There is a major difference between short-term and long-term disability payment programs. If we are discussing the Social Security Administration’s disability benefits programs, then we can only be talking about long-term disability payments. Both the Social Security Disability Insurance (SSD or SSDI) and the Supplemental Security Income (SSI) programs do not recognize any short-term impairments or disabilities.
Short-term disabilities may qualify a person for other programs operated by state agencies for Temporary Disability Services, or for Worker’s Compensation. There are also short-term disability insurance policies that you or your employer can purchase to provide income replacement payments in the event you suffer a covered injury or illness.
At Liner Legal Disability Lawyers, we specialize in helping disabled Ohioans get approved for all the disability benefits they may be entitled to. We know about the intense pressure disabled people feel when thinking about how they will meet their and their family’s daily expenses. Liner Legal only practices disability law. We focus 100 % on clients and families whose lives are being affected by an illness, injury, or condition that entitles them to disability benefits.
In this blog post, we’ll look at how the Social Security Administration determines the amount of your monthly long-term disability payments.
Determining the Amount of Your Monthly SSD Payment
Social Security Disability Insurance (SSDI or SSD) is a program to which every worker contributes payroll deductions from each paycheck. Every year, the IRS reports the amount of every worker’s taxable income to the Social Security Administration. When a worker either becomes disabled or reaches their full retirement age, the Social Security Administration uses the figures from the worker’s earning history to determine the amount of disability or retirement benefits the claimant will receive.
Here’s how they figure the payment amount.
The Social Security Administration takes the 35 highest annual incomes you reported over the course of your working life. Then they “index” each of the annual income figures to adjust the amounts to current dollars in comparison to the national average annual income. Then those 35 indexed income amounts are totaled and divided by 35, and again by 12 to reach your Average Indexed Monthly Income (AIME).
The AIME is the starting point for the formula used to determine how much your monthly SSD benefit payment will be.
The formula the SSA uses is the following:
- Add 90% of the first $1,024 of the AIME, plus
- 32% of the AIME between $1,024 and $6,172, plus
- 15% of the AIME above $6,172,
- Then round down to the next lowest $0.10 if not already a multiple of 10.
This formula is used to find both the amount of your monthly disability payment as well as the amount you will receive when you reach full retirement age (FRA). Let’s work through the formula with a hypothetical case in which Worker A has an Average Indexed Monthly Income (AIME), based on their 35 highest earning annual incomes, of $6,820.
AIME = $6,820
- 90% of the first $1,024 = $921.60, plus
- 32% of the AIME between $1,024 and $6,172 = ($6,172-$1,024 = $5,148 x .32) = $1,647.36, plus
- 15% of the AIME over $6,172 = ($6,820-$6,172 = $648 x .15) = $97.20
- $921.60 + $1,647.36 + $97.20 = $2,666.16
- Rounded down to next lowest $0.10 = $2,666.10
Worker A’s monthly SSD benefit will be $2,666.10, known as their Primary Insurance Amount (PIA).
The maximum any person may receive in 2022 in an SSD benefit payment is $3,345 per month, no matter how high their AIME is after figuring their 35 highest earning years.
The purpose of SSD benefits (and retirement benefits) is to replace a portion of the income that the worker is no longer able to earn. Generally, the formula used by SSA yields a payment of about 40% of the amount of the worker’s AIME.
Determining the Amount of Your Monthly SSI Payment
The Supplement Security Income (SSI) program is also a long-term disability program and uses the same criteria to determine if an impairment is severe enough to qualify for disability benefit payments. But the SSI program has an entirely different process to determine SSI benefits than the SSD program uses.
SSD benefits are only available to people who have worked for enough years and recently enough to have earned a minimum amount of work credits. Those who do not qualify for SSD due to insufficient work credits are eligible for SSI benefits.
SSI’s payment formula begins by assuming every benefit recipient is entitled to the full, maximum monthly benefit amount, $841 in 2022 for an eligible individual, and $1,261 for an eligible individual with an eligible spouse (more if blind). Then, the SSI program reviews all of the recipient’s other sources of income (state benefits, gifts, pension, work) and separates them into “countable income” and “noncountable income.”
SSI then uses its own equation to apply the countable income and then deducts the final figure of countable income from the presumed maximum payment. So, if an SSI beneficiary’s worksheet credits all the person’s valid exemptions, deductions, credits, etc. results in an amount of unexempted countable income of, say $275 for example, that amount is subtracted from the $841 maximum for a resulting monthly benefit payment of $566; ($841 – $275 = $566).