As one researcher famously puts it, “We enter the world almost completely disabled, and many of us will become so again in our later years.”
The period of so-called ability is a brief window that can shut at any time without warning, due to injury, illness, or accident. The thin line between ability and disability divides the world into those who need help and the rest who are supposed to provide that help.
Ongoing research also suggests that as we enter adulthood and independence, the chances are that 25 percent of people aged 20 today in America could become disabled by the age of 67, and unable to work before they reach the age of retirement.
Such people and their families face an enormous physical, emotional, and financial burden. Being unable to work, their income-earning capacity is greatly reduced or completely eliminated. They may incur huge expenses for medical diagnosis, treatment, and therapy.
They require money to meet their daily living expenses, and a continuous stream of funds for medication, hospitalization, out-patient services, modifications to the home, assistive devices, prosthetic devices, etc. Apart from these, unless certain emotional and social needs are met, they could slip into depression.
With this concept in mind, the SSDI (Social Security Disability Insurance Scheme) was incorporated in 1956.
What Is SSDI?
Persons with disabilities can receive an inflation-proof income stream when they are unable to work through an insurance scheme entitled the SSDI. This is available to people who meet the prescribed disability criteria, after working for a designated number of years.
It is a federal insurance program that is funded by a part of the taxes you pay while working and the benefits are paid to those workers who are unable to work due to the effects of an illness/injury that are estimated to last for at least one year, or result in death.
SSDI is not a welfare payout or dole. It is an earned benefit for which workers would have to meet certain qualifying criteria. Generally, the disability that is covered is physical.
The benefits are available based on whether the disability is deemed to be temporary or permanent.
How It Works
1. Qualifying Criteria
The person should have a physical/mental condition that prevents him/her from being employed or engaged in gainful activity. They should have worked in an organization that provides Social Security-covered employment for a certain number of years.
The condition should be estimated to last for at least 12 months or result in death. The person should be below the age of 65, and they must have accumulated the required credits.
These are termed as the qualifying conditions that make the person eligible to receive SSDI benefits. If the person became disabled before age 22, they could receive their parents’ SSDI work credits with no loss to the parents as auxiliary benefits.
2. Eligibility Tests
Several mandatory tests must be passed to qualify for SSDI. Persons who are blind, widowed, applying for a child or a member of the Armed Forces may have slightly different tests.
Standard tests include:
- Means Test: To meet the Administration’s definition of disability
- Severity Test: To gauge the severity of the disability and its effect on our ability to work
- Medical Records: Providing medical documentation that locates your disability in the Disability Evaluation Under Social Security book. Some conditions automatically qualify
- Work Test: Assessment of ability to work based on the type of work you were engaged in, your education, age, work experience, etc.
3. Start of Payments
It is legally required that the person should have been disabled for at least five full months before the SSDI payments can start in the sixth month.
In case family members are also eligible for benefits based on the person with disability’s work, they will receive a notice informing them about it.
The wait time for applications to be processed can be quite long. The initial benefits application could take between 90-120 days to process, but in reality, the entire process could take nearly eight months.
4. Duration of Payments
In general, the SSDI payments continue throughout the duration of the condition, if it hasn’t improved and you are still unable to work.
However, there is no guarantee that the benefits will continue indefinitely, and the person’s disability status may be periodically reviewed.
This is due to the advances in medical science, therapy, technology, etc. that enable better mobility and skill development, that allows the person to find gainful employment, thus disqualifying them for SSDI benefits.
It is the responsibility of a person with a disability to keep the board informed of changes in the ability to work, improvement in medical condition, and/or return to employment.
5. Schedule of Payments
SSDI benefits are paid out each month. The date of payment is usually computed according to the person’s birth date.
Other members in the family eligible to get benefits based on their loved one’s disability would receive the payments on the date of birth of the person with a disability.
6. Mode of Payments
Those applicants who have applied for benefits on or after 1 May 2011 will have to receive only electronic payments. This is a simple, safe, and direct way of receiving your benefits, and your bank can give you the right advice and assistance on this.
Federal payments are also made through a DirectExpress card program, where payments are made straight into the account holder’s card account.
Those who receive their SSDI payments by checks in the mail have to ensure that their mailing address is correct and kept updated in case of changes. Checks have to be encashed within a year, and if you miss cashing it, you can apply to get it re-validated.
The assumption is that the person receiving the payments is capable of managing their financial affairs themselves.
However, if the person has a mental impairment, the board would require them to appoint a payee representative who can take charge of receiving the payments and making the disbursal.
In the case of homeless persons, the representative payee system is very useful as they don’t have a postal address where the checks can be mailed to.
Persons with disabilities who have a substantial income in addition to their SSDI benefits must pay income tax.
If the person with a disability holds a joint account with their spouse, their combined income is calculated, and if it is more than a certain amount, SSDI benefits are liable to be taxed.
If you receive private disability insurance payments, they may be taxable if the premiums were paid by the employer, but not taxable if you paid them out of your own pocket.
You could get early Medicare benefits though you are below 65 as SSDI beneficiaries get automatic Medicare coverage after receiving SSDI payments for more than two years.
9. Regular Increase
SSDI benefits are indexed every year to meet inflationary rise and cost-of-living increases. This happens automatically every January.
You will also be given all reasonable opportunities to improve your condition and go back to work while still being eligible to receive the SSDI benefits.
How to apply for SSDI benefits
You need to provide:
- Birth certificate
- Social Security Number
- Complete medical information records
- Complete work history
- Recent W2 or Tax return
Find a financial advisor in San Ramon who can give you the right inputs, advice, and assistance to maximize your SSDI benefits. They can update you on the changes, amendments, etc. to the Act that happens from time to time.
Getting help to apply or appeal
Applications may be accepted or denied, based on certain criteria. It may not be possible for a person with a disability to complete all the paperwork accurately, supply the necessary documents, and submit the application within the prescribed time limit.
Family members, co-workers, and friends may not have the experience or information to do this. The organization you work for may help you, but this could mean delays and an inordinate amount of back and forth.
The board allows applicants to engage the professional services of a lawyer or non-legal representative for this purpose. Your local community services may have trained specialists who can assist you, or you can hire a lawyer/financial advisor who specializes in these areas.
According to statistics, almost 90 percent of applicants hire a legal expert to help them with the process, especially when they make their first application or appeal. This can considerably reduce your chances of rejection.
There are certain stipulations set by the government about the fees that such legal representatives can charge their clients. It is generally set at about 25 percent of the dollar amount awarded, but not exceeding $6000. The fees could vary according to the nature of the claim, the amount of paperwork involved, etc.
In case the claim is rejected, the lawyer/representative does not charge any fees. This is why if they feel that your claim does not stand a chance of being approved, they may decline to take up the case.
For instance, if your disability does not meet the board’s criteria, is not at the required level of severity, or you don’t have the necessary work history and credits for your claim to be successful, the application may be rejected.
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Melissa is a special needs financial planner who currently working for My Open Advisors. She is also performing as a content marketing manager for this company.