Congress originally intended Social Security to reduce the poverty rates among seniors but over time the idea has evolved.

More than 60 million Americans receive some form of Social Security with most recipients using it to replace income lost at retirement.

According to the Social Security Administration, almost 1 in 3 young adults will require benefits before they reach retirement age. It is therefore important to understand the differences between Social Security Disability (SSDI) and Supplemental Security Income (SSI).

In order to qualify for SSDI,

• a person must have worked at least 25% of their adult life (and five of the past 10 years),
• suffer from a severe physical or mental impairment that is expected to last 12 months or result in death,
• and be unable to perform “substantial gainful activity.”

Even after all levels of appeal have been exhausted, only about 40% of applications are approved.

There is also a significant backlog in processing applications with the average wait for a determination decision lasting 240 days without an appeal and 627 days if an appeal is necessary.

SSDI benefit amounts are calculated using the same formula that determines retirement benefits.

It is based on your lifetime average earnings covered by Social Security. The Social Security Administration (SSA) calculates the average monthly income over your career and pays differing amounts based on how much a person has paid in during that time.

Up to five of a disabled worker’s elapsed years with the lowest earnings are disregarding in calculating their average indexed monthly earnings. This feature reduces the effect of years of lower—or zero—earnings on benefits with the intent of recognizing that disabled workers have lost years of valuable work credits that cut into their benefits.

SSDI is funded primarily through payroll taxes.

Currently, employers and employees both pay 0.9% of their earnings up to the cap of $132,900 yearly into the SSDI trust fund.

SSI is a needs-based program and unlike SSDI, eligibility and awards are not impacted by work history.

To qualify for SSI an individual cannot own more than $2,000 ($3,000 for a married couple), and must be 65 years or older, blind, or otherwise disabled.

The highest amount SSI pays an individual (Federal Benefit Rate) is $771 a month ($1,157 for a married couple) with benefits decreasing based on monthly earnings and other benefits of recipients.

As the name suggests, SSI is intended to supplement other earnings or benefits up to a minimum amount the SSA determines a person needs to live on.

For example, a 70-year-old retiree who receives $500 a month from SSDI, if approved would receive $221 in SSI to make their total monthly benefit the Federal Benefit Rate of $771.

With different purposes, eligibility requirements, and interconnected workings, navigating the Social Security world can be confusing.

Contact Abraham & Bauer for help with an application, eligibility appeal, or to receive and manage benefits today.

Planning ahead is a gift to your loved ones!

Richard K. Abraham, Esquire

Mr. Abraham is an experienced attorney and founding member of the Law Office of Richard K. Abraham. The Sparks, MD office of the firm concentrates its practice in Estate Planning, Elder Law, Probate, Medical Assistance (Medicaid), Guardianship, Asset Preservation and Fiduciary Representation.

He is an active member in a number of professional organizations that focus on law, the senior community, and estate planning. He works with clients in Central Maryland, especially in Towson, Hunt Valley, Lutherville/Timonium, Parkville, White Marsh, Bel Air & Northern Baltimore City.

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