Social Security Disability Insurance (SSDI)

Social Security Disability Insurance delivers monthly financial payments to people whose health won’t allow them to work. SSDI provides for those who contributed to the benefits pool through work and have a documented disability that lasts, or is expected to last, more than 12 months.

Disability benefits are funded by payroll taxes deducted from workers’ paychecks and matched by employers, plus employment taxes of self-employed people. If you apply for SSDI benefits and qualify for them, you receive monthly payments from the Social Security Administration once it approves your application.

The application process for SSDI can be complicated and take several months or even years. SSDI has a strict eligibility standard that the government follows closely. In fact, many applicants find their initial applications denied, forcing them to pursue benefits through an extensive appeals process.

Payroll taxes paid by both employers and workers fund Social Security Disability Insurance. According to the Social Security Administration, all workers pay a Social Security tax of 6.2% on their wages. Employers also pay 6.2% tax of every employee’s wages. People who are self-employed pay a 12.4% Social Security tax on their net earnings.

The Internal Revenue Service collects these payroll taxes and deposits them into Social Security trust funds that finance the SSDI program.

The government invests SSDI funds in special U.S. Treasury bonds, which carry the financial backing of the U.S. government.

To qualify for the SSDI program, you must be a U.S. citizen or a legally admitted non-citizen. After that, you must meet a specific set of requirements, and you must be able to document your disability with medical records.

By meeting these requirements, you can qualify for SSDI benefits. The amount of money you qualify for depends on your income and your work credits.

The amount of money a person can qualify for through the Social Security Disability Insurance program depends on their previous earned income.

This amount is calculated by a formula that considers the amount of money a person has previously made and how much they paid into the Social Security system.

A person’s maximum monthly income through the SSDI program is set at $3,636 per month in 2023 for a single person. It can be higher for people with dependents. However, the average monthly benefit payment was $1,688 as of Dec. 2022, according to the National Council on Aging.

You gain a maximum of four credits per year based on your annual pay income. For 2023, one credit is given per every $1,640 earned from either self-employment or wage income. However, the amount needed for a work credit changes.

When you apply for SSDI benefits, the Social Security Administration examines how many work credits you have earned over the past 10 years. You can earn a maximum of 40 work credits during that time.

Aside from work credits, you must also have worked five of the past 10 years before becoming disabled. The number of years increases to six years if you are ages 24 to 31 when you become incapacitated and seven years if you are ages 22 to 23.

If you’re disabled and want SSDI benefits, you must complete the Social Security Disability Insurance Application. The process can be lengthy and confusing, especially if you have a chronic condition or physical limitation that makes it difficult to work long term. That’s because you must document your condition, and you may need to gather medical paperwork from multiple doctors and other medical providers.

However, many gain benefits through the appeals process.

The next step after filing your application can be the hardest — waiting. About 66% of people who file for SSDI claims are initially denied. Denials set the stage for the next steps in the process, which are appeals.

Filing an appeal for a declined SSDI application is straightforward. Although, there are four tiers of appeals. You must have patience with the process and have faith that in the end, you’ll get your benefits.

If you win an appeal at any of the four levels, your benefits payments will be retroactive to the month after the protective filing date of your application. Your first SSDI payment will be a large lump sum, unless you elect to take payments over a six-month space. After the initial payment, your set payments will follow each month.