SOCIAL SECURITY DISABILTY INSURANCE (SSDI)

&

SUPPLEMENTAL SECURITY INCOME (SSI)

 

 

There are the two types of disability benefits paid by Social Security:

 

 

Social Security Disability Insurance (SSDI – Title II)

 

  1. Funded by Social Security (FICA) taxes.  People build up Social Security credit by working or being self-employed and paying taxes on their earnings. 
  2. Entitlement is based upon being disabled and earning enough work credit (not based on need).  These benefits are considered to be earned based on the payment of taxes.  Benefit amounts are not affected by a person’s wealth or poverty.  A person can be a millionaire and still draw SSDI benefits.
  3. SSDI benefits can be paid to adult workers who earned them and to their dependents (spouses and children).  A special category of SSDI pays benefits on a parent’s work record to an “adult child” who was disabled before age 22, as long as a parent who worked under jobs covered by Social Security is retired or disabled and drawing Social Security benefits, or is deceased. 
  4. Amount of benefit is based on level of earnings during a person’s working lifetime (the higher the earnings, the higher the benefit will be). 
  5. SSDI provides Medicare coverage, but not until a beneficiary has been entitled to SSDI for 24 months. 
  6. An SSDI beneficiary who works is entitled to a 9-month Trial Work Period, during which benefits can be paid in full despite the earnings from work.  This is followed by an Extended Period of Eligibility, which allows full benefits to be paid in months when earnings are not considered to be substantial and no benefit payments in months when earnings are considered substantial.

 

Supplemental Security Income (SSI – Title XVI)

 

  1. Funded by general tax revenues.  People do not have to have worked under jobs covered by Social Security taxes to qualify for SSI.
  2. Entitlement is based upon being disabled and being in financial need (funded from general taxes, not from Social Security taxes).
  3. SSI pays benefits only to the disabled individual (not to any dependents).  However, SSI disability benefits can be paid to disabled children (parents’ income and resources are considered until each child reaches age 18).
  4. Amount of benefit is set at fixed rates nationally, but can vary due to income, living arrangements, and individual state supplements.  Michigan pays a small quarterly supplement.  
  5. Based on financial need.  Social Security looks closely at each applicant’s income and resources to determine SSI eligibility and payment amount.  Living arrangements are also considered.  Individuals are limited to $2,000.00 of liquid resources, but can also own property that they live in, a car, and within limits, other assets.
  6. Any monthly amount of SSI payment provides automatic Medicaid coverage. 
  7. SSI does not have a Trial Work Period or an Extended Period of Eligibility.  If an SSI recipient works, SSI payments are reduced by the following formula:  monthly gross wages paid, minus $85 (or $65 if the person has other income besides just SSI) and divided by ½, equals the amount by which a monthly SSI payment must be reduced.