Thrifty Thinking: Social Security Disability Insurance

If you experience a disability, your finances will drastically change. You'll likely apply for the notoriously complex Social Security Disability Insurance (SSDI) program. There's a lot of literature out there with tips to get awarded. 

I had a chance to interview Regina Carlton Director of Allsup to learn more.

Is it possible to work while on SSDI? If so, how much can a person earn? 

Yes, in general, SSDI beneficiaries can work; however, they are limited to the amount they can earn from "substantial gainful activity" (SGA) and continue to receive their disability benefits. SGA earnings cannot exceed $1,180 per month (or $1,970 for blind individuals).

However, SSDI beneficiaries can also participate in the Social Security Administration’s Ticket to Work program and receive assistance from an Employment Network in returning to work. The Ticket to Work program allows the individual to earn above SGA, while protecting their SSDI benefits during a trial work period. If they are unable to remain at work within a period of five years due to their disability, SSA can reinstate their benefits. The average monthly SSDI benefit was $1,071.42 for women and $1,321.55 for men in July 2018.

What about dependent benefits?

Yes, minor dependents can also receive disability benefits if a parent is receiving SSDI. Dependents can receive up to half the benefit payment of the parent, depending on the family’s maximum benefit. For example, if the adult receives $2,000 a month in benefit income and has one child, the dependent could receive up to $1,000; and if there are two dependents, they each receive up to $500, and so on. If both parents received SSDI benefits, the minor dependent’s benefit payment is aligned with the parent who is receiving the highest monthly amount.   

What about spousal benefits? 

Your spouse may be eligible for benefits if he or she meets one or more of the following requirements: 

• 62 years or older when you start receiving SSDI benefits.
• Your spouse is caring for your minor child under the age of 16. 
• Your spouse is caring for your child with a disability, who is also collecting Social Security benefits.

How does SSDI work with other programs, such as private long-term disability insurance, workers' compensation or veterans disability benefits? 

Similar to SSDI, private long-term disability benefits are used as income replacement if you experience a severe medical condition. However, LTD plans typically insure you for a specific job you are performing (generally providing 60% of your salary) and sometimes for only a couple of years. You can receive both LTD and SSDI payments; however, your LTD likely will “offset” its payments with your SSDI payments. For example, if your LTD plan pays you $3,000 a month and you are approved for $1,500 in SSDI monthly benefits, the private insurer will reduce what it sends you by $1,500. You continue getting $3,000 total, but from two different sources. 

Workers’ compensation is a type of insurance that provides wages and medical benefits if you are injured while on the job (e.g., slips, falls or machinery-related accidents). A key difference between being eligible for workers’ compensation and LTD or SSDI is that your injury must have been the direct consequence of a work-related task. In most states, if your workers’ compensation payment is above a certain amount, the SSA will offset its payments to you. 

Veterans are able to receive both SSDI benefits and VA compensation. The big difference between VA and SSDI benefits is VA requires the disability to be related to service in order to be granted, and it does not have to prevent them from working. The VA uses a rating system that determines the severity of the disability (10% to 100%), and a veteran can have more than one rating for more than one disability. If additional medical conditions are caused or aggravated by a condition related to a veteran’s military service, those conditions are granted a service connection on a secondary basis. If a veteran is 100% service connected with the VA, there is a good chance they also meet the inability to work requirements required by SSA. However, the two agencies have different regulations regarding the work requirement, and a grant by one agency does not guarantee a grant by the other agency. 

Here's a great article that delves deeper into this topic. 

What strategies can help SSDI recipients stay out of debt?

It’s critical to review spending habits immediately after experiencing a severe disability. Because of the long wait for benefits – often more than two years -- many people who do not adequately prepare can lose their savings, 401(k)s, cars and sometimes their homes. Many suffer financial ruin, or are faced with foreclosure. Work to reduce spending as quickly as possible, solicit advice from others if necessary and prepare for a long wait.

While waiting for benefits, it can be difficult to make ends meet. For this reason, it’s important to start practicing a new set of spending habits as early as possible. The previously standard budget and purchasing decisions need to be reassessed. Although SSDI benefits will put food on the table and help individuals retain their livelihood, they aren’t meant to replace the salary from before. Making this transition will require permanent lifestyle adjustments. SSDI beneficiaries can search their community for organizations that can help with food, utilities, housing and other expenses to adjust to this new reality. These may include United Way (you can dial 2-1-1 to access assistance), your state Medicaid agency, and the Supplemental Nutrition Assistance Program, or SNAP, and other programs.

What if the condition that causes a person to qualify for SSDI improves?

If an individual’s condition improves and they’re medically able to try returning to work, the Ticket to Work (TTW) program is available. TTW offers the opportunity to test the waters, without the fear of losing SSDI and Medicare benefits. Anyone who receives SSDI automatically qualifies for Ticket to Work, and there are organizations such as Employment Networks designated by the Social Security Administration to provide this help for free.

Some people mistakenly believe that seeking SSDI is a decision to give up on working for good. This couldn’t be further from the truth. The program is designed for those who can’t work due to a disability for 12 months or more. This could include mothers who have health setbacks for an extended period of time as the result of pregnancy, severe but curable cancers and organ transplants. TTW was specifically created to help individuals with disabilities earn more than their minimal SSDI benefit and put them back on the path to financial independence. Unfortunately, few people know that their SSDI benefit was designed to get them back to work, too, but this door is open and waiting for them.

About Regina

Regina Carlton has more than a decade of experience helping individuals obtain Social Security Disability Insurance (SSDI) benefits. As Director of Consumer Operations at Allsup, she manages the teams that help individuals apply for SSDI and file their first appeal, if their initial application has been denied. As a claimant representative, she serves as a liaison with the Social Security Administration (SSA) helping claimants build compelling and complete SSDI claims. Find more at FileSSDI.TrueHelp.com.