What Affects My Social Security Disability Insurance (SSDI)? Does inheritance affect Social Security disability insurance (SSDI)?
What about workers’ compensation? Read on for answers to these questions and more!
If you receive Social Security disability benefits (SSDI), you might wonder if anything can affect your benefits. Social Security Disability insurance is an entitlement program, not a needs-based program, meaning that there aren’t too many things that can affect your benefits. But some things can. If you collect SSDI, here are some answers to the questions you may have about what affects your benefits.
What Is Substantial Gainful Activity and How Does It Affect SSDI?
Substantial gainful activity is a predetermined work activity and earnings level. For SSDI eligibility, people must be unable to engage in substantial gainful activity or SGA, which means that they cannot have an earned income over a certain amount of money every month. The amount that people on SSDI can earn depends on their disability or special needs. Generally, people with blindness have a higher SGA than those who are not blind.
In 2023, the monthly SGA amount for those with blindness is $2,640; for other disabilities, it’s $1,470. Another difference is that SGA for people with blindness does not apply to their Supplemental Security Income (SSI), while SGA for those with disabilities who are not blind does apply to SSI benefits.
Do Worker’s Compensation or Other Disability Payments Affect My SSDI?
Disability payments from private insurance benefits or pensions do not affect your SSDI benefits, but worker’s compensation and other disability payments from federal, state, or local governments might.
Workers’ compensation benefits are paid to workers when they experience job-related illnesses or injuries. These payments may come from government workers’ compensation agencies or insurance companies on behalf of the employers. Federal, state, or local government agencies may pay benefits for disabling medical conditions that are not work-related.
If you receive workers’ compensation or any other disability benefits and SSDI, the total amount cannot exceed 80% of your average earnings before you became disabled. (Some public benefits, including Veterans Administration benefits, Supplemental Security Income, and state and local government benefits that have Social Security taxes deducted from them do not count.)
If the total amount of the benefits you’re receiving exceeds 80% of your prior income, the excess will be deducted from your SSDI benefits. Lump sum payments may also affect this amount.
What If I Recover from My Disability?
SSDI benefits continue as long as your condition prevents you from working. They do not necessarily continue indefinitely. Many people recover from serious illnesses and disabilities. While the SSA reviews every case periodically to make sure you still qualify for these Social Security benefits, you are responsible for reporting if there is a change in your ability to work, if you return to work, or if your condition improves.
What Happens If I Collect SSDI and I Reach Full Retirement Age?
Once you reach full retirement age, your SSDI benefit switches to your retirement benefit. Full retirement age varies depending on the year you were born. For example, for people born between 1943 and 1954, the full retirement age is 66. For those born in 1957, it’s 66 and six months. For anyone born after 1960, it’s 67.
Should I Consider Early Retirement If I Collect SSDI?
If you have eligibility for more than one type of Social Security benefit, the SSA will pay you whichever benefit is higher. In most cases, you’re better off collecting SSDI than taking early retirement, which is available when you turn 62.
Your SSDI benefits are calculated in a similar way to your full retirement benefits, but there are some key differences. The SSA bases retirement benefits on your average monthly income for your 35 highest-earning years and adjusts it for historical wage trends. For SSDI, because you may have worked fewer than 35 years, your benefit amount is derived from your adjusted monthly average income from age 21 until the year you became disabled and were unable to work.
If you retire early at age 62, you’re only entitled to 70% of your full retirement benefit. This amount is likely to be less than your Social Security disability benefits. When it comes to retirement, it is usually best to wait until full retirement age to begin collecting benefits.
The Social Security Administration (SSA) defines inheritance as “… cash, a right, or a noncash item(s) received as the result of someone’s death.” It must have a value and be usable for your basic needs to be considered income or a resource, and it’s only income in the first month it has value. It is not considered income if it was a resource immediately before the testator’s death. An example of this scenario is when one spouse in a married couple dies, and the other spouse inherits part or all of the deceased’s estate.
If you are receiving SSDI benefits, your inheritance money will not have an effect. SSDI requires you to pay into Social Security for at least ten years (with a few exceptions) before your disability. SSDI-eligible individuals have a work history and have contributed to Social Security via payments deducted from their paychecks.
Keep in mind that every situation is different. If you have other questions, it might help to contact an attorney or other estate and beneficiary professional to help you with your unique circumstances.
What If I Am Convicted of a Crime?
If you are imprisoned for committing a crime, SSDI payments are generally stopped, and they do not restart automatically once you are released. SSDI payments are automatically suspended if you are sentenced to prison for more than 30 days, but they can be reinstated the month following your release if you inform the SSA of changes in your status.
How Can I Get Help Understanding SSDI?
If you need help understanding your SSDI benefits, talk to a financial advisor or contact the team at BenefitsClaim.com for a free consultation to learn more about what you may be entitled to.