Becoming disabled can be devastating for most people. It can be difficult to figure out the complexities of Social Security Disability Insurance (SSDI) while going through such a hard time. After reading through all the information on the social security administration’s website, you may be wondering whether you should apply for SSDI at all.
Social Security Disability Insurance has pros and cons that an applicant must consider. The pros include a higher income, Medicare coverage, and vocational rehabilitation. The cons of SSDI include a tough application process, income limits, and benefits that may be lower than private disability insurance.
Before we go into this answer in more detail, let’s have a look at what SSDI is.
What is SSDI?
The Social Security Administration (SSA) oversees the payroll-tax-funded government insurance program known as Social Security Disability Insurance.
As its name implies, it is intended to pay monthly disability benefits to those who are unable to work due to a medically determined physical or mental handicap.
Pros of SSDI
If you are unable to work because of a mental or physical impairment, Social Security Disability Insurance benefits may be able to help. This federal program run by the SSA offers some great benefits.
Increased Monthly Earnings
If you have enough work credits and are therefore qualified to receive Social Security Disability Insurance benefits, the amount of money you are eligible for changes according to changes in the cost-of-living adjustments (COLA) that are in effect at the time.
Monthly benefit payments for long-term disability, disability pension from your job, and insurance coverage are not modified for changes in cost-of-living adjustments.
As a result, if you receive SSDI benefits, it’s possible that your monthly check will increase by a certain percentage every time the Consumer Price Index rises. Long-term disability insurance policies, for example, do not provide modified payments even if inflation levels climb dramatically.
Vocational Rehabilitation
When deciding whether or not to grant a claim for Social Security Disability benefits, the Social Security Administration takes into account the applicant’s prognosis for recovery. Disability insurance payments from the Social Security Administration will remain in place until the vocational rehabilitation program is completed, even if the applicant’s condition improves during the program.
If there is not likely to be any improvement, the candidate will be requested to work on a 9-month trial basis. For nine months, no limits will be placed on your income.
For example, if your trial period is determined to be 9 months, you will be requested to work without any limits placed on your income during this time.
After this period, the applicant will be permitted three additional months to continue working while their application is reviewed. If the applicant is found to still be handicapped after the evaluation, they are eligible to continue receiving a monthly check from the social security disability insurance.
Medicare Coverage
It’s not easy to get financial aid if you’re disabled. When a person becomes disabled on the job, their employer will typically only protect the terms of the Consolidated Omnibus Budget Reconciliation Act (COBRA).
When an employee leaves their job, they have the option to continue their health insurance coverage via COBRA for up to 18 months.
However, if a person is eligible for SSDI benefits during the first 18 months of COBRA coverage, an additional 11 months of COBRA coverage can be obtained.
This means that if you are awarded SSD benefits, you will have access to medical care for up to 29 months after becoming disabled. Disabled individuals of any age are welcome to apply for Medicare once their COBRA coverage expires.
There are two parts to Medicare. Part A deals with hospital care, whereas Part B addresses other medical needs.
Cons of SSDI
The following are some of the drawbacks of receiving SSDI payments that could work against you:
Tough Application Procedure
Obtaining Social Security Disability Insurance benefits is extremely challenging due to the federal government’s complex laws and lengthy SSDI application process.
An eligibility hearing for Social Security Disability Insurance typically takes around 360 days to be scheduled. In addition, only about a third of SSA applications are accepted. In some cases, you may require the assistance of an attorney, such as appealing a denial of your disability benefits.
If your initial application is denied, you may have to go through a lengthy, four-step appeals process to get the benefits to which you are entitled.
The Social Security Administration’s requirements for receiving SSDI compensation are also extremely stringent. It is common practice for private long-term disability insurance policies to include own-occupation definitions. These definitions make it possible for policyholders to be eligible for benefits even if they can perform other types of work but are unable to return to their previous line of work.
To be eligible for Social Security Disability Insurance benefits, you must demonstrate that you are completely disabled from performing any kind of substantial gainful activity. SSDI requirements are thus stricter than those of private disability insurance plans.
You’ll need more than just medical proof of disability to get Social Security Disability Insurance benefits.
Payouts Could Be Lower Than Private Disability Insurance.
Payments from Social Security Disability Insurance may not be enough to cover all of your monthly expenses. The current benefit average is $1,171 per month.
No matter how much money you pay into Social Security each month, the maximum monthly benefit payment is still $2,687. In addition, if you have a working spouse, the government may tax your monthly SSDI benefit payments.
However, if you pay for your private disability insurance coverage, you could get up to 60% of your pre-disability gross income in tax-free payments. Private disability insurance also gives you more leeway to tailor your coverage to your needs and budget.
Therefore, it’s likely that SSDI won’t meet all of your financial requirements. Successfully applying for SSD benefits is not easy, and you may not benefit much even if you are approved.
Obtaining SSDI Benefits Can Take A Lot Of Time
You may have to wait several months before receiving Social Security Disability Insurance benefits, even if you fulfill the qualifying standards established for monthly benefits and can verify that you qualify.
Over a million Americans are still waiting for the Social Security Administration to process their claims for disability payments due to the agency’s massive backlog and number of applications.
As a result, it could take many months for your SSDI application to be approved if you become disabled, even after you submit the necessary paperwork. Thousands of people apply for SSDI each year, and many of them never make it long enough for a decision to be made on their claims.
If you do not have private disability insurance and become disabled, you may be out of work for a long period of time. So, Social Security Disability Insurance might not be the best when it comes to replacing lost earnings due to a disability.
Income Limit
Receiving SSDI could result in the loss of SSI or Medicaid payments due to these programs’ extremely strict income and financial limitations. In some circumstances, the financial benefit from SSDI may not be enough to make up for the loss of Medicaid.
Medicaid is a highly exhaustive health insurance plan that pays for everything from hospital stays and preventative medicine to prescription medicines and mental health services. Without Medicaid’s assistance with their costly treatment, some people with severe disabilities would not have a chance at survival.
In addition to medical needs, a person’s income and resources also affect their eligibility for Medicaid. If a person’s income is even slightly higher than the Medicaid income threshold, it is highly unlikely that they will be able to qualify for benefits right away.
Many Medicaid recipients receive SSI benefits, and vice versa; if they stop receiving SSI due to financial gains, they may also stop receiving Medicaid.
Unfortunately, SSDI benefits are considered income for Medicaid and SSI, meaning that a person who is already receiving Medicaid but who starts receiving SSDI could lose their Medicaid coverage if their income exceeds the set limit.
A person who loses Medicaid because of SSDI may go without coverage for a long time, as Medicare doesn’t start until 24 months after the SSDI eligibility date.
How Does the SSA Define Disability?
To determine eligibility for SSDI, the SSA uses a strict definition of disability. An employee must be totally disabled to qualify for disability benefits. Social Security Administration payments are not given out for temporary or partial disabilities.
The Social Security Administration specifies the following requirements for a person to be declared disabled:
- First, the applicant’s health prevents them from working or performing any other significant gainful activity. The amount of money a worker can earn varies from year to year. If you’re blind, your maximum annual salary in 2023 is $2,460, whereas, for the sighted, it’s $1,470.
- Second, the applicant’s condition has lasted for at least a year, is expected to endure for at least a year, or will ultimately result in the applicant’s death.
- Third, the applicant’s medical condition prevents them from returning to their previous line of employment or from entering a new line of work.
Work Credit Requirements for SSDI
To be eligible for SSDI disability benefits, you also need to meet the work credit requirement. The required number of credits for eligibility is age-specific.
In contrast to various other forms of disability insurance coverage, Social Security Disability Insurance cannot be purchased. It’s not like buying individual disability insurance, where you can just go out and get it. Instead, your Social Security tax payments entitle you to benefits in the event of a disability.
To be eligible for Social Security Disability Insurance, you must have paid Social Security taxes through your employment for a minimum number of years.
These are referred to as FICA taxes. You get “work credits” for Social Security based on how much you pay in taxes. Each year, you can accumulate a maximum of four work credits.
The minimum wage required to qualify for a work credit is subject to change from one year to the next.
In 2023, you earn 1 Social Security and Medicare credit for every $1,640 in covered earnings each year. You must earn $6,560 to get the maximum of 4 credits for the year. During your lifetime, you might earn more credits than the minimum number you need to be eligible for benefits.
You need a certain number of work credits to be eligible for SSDI, and that number varies with your age. Your age determines the number of work credits required.
For instance, if you become disabled before you reach 24, you may be eligible for benefits if you have earned a total of six credits in the three years preceding the date on which your disability began.
If you become disabled between the ages of 31 and 42, you will be required to have at least 20 credits to qualify for benefits. You need one more work credit to be eligible for SSDI for every year you’ve lived beyond the age of 22.
You need to have at least 21 work credits by the time you’re 43 years old. At 44 years old, you’ll need 22, and at 45, you’ll need 23. You can qualify with as few as 40 credits if you’re 62 years old.
To be eligible for Social Security Disability Insurance benefits, you will need to have both work credits and medical documentation that proves you are disabled.
How Long Does the SSDI Approval Take?
To begin, if you are diagnosed with a disease that has little chance of recovery or if you have a severe disability, the Social Security Administration will likely approve your application immediately, or even within a month at the earliest.
If not, it could take two months or even a few years to win your case and start getting benefits. There are a few applications that are accepted at the initial level, which only takes a few months to complete.
In most cases, applications are first denied and must be appealed to get a hearing in front of a judge. When a case is denied even at the hearing level, the next step is to consider appealing the decision and filing the necessary paperwork within a strict time frame.
Getting benefits can be a long and arduous process but having legal representation can help you make sense of the process, gather the medical data you need, and present your case in the most compelling light possible.
Conclusion
There are many pros and cons that must be weighed before an applicant applies for Social Security Disability Insurance benefits.
We hope you found this article regarding the pros and cons of SDDI helpful in your research.
