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How Are Social Security Disability Payments Calculated

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How Social Security Disability Benefits Are Calculated: The Good Law Group

The first step the Social Service Administration takes when deciding your SSDI benefits is to calculate your average covered earnings through the course of your lifetime, prior to the onset of your disability.

Covered earnings refer to the wages you earned that have been deposited into Social Security Taxes or FICA by you or your employer. This is the primary factor in determining your disability benefits. Your average covered earnings are also referred to as Average Indexed Monthly Earnings

The SSA then uses a formula to determine your PIA . This is the amount you would have received had you stopped working after reaching full retirement age. With the AIME and PIA figures, the SSA then uses another fixed formula to calculate the final amount you are liable to receive.

If You Are Getting Other Benefits

If you get both a CPP survivor’s pension and a disability benefit, they will be combined into a single monthly payment. The total amount you get cannot be greater than $1,413.66 per month .

If you are receiving both a retirement and survivor pension, and are then granted a post-retirement disability benefit, you will receive the higher amount of the survivor or post-retirement disability benefit flat rate.

What Happens If You Start Your Cpp After 65

If you are starting your CPP retirement pension later than age 65, increase your RTR-FBC calculated in Step 5 by the appropriate age factor .

If you delay starting your CPP until after age 65, there is an additional dropout provision, known appropriately enough as the over-65 dropout

Under the over-65 dropout provision, one of two things will happen:

  • First, if you are still working after age 65, you can use these earnings to replace any periods of time under age 65 where you had lower APE.
  • Second, if you are not working after age 65 or if your earnings after age 65 are less than any of your under-age 65 APE, you can simply drop out all periods after age 65 from both your NCM and your APE.

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Retirement Pay Calculations Under The Temporary Disability Retirement List

One of two options are used to calculate the benefitwhich one is used? According to the Department of Veterans Affairs, the pay is calculated at whichever method provides the greater advantage for the veteran:

  • Pay calculated on your disability percentage. This calculation uses a minimum of 50 percent while on the temporary list. This is known as Method A.
  • Pay calculated on the years of active service. This is known as Method B.

Your pay will be computed based on whichever is more beneficial for you.

While on the Temporary list, federal guidelines state you must have a physical no later than every 18 months. Those who fail to do so will have their payments suspended until the examination has been performed.

The date you were signed on to the temporary list is very important. According to the DoD, those on the temporary list prior to January 1, 2017 are allowed to remain on that list for a maximum of five years assuming there is no change in the condition.

Those who were placed on the Temporary list on or after January 1, 2017 are allowed three years maximum, providing you condition does not change during that time. According to the DoD, those who are found fit for active duty during this time may be removed from the list and returned to active duty.

First Find Your Lifetime Average Earnings

Top 6 Best Social Security Calculators

The Social Security Administration keeps track of the taxable income you reported throughout your working life. You can access the numbers through the SSAs website at, on the my SSA account page.

The government finds your 35 highest-earning years and indexes those numbers with the average annual income for each year, adjusting your earnings upward by the average wage ratio from the previous year. Its a bit complicated, but the net result either raises your figures slightly or makes no change.

When the SSA collects your highest-earning years, indexes them, and then averages them, the number reached in that process determines your Average Indexed Monthly Income .

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Supplemental Security Income Benefits

Social Security has another program offering benefits to disabled or blind individuals in addition to the SSDI program. Supplemental Security Income or SSI is a Social Security disability program based on financial need. As such, your countable monthly income may not exceed the Federal Benefit Rate of $794 for an individual or $1,191 for a couple. The total value of the assets you own may not exceed $2,000 for an individual and $3,000 for a couple.

The amount of your monthly SSDI payment may not exceed the SSI federal benefit rates for individuals or couples to qualify for what is known as concurrent benefits, which means that you qualify for both SSDI and SSI benefits. If you qualify for current benefits, you receive Medicaid coverage as an SSI benefit. After 24 months of receiving SSDI payments, you would also be eligible for Medicare coverage with Medicaid being the secondary payer of your medical claims and Medicare acting as the primary payer of your medical claims.

How Is Social Security Disability Calculated

by Jason BarilMay 8, 2017

How Is Social Security Disability Calculated?

The Social Security Administration maintains two distinct disability benefit programs, Social Security Disability Insurance and Supplemental Security Income , and calculates each benefit differently. In this article, we review the basic formulas the SSA uses when determining benefit amounts for disabled applicants and provide examples to demonstrate how Social Security disability is calculated.

For specific information about your benefits or for help applying for disability, call the Disability Advantage Group at for a free consultation.

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Other Factors That Impacts Your Disability Benefit

  • If you are disabled due to occupational injury / illness, your disability benefit is calculated according to separate rules if this option results in a higher disability benefit.
  • Disability benefit is adjusted according to your period of national insurance cover, which is the time you have been a member of the National Insurance Scheme. A distinction is made between actual and future period of national insurance cover. The Actual period is the time between the age of 16 until the disability occurred, while the Future period is calculated from the time the disability occurred up until the year you turn 66. Full national insurance cover is 40 years. If you have lived in Norway all your life, you have full national insurance cover.

What Are Social Security Disability Benefits Answers: How is my monthly SSDI payment calculated?

Social Security disability benefits come from payroll deductions required by the Federal Insurance Contributions Act to cover the cost of Social Security benefits such as retirement, as well as spousal and survivor benefits. Some of this funding goes into the Disability Insurance Trust Fund and pays for disability benefits.

According to the Social Security website, to qualify for Social Security disability benefits, you must have worked a certain length of time in jobs covered by Social Security. Generally, you need 40 credits, 20 of which were earned in the last 10 years, ending with the year when you became disabled. You must also have a medical condition that meets Social Securitys definition of disability.

Social Security Disability Insurance should not be confused with Supplemental Security Income , which pays benefits to those who have financial needs regardless of their work history. Although these two names sound similar, the qualifications to get the payments and what you might receive are very different.

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Ssdi Vs Ssi Benefits And Cola Increases

Depending on whether you receive Social Security Disability Insurance benefits or Supplemental Security Income benefits will determine how much money you are entitled to.

SSI benefits are calculated on need and have a maximum amount you can receive. In 2020, that amount is $783 a month for an individual or $1,175 a month for a married couple. If there is a COLA increase, that would raise the maximum amount you could receive accordingly.

SSDI benefits are calculated differently. The amount of SSDI benefits you receive are calculated by the number of credits you have. This number of credits is determined by:

  • How much you paid into the Social Security system through taxes while you were working, and
  • How many years you paid into the system.
  • This amount is different for everyone and is based on a formula the Social Security Administration uses to calculate your benefits. The easiest way to understand how much you will receive in SSDI payments is to review your Social Security Statement. This statement will give you an estimate in how much you will receive if you are approved for benefits.

    SSDI benefits are also affected by cost of living increases, but how much you receive in your benefit check will vary because each claimant gets a different amount based on their work history. If you have questions about how this works, you should speak with the SSA.

    Cost Of Living Disability Benefits Increase

    There was a cost of living increase of 1.6 percent in January of 2020. Because of the coronavirus affecting the economy in 2020, experts are torn on whether or not there will be a cost of living increase for 2021. Inflation has slowed over the past few years, and therefore so have cost of living increases.

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    What If I Continue Working In My 60s

    Many people whose health allows them to continue working in their 60s and beyond find that staying in the workforce keeps them young and gives them a sense of purpose. If this sounds like something youâd like to do, know that working after claiming early benefits may affect the amount you receive from Social Security. Why? Because the Social Security Administration wants to spread out your earnings so you donât outlive them. If you claim Social Security benefits early and then continue working, youâll be subject to whatâs called the Retirement Earnings Test.

    If youâre between age 62 and your full retirement age, and youâre claiming benefits, you need to know about the Earnings Test Exempt Amount, a threshold that changes yearly. For 2021, the Retirement Earnings Test Exempt Amount is $18,960/year . If youâre in this age group and claiming benefits, then every $2 you make above the Exempt Amount will reduce by $1 the Social Security benefits you’ll receive.

    Contrary to popular belief, this money doesnât disappear. It gets credited back to you – with interest – in the form of higher future benefits. You may hear people grumbling about the Social Security âEarnings Taxâ, but itâs not really a tax. Itâs a deferment of your benefits designed to keep you from spending too much too soon. And after you hit your full retirement age, you can work to your heartâs content without any reduction in your benefits.

    Continuing Benefits & Deductions

    Social Security Benefits  The Kid Picked Last for Dodgeball

    Health Coverage

    If youâre currently a member of the CalPERS Health Program, you must meet specific requirements to continue your health insurance coverage into retirement, or maintain the right to re-enroll in the future after retirement.

    To continue your CalPERS health benefit coverage after retirement, you must meet both of the criteria below:

    • Be enrolled in a CalPERS health plan upon separation from employment, either in your own name or as a dependent
    • Retire within 120 days of your separation from employment

    If you donât meet both requirements before you retire, youâll lose all future rights to be in the CalPERS Health Program. If your family members are included in your CalPERS health plan at the time of your death, their enrollment will continue automatically if theyâre eligible for and receive a monthly allowance.

    Public Agency or School Members

    If your employer doesnât contract with CalPERS for health benefits, contact your employer to determine if your benefits will continue.

    Dental Coverage

    To continue dental coverage into retirement, you must:

    • Be enrolled in a state-sponsored dental plan on the date of your separation from employment
    • Retire within 120 days of your separation

    Long-Term Care

    If youâre enrolled in CalPERS Long-Term Care and have premiums deducted from your paycheck, youâll need to call 982-1775 before you retire to find out how to continue your premium deductions.

    Other Deduction Payments

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    What Is Supplemental Security Income

    SSI is a program administered by the Social Security Administration that provides monthly cash payments to low-income elderly or disabled individuals, including blind or disabled children. In addition, to be eligible for SSI the individual must have very few assets. For children on SSI, the Social Security Administration reduces the childs SSI benefit by two-thirds of the amount that is paid in child support.

    Reduction For Disability Payments From Other Sources

    If you receive disability benefits from a private source, like a private pension or private insurance benefits, these benefits will not affect your SSDI benefits. If, however, you receive other public disability benefits, they may affect your SSDI benefits. For instance, if you were injured on the job and are receiving workers’ compensation benefits, the amount of SSDI benefits you receive might be reduced.

    Other disability benefits that are not job-related and are paid for by the federal, state, or local government may also reduce your SSDI benefit amount. Examples of these include temporary disability benefits paid by the state, military disability benefits, and state or local government retirement benefits that are based on disability. Some public benefits are not counted toward the 80%, including SSI or VA benefits.

    The combined total amounts you receive from SSDI and all other public disability benefits cannot be more than 80% of the average amount you earned before you became disabled. If the amount is more than 80% of what your average earnings were before you became disabled, in most states, the excess amount is deducted from your SSDI benefits.

    The interaction between workers’ compensation and SSDI can be complicated and varies depending on what state you live in. If you qualify for more than one public disability benefit, you may want to speak with an attorney to make sure you do not miss out on any benefits you are entitled to.

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    Your Primary Insurance Amount

    PIAs are complex to calculate and even harder to explain. The PIA is the sum of three separate percentages of portions of average indexed monthly earnings, states the SSA. Essentially, the SSA separates your AIME into three portions that it calls bend points:

    • Bend Point #1: Your first $885. They SSA will take 90 percent of this figure.
    • Bend Point #2: Your earnings between $885 and $5,336. The SSA takes 32 percent of these earnings.
    • Bend Point #3: Your earnings above $5,336. The SSA takes 15 percent of these earnings.

    The sum of the three bend points will be your monthly disability benefit amount.

    Example of Calculating Your PIA and Monthly SSDI Benefit

    • Lets say your AIME was $3,800/month.
    • Your PIA would be the sum of $796.5 for Bend Point #1 + $932.80 for Bend Point #2 .
    • You receive a grand total of $1,729/month for SSDI.

    How Are Back Payments Made

    How do Lump Sum Payments Work in Social Security Disability?

    If you are approved for SSDI only, you’ll most likely receive one lump-sum payment for the entire amount of your backpayments.

    If you are approved for SSI, or SSI and SSDI, the rules are different. Social Security generally pays the past-due benefits for SSI or combined SSI/SSDI in three equal installment payments that are separated by six months each. However, you are eligible for larger first and second installments if you need funds for necessities or to pay off debts for necessities. Or, you may be eligible for one lump-sum payment if you are not expected to live past the next 12 months or you are no longer eligible for SSI benefits at the time you receive your backpay . For more information, read our article on lump-sum payments of backpay.

    To learn more about disability backpay in general, see Disability Secret’s section on Social Security disability backpay.

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    What Conditions Do I Need To Meet

    You must be aged between 18 and 67.

    You must have been a member of the National Insurance Scheme for the last 5 years up to the contingency. If you are an EEA citizen and have been in active work and a member of the National Insurance Scheme for at least 1 year, your earnings in or membership of another EEA country can count towards this assessment.

    Your earning capacity must have been reduced by at least 50% because of an injury, illness or defect. For anyone who is receiving work assessment allowance at the time of the claim, it is sufficient that their earning capacity has been reduced by 40%.

    You must have undergone both medical treatment and vocational rehabilitation. This is in order to document that it is not possible for you to work full-time in another suitable job, and that treatment cannot change the situation.

    How To Calculate Social Security Disability

    The Social Security Administration calculates your monthly benefits based on the number of years you have worked and how much income you earned. While most people earn about $1,200 per month, your benefits can be much higher depending on your work history. Our Free Disability Evaluation can help you calculate how much you could receive in Social Security disability benefits each month.

    To calculate your Social Security benefits, you will need to know how much you make in a year, then adjust that rate for inflation and cost of living, and then increase or decrease that amount based on when you plan to retire.

    The first step to calculating your Social Security benefits is to determine your Average Indexed Monthly Earnings . To do this, take 35 of your highest earning years, adjust the salary from those years for inflation, and add them all together. If you havent worked for 35 years, add in 0s for those years. To find your annual coverage, divide by 35. Finally, divide that total salary sum by 12 to calculate your monthly coverage.

    The SSA then uses a complicated formula to determine how much in disability benefits youre entitled to each month. Your disability benefits will be calculated based off of how high your AIME is. Please refer to the table below to see approximate Social Security disability monthly benefits based on your AIME.

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