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How Are Social Security Disability Benefits Calculated?

Social Security Disability Insurance (SSDI) is designed to assist those who are unable to work due to a disability. When applying for SSDI, you are likely concerned about how much your monthly payment will be if you are eligible for disability benefits. Understanding how SSDI benefits are calculated can provide you with peace of mind and help you feel confident that you will have an income to live on.

The Difference Between SSDI and SSI

The Social Security Administration (SSA) has two programs for people unable to work due to disability. Both programs are dependent on substantial past employment and disability.

Supplemental Security Income

Just like SSDI, Supplemental Security Income (SSI) is made for those with long-term or permanent disabilities who cannot work because of their disability. SSI is for those with low incomes or who are disabled, as well as for those under 18 who are disabled and have guardians with low incomes.

SSI is a benefit program for those who cannot meet the work requirements of SSDI. Someone who receives SSI has limited income and assets, so there are upper limits to these before they no longer qualify for SSI.

Social Security Disability Insurance

Social Security Disability Insurance (SSDI) is for those who have been disabled but have a stable work history. If you meet the work requirements, you may be eligible for SSDI. Workers pay portions of their income to the Social Security program as a form of insurance. If you have worked and become disabled, these disability benefits are available to you.

How are Social Security disability benefits calculated?

How SSDI Is Calculated

The monthly payment you receive as benefits is based on your average lifetime income and earnings prior to becoming disabled. The Federal Insurance Contributions Act (FICA) mandates that a certain amount be deducted from your previous paychecks to be paid to Social Security. This money is your covered earnings, which are also used to calculate your benefits. Most wages or salaried work include covered earnings. Self-employment taxes for business or freelance income also count towards FICA taxes and covered earnings.

The severity of your disability does not affect your SSDI. Only the inability to work because of a long-term or permanent disability determines whether you qualify. The only other factor in determining SSDI benefits is potential deductions if you receive other benefits for disability. Your current income, assets, or assistance from others are not factors in SSDI.

How to Estimate Your SSDI Benefits

The SSA will average your covered earnings over a certain period. This is called your Average Indexed Monthly Earnings (AIME), which is then used to determine your Primary Insurance Amount (PIA). This is then the base figure the SSA uses to determine your monthly benefits.

Income That May Impact the SSDI Amount

While your income is not a factor in determining whether you are eligible for SSDI benefits, there are some income sources that may reduce how much SSDI you receive. The SSA has a limit on the amount of public disability income you can collect based on your average past income. This includes workers’ compensation settlements, public disability benefits, and public pensions—a pension based on work not covered through Social Security. Public disability benefits are government disability benefits unrelated to your job and include:

  • State temporary benefits
  • Military disability benefits
  • Disability-based state retirement benefits

Some exceptions include receiving SSI or Veterans Administration benefits. Private sources of income will not usually affect SSDI. Private pensions and private insurance have no impact. However, if you are receiving private long-term disability, it may be reduced when you begin receiving SSDI benefits.

Public Disability Income Limit

Your past income determines how other public disability benefits may impact your SSDI payments. The SSA allows your total public disability income to be no more than 80% of your average prior income before you were disabled.

If you collect workers’ compensation or another form of public disability, you will receive an offset, or reduction, to your SSDI so that your income stays below that amount. In California, depending on how you receive your benefits, the offset may come from your workers’ compensation or public disability income instead of your monthly SSDI.

FAQs

Q: What is the average Social Security disability benefit per month?

A: The Social Security Administration (SSA) uses your past earnings to determine what amount you receive from your SSDI. The average monthly payment is approximately $1,300. It can range from $800 to $1,800, depending on your state and situation. Consulting an expert disability attorney can help you determine the best way to maximize your benefits.

Q: How do they determine how much disability you get?

A: The SSA determines your SSDI benefits based on your average earnings throughout your work history, prior to being disabled. The amount you receive is calculated based on the amount paid into the Social Security program. SSI payments, which are part of a different program within Social Security, are based on income, assets, and need.

Q: What could cause you to lose your SSDI benefits?

A: Your Social Security Disability Insurance will stop if you begin working again while receiving benefits, are incarcerated, or are institutionalized. Reaching retirement age will also stop SSDI payments because they will convert into retirement benefits. SSDI benefits do not depend on your income or assets the same way that SSI benefits do.

Q: What is the maximum amount Social Security Disability pays?

A: As of 2022, the maximum monthly disability benefits for SSDI that an individual can receive is $1,350 per month. This amount is expected to increase in 2023. These payments are different from SSI, which is part of a separate program administered by the SSA. Payments for SSI are capped at $914 a month for an individual.

Q: Can I receive retroactive Social Security disability payments?

A: If the SSA approves your application for SSDI benefits, you could receive retroactive payments. These are calculated from the onset of your disability, or when you filed your application, until the application was approved. If your disability onset was long before you filed the application, this must be proven. This timeframe does not include the mandatory waiting period for your application.

Your Disability Benefits Attorneys: Gade & Parekh, LLP

If you are unsure how a public disability benefit impacts your SSDI earnings, or are unsure what program you qualify for, talk with a disability attorney who has experience with Social Security programs. Knowing how these public programs interact, what you qualify for, and what is in your best interests can be complex without expert legal assistance. It is important that you receive the income that you deserve.

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