Updated: Sep 3, 2019
We recently received a call from a client who was confused about a social security payment that her disabled sibling was receiving. Her brother had a work related injury that left him with serious brain damage and was approved for Social Security Disability Insurance when he was 57 years old. He was now turning 67, full retirement age, and her question was pretty simple -- or maybe not -- "does he continue on SSDI or will he move over to retirement benefits?"
"I have heard all sorts of answers from people I ask," she told Attorney Connelly. "But I can't seem to get a straight answer. I called the Social Security office but I work and I can't stay on hold forever. I need some help with this."
This is a question we do hear from time to time about SSDI and similarly, about Supplemental Security Income (SSI). One would think a concrete answer does exist, and it does, but it is convoluted and filled with special circumstances. So we will do our best to provide an answer here that applies to the majority of recipients on SSDI and SSI moving into retirement age or even wanting to return to work.
Let’s see if we can explain this and maybe a few other things about the confusing maze of government programs. First, there is a big difference between Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
For an individual who has been approved for SSDI, these are earned benefits, meaning that he or she has paid for these benefits through earning taxable income. Those who have jobs, work and pay into the Social Security Administration (SSA) system earns credits. The number of work credits needed to qualify for disability benefits depends on age when the person becomes disabled.
In most cases, someone needs 40 credits, 20 of which were earned in the last 10 years ending with the year they become disabled. There are some exceptions, but we will not discuss them in this blog so not to complicate this too much.
Social Security work credits are based on a person’s total yearly wages or self-employment income. An individual can earn up to four credits each year. However, keep in mind that the amount needed for a work credit changes from year to year. In 2019, for example, a person earns one credit for each $1,360 in wages or self-employment income. When earnings reach $5,440, four credits for the year has been reached – and remember, 2020 is just around the corner so this wage amount may change.
And, for someone who is approved for SSDI benefits, there is no asset limit. In fact, they can be multi-millionaires and still receive a monthly benefit check. Why? Because they participated in the system and paid into it. For 2019, the average SSDI payment is $1234 a month with the maximum monthly benefit being $2,861.
Supplemental Security Income (SSI), on the other hand, is a needs-based benefit that is often distributed to those with a disability and not enough work credits to supplement a very low income. The benefits are standard for all who qualify, for 2019 it is $771 a month and individual states can also supplement this amount with an additional payment (in Rhode Island for an individual living on their own it amounts to $39.92, in Connecticut it can run up to $150 and in Massachusetts, about $115. However these amounts are subject to variables like living as a couple, having children, being homeless, etc.). So as a rough working number, consider the average SSI benefit for a single person living independently to average about $810 a month -- plus they can receive SNAP benefits, Medicaid, Housing, etc.
One other thing, those on SSI cannot have more than $2000 in the bank, which SSA considers as a countable resource. But, those receiving SSI can have a home and property, burial funds and spaces, household goods and jewelry, a vehicle (if used for transportation of the person or a household member), a life insurance policy (of $1500 or less) and other assets. And, for those on the lower end of SSDI benefits, they can also qualify for needs based programs like SNAP, Medicaid and Housing.
SSDI and Retirement Age
If a person is on SSDI and reaches full retirement age (currently, the full benefit age is 66 years and 2 months for people born in 1955, and it will gradually rise to 67 for those born in 1960 or later), SSA will change the benefits from SSDI to the retirement program. Generally, someone cannot receive both SSDI and SSA retirement benefits, but there is a caveat to this, it is complicated, and we won’t discuss that in this blog as it is a rare occurrence. When SSA changes someone from SSDI to retirement benefits, there is not a change in income.
So we know full retirement age is now closing in on 67, but what if someone is disabled at age 62 and is awaiting a SSDI approval but chooses the early retirement age of 62 (which can result in as much as a 30% reduction in benefits)? Well, if SSDI is eventually approved for that person, the check amount will be raised. However, taking an early retirement in hopes that the SSDI application will be approved can be risky. So think long and hard about that choice.
SSI and Retirement Age
As you can probably imagine, things are a bit different here. First, for most people, they are on SSI because they did not have enough work credits to qualify for SSDI, so their SSA payments will usually be very low (if there are any) and they could still qualify for SSI. Remember, these benefits are meant to help low income earners, the disabled, elderly and blind maintain a certain level of safe living.
However, whether you are 30 or 70, the key to determining whether these benefits stop remains to be needs based. As we stated earlier, there is a countable income amount for those on SSI (and each state can have different levels), so if someone qualifies for SSA benefits, it must still be below the income limit of $771 (but in the case of retirement, SSA does not count the first $20 so it can be below $791.)
For unearned income, you'll see a dollar-for-dollar reduction in monthly SSI benefits for any money you get (above the first $20 that doesn't count). If you receive a $700-per-month Social Security retirement benefit, SSI benefits would be reduced by $700 and you'd get just $71 monthly from SSI to supplement your retirement benefits.
Going back to work on SSDI
Because SSDI is for someone disabled with enough work credits to qualify, it is possible that they may recover enough to return to work. For instance, Jim Jones suffered a serious back injury on the job and was initially considered too disabled to ever work again. But after years of rehab and multiple surgeries, Jim has recovered enough to try and return to work.
But he is concerned that if he does go back and his injury does not allow him to perform at the level needed, he will not only lose out on his SSDI but also lose his job. But SSA has a program to help those wanting to return to work to give it a try.
They allow a trial work period for recipients without losing any access to disability income. During this period, the individual can continue to get full benefits no matter how much they earn as long as they meet the definition of disabled. This period lasts for nine months. As soon as the recipient has worked a total of nine months within a 60 month period, the trial period is over.
Then, for the next 36 months, the recipient is allowed to receive disability benefits in any month where they do not have any substantial earnings. For 2019, substantial earnings are considered to be more than $1,220 in a month, or more than $2,040 if you're blind. These limits can also change from year to year.
If benefits are stopped because the individual makes “substantial earnings”, there does exist an expedited reinstatement period where SSA can be requested to restart benefits if the disability prevents continued working. The individual will not need to go through the application process again or wait for SSA to review the medical status before granting SSDI once again. Also, if a person incurs expenses while working with a disability, such as taxi rides, adaptive devices, etc., these expenses can be deducted from countable income.
Going back to work on SSI
Once again, the rules are different. The limits for earned income are different from unearned income (such as Social Security benefits). Although a person can receive these benefits if working, the income must be below the SSI income limits. A SSI recipient can earn up to $1,627 per month without being disqualified from getting SSI. So how is this possible?
The earned income limit is higher than the unearned income limit because SSA does deduct the first $20 of all income, the first $65 of earned income and half of all additional income when determining if you fall below the $771 monthly federal income limits.
That’s why a person on SSI can receive up to $1,627.00 in earned income and still get benefits versus only $791.00 in unearned income. But, although you can continue to get SSI benefits while working as long as it’s below the $771 federal benefits limit, the benefits are reduced. After subtracting the first $85, SSA will also subtract $0.50 for each dollar earned on the monthly paycheck. So if a person earned $1000 month, subtract $85 to get $915.00, and the SSI benefits are reduced by half that amount or $457.50. See below.
But remember, a person returning to work on SSI benefits could also see other benefits affected such as SNAP or housing assistance. Make sure you keep track of this and speak with your benefits coordinator about making these changes in your life.
No longer disabled
So, what happens if a person no longer meets the definition of being disabled? Well, first we need to understand what disability means to SSA. To meet their criteria, there is a very narrow set of definitions that must be met. They are as follows:
The condition must have lasted at least 12 months, be expected to last at least 12 months, or be terminal.
The condition must have a significant impact on the person's ability to do basic work activities such as sitting, walking, or remembering information.
The condition must prevent the person from doing any work they did before.
The condition must be on the SSA's Listing of Impairments or must be medically equivalent in severity to a listed condition. The Listing of Impairments is a long list of medical problems, including musculoskeletal issues, neurological disorders, and more.
Conditions on the list, which is also called the Blue Book, can usually qualify the person for benefits provided they exhibit specific required symptoms for the listed ailment. It's also important to know that the SSA will do periodic reviews of cases to make sure the person still qualifies for benefits. This review depends on the individual's condition. This includes:
If medical improvement is expected, the case may be reviewed every six to 18 months.
If improvement is possible but not expected, the case may be reviewed every three years.
If improvement isn't anticipated, the case may go as long as five to seven years without a review.
Other events, such as earning income from work or completing a vocational rehabilitation program, could also trigger a Continuing Disability Review. In such cases, the person will be notified when this review is taking place and will be expected to cooperate, which could mean completing and returning forms or even undergoing a medical exam.
If the SSA finds that a person no longer meets the criteria of being disabled, this could result in the end of SSDI or SSI benefits. Benefits could also be discontinued if it is found that the person has not complied with treatment requirements or fails to follow a doctor's orders. In such cases, there is a 60 day appeal process if that person wants to continue receiving benefits.
Finally, what if a person exceeds the asset limits of SSA? As we stated before, SSDI has no asset limits but SSI does. Having more than $2000 in countable resources can cause the benefits to be halted. This could occur if there is a generous gift or inheritance, which is why it may be necessary to consult an attorney about special needs trusts or other tools that could protect the benefits of a disabled person.
We also provided a list earlier of permissible assets while receiving SSI. These include owning a home and land, having a vehicle, life insurance policies and more. But, these must meet certain guidelines as set forth by the SSA and once again, they are subject to change from year to year. Staying in touch with the benefits coordinator is the best way to avoid problems.
Takeaways from this week's blog:
SSDI is a earned benefit that has no asset or resource limitation while SSI is a needs based benefit that has resource and asset limits.
When a person on SSDI reaches full retirement age, SSA may switch them over to retirement benefits with no loss of income.
When a person on SSI reaches retirement age, there may be some changes in income if there are SSA benefits available, however in the overwhelming majority of cases, an SSI recipient has no SSA benefits that would make any difference.
Both SSDI and SSI recipients can earn money from work but the amounts are different and how the effect that earnings have on the benefits is substantially different.
Always check with the SSA regarding questions about SSDI and SSI as the rules are always subject to change and there are some special criteria that exists for some conditions and situations.
Don Drake oversees Connelly Law's Community Education Programming. He is a retired licensed clinician in the Commonwealth of Massachusetts with over three decades of experience working with older adults diagnosed with HIV/AIDS, substance abuse disorders, chronic homeless and mental illness. Prior to his retirement, he was the director of a unique treatment program for older adults with histories of mental illness, cognitive disabilities, and addiction at Shattuck Hospital in Boston. He was also a director at Steppingstone, Inc. in Fall River, Massachusetts where he was the clinical trainer, program and curriculum developer for the agency and oversaw treatment programming for older adults. He has over 40 years of human service and law enforcement experience and has worked as an administrator at programs in Boston, Hartford, Providence and Philadelphia, helping to structure, hire and train staff in providing behavioral and addictions treatments to adolescent and adult clients. Drake also worked as a trainer for the Massachusetts Department of Public Health presenting training on QPR, a suicide prevention curriculum for the general public, the Massachusetts Council for Problem Gambling and the Crisis Prevention Institute, an international training organization that specializes in the safe management of disruptive and assaultive behaviors. He is also a retired professional wrestler who is in the New England Professional Wrestling Hall of Fame. Drake can be reached at Connelly Law Offices, Ltd. at firstname.lastname@example.org