Who is entitled to Social Security disability benefits? How is a "disability" determined? How long do payments continue? What happens when you reach retirement age? This Financial Guide provides information you should know about Social Security disability benefits in the event you or a loved one becomes disabled.
Every family needs to plan for the possibility of a disabling illness that prevents a breadwinner from earning income. Here is a summary of the part that Social Security benefits will play in your disability insurance planning-the amount you're entitled to and the rules that apply. This Guide also informs you of what changes you need to report to Social Security and the easiest ways to report them.
An individual who is determined by the Social Security Administration to be disabled receives a Certificate of Award. This Certificate explains how much the disability benefit will be and when payments start. It also tells you when you can expect your condition to be reviewed to see if there has been any improvement. If family members are eligible, they will receive a separate notice and a booklet about things they need to know.
Planning Aid: Social Security Disability Benefits gives a general overview of social security disability benefits.
Caution: You never have to pay for information or service at Social Security. Some businesses advertise that they can provide name changes, Social Security cards, or earnings statements for a fee. All these services are provided free by Social Security.
Generally, a worker is entitled to disability if he or she (1) is "insured" for disability (i.e., has accumulated sufficient credits in the Social Security system), (2) is under age 65, (3) has been disabled or is expected to be disabled for at least 12 months, (4) has filed an application for benefits, and (5) has completed a five-month waiting period. Disability is generally defined as the inability to perform substantial gainful activity due to a medical or mental impairment. Meeting this definition under Social Security is difficult.
If you are getting disability benefits on your own work record or on a deceased spouse's record, your payments cannot begin before the sixth full month of disability. If the sixth month has passed, your first payment may include some back benefits.
Note: Your Social Security disability benefit may be reduced if you are eligible for workers' compensation, other public disability payments, or a pension from a job where you did not have to pay Social Security taxes (discussed later). You can expect your payment amount to go up in future years. Whenever the cost of living goes up in a year, benefits will be increased by that amount the following January. If there is an increase, you will get a notice telling you about it.
Caution: If a person claiming to be a Social Security employee visits you to talk about Social Security or SSI, ask for identification. A bona fide Social Security employee will be glad to show you proper identification. If you have any doubts, check with SSA. Remember: Social Security employees will never ask you for money to have something done. It is their job to help you.
Taxation Of Benefits
If you get Social Security, you may have to pay taxes on these benefits if you have substantial income. And if you are married and file a separate return, you probably will pay taxes on your benefits.
When To Expect Them
Your check should arrive on the third day of every month. If the third falls on a Saturday, Sunday, or legal holiday, you will receive your check on the last banking day before then. The check you receive is the benefit for the previous month. For example, the check you receive dated July 3 is for June.
Form Of Payment
Your benefit can either be mailed to you or deposited directly into your bank account.
Mail. Cash or deposit your check as soon as you receive it. If it is late, wait until three days after it was due and then contact Social Security. If it is determined to be lost or stolen, contact Social Security immediately. Your check can be replaced, but the process takes time.
Tip: Do not sign your check until you are about to cash or deposit it.
If you receive a check you know is not due (for example, you are working and your condition has improved), take it to any Social Security office or return it to the U.S. Treasury Department, Division of Disbursement, at the address on the check envelope. Enclose a note explaining why you are sending the check back.
Direct Deposit. Direct deposit of your check can prevent problems with delayed, lost, or stolen checks. Direct deposit also adds convenience, especially if you are away from home. If you see a deposit in your account for a benefit that you know is not due you, you are, of course, required to refund it.
Most questions about direct deposit can be answered by your financial institution or any Social Security office.
Tip: It is especially important to tell Social Security about any change in your mailing address when you receive your benefits by direct deposit. If you decide to change the account or the financial institution where your benefits are going, it is important to keep the old account open until the first benefit is received in your new account. It usually takes one or two months to process the change from one bank or account to another.
Duration Of Payments
Your disability benefits generally continue for as long as you cannot work and your impairment has not medically improved. They will not necessarily continue indefinitely, however. Because of advances in medical science and rehabilitation techniques, an increasing number of people with disabilities recover from serious accidents and illnesses. Also, many individuals, through determination and effort, overcome serious conditions and return to work in spite of them.
Having A Child After Benefits Start
If you become the parent of a child after you begin receiving Social Security benefits and the child is in your care, be sure to notify SSA so that the child can also receive benefits.
Reaching Retirement Age
If you are still getting disability benefits when you reach full-retirement age (65 or later if born after 1937), your benefits will be automatically changed to retirement benefits, generally in the same amount. You will then receive a new booklet explaining your rights and responsibilities as a retired person. If you are a disabled widow or widower, your benefits will be changed to regular widow or widower benefits (at the same rate) at 60, and you will receive a new instruction booklet that explains the rights and responsibilities for people who get survivors benefits.
Eligibility For Medicare
After you receive disability benefits for 24 months, you will be eligible for Medicare. You will get information about Medicare several months before your coverage starts. (If you have chronic kidney disease requiring regular dialysis or a transplant, you may qualify for Medicare almost immediately.)
Changes That Can Affect Your Benefits
You should promptly report any changes that may affect your disability benefits. Family members receiving benefits also should report events that might affect their checks. The events that must be reported are explained in this section.
If You Change Your Address
You must notify the post office and Social Security immediately if you change your mailing address. In fact, failure to report a change of address is the leading cause of checks not arriving on time. Your report should include your claim number, your old address, and the new address, including the ZIP Code. Give the names of all family members who should receive benefits or information at the new address. Even if you have direct deposit, you should report a new address because important letters from Social Security are sent to your mailing address, not to a bank. Your benefits could be stopped temporarily if Social Security cannot locate you because of your failure to report a change of address.
If Your Condition Changes
You must notify SSA if there is any change for the better in your condition. Failure to do so could mean you will receive payments you aren't due--money that will have to be repaid. Remember, your case will be reviewed periodically to determine if you are still disabled, so any such abuses are easily detectable.
If You Go To Work
You should tell SSA if you take a job or become self-employed no matter how little you earn. If you are still disabled, you will be eligible for a trial work period and can continue receiving benefits for up to nine months. Also, notify SSA if you have any special work expenses resulting from your disability (such as specialized equipment, a wheelchair, or even some prescription drugs), or if there is any change in the amount of the expenses.
If You Receive Other Disability Benefits
If you are disabled and under the full-retirement age, Social Security benefits for you and your family may be reduced if you are also eligible for workers' compensation (including black lung payments) or for disability benefits from certain federal, state, or local government programs. Tell SSA if you:
- Apply for another type of disability benefit
- Begin receiving another disability benefit or a lump-sum settlement
- Already receive another disability benefit and the amount changes or your payment stops.
If You Get A Pension From Work Not Covered By Social Security
If your disability began after 1985, tell SSA if you start receiving a pension (for which you were first eligible after 1985) from a job where you did not pay Social Security taxes.
Note: For more information, ask at any Social Security office for the fact sheet A Pension From Work Not Covered By Social Security (Publication No. 05-10045).
If You Are A Spouse Or A Surviving Spouse Who Receives A Government Pension
If you are a disabled widow or widower or the spouse of someone getting disability benefits, your Social Security payments may be reduced if you worked for a federal, state, or local government agency where you did not pay Social Security taxes and you receive a pension from that agency. Notify Social Security if you begin to receive such a pension or if the amount of the pension changes.
Note: Ask for the fact sheet Government Pension Offset (Publication No. 05-10007) for more information.
If You Get Married
Here is how marriage may affect your disability benefits:
- If you are getting disability benefits on your own record, your payments will continue and you do not need to report the marriage. But report any change of name so it will appear on your future checks.
- If you are a disabled widow or widower, payments will continue, but remember to report the name change. If your current spouse dies, you may be eligible for higher benefits on his/her work record.
- If you are an adult who was disabled before age 22 and you are getting benefits on the Social Security record of a parent or grandparent, you should report your marriage. Payments generally will end unless you marry a person receiving certain types of Social Security benefits. If your benefits stop because of marriage, they cannot be started again unless the marriage is declared void.
If You Leave The Country
If you leave the United States but remain a U.S. citizen, your Social Security payments can generally continue for as long as you are outside the country and meet all requirements. (The Social Security office has a list of 60 other countries whose citizens can also get Social Security checks if they leave the United States.) However, you must notify Social Security when you plan to leave the U.S. for 30 days or more so that any letters can be sent to the right address. Notifying SSA will also enable you to learn about any special rules that apply to those receiving benefits outside the U.S. Finally, remember to let Social Security know when you return to the U.S.
Caution: If you are a citizen of a country not approved for SSA to send checks, your benefits will be suspended after you have been outside the U.S. for six months, unless you meet specific conditions. Furthermore, if you go to a country where U.S. Treasury Department regulations prohibit sending checks, your benefits will stop immediately.
Note: For more information, ask any Social Security office for the booklet Your Social Security Checks While You Are Outside The United States (Publication No. 05-10137).
If A Beneficiary Dies
When a beneficiary dies, no payment is due for the month of death. For example, if the person dies in June, even if it was on the last day, the check dated July 3 (which is the June check) should be returned. However, if the check is issued jointly to a husband and wife, the survivor should contact any Social Security office about cashing the check. If the beneficiary was using direct deposit, the bank should also be notified of the death so it can return any payments received after death.
When a person getting disability benefits dies, payments to his or her family will be changed to survivors benefits. If the worker received benefits on behalf of children, a new representative payee must be appointed. A death certificate or other proof of death is needed.
How To Report A Change
You can report a change by simply calling Social Security at (800) 772-1213, visiting any SSA office or mailing in the reporting form given to you when you applied for benefits. If you send a report by mail, be sure to include:
- Your name, and if different, the name and Social Security claim number of the person on whose account you get benefits
- Name of person's) about whom the report is made
- Your Social Security claim number
- What new information is being reported
- Date of the change
- Your signature, address, phone number, and date
If you are getting benefits on somebody else's record (a spouse, for example), SSA needs his or her Social Security number as well.
Disability Case Reviews
Under federal law, all disability cases must be reviewed from time to time. This review is to make sure that people receiving benefits continue to be disabled and meet all other requirements. Your benefits generally will continue unless there is strong proof that your condition has medically improved and there is evidence that you are able to return to work.
Frequency Of Reviews
How often your case is reviewed depends on the severity of your condition and the likelihood of improvement. The frequency can range from six months to seven years. Your Certificate of Award states when you can expect your first review. Here are general guidelines for reviews:
- Improvement expected-If medical improvement can be predicted when benefits start, your first review should be six to 18 months later.
- Improvement possible-If medical improvement is possible but cannot be predicted, your case will be reviewed about every three years.
- Improvement not expected-If medical improvement is not likely, your case will be reviewed only about once every five to seven years.
What Happens During A Review
After you get a letter announcing the review, someone from your Social Security office will contact you to explain the review process and your appeal rights. You will be asked to provide information about any medical treatment you have received and any work you might have done. Then your file will be sent to the state agency that makes disability decisions for Social Security. An evaluation team that includes a disability examiner and a doctor will carefully review your file and request your medical reports. If reports are not complete or current enough, you may be asked to have a special examination or test that the government will pay for.
Once a decision is reached, SSA will send you a letter explaining it. If SSA decides you are still disabled, your benefits will continue. If they decide you are no longer disabled, you can file an appeal (see below); otherwise, your benefits will stop three months after SSA determined that your disability ended.
Even after you start receiving disability benefits, you may want to try working again. To help you, there are many "work incentives"-rules that are designed to ease the transition back to work. These rules continue cash payments and Medicare while you work, help with the extra work expenses associated with working with a disability, and help with rehabilitation and training that may lead to a new line of work. A brief description of these rules follows.
Note: For detailed "work incentive" information, ask Social Security for the booklet Working While Disabled...How Social Security Can Help (Publication No. 05-10095).
To understand how work affects your disability benefits, you need to understand how Social Security measures your work. Disability benefits can be paid only if you are unable to do any "substantial" work. The amount of your earnings determines whether your work is substantial:
- In general, if your wages average more than $500 a month (after allowable deductions), you are performing substantial work.
- If your average monthly earnings are between $300 and $500 a month, your work could be considered substantial if the amount and quality of your work are about the same as that done by workers in your area who are not disabled. In making this decision, SSA considers the time, energy, skill, and responsibility involved in your work. Earnings of less than $300 a month are not considered substantial. (There are special rules for blind people who work.)
- If your earnings are "subsidized"-that is, if your employer says you are paid more than the reasonable value of your work-the subsidy part of your pay is not counted as earnings in deciding whether you are performing substantial work.
If you are self-employed, your business income alone may not be the best measure of whether you are doing substantial work. Business income may depend on many other factors, such as the economic situation and services of other people. In such cases, more consideration is given to the amount of time you spend in your business than the amount of your income.
Nine-Month Trial Work Period
You can continue to receive benefits for up to nine months while you try to work. The months need not be consecutive, but they must take place within a 60-month period. Generally speaking, a "trial work" month is any month in which you earn over $200 in gross wages (regardless of amount of time worked) or spend 40 hours in your own business (regardless of amount of earnings). You will receive your full benefits during this period.
Your trial work period will continue only if you are still disabled. If you recover during a trial work period, your benefits will stop after a three-month adjustment period.
At the end of nine months of trial work, SSA will decide if you are able to do "substantial" work. If you can, your benefits will stop after a three-month adjustment period. If you are not able to work, your payments will continue.
36-Month Extended Period Of Eligibility
If your benefits stop because you have returned to work even though you are still medically disabled, you receive special "benefit protection" for the next 36 months. During that time, you can receive a benefit for any month your earnings fall below $500. You do not have to file a new application, but you do have to notify Social Security. If you are unable to continue working, your benefits continue indefinitely so long as you remain disabled.
If you are working even though you are still disabled, your Medicare coverage may continue for at least 39 months after the trial work period. Beyond that, you may purchase the coverage with a monthly premium.
Help With Work Expenses
If you need certain equipment or services to help you work, the money you pay for them can be deducted from your earnings in deciding whether you are doing "substantial" work. It does not matter if you also need the items or services for daily living (such as a wheelchair).
The cost of medical equipment, certain attendant care services, prostheses, and similar items and services is generally deductible. The cost of drugs or medical services is deductible only if required because of your condition.
When you applied for disability benefits, information about you and your impairment may have been sent to the state vocational rehabilitation agency. If they offer you services and you refuse them without good reason, your monthly benefits may be withheld. If you have not heard from them and are interested in receiving rehabilitation services, you should give them a call.
Your disability benefits will continue while you receive rehabilitation services. Under a special rule, benefits can continue even if you medically recover while participating in an approved vocational rehabilitation or training program.
Note: For more information, review the Social Security booklet How Social Security Can Help With Vocational Rehabilitation (Publication No. 05-10050).
Benefits For Children and Students
If a child is getting checks on your account, there are several important things you should know about his or her benefits.
When a child reaches 18, the child's benefits stop with the month before the child reaches 18, unless the child remains unmarried and is either disabled or is a full-time elementary or secondary school student.
About five months before the child's 18th birthday, the person receiving the child's benefits will get a form explaining how benefits can continue.
A child whose benefits stopped at 18 can have them started again if he or she becomes disabled before reaching 22 or becomes a full-time elementary or secondary school student before reaching 19.
If a child is disabled, the child can continue to receive benefits after age 18 if he or she has a disability. The child also may qualify for SSI disability benefits.
If a child at 18 is a student, the child can receive benefits until age 19 if he or she continues to be a full-time elementary or secondary school student. When a student's 19th birthday occurs during a school term, benefits can be continued up to two months to allow completion of the term.
Social Security should be notified immediately if the student drops out of school, changes from full-time to part-time attendance, is expelled or suspended, or changes schools. SSA should also be told if the student is paid by his or her employer for attending school.
SSA sends each student a form at the start and end of the school year. It is important that the form be filled out and returned to us. Failure to return the form could result in a suspension of benefits..
A student can keep receiving benefits during a vacation period of four months or less if he or she plans to go back to school full time at the end of the vacation.
A student who stops attending school generally can receive benefits again if he or she returns to school full time before age 19. The student needs to contact Social Security to reapply for benefits.
Benefits for the child of someone getting disability benefits always end if the child marries. The must be reported right away.
If A Person Is Not Able to Manage His Or Her Own Funds
If a person receiving benefits becomes unable to manage his or her funds, someone should let Social Security know. Social Security will arrange for an organization or person called a "representative payee" to receive and use the benefits for that person. The representative payee is responsible for:
- Properly using the benefits on behalf of the beneficiary
- Reporting any events that may affect payments
- Completing a Representative Payee Report when asked to do so by Social Security
Note: Having a power of attorney does not automatically qualify you to be the representative payee.
Note: For more information, ask Social Security for A Guide For Representative Payees (Publication No. 05-10076).
If A Beneficiary Is Convicted Of A Crime
If someone getting Social Security benefits is convicted of a criminal offense, Social Security should be notified immediately. Benefits are not generally paid for time during which a person is imprisoned for a criminal conviction, but any family members who are eligible may continue to receive benefits.
Benefits are also not paid to individuals confined in an institution by court order who, in connection with a criminal offense:
- Have been found guilty but insane
- Have been found not guilty by reason of insanity or similar factors (such as mental disease, mental defect, or mental incompetence), or are incompetent to stand trial.
If You Have A Disability Based On Drug Abuse or Alcoholism
If you are addicted to drugs or alcohol, there are important things you should know about your benefits.
- Your benefits must be paid through a representative payee.
- You can get disability checks only as long as you take treatment for your addiction, if it is available. Your benefits will stop if you do not participate in available treatment. If that happens, you will need to be back in treatment for a certain period of time before SSA can start paying your benefits again. Your payee should let Social Security know if you are not taking treatment for your addiction.
- Disability benefits can be paid for a total of 36 months. In counting the 36-month period, SSA will not count months when your benefits were suspended. Also, SSA will not count months when treatment was not available.
Note: To get more information, ask Social Security for the fact sheet Disability Based On Drug Addiction Or Alcoholism (Publication No. 05-10047).|
Your Right To An Appeal
If you disagree with SSA's decision, you can appeal it. You have 60 days to file a written appeal with any Social Security office. Generally, there are four levels to the appeals process. They are:
- Reconsideration. Your claim is reviewed by someone who did not take part in the first decision.
- Hearing Before an Administrative Law Judge. You can appear before a judge to present your case.
- Review by Appeals Council. If the Appeals Council decides your case should be reviewed, it will either decide your case or return it to the administrative law judge for further review.
- Federal District Court. If the Appeals Council decides not to review your case or if you disagree with its decision, you may file a lawsuit in a federal district court.
If you disagree with the decision at one level, you have 60 days to appeal to the next level until you are satisfied with the decision or have completed the last level of appeal.
You have two special appeal rights when a decision is made that you are no longer disabled. They are:
- Disability Hearing. As part of the reconsideration process, this hearing allows you to meet face-to-face with the person who is reconsidering your case to explain why you feel you are still disabled. You can submit new evidence or information and can bring someone who knows about your disability. This special hearing does not replace your right to also have a formal hearing before an administrative law judge (the second appeal step) if your reconsideration is denied.
- Continuation of Benefits. While you are appealing your case, you can have your disability benefits and Medicare coverage (if you have it) continue until an administrative law judge makes his or her decision. However, you must request the continuation of your benefits during the first 10 days of the 60 days mentioned earlier. If your appeal is not successful, you may have to repay the benefits.
Andrew Landis, Social Security: The Inside Story – An Expert Explains Your Rights and Benefits, (Crisp Publications, November 1997) ISBN 1560524529.
Frederick A. Johnson, How to Apply for and Win Social Security Administration Disability Benefits, (Disability Income Association, May 1995), ISBN 096469980X.
William W. Thomas, Editor, Social Security Manual, (National Underwriter Company, 1998), 1-800-543-0874.