The Social Security Administration (SSA) calculates disability benefits based on your earnings history, the nature and severity of your disability, and your other individual circumstances. This article guides you through the factors influencing your monthly Social Security Disability benefits amount. We also offer some useful insights into how you can determine your potential benefit amount.
Eligibility for Social Security Disability Insurance (SSDI)
Social Security Disability Insurance (SSDI) benefits are designed for individuals who have worked and paid Social Security taxes but can no longer work because of a disability. To be eligible, you must have earned enough work credits during your working career. Generally, you need to have worked at least five of the last ten years before becoming disabled.
Definition of Disability
The SSA uses a strict definition of disability. To qualify for SSDI, you must have a medically determinable physical or mental impairment lasting or expected to last 12 months (or result in death) that prevents you from performing substantial gainful activities. A substantial gainful activity (SGA) in 2024 is any activity through which you can earn $1,550 per month or more. Those who are blind may earn up to $2,590. Earning more than those amounts per month disqualify you from the definition of “disabled” under the SSA’s regulations.
However, there are deductions and exemptions that may bring your “countable” income below the income eligibility threshold. Consulting with an experienced Social Security disability lawyer is highly recommended before you assume you do not qualify.
Calculating SSDI Benefits
Your SSDI benefit amount is based on your Average Indexed Monthly Earnings (AIME), which is calculated based on your taxable income in your 35 highest-earning years. The SSA uses your AIME to determine your Primary Insurance Amount (PIA), which is the base amount for your benefits. The PIA is calculated using a formula that applies different percentages to portions of your AIME, known as “bend points.” Bend points are adjusted annually to reflect changes in national average wages.
Here’s how the calculation works:
First, the SSA indexes your 35 highest annual incomes by adjusting them in light of each year’s average wage. Then the resulting 35 indexed incomes are added together and divided by 35 to determine your AIME. The AIME is then run through the following formula:
- 90%: The first $1,174 of AIME, plus
- 32%: Earnings between $1,174 and $7,078, plus
- 15%: Earnings above $7,078.
The resulting figure is rounded down to the nearest dime and that is your Primary Insurance Amount, your monthly benefit.
For example, a person whose Average Indexed Monthly Earnings is $4,200 would figure their benefit amount as follows:
- 90% of the first $1,174 = $1,056.60, plus
- 32% of earnings between $1,174 and $7,078 = ($4,200 – $1,174) = $968.32, plus
- 15% of earnings over $7,078 = $0.00
- Add $1,056.60 + $968.32 + $0 = $2,024.92, rounded down to nearest dime = $2,024.90.
In this example, the person’s monthly SSDI benefit would be $2,024.90.
Impact of Earnings on Benefits
If you receive SSDI benefits and decide to return to work, your benefits may be affected based on your earnings. However, the SSA allows a trial work period during which you can test your ability to work without losing your benefits. The trial work period allows you to earn an unlimited amount for nine months without losing your benefits. The nine months do not need to be consecutive but can be spread over a five-year period. After the trial work period, your benefits may be reduced or terminated, but you will have Extended Period of Eligibility (EPE) for 36 more months. During this time, if you become disabled again from the same impairment, you can resume your monthly disability benefits almost immediately.
Spousal and Dependent Benefits
Social Security also provides benefits to spouses, former spouses, and dependents of disabled workers. As a spouse, you may be eligible for benefits based on your own earnings record or up to 50% of your spouse’s PIA, whichever is higher. Dependent children may also qualify for disability benefits, which can provide additional financial support to families dealing with disability.
Continuing Disability Reviews
The SSA periodically conducts Continuing Disability Reviews (CDRs) to ensure that individuals receiving SSDI benefits still meet the medical criteria for disability. The frequency of these reviews depends on the expected likelihood of medical improvement.
Comments are closed.