How Much Does Social Security Disability Insurance Pay?

Social Security Disability Insurance Payment Amount

Americans who are no longer able to work due to a physical or mental condition and who are pursuing a social security disability insurance benefits claim are understandably concerned about how much they will receive if approved. Unfortunately, the answer is: “it depends”.  That is, it depends upon the claimant’s work record and the amount of FICA taxes that are withheld from wages, as well as self-employment taxes paid on income from a business. FICA is short for Federal Insurance Contributions Act, government legislation passed in 1935 to fund Social Security. Disability benefits are based on average lifetime earnings prior to the onset of disability. In determining the social security disability insurance benefit, the Social Security Administration will not, however, count any income on which no FICA taxes were paid.  Those who earned a high income during their working years will receive a higher monthly disability insurance benefit than those with spotting, low-wage employment. In general, most people get between $700 and $1,700 each month in social security disability insurance benefits. The estimated average Social Security disability insurance benefit amount for a disabled worker in January 2019 is $1,234 per month, but the benefit could be as high as $2,788 per month.

The FICA tax goes into a Social Security fund to pay for the Social Security programs. The calculation formula that the Social Security Administration uses to determine the amount of an individual’s social security disability insurance benefit is quite complex.  The combined wages and self-employment income on which FICA taxes were paid is called “covered earnings.”  The average covered earnings over a period of years is known as the average indexed monthly earnings (AIME).  In determining the amount of the social security disability insurance benefit, a formula is applied to the AIME to calculate another figure called the primary insurance amount (PIA).  PIA is the base figure that the Social Security Administration uses in setting the social security disability benefit amount. The Social Security Administration has an SSA’s online benefits calculator found at www.socialsecurity.gov/planners/benefitcalculators.htm where it is possible to enter salary and wage information to determine the amount of the social security disability insurance benefit. Taxpayer annual Social Security Statements are also available online at www.ssa.gov/mystatement/.

It is important to realize that the social security disability insurance benefit is a fixed amount of money which increases annually only based upon the Cost of Living Adjustment (COLA).  The benefit amount has no relation to the extent or numbers of illnesses.  The benefit is the same if the individual has only one, or 20 impairments. 

Decrease in Social Security Disability Benefits Due to Worker’s Compensation Benefits

Receipt of long-term disability insurance policy benefits, or Veterans Administration disability benefits will not reduce the social security disability insurance benefit. The social security disability insurance benefit will not be reduced by other assets, investments or even earned income. Earning wages or income from self-employment will, however, endanger one’s “disabled” status with the Social Security Administration; but as long as the taxpayer remains “disabled” by the social security administration the monthly disability insurance benefit will not be reduced.

There is a lone exception to this rule that social security disability benefits are not reduced by other receipts or benefits.  Receipt of worker’s compensation benefits or temporary state disability benefits can reduce the amount of the disability insurance benefit.  This offset is, however, dictated by state law (worker’s compensation benefits are state benefits) so a competent disability lawyer in the taxpayer’s state should be consulted.  Most states – including Texas – are referred to as “Standard Offset” states.  In these states the social security disability insurance benefit may be offset to ensure that the combined benefits (social security disability and worker’s compensation) do not exceed a cap established by the Social Security Administration.

 

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