SSDI, a component of Social Security, offers modest but critical payments to employees who are unable to support themselves due to a serious and long-lasting medical impairment. SSDI is administered by the Social Security Administration (SSA).
Social Security provides disability compensation to around 8.2 million people. Additionally, some of their family members receive payments: 104,000 spouses and 1.4 million children.
SSDI payouts are primarily funded from a portion of the Social Security payroll tax, which totaled around $145 billion in 2019. That is less than 4% of the federal budget and less than 1% of GDP. Employers and employees both pay a 0.9 percent SSDI tax on earnings up to the Social Security tax ceiling, which is presently $142,800. Financial transactions for the program are handled by an SSDI trust fund, which collects payroll taxes and pays benefits legally distinct from the considerably larger Social Security retirement fund. According to the most recent forecasts (made prior to the COVID-19 epidemic), the SSDI trust fund will require refilling in 2065.
What Is the Importance of Social Security Disability Insurance?
Social Security is much more than a pension system. A young individual beginning a job today has a one-in-three probability of dying or qualifying for SSDI before reaching full retirement age under Social Security.
SSDI is a deserved benefit that protects millions of employees. Nearly 156 million workers have earned SSDI protection through their payroll tax contributions in the event of a serious, long-lasting medical impairment. Around 8.2 million of them get SSDI benefits as handicapped workers.
Disability risk increases with age. Individuals are twice as likely to collect SSDI at the age of 50 as they are at the age of 40 — and twice as likely at the age of 60 as they are at the age of 50.Chart Link
Who Qualifies for SSDI?
SSDI eligibility requirements are stringent, and the majority of applicants are denied. Applicants requesting SSDI benefits must meet the following criteria:
Insured against disability (essentially, they must have worked for at least one-fourth of their adult life and five of the last ten years).
Suffering from a serious, medically determinable bodily or mental impairment that is predicted to endure at least 12 months or result in death, as determined by clinical findings from credible medical sources.
Unable to perform “substantial gainful activity” (any job that pays at least $1,310 per month for the majority of people and $2,190 per month for blind people) doesn’t matter where in the national economy — regardless of whether such work exists in the applicant’s location, whether there is a specific job opening, or if the candidate would be hired.
Lack of education and insufficient skills are considered in the case of older, severely disabled applicants who are unable to change jobs realistically — but not in the case of younger applicants.
SSDI has a five-month waiting period, however Supplemental Security Income may be accessible throughout that time period for low-income and asset-poor beneficiaries.
SSA denies applicants who are technically ineligible (most commonly due to insufficient work experience) and refers the remainder to state disability determination services (DDS) for medical review. Applicants who are denied at that stage may petition the same state agency for reconsideration and then send in an appeal to an administrative law judge (ALJ) at SSA. Approximately half of those who receive an initial denial file an appeal.
Finally, if we follow a cohort of applicants through the application and appeal processes, we find that less than four in ten are awarded benefits. Approximately half of applicants who meet the program’s technical requirements are found medically qualified for SSDI.
The Social Security Administration reviews disability decisions at every stage of the procedure. The Social Security Administration conducts continual quality reviews at all stages of the application and appeals processes. Numerous reviews take place prior to any benefits being issued, hence reducing errors.
Over the last two decades, the acceptance rates at the first application and reconsideration stages have been very consistent. However, allowance rates decreased significantly between 2010 and 2014, as SSA enhanced its control of hearings. (Because these allowance rates are based on decisions made in a given year on applications filed in previous years, they are not directly comparable to those generated from tracking a cohort of applicants throughout their procedure.)
Allowance rates, on the other hand, remain higher at the ALJ level than at the first stage. This is partly because ALJs frequently face claimants whose circumstances have deteriorated in the year or so since their application was denied and whose case is more detailed (generally with the assistance of an attorney) than at the DDS level.