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Social Security: A Study in Contrasts

Most Americans have an understanding of the benefits that Social Security provides in the event of disability or retirement, but they may not understand the differences between different benefit programs or that they can work both separately and together. Today, we take a closer look at Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and Social Security retirement benefits.

The Social Security program came into being after President Franklin D Roosevelt signed the Social Security Act into law in 1935 when America was still reeling from the Great Depression. Today, it provides a myriad of benefits, including retirement benefits, SSI and SSDI disability benefits, survivor benefits, and benefits for children.

SSDI provides support to disabled workers with a qualifying work history. In order to receive SSDI benefits, you must meet a strict definition of disability and have enough work credits over the last ten years. SSDI is funded by a trust fund that workers pay into over the course of their working lives. This trust is funded by Federal Insurance Contributions Act (FICA) payroll taxes. Additionally, there is a five-month waiting period before you start receiving benefits. A portion of these funds are diverted to the Disability Insurance Trust Fund, which pays out SSDI benefits to approved recipients.

If you have never worked or have not worked for long, SSI might be the only kind of disability benefits for which you can qualify. SSI is a means-tested program that provides minimum basic financial aid to older adults, disabled children, and disabled adults who have extremely limited income and resources. SSI benefits are often supplemented by state programs because the federal benefit amount per qualifying individual is so low. Whereas SSDI recipients qualify for Medicare after they have received benefits for two years, SSI recipients usually qualify for Medicaid immediately upon receiving SSI benefits. SSI is funded by a general tax fund, and, in order to qualify, you must have under $2,000 in assets (individual) or under $3,000 (couple).

Social Security has a strict definition of disability for both SSDI and SSI. You cannot qualify for benefits if your disability is short-term or partial. Some conditions or disabilities are so severe that the diagnosis alone is enough to fall into the category of Compassionate Allowances; in this case, your case will receive expedited review and approval, and it does not require a special process or application. For most people, however, your mental or physical impairment needs to be so severe that you cannot perform the duties of your normal occupation or the work of another job, and it must be expected to last at least twelve continuous months or result in your death.

For a number of reasons, it tends to be easier to qualify for SSDI benefits than SSI. SSDI recipients are likely to have higher incomes and insurance coverage, so there’s a greater likelihood that they have seen doctors for their medical conditions. Judges also tend to give more credibility to applicants with lengthy work histories, which SSI recipients do not usually have.

On the other hand, Social Security retirement benefits are provided to most Americans around age 65 and do not prohibit retirement benefit recipients from continuing to work, even if they have reached retirement age.

Like SSDI benefits, Social Security retirement benefits are funded by payroll deductions, and work credits determine your eligibility. But the two areas rely on different guidelines to determine eligibility, and benefit amounts can vary depending on your age. Once you reach retirement age, your SSDI benefits automatically convert to retirement benefits.

Often, disabled people face the choice of applying for SSDI benefits or opting for early retirement at age 62 to commence receipt of Social Security retirement benefits. Although the disability approval process can be lengthy, it is frequently more advantageous to receive SSDI benefits. It can be easier to get approved for SSDI benefits if you are older as well: SSA takes into consideration the fact that it will be harder for you to get a job, learn new skills, and make the transition to a new work environment. If you are approved for SSDI benefits, your benefit amount will be equal to your full Social Security retirement benefit at retirement age. In contrast, if you opt for early retirement, you will receive your benefits at a reduced rate for the rest of your life.

If you are interested in applying for Social Security disability benefits, speak to a trusted disability attorney. He or she can bring years of experience to the process and present options so that you can make an informed decision. If you think you might qualify but are not confident enough to apply immediately, SSA offers a Benefits Eligibility Screening Tool on its website to help you determine if you might qualify.