HOW SOCIAL SECURITY IS LIKE ANY OTHER INSURANCE PLAN

 HOW SOCIAL SECURITY DISABILITY IS A TYPE OF INSURANCE POLICY

Individuals are often surprised when I refer to Social Security Disability as "insurance." Yet, the name of the program is "Social Security Disability Insurance," often abbreviated as SSDI.

SSDI is really a disability insurance program provided to workers by the US Government through the Social Security Administration. It was established in 1935 by President Franklin D. Roosevelt during the Great Depression, although today's disability part wasn't added until 1954.

Like all other insurance, SSDI has defined benefits, requires certain qualifications and must be paid for by each individual. The tax which pays for Social Security is called FICA, which stands for the law which mandates the tax: The Federal Insurance Contributions Act. Each worker pays a portion of wages, usually through payroll deduction. (Look at your pay stub and you will see a deduction for FICA; this is the Social Security tax). As long as you pay this tax you have insured status for disability. After you stop working and stop paying FICA your disability coverage will eventually expire, though not immediately. That's why you can "wait too long" to file a new disability claim. Yes, your SSDI benefit does expire after you stop working--no matter how much you've paid into it in years past.

Here's an example I use: You pay your car insurance for 35 years. Miss one or two premium payments and---oops---your insurance is gone!

HOW SSDI IS LIKE ANY OTHER INSURANCE

General Insurance Policy                                 Social Security Disability Insurance

Has a defined benefit                                          Has a defined benefit

Has certain eligibility requirements                 Has certain eligibility requirements

Requires regular payment of premiums          Requires regular payments (FICA)

Will require proof of a a loss                             Will require proof of disability

Has carefully defined terms/conditions            Carefully defined terms/conditions

Is basically a contract with the insured             Is a contract with the Government

May be difficult to collect benefits                    May be difficult to collect benefits

Doesn't cover everyone; only the insured         Doesn't cover everyone; just insureds

May require legal help to get paid                     May require legal help to get paid

Coverage can expire                                           Coverage can expire

You are not required to purchase it                    Workers are required to purchase it

Most workers are not aware that they are purchasing disability insurance through the US Government and the Social Security Administration (SSA) when they take their first job. This is "unseen" insurance and almost every worker in the United States who has a job is enrolled.  It is mandated (required) by the Social Security Act of 1935 and the Federal Insurance Contribution Act (FICA).  It covers only workers and those who have stopped working within about the last 5 years.

So, we now understand that Social Security disability is not some universal thing given to everybody by the US government. It has to be earned and it has to be paid for. An individual must accumulate a certain number of "work credits" or "quarters of coverage" in order to be insured. (Yes, insured is the correct word). So individuals who haven't worked--or who haven't worked recently--may not be "insured" or covered. The general rule of thumb is: You must have worked at least 5 years out of the most recent 10-year period. That rule is a bit different for persons under age 31.

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Provided as information only by The Forsythe Firm, disability specialists in Huntsville, Alabama. Let us help you make sense out of Social Security Disability. May we help you with a claim, appeal or hearing? Free consultations at (256) 799-0297. forsythefirm@gmail.com