Calculating SSDI Monthly Benefits
Someone seeking to qualify for Social Security Disability Insurance (SSDI) benefits is not trying to get rich, but, really, just searching for a way to generate enough income to pay for basic expenses. People applying for SSDI benefits have generally worked for years, and expect the money they paid in Social Security taxes will be returned to them in some form, including disability benefits. Paying even a minimal amount of attention to the news will quickly inform anyone that the benefits programs offered by the federal government are in serious financial trouble, but a recent set of good news came out that, for the first time in six years, disability recipients can expect to receive a sizeable cost of living increase of 2.2 percent in 2018. Some upward adjustment of benefits is made every year so the benefits paid keep up with the rate of inflation, but the typical increase in recent years has been well under one percent, which is negligible on a monthly basis. However, when someone becomes unable to work due to a disability, extreme adjustments to a person’s standard of living are usually required, and must continue to some extent even when SSDI benefits are awarded. But, knowing how much the monthly benefit should be is important information an SSDI applicant needs to know for long-term planning. An overview of how the Social Security Administration (SSA) calculates the monthly benefit an SSDI benefits recipient receives will be explored below.
Factors Included Used to Calculate Monthly Payments
To qualify for SSDI benefits, one must have paid a sufficient amount of Social Security taxes over the course of his/her working life, and some of this work must be recent. The amount of Social Security tax paid depends upon the wages a person earned, and past earned wages also serve as the basis for SSDI benefit calculations. Specifically, the SSA looks at an applicant’s Averaged Indexed Monthly Earnings (AIME) and Primary Insurance Amount (PIA). Both numbers require complicated calculations, but basically, AIME is a person’s adjusted lifetime earnings that takes into account increases in wages over time. PIA forms the base amount of a person’s benefits, and is derived from various percentages of his/her AIME. To put this information in more concrete terms, the average monthly SSDI benefit for 2017 is $1,171, but those with higher earnings could see this amount jump well over $2,000 per month. However, in addition to the monthly benefit, most SSDI applicants, if approved, will receive a lump-sum payment for backpay that covers the time spent waiting for a decision while otherwise qualified to receive benefits.
The payment of back benefits is only paid once, but is often a sizeable amount, which can provide a measure of financial security if the funds are stretched out over time. Whether a person will receive backpay depends upon when he/she applied for SSDI, and the date selected by the SSA as the time an individual’s disability began (established onset date, or EOD). Further, the SSA will pay retroactive payments for the 12 months before an application was filed if the person was disabled during this period. Note that retroactive payments only apply if the SSA determines the EOD was earlier than the year preceding an application. Additionally, a five month waiting period must be satisfied before payments begin, which starts from the EOB. Thus, to receive the maximum amount of backpay, a person’s EOD must be 17 months earlier than the application date.
The application and approval process for SSDI benefits is complicated and time consuming. Take some of this pressure off by working with an experienced disability insurance attorney who will know how to give your claim its best chance at approval. Farrell Disability Law has decades of experience representing clients in disability claims, and can help you get the money you deserve. If you live in Jacksonville, Middleburg, Neptune Beach or the surrounding areas, call the office today for a free consultation.