How Are My Benefits Calculated
The SSA uses your Average Indexed Monthly Earnings and Primary Insurance Amount to calculate your benefits. The formula Social Security uses is quite complicated, and most people won’t be interested in trying to calculate their benefits on their own, especially because Social Security can give you an estimate.
To give you an idea of what you might receive, for 2021, the average SSDI benefit amount is $1,277 per month, but those whose income was fairly high in recent years can receive up to $3,148.
If you’re interested in how Social Security calculates your AIME and PIA, here’s how.
Average SSDI Benefit in 2021 Monthly Social Security disability benefits range from $100 to $3,148.
I Have Some Vacation And Sick Days May I Use My Vacation Or Sick Days At The Same Time I Receive Sdi
You may receive vacation pay and SDI at the same time.
You may not receive full sick pay and SDI at the same time. You may receive partial sick pay to cover some or all of the difference between SDI and your full wages. If you are uncertain, you should report to EDD any pay you receive from your employer.
How Is Social Security Disability Calculated
by Jason BarilMay 8, 2017
How Is Social Security Disability Calculated?
The Social Security Administration maintains two distinct disability benefit programs, Social Security Disability Insurance and Supplemental Security Income , and calculates each benefit differently. In this article, we review the basic formulas the SSA uses when determining benefit amounts for disabled applicants and provide examples to demonstrate how Social Security disability is calculated.
For specific information about your benefits or for help applying for disability, call the Disability Advantage Group at for a free consultation.
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If Im Injured On The Job Am I Eligible To Collect Sdi
In general, no. If youre injured on the job and cannot work, you should qualify for temporary income replacement through Workers Compensation.
There are two exceptions. First, if the amount of money paid to you from your Workers Compensation benefits is less than what SDI benefits would pay, then you may make a claim for SDI to cover the difference. Second, if there is a delay in your Workers Compensation application you may apply for SDI benefits until the dispute is settled.
If your Workers Compensation claim is later approved, you will have to pay back the SDI you received so that you dont get double benefits for the same period of time. If you receive both Workers Compensation and SDI benefits for the same injury, be sure that you keep the EDD updated on your Workers Compensation claim and the Workers Compensation carrier updated on your SDI claim, so that you can avoid an overpayment.
What Type Of Disability Insurance Should You Buy
When youâre shopping for disability coverage, you have three primary choices: long-term, short-term, and Social Security disability insurance.
Long-term disability insurance is the best option for most people.
Long-term disability is easier to qualify for than Social Security disability insurance, and short-term disability insurance only offers coverage for up to a year. A long-term policy the most comprehensive and cost-effective form of income protection you can buy to keep your financial goals on track.
However, these three types of disability insurance can complement each other for instance, a short-term policy can pay benefits during the waiting period before your long-term policy kicks in.
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Calculate How Much Income You Will Need
The best way to do this is to refer to the budget I discussed in my making informed decisions video. Essentially, you want to determine your main expenses and make sure you can cover those if you were unable to work due to a disability. To be safe, youll want to also consider the amount of savings youll need to continue put away for retirement. Most disability insurance plans stop at age 65, so if you become disabled early and dont recover, your retirement savings may be insufficient. Also, not incorporating retirement savings puts more pressure on future you to make up the difference, including compound returns. Lets say you need $6,000 per month after-tax to cover your expenses and savings.
What If I Attempt To Return To Work But I End Up Needing To Go Out On Disability Again
If you return to work and are able to perform your regular or customary job for more than 60 days, then your disability benefit period is considered ended. If you stop working again due to disability, you must file a new claim for SDI, and re-establish your eligibility for benefits as of the date of the new claim. If you are eligible for SDI as of the date of your new claim, you are entitled to a new benefit period of up to 52 weeks.
If you return to work for more than 60 days, but do not perform your regular or customary work due to your disability for example, you work only light duty or only part-time you may be able to continue your prior disability claim. You will need to show EDD that you did not perform your regular or customary work when you attempted to return to work.
If you return to work for fewer than 60 days, and stop working due to the same disability, you are considered to be within the same disability benefits period. You may continue receiving benefits under your original claim and the 7-day waiting period required by these claims will be waived.
Determine Your Current Coverage
Lets say you have group coverage for $4,000 / month. Your coverage is own occupation for the first 2 years, then any occupation thereafter. When it comes to group coverage, you need to figure out whether that $4,000 benefit is taxable, or tax-free. If your employer pays for the regular premium, it will be taxable. In Ontario, the after-tax value of this disability benefit would be about $3,300. If you pay for the premium, even if its automatically deducted from your paycheque, it will be tax free, so you receive the full $4,000. For this example, well assume you pay for the disability insurance so you receive $4,000 in after-tax disability payments.
Average Indexed Monthly Earnings
First, the SSA will determine your AIME. To do this, the SSA will adjust, or index, your lifetime earnings to account for the increase in general wages that happened during the years you worked. This is done to make sure that the payments you get in the future mirror this rise.
The SSA will use up to 35 of your working years in the calculation. The SSA takes the years with the highest indexed earnings, adds them together, and divides them by the total number of months for those years. The average is then rounded down to reach your AIME.
You can see an example of how the SSA calculates an AIME on its website.
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If You Need Help With An Application For Social Security Disability Benefits
SSDI and SSI benefits provide a vital financial lifeline for individuals who are unable to work due to physical or mental disabilities. If you are applying for Social Security disability benefits, you need to speak with an experienced Social Security disability attorney as soon as possible to ensure that your application thoroughly documents your condition and your legal right to benefits. Please contact us online, or call our Virginia Beach office to schedule your free consultation. We have offices throughout Virginia, including Chesapeake, Newport News, Norfolk, and Suffolk.
How Ssi Payments Are Calculated
Unlike SSDI, Supplemental Security Income is a need-based program. People who have low income, minimal assets, and insufficient work credits for SSDI can apply to receive cash compensation. In some cases, people who receive very low SSDI payments can also receive SSI benefitswhich is referred to as a concurrent claim.
SSI payments are calculated based on what is referred to as the Federal Benefit Rate . For 2020, the FBR is $783 for an eligible individual, $1,175 for an eligible individual with an eligible spouse, and $392 for an essential person. Any countable income you have, such as funds from performing odd jobs, reduces the benefits you receive.
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Andoptional Factors That Vary By Person
- Coverage amount: The amount you receive each month when you cant work. It should be between 60 to 80 percent of your monthly salary. The benefit of an individual policy usually isnt taxed for a group plan if paid in part by your employer, the benefit will be taxable.
- Benefit period: The length of time you can receive benefits. For short term disability this will typically not be more than a year for long term disability it could range from two years to retirement, or until you recover from your disability.
- Waiting period: Also called an elimination period, its the amount of time after you are disabled until you can start receiving benefits. It will generally be shorter for STD and longer for LTD.
Calculating Benefit Payment Amounts
Your Weekly Benefit Amount depends on your annual income. It is estimated as 60 to 70 percent of the wages you earned 5 to 18 months before your claim start date and up to the maximum WBA.
Note: Your claim start date is the date your disability begins.
We will calculate your WBA using a base period. To receive these benefits, you must have paid into State Disability Insurance during your base period. You will see this listed as CASDI on your paystub.
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The definition of disability will vary depending on your employer’s plan. Some policies consider you disabled when you’re unable to perform your job duties, while others pay only if you’re unable to perform in any job suitable for you based on your training, education and experience. Other policies require that you not be gainfully employed while you’re collecting benefits or that you are unable to earn a certain percentage of your pre-disability income because of injury or sickness.
There are some policies that will pay you a portion of your total disability monthly benefit amount if you have lost a part of your income due to a disability. Other policies and plans may include a rehabilitation provision that requires you to take part in a vocational rehabilitation program in order to continue to receive benefits.
Keep in mind that many policies and plans have exclusions and limitations and may not fully cover certain disabilities and pre-existing conditions. Benefits differ from company to company, so speak with your benefits administrator for your workplaces complete plan details.
Benefits may begin after you have met an elimination period a plan-defined period of time, starting with the date you are disabled from work and the number of days you must continue to be disabled until benefits may begin. Most group long term disability plans have an elimination period of 90 days or 180 days. Under most group plans, generally the employer selects the elimination period.
Understanding The Base Period For Sdi
Most California employees are entitled to an SDI benefit equal to 60% of their regular wages, up to a cap. Currently, the cap is $1,357 per week the state adjusts the cap as necessary to adjust for inflation. Lower-income employees may be entitled to 70% of their regular wages.
However, you won’t necessarily receive 60-70% of what you were earning just before becoming unable to work. Instead, California benefits depend on your earnings during the “base period.” The base period is the 12-month period ending just before the last complete calendar quarter you were able to work. For example, if you become disabled in November 2020, the last complete calendar quarter you worked was July 1, 2020 through September 30, 2020. So, your base period for benefits is July 1, 2019 through June 30, 2020.
The state uses your highest-paid calendar quarter during the base period as a starting point. If you receive the same salary year in and year out, the timing of your claim won’t affect you much. Your highest-paid quarter will be the same as any other quarter. However, if your wages are irregular, or you receive a windfall at some point, when you file your claim could significantly change your benefit amount. If the months in which you earn the most fall within the base period, your payment will be higher.
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Calculating Your Social Security Disability Payment
The amount of money you will receive from Social Security on a monthly basis is unique for every individual. This is due to the fact that the Social Security Administration uses a complex weighted formula in order to calculate benefits for each person, up to the maximum benefit of $3,148 in 2021.
Social Security bases your retirement and disability benefits on the amount of income on which you’ve paid Social Security taxescalled “covered earnings.” Your average covered earnings over a period of years is known as your average indexed monthly earnings .
A formula is applied to your AIME to calculate your primary insurance amount , which is the base figure the SSA uses in setting your benefit amount. The formula consists of fixed percentages of different amounts of income . For example, in 2021, 90% of the first $996 of your AIME is added to your PIA, plus 32% of your AIME from $996 to $6,002, plus 15% of your AIME over $6,002. These amounts are added up to come up with your PIA.
Average SSDI Benefit in 2021
Regular Or Own Occupation
The definition of “regular or own occupation” plan means you’ll receive benefits if you’re unable to perform the main duties of the job you had at the time the disability started.
You’ll still receive benefits even if you can work in a different job from the one you had before your disability, based on your training, experience and education. Some policies don’t allow you to get benefits, or may reduce your benefits, if you begin working in a different job.
In group policies, it’s common that policies have regular or own occupation plans for a specified period of time. At the end of the specified period of time, usually after the first 2 or 5 years, the disability policy will often change to the any occupation definition.
Own occupation plans that never change in definition are often purchased individually and usually cost more than any occupation plans.
You may want to consider an own occupation plan if you have a specialized occupation that would require you to take a significant pay cut in order to work in another field.
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Comprehensive Disability Insurance Coverage You Should Consider*
- Tax-free payments up to $7,500 per month . Please consult with your tax advisor for more information.
- Coverage for a working spouse/domestic partner is also available.
- Affordable group rates with many convenient payment options.
- Benefits are protected from inflation. Cost of Living Adjustments begins with your second year of collecting disability. Up to six annual adjustments will be made, with a maximum annual increase of 6%.
- Partial Disability and Rehabilitation Benefits.
- No premium after you begin receiving your benefits.
- Survivor Income Benefits, when available, are paid to the insureds designated beneficiary .
*Sponsored Family Members are not eligible for the Group Long Term Disability Insurance Plan.
Optional Individual Disability Plan Riders
- Future purchase option2: This lets you increase coverage in the future as your income rises, without having to undergo a medical exam or provide proof of medical insurability.
- Cost-of-living adjustment3 : A policy rider that states the insurance company will increase your benefit to account for inflation.
- Catastrophic disability benefits: Provides extra funds up to 100% income replacement if due to injury or sickness you are unable to perform two or more activities of daily living, are cognitively impaired or irrecoverably
- Student loan protection rider4: This optional benefit provides extra money to make student loan payments during the benefit period. It is particularly useful for early-career professionals such as doctors and lawyers who have invested heavily in their education.
- Retirement protection5: A rider that protects retirement savings by replacing the contributions you would have made to your defined contribution plan while totally disabled.
- Unemployment waiver of premium: Waives your premiums while youre unemployed, allowing you to stop paying premiums but continue owning the policy. You may remain eligible for disability benefits should you become disabled during that time, since your policy remains active.
- Social insurance substitute: This monthly benefit coordinates with payments received under Social Security and some other government programs.
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How Long Will Long
Most long-term disability insurance policies pay out for two, five, or 10 years, or until retirement, and a five-year benefit period is typically enough to cover people according to the Council for Disability Awareness, the average individual disability claim lasts for a little under three years.6 jui. 2018
Special Rules For People Who Are Blind Or Have Low Vision
We consider you to be legally blind under Social Security rules if your vision cannot be corrected to better than 20/200 in your better eye or if your visual field is 20 degrees or less, even with a corrective lens. Many people who meet the legal definition of blindness still have some sight and may be able to read large print and get around without a cane or a guide dog.
If you do not meet the legal definition of blindness, you may still qualify for disability benefits if your vision problems alone or combined with other health problems prevent you from working.
There are a number of special rules for people who are blind that recognize the severe impact of blindness on a person’s ability to work. For example, the monthly earnings limit for people who are blind is generally higher than the limit that applies to non-blind disabled workers.
In 2021, the monthly earnings limit is $2,190.
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