How Is The Amount of Social Security Disability Benefits Calculated?

When you depend on the money you get from Social Security disability benefits, you want to know that it has been correctly calculated. No one appreciates your concerns better than a disability advocate at London Eligibility, so we want you to understand the methods that Social Security uses to calculate Supplemental Security Income and Social Security Disability Insurance benefits.

Some of them, particularly the method used to determine your monthly SSDI benefit, can be quite complicated. That is why we check to make certain that the benefits are correctly calculated and work hard to get Social Security to make corrections when we discover errors.

What method do they use to calculate SSI benefits?

To qualify for benefits through the SSI program, you must be blind, disabled or elderly, which means that you are 65 years of age or older. You also must be financially eligible by having limited income and resources or assets that do not have a total value in excess of $2,000 for individuals or $3,000 for married couples where both spouses are eligible for SSI benefits.

The monthly federal benefit payable through SSI is $841 for an individual and $1,261 for a couple who both qualify for benefits. These payments represent a 5.9% increase over what was paid to beneficiaries in 2021 as a result of an annual cost-of-living adjustment. If you live in a state that supplements the federal benefit, you may receive more than these amounts.

Income that you receive from sources other than SSI may reduce the federal benefit amount. For example, earnings from working while receiving SSD benefits may decrease your monthly benefits. However, not all income counts toward reduction of your SSI benefits.

For example, the first $20 of unearned income, which would be income from a source other than a job or self-employment, does not count and may be excluded. The same is true for the first $65 of earned income and one-half of the remaining balance, which are excluded before any deduction is made from monthly SSI payments.

To see how that works, assume that an SSI beneficiary has a part-time job or is self-employed and earns $599 a month. The first $65 is deducted leaving an earnings balance of $534, but that is not what counts against your monthly benefit. Instead, only one-half of it counts, so your SSI payment for the month would be reduced by $267, which means your SSI payment for that particular month would be $574 instead of $841.

How are SSDI benefits calculated?

Things get more complicated when you become disabled after establishing a record of earnings at jobs or through self-employment. If you paid into the Social Security system through payroll taxes or self-employment taxes on the income, you may qualify for SSDI provided you are disabled within the definition used by the Social Security Administration.

The SSA definition of disabled requires that you meet each of the following requirements:

1). You must be unable to engage in substantial gainful activity.

2). It must be caused by a medically determinable physical or mental impairment.

3). The impairment or impairments must have lasted or be expected to last for at least 12 months or be expected to cause death.

In other words, just because you qualified for temporary disability benefits through a state-funded program in your state does not mean you automatically qualify for benefits through SSDI. It is more difficult to meet the definition used by the SSA.

If you do have a disability that qualifies you for SSDI benefits, the monthly benefit is not based on the severity of your disability nor how long it has lasted. It is based on a calculation that uses your lifetime covered earnings. “Covered earnings” are those earnings on which you paid Social Security taxes.

The calculation starts by determining the average monthly earnings over the course of your working life, which is then adjusted for historical growth. Some of your highest-earnings years are used to calculate your primary insurance amount or PIA. However, the number of years actually used varies depending on how long you worked before becoming disabled.

Keep in mind that whatever the calculations determine as your monthly SSDI benefit may be reduced if you also receive state disability benefits or benefits through workers’ compensation. The total of the other benefits and the SSDI cannot exceed 80% of the average earnings you had prior to being disabled.

Checking to make certain you get the benefits you deserve

The disability advocates at London Eligibility want you to get all of the Social Security disability benefits that you are entitled to receive, so we carefully review your claim for benefits to ensure that it has been correctly calculated by Social Security. When you have questions about SSDI and SSI benefits, contact us at London Eligibility for answers.