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This post tells a story about a benefit available to most people living and working in the United States – Social Security Disability Insurance (SSDI). The SSDI program pays benefits to you and certain family members if you are unable to work due to a medical condition that’s expected to last at least one year or result in death, and you are “insured,” meaning you worked long enough – and recently enough – and paid Social Security taxes on your earnings.
Otis Darby – a legend in the SSDI advocacy industry and the founder of Integrated Benefits, Inc. (IBI) – started a business 25 years ago because he saw a need: claimants were disabled, out of work, and struggling to navigate a new and confusing process. After 11 years working for the Social Security Administration, Darby saw firsthand the need for advocates to help individuals obtain SSDI. He knew having an expert guide individuals through the process would be very valuable. The process seemed even more challenging for applicants who were also receiving long-term disability insurance payments. People needed help and there were not many assistance options available.
Recently, Carol Harnett of The Council for Disability Awareness interviewed Otis and me to capture the history of Social Security Disability Insurance advocacy and speculate on its future.
You can click here to listen to the interview.
I wanted to capture the highlights of this discussion so you could gain an appreciation of what SSDI is all about and where we believe it’s headed in the future.
What is Social Security Disability Insurance?
Darby: [00:02:46] A short definition would be that it’s a payroll-funded program to protect American workers; to provide income in the event of disability so they can’t lose their earnings.
Who is eligible for this program?
Darby: [00:04:03] You have to have a connection to the workforce. I think a lot of people are familiar with the concept of 20 quarters in a 40-quarter period. But then you also have to be fully insured, which is defined as having at least one quarter of coverage for every year that you’ve worked after age 21.
Somebody who is 51 years of age would have to have 20 quarters or five years of work in a 40 quarter or 10-year period. But then they would also have to have 30 lifetime quarters (one quarter for each of those 30 years between 21 and 51 years old).
So, you have to be both currently and fully insured, and then you have to meet Social Security’s very simple definition of disability or impairment that prevents you from working for at least 12 months, or results in death.
Why is it challenging for an individual to apply for SSDI on their own?
Darby [00:08:25]: The best answer to that, I think, is when I worked for Social Security (and I did that for 11 years starting as a claims representative and then ending as a supervisor and as a manager), I would frequently encounter people coming in to file for disability. Invariably, you would ask them, Why are you filing; meaning what is your disability? And over and over again, people would say, Well, because my insurance company is making me file. And that was kind of a red flag. I thought, Well, this person doesn’t want the stability this benefit brings. That was my perception as a Social Security employee. They’re just being required to come in by their insurance company.
So, you would write that in remarks on the application. And I think that sent the wrong message all the way through the process. Someone starting out like that is often starting in a bad direction.
The application process itself uses a simple definition of disability. But the process is a five-step sequential evaluation, including:
- Are you working?
- Do you have a severe impairment?
- Does that impairment meet or equal a listing?
- If not, does it prevent your past work?
- And, if it does, then the fifth step and final step is, Does it prevent any other work?
And so the application process seems very simplistic, but in reality, there are reams and reams of regulations and rules that govern how those things are evaluated and decided.
What makes it more difficult to qualify for SSDI than it does for long-term disability insurance?
Darby [00:11:49]: The definition of disability under a long-term disability policy is your “own occupation.” If you can’t perform your occupation, then you’re eligible for long-term disability benefits. Maybe it’s just for a two- or three-year period, or perhaps you might transition to an “any occupation” definition of disability. But with Social Security, the definition of disability is any occupation from the start of the process.
If you’re under the age of 50 (that’s a milestone age for SSDI), you’re what they call a younger individual. You have to be disabled not only for your job, but for any job that might exist in significant numbers in the economy. When you’re 50 to 55 years old, you’re closely approaching “advanced age” in Social Security language.
There may be some exceptions during the evaluation, such as
- The exertional level of your past work. What limitations do you have now?
- They’ll also look at the skill level of that work (unskilled, semi-skilled, and skilled), and they’ll apply these vocational factors as to what kind of a transition you might be able to make to other work.
So, Social Security uses a more technical definition of disability right from the beginning for anyone filing. There’s good reason for the common perception that SSDI is more difficult to attain because it is.
Are there other benefits that come with being approved for SSDI?
Darby [00:15:47]:
- The foremost benefit is health insurance – specifically Medicare. In order to be eligible for Medicare, you have to be disabled for 24 full months.
- The health insurance workers have when they apply for LTD benefits will drop typically after 12 months. If they receive a SSDI award, they can get a Cobra extension that will continue their private health insurance right up to 29 months when Medicare coverage would begin (24 months coupled with a five-month waiting period results in the 29 months needed to receive Medicare).
- SSDI recipients will receive cost of living increases from Social Security. (Many long-term disability policies do not provide for a cost of living increase.)
- Thirdly, and perhaps most importantly for the individual, is your earnings record for Social Security retirement benefits. If you go out of work at age 50, you have 12 plus years that your earnings record is still running, so to speak. And if you aren’t approved for SSDI, those 12 years are all zero income years that are going to be used in the calculation of your retirement benefit. And that’s going to have a profound impact on the amount of money you receive in Social Security retirement.
- Regardless of your age when you start collecting SSDI, you receive what you would get if you claimed benefits at full retirement age — the age at which you are entitled to 100 percent of the benefit calculated from your average monthly earnings. (Full retirement age is rising gradually to 67 for people born in 1960 or later.)
- If you turn 62 in 2021, you’reeligible for only 70.8 percent of that full retirement benefit, so your SSDI benefit will probably be higher. When you reach full retirement age, the disability benefit automatically converts to a retirement benefit, and you’ll get the same monthly amount you’ve been getting.
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- Your full retirement benefit is based on your average monthly income in your 35 highest-earning years, adjusted for historical wage trends. Since you may have worked fewer than 35 years when you claimed disability benefits, the calculation for SSDI is different: Your full benefit is derived from your adjusted monthly average income from age 21 until the year you became disabled.
How has the Social Security Administration handled applications during the pandemic?
Jensen [00:26:00]: Similar to many companies, the SSA was forced to transition their massive organization into a work-from-home organization. While many would expect the SSA to stumble, the SSA did an impressive job continuing operations. First, their transition occurred quickly, and no essential functions of the SSA were halted. There was a drop in productivity during the summer of 2020, but the SSA has already made steps towards eliminating any backlog created by the pandemic. We’re hopeful the SSA will be back to normal productivity numbers in 2021.
How do you see SSA evolving as we move forward beyond the pandemic?
Jensen [00:27:41]: The most exciting part about the SSA’s development during the pandemic is their push to become more technologically aligned with the modern day.
In the past, wet signatures were required to submit a SSDI application. This was always a problem for IBI because we have clients nationwide, so we must rely on the mail. Now, the SSA is allowing digital signatures temporarily. We hope this new change becomes permanent.
Next, the SSA is allowing claimants to access their SSA files online via a “my Social Security” account. This update is wonderful news, as it was not possible to obtain the files until late in the SSDI process. Now, claimants have access and can see what their determination was made on.
Finally, the SSA is now performing hearings via telephone and video chat. This is clearly due to the pandemic; however, we feel the SSA will move to eliminate as much “in-person” SSA business in the future as possible.
These technological advancements are extremely exciting, and we can’t wait to see what is in store in the coming days.
If you have a little time, listen the podcast. It contains helpful information about SSDI, and is also a wonderful tribute to Otis Darby’s legacy. It shares his story about the creation of the SSDI advocacy industry and the avenues he pioneered to help so many.
You can click here to listen to the interview.
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