The basics: SSDI and SSI

The nation’s two largest long-term disability programs are Social Security Disability Insurance and Supplemental Security Income, both of which are administered by the Social Security Administration.

Social Security Disability Insurance is part of the Old-Age, Survivors and Disability Insurance (OASDI) program administered by the SSA, the same program that funds retirement benefits for seniors. SSDI benefits are funded by worker contributions to Social Security; of the 12.4 percent payroll tax paid by workers and employers, about 15 percent is paid to the Disability Insurance Trust Fund (the remainder goes to the trust fund for old-age retirement benefits).

To qualify for SSDI, individuals must be unable to engage in any “substantial gainful activity” due to a medically verified physical or mental impairment that is expected to result in death or persist at least 12 months. Applicants must also have worked in a job that contributed to Social Security for roughly a quarter of their adult lives before they became disabled and have worked at least five of the past 10 years before the onset of disability. In 2014, there were 151 million workers who in principle could qualify for SSDI.

Income stipends are based on lifetime earnings (similar to old-age retirement benefits). The average SSDI benefit is $1,150 monthly; virtually all enrollees receive less than $2,500 per month. SSDI beneficiaries also qualify for Medicare coverage after a two-year waiting period. Both cash and Medicare benefits continue unless the beneficiary earns too much income, recovers from the disability, dies or reaches full retirement age and transfers to Social Security retirement.

Supplemental Security Income is a need-based program that provides a flat monthly cash benefit to aged, blind and disabled individuals with limited income and assets. About 90 percent of SSI recipients qualify on the basis of disability.

Qualifying for SSI is similar to SSDI, except that there is no prior work or contribution requirement. Individual cash stipends for 2015 are $733 a month, funded by federal income and other taxes. In most states, SSI recipients are also immediately eligible for Medicaid, the joint federal and state health care program for the poor. Cash and Medicaid benefits continue unless the recipient earns too much money, dies or experiences a medical recovery.

An individual may receive SSI and SSDI if he or she is both poor and has a limited work history that provides a minimal SSDI cash benefit. In 2013, this equaled about 9 percent of beneficiaries (about 41,000 recipients) in the Ninth District. The monthly maximum combined cash benefit is only marginally higher ($753) than the full SSI cash stipend because SSDI benefits offset those from SSI on a dollar-for-dollar basis after the first $20. A more significant reason to apply for both SSI and SSDI is the immediate availability of health care with SSI (via Medicaid), which gives enrollees coverage during the two-year SSDI waiting period for Medicare coverage, which is widely seen as superior.

When SSI recipients reach full retirement age, any SSDI benefits are transitioned to old-age benefits, and all recipients move from Medicaid to Medicare.