (EPE)

Compassionate Allowances

Quick Disability Determinations

Family Benefits

Eligibility Criteria

SSDI Eligibility

SSI Eligibility

Earnings Tests for SSDI

Private Disability Insurance Eligibility

Application Process

How to Apply for SSDI

How to Apply for SSI

Private Disability Insurance Application

Appealing Denied Claims

Expedited Reinstatement

Benefits and Payments

SSDI Benefits

SSI Benefits

Private Disability Insurance Benefits

Medicare and Medicaid

Family Benefits

Payment Schedules

Work and Disability

Returning to Work with SSDI

Reporting Work Activity

Work Incentives and Special Rules

Private Disability Insurance Work Rules

The Ticket to Work Program

Special Considerations

Blindness or Low Vision

Children with Disabilities

Disabled Adult Child (DAC) Benefits

Surviving Spouses with Disabilities

Cost of Private Disability Insurance

Reporting and Maintaining Benefits

What to Report

How to Report Changes

Impact of Other Payments

Additional Resources and Programs

Achieving a Better Life Experience (ABLE) Account

Workers’ Compensation and Disability Insurance

Federal Employees’ Compensation Act (FECA)

Other Disability Resources

FAQ: Frequently Asked Questions

What is the difference between SSDI and SSI?

How do I apply for SSDI or SSI benefits?

What is a Trial Work Period (TWP) and how does it work?

How do other payments, like workers’ compensation, affect my SSDI benefits?

What is an ABLE account, and how does it work with SSI?

Can I receive both SSDI and private disability insurance benefits?

What are Disabled Adult Child (DAC) benefits?

What should I do if my SSDI or SSI claim is denied?

How does the Ticket to Work program help SSDI and SSI beneficiaries?

What is the Federal Employees’ Compensation Act (FECA)?

How often do I need to report changes to the SSA, and what should I report?

What is the process for reinstating SSDI benefits if I return to work but cannot continue due to my disability?

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