Having an illness or condition that prevents you from working full time can lead to significant financial stress. Rising costs of housing, food, and insurance add to the burden. If you’re in this situation, you might wonder what resources are available to alleviate your financial stress. One possible solution is Social Security Disability Insurance Benefits, depending on your medical conditions and work history.
Social Security Disability Insurance is a federally administered program which provides both monetary payments and Medicare coverage to United States citizens or lawful permanent residents who have worked and paid taxes on their income for at least five of the last ten years. In order to qualify for Social Security Disability benefits, the person must have a condition which lasts or is expected to last for at least twelve months or result in death. The condition must be severe enough to prevent the person from participating in significant work activity, referred to by Social Security as “substantial gainful activity.” Social Security defines substantial gainful activity in terms of amount of pay received from work, rather than the number of hours that are worked. In 2023, the maximum amount that one can earn from work activity after their date of disability, referred to as the alleged onset date, is $1450 per month. This amount is a gross pay amount and not take home pay.
How are my Social Security benefits funded?
Social Security benefits are funded from payroll taxes based on earnings from work activity. The payroll tax is 7.65 percent of earnings, and this tax applies to both the worker and the employer. The total percentage combining worker and employer contribution is 15.3 percent. Individuals who are self employed pay both the employer and worker portion combined, or 15.3 percent. These tax earnings are allocated to fund separate trusts: the Hospital Insurance (HI) Trust Fund, Old Age and Survivors Insurance (OASI) trust fund, and the Disability Insurance Trust Fund. Social Security has adjusted the allocation percentages to each trust fund over time.
How does Social Security calculate my benefit amount?
Social Security calculates benefits based on the amount that the person has earned through work activity. The benefit amount is measured based on the lifetime predisability earnings. This is referred to as the Average Indexed Monthly Earnings (AIME). This amount is also adjusted for historical wage growth. Then, that figure is plugged into a formula to determine your Primary Insurance Amount, or PIA. The PIA formula is very similar to Social Security’s retirement benefit PIA formula. Social Security will use a certain number of years of earnings to calculate the PIA, and this number varies based on the age the person became unable to work due to their condition. Social Security will count the number of years from when the person turned 22 to the year the person became disabled. Social Security will then throw out between one and five years, depending on how long the person has been working. The longer the person has been working, the more years will be removed. Then, Social Security will use the remaining highest earning years to calculate the person’s PIA. Social Security also applies an annual cost of living adjustment, so the person’s PIA will change on a yearly basis. In 2023, Social Security applied a cost of living adjustment of 8.7 percent. This is an increase over the previous cost of living adjustment in 2022 of 5.9 percent.
Social Security Disability Insurance benefits can be reduced if the person receives other public disability benefits – for example, if the person also receives state disability benefits, if those are available in the state where the person lives. Additionally, Social Security Disability Insurance benefits can be reduced or offset if the person has received workers compensation benefits or received a workers compensation settlement.
When will I receive my benefits?
Unfortunately, Social Security, being a federal government agency, moves very slowly. Most individuals who are approved will need to reach the hearing level, where an administrative law judge will review their file and decide their case. This typically takes at least two years to occur after the initial application is filed. This causes a great challenge, especially to those who have minimal to no outside financial support. Sadly, cases can only be expedited when the individual has a condition which falls under Social Security’s Compassionate Allowance list, or the condition is considered to be terminal in nature. However, once the case is decided and approved, Social Security will pay past due benefits for all of the time spent waiting for a favorable decision. There is a five month waiting period for benefits after the date of disability. After that five month period has passed, monthly past due benefits will be paid as a lump sum. For example, if the person becomes disabled in January 2021, and the case is approved in April 2023, they will receive benefits starting from June 2021 through the present. Also of note, Social Security will only pay benefits up to one year prior to the date the application for benefits was filed. Therefore, if the person became disabled in January 2019, but filed for benefits in January 2021, Social Security will only pay past due benefits back to January 2020.
Should I get an attorney?
Hiring an law firm with years of experience working with Social Security and representing disabled persons at hearings helps place your case in the strongest position for approval. Social Security Disability attorneys only receive payment for attorney’s fees if they win your case. By law, representatives receive 25 percent of the person’s past due benefits, with a maximum fee amount of $7200. This fee is sent directly to the representative by Social Security.
Navigating Social Security’s processes can be very challenging, and having an experienced team on your side helps relieve the burden of a stressful time in life. Give LaBovick Law Group a call at (561) 625-8400 to get your case started.
