WHAT IS SOCIAL SECURITY DISABILITY INSURANCE (SSDI)?

Social Security disability has several names.  Its official name is Social Security Disability Insurance, or SSDI for short.

It is also called Title 2 Insurance or Title 2 benefits.

Sometimes, its just called "Social Security disability."

All those names refer to a program by the US government, through the Social Security Administration (SSA), that insures most workers against total disability that occurs before their full retirement age.

I should emphasize here that the key word is insurance.  SSDI is based on the same principle as all other forms of insurance.  The insured person pays a premium and is given a "policy" or contract that promises certain benefits if the terms of the contract are met while the policy is paid up.

The reason most people do not recognize Social Security as "insurance" is because.....

(1) They were never asked to purchase SSDI insurance, and

(2)  They are not aware that they ever paid "premiums" for such disability insurance.

This brings us to the question, "How do we pay for our Social Security Disability Insurance or SSDI? 

The answer is:  Each worker pays a percentage of his/her wages into the SSDI trust fun--usually through payroll deduction.  There is a term that you should be familiar with because it appears in the "deduction" column of every paycheck you receive.

This mandatory tax is authorized by a law called the Federal Insurance Contributions Act (FICA).  The FICA tax began in 1935 as part of the original Social Security law.  Both workers and their employers are required to pay this tax.

Since 2020, each covered worker pays 6.2 percent of his/her wages, up to a maximum tax of $8,537.40 each year.  (The amount was slightly different before 2020).

The employer matches this tax, paying an additional 6.2 percent of wages into FICA.

Thus, the total FICA tax on wages is 12.2 percent.  For every $100 in earnings, a total of  $12.40 of gross wages are paid as FICA tax.  A self-employed individual pays both parts of the FICA tax--or 12.4 percent of earnings until the maximum amount is contributed.

These FICA taxes fund all of the various Social Security benefit programs:  retirement, disability, widows/widower, survivor's benefits and dependent children's benefits.

The United States general budget does not contribute any money to the Social Security benefits.  So, besides the FICA earmarked taxes, no tax money goes to fund Social Security benefits.

A few important things to know about FICA and SSDI:

• When you stop working, no FICA tax is collected from you because you have no wages.
  
• Your SSDI insurance (disability coverage) ends within about 5 years after you stop working.  
• Each insured worker as a "Date Last Insured" or DLI.  This is the date your insurance or "coverage" for Social Security disability ends in terms of filing a new claim for a new disability onset.
• Example:  Your DLI is 3/30/25.  After that date you are no longer insured against a new disability under the Social Security Act.  Don't wait too long to file!
  

When you call a Social Security disability lawyer or advocate, one of the first questions will be:  When did you last work?  In short, When did you last pay FICA tax?  That leads to, Do you still have insured status under SSDI?

We frequently get calls from individuals who are obviously disabled.  Yet, they cannot collect an SSDI benefit because they have not worked in several years, have not paid any FICA tax and have ceased being insured for Social Security disability.  There is no such thing as universal coverage for SSDI--whether a person has worked or not.  The SSDI program covers only workers who have acquired a certain required number of work credits (also called "quarters of coverage).  And these work credits expire a few years after the individual stops working and stops paying FICA taxes (not the same thing as federal income tax).

As a general rule, most individuals must have worked for at least 5 years out of the most recent 10-year period to be covered by SSDI.

So in every sense SSDI is an insurance program for covered workers, and no one else.

The Social Security disability insurance program is very complex with complicated rules.  Even if you still have coverage under the Social Security Act, it can be very difficult to convince the Social Security Administration that you meet their definition of "disability."  Often, it is helpful to have a lawyer or expert advocate to help you navigate the application and appeals process.  In fact, most of the claimants who finally get approved for SSDI benefits are legally represented. Can you do it alone?  Not likely.  A study by the US Government found that only 31 percent of claimants get approved without legal representation.  With legal representation, 60 percent get approved. 

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Need help with a Social Security disability claim, appeal or hearing?  Or just have questions?  Call the Forsythe Firm, local SSDI experts in Huntsville for a free consultation, or just to talk.  (256) 799-0297 or (256)O 503-8151.