Monday, May 9, 2022

How Is Social Security Disability Income Calculated

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What If Your Application Is Denied

Lawyers.com Answers: How is my monthly SSDI payment calculated?

The denial rate for Social Security Disability benefits is very high, so there’s a significant chance your application won’t be approved. If your claim is denied, there are multiple stages of appeal, including:

  • Request for reconsideration, which means a new disability claims examiner reviews your claim again
  • A hearing before an administrative law judge
  • A review by the Social Security Administration’s internal appeals board
  • Appeal to a federal court

The decision not to award you benefits could be reversed at any stage of the appeals process. For example, your request for reconsideration could result in your benefits being approved and you wouldn’t need to move on to additional appeals. However, you must go through each phase if your claim continues to be denied and you want to keep fighting.

If you must appeal a benefits denial, the process of getting benefits can take a very long time. In fact, depending where you live, it may take around a year for a hearing to be scheduled. You may be able to attend your hearing via video if you’re unable to attend in person.

All of these stages of appeal take place within the Social Security’s administrative process until you get to the federal court appeal. The ALJ works for the Social Security Administration but is still supposed to impartially weigh the evidence to determine whether your claim was handled properly.

Calculating Social Security Credits

Calculating Social Security credits is a fairly simple prospect, but the math can get detailed. You will want to check the income eligibility for each year you worked, usingthe tables available on the SSA website, and calculate how many quarters you earned for each year you worked. Alternatively, you can use an online calculator offered by organizations like AARP.

Another option is to contact an experienced Social Security Disability law firm. You can use our form below to have a disability firm contact you.

Social Security Uses A Progressive Benefit Formula

The Average Indexed Monthly Earnings is then applied to Social Securitys Progressive Benefit Formula to calculate a disability benefit. Under the formula, monthly earnings are multiplied by percentages of:

  • 90% for the first approximately $1,000 of income,

  • 32% for the next approximately $5,000 of income, and

  • 15% for the next approximately $5,000 of income.

Those amounts are then added up to come up with your monthly benefit.

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Here’s How Social Security Calculates Your Ssdi Benefits

By Melissa Linebaugh, Contributing Author

How much your Social Security disability benefit will be is based on your covered earningsthe wages that you paid Social Security taxes onprior to becoming disabled. is the federal insurance program that provides benefits to qualified workers who can no longer work. To be eligible, you must be insured under the program and meet the Social Security Administration’s definition of disabled. SSI payments, on the other hand, aren’t based on past earnings.)

Your SSDI benefit payment may be reduced if you get disability payments from other sources, such as workers’ comp, but regular income doesn’t affect your payment amount.

Disability Help Center Can Help You With Your Disability Claim

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If you are currently in the process of applying for Social Security disability or SSI, you probably are already aware that it is a challenging and drawn out process.

Represent Myself offers you expert guidance, video tutorials, and support from knowledgeable professionals who understand how the application and appeals process works.

With our tools and knowledge, you will never need to hire a disability lawyer to obtain benefits which can save you a substantial amount of time and money.

We encourage you to apply for social security disability or SSI, even if you are not sure whether or not you will qualify. A representative at your local Social Security field office will be able to inform you about your eligibility based on your income and expenses.

Dont assume that you wont be eligible just because you earn a certain amount or arent sure about your eligibility. The SSA considers many factors when calculating your eligibility for SSDI or SSI and the amount that you can qualify for.

Company Information

Disability Help Center San Diego1833 Fourth Ave. San Diego, CA 92101

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What Is A Disability

Under the provisions for VRS disability retirement, a disability may be:

  • The result of a physical illness or injury or a cognitive condition. A cognitive disability is a loss or deterioration in intellectual capacity, such as Alzheimers disease.

  • Non-work related or work-related. A work-related disability is the result of an occupational illness or injury that occurs on the job and the cause is determined to be compensable under the Virginia Workers Compensation Act. A non-work-related disability is the result of an illness or injury that is not compensable under the Virginia Workers Compensation Act.

  • A chronic condition, such as diabetes or mental illness, that worsens to the point that you no longer can perform your job duties.

Any condition that existed before you were employed in a covered position must substantially worsen for you to be considered for disability retirement.

Using The Social Security Disability Calculator To Estimate Benefits

When you apply for supplemental security income or Social Security Disability Insurance , how do you know what the award will be? Some claimants will be approved for one amount while others are approved for other amounts, and others still are denied altogether. What factors make that critical difference? How does the Social Security Administration calculate disability for 2019 and 2020? Its a complex process, but you can get a preview into your award by using Social Security calculators to estimate your monthly benefits. For help with your disability application and understanding how much your case might be worth, contact the Philadelphia disability lawyers at Young Marr & Associates today.

Read Also: Where Do I Apply For Social Security Retirement Benefits

Does Disability Pay More Than Social Security

Applying for Disability benefits has a reputation as a time-consuming and inefficient process. Consequently, many people entering their 60s who could potentially qualify for disability benefits may opt to just elect for Social Security a couple of years early to avoid the hassle. However, this strategy has the potential to cost you a lot of money in the long run. Whether opting for disability would be the more remunerative strategy will depend on your age. A financial advisor could help you weigh the best options for your retirement goals.

To be clear, when we say Disability, we mean Social Security Disability Insurance. If we say Social Security, were referring to Social Security Retirement Benefits. Additionally, the analysis presented here is based on the assumption that you are eligible to begin receiving either of these benefits, and therefore are at least 62 years old. If youre younger than that, youre not eligible to begin receiving Social Security benefits. In this case, your only option is to take disability.

Social Security Indexes Your Past Wages

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

Unfortunately, $1000 in wages is not the same as $1,000 of wages earned 20 years ago. Because of inflation, $1000 today buys less than it did 20 years ago. To account for this, Social Security indexes wages. In essence, a multiplier is applied to past monthly wages to compute what an equivalent wage would be today. That calculation does not take into account promotions and other increases in wages not related to inflation.

Once it has an average monthly wage, appropriately indexed for inflation, Social Security then uses what it calls your Average Indexed Monthly Earnings or AIME to calculate a monthly disability benefit.

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History Of Social Security Tax Rates

The Social Security tax began in 1937. At that time, the employee rate was 1%. It has steadily risen over the years, reaching 3% in 1960 and 5% in 1978. In 1990, the employee portion increased from 6.06 to 6.2% but has held steady ever sincewith the exception of 2011 and 2012.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced the contribution percentage to 4.2% for employees for those years employers were still required to pay the full amount of their contributions.

The tax cap has existed since the inception of the program in 1937 and remained at $3,000 until the Social Security Amendments Act of 1950. It was then raised to $3,600 with expanded benefits and coverage. Additional increases in the tax cap in 1955, 1959, and 1965 were designed to address the difference in benefits between low-wage and high-wage earners.

The Social Security tax policy in the 1970s saw a number of proposed amendments and re-evaluations. The Nixon Administration was paramount in arguing that tax cap increases needed to correlate with changes in the national average wage index in order to address benefit levels for individuals in different tax brackets. The 1972 Social Security Amendments Act had to be revamped due to problems with the benefits formula that caused financing concerns. A 1977 amendment resolved the financial shortfall and established a tax cap increase structure that correlated with average wage increases.

When Can I Apply

There are no minimum requirements for age or service under VRS disability retirement. You can apply from the first day of employment or within 90 days of your last day of employment. If you are on leave without pay, you have up to 24 consecutive months on leave without pay to apply for disability retirement after 24 months, you are no longer eligible to apply. If you are on active duty military leave, you can apply at any time while on military leave, even if it exceeds 24 months.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Back Pay For Social Security Benefits

How is the social security disability income amount ...

Your monthly SSDI benefit will determine the amount you receive in back pay. The number of months of back pay you receive will be based on when your disability started or when you filed an application for benefits. It is important to file your application soon after becoming disabled to avoid losing back pay to which you may be entitled. If you had applied for disability previously, you may have a chance of earning back pay from the first date of applying for SSDI.

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What Factors Determine The Amount Of My Social Security Disability Benefits

The amount of your monthly payments from SSDI depends entirely on your average lifetime earnings before the onset of your disability, while the government bases SSI payments only on need. The most enduring myth about Social Security benefits is that the severity of your disability determines the amount of money you receive. While this is true for workers compensation and other insurance settlements, this is not the case for SSDI and SSI.

You have probably noticed deductions on your paycheck that go toward Social Security . The money taken out of your paycheck ensures that you will qualify for disability insurance benefits if you become disabled. The total amount you have paid into Social Security over your lifetime through these payroll deductions is the major factor that determines the amount of your SSDI payment. If you are unsure of your earnings history, you can download your earnings report and an estimate of the benefits you would receive for disability by going to the website for the Social Security Administration. On the home page of that website, click on the link to My Social Security and follow the instructions.

How Is The Amount Of Social Security Disability Benefits Calculated

The social security disability amounts vary for each individual. Calculating social security disability benefits often requires the Social Security Agency to evaluate your Average Indexed Monthly Earnings in addition to your Primary Insurance Amount . Depending on how high your AIME was, a social security disability benefits amount calculator may calculate a higher amount for you.

The AIME is used to estimate social security disability benefits by adjusting or indexing your earnings to reflect the general wage increases throughout the years you were employed or worked. The AIME is crucial to demonstrate an increase in your benefits and ensure the rise in earnings reflects your benefits. The SSA looks at up to thirty-five years of your work history, then uses the social security disability income calculator to calculate the years with the highest indexed earnings divided by the total months of those years.

For SSDI, the average lifetime earnings before your disability are the only factor for calculating your social security disability benefit amount. Therefore, the severity of your disability is not included in the calculation. Once your AIME is calculated, the SSA then uses that number in a formula that calculates your PIA. The PIA is the key factor in the calculation and acts as the base amount for your social security disability monthly payment.

The SSA uses a PIA formula that calculates the sum of:

  • 90% of the first $996 of the AIME +
  • 15% of the AIME over $6,0002.
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    Can You Receive Retroactive Payments

    Once the SSA approves your SSDI application and calculates your monthly benefit, you may be entitled to a back pay award. How many months of payments you will receive will depend on the date you applied for benefits and your disability onset date.

    If you are applying for SSDI benefits, you need the assistance of a skilled Social Security disability lawyer to get your application approved and receive the benefits you deserve. To schedule a free consultation with a member of our legal team, fill out the online form on this page or call our Roswell office today.

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    What You Need To Know About Va Combined Disability Ratings

    How Social Security Disability is Calculated

    In cases where the VA must rate a veteran for more than one medical issue, the VA uses a combined ratings table to determine the final percentage.

    The VA points out that its disability system is not additive, which the VA official site explains means that if a Veteran has one disability rated 60% and a second disability 20%, the combined rating is not 80%. This is because subsequent disability ratings are applied to an already disabled Veteran, so the 20% disability is applied to a Veteran who is already 60% disabled.

    The VA Combined Ratings Table is a tool used by the VA to make the combined rating determination. The table is lengthy and requires each disability to be listed in order of severity and the VA rater follows a procedure using the ratings matched with the table to arrive at the accurate combined disability percentage. The VA official site offers an example of how this calculation is made:

    • A veteran is rated with a 50% disability and is also rated with a different medical condition at 30%
    • According to VA calculations, the combined value will be found to be 65 percent, BUT
    • The 65 percent must be converted to 70 percent to represent the final degree of disability
    • In a different example on the VA official site, a veteran rated with two disabilities at 40% and 20% requires a calculation to arrive at the combined value of 52%
    • The 52% must be converted to the nearest degree divisible by 10, which is 50%.

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    How Social Security Retirement Benefits Are Calculated

    When the Social Security Administration calculates your retirement benefit, they start by inflating your historical earnings to reflect historical wage growth using the Average Wage Index. The formula sums up your highest 35 years, divides by 35, and then divides again by 12. The result is your average indexed monthly earnings, or AIME.

    If you have fewer than 35 years of covered earnings in your working career, the years with no earnings still go into the formula as zeroes. Zeroes significantly bring down average sums, so this can severely reduce the amount of your Social Security retirement benefits.

    Once the formula determines your AIME, the calculation applies that figure to the Social Security benefits formula that is in place the year you attain age 62.

    The retirement benefits formula is based on two numbers called bend points which creates three separate bands your average income falls into to determine your benefit amount:

    • For earnings that fall under the first bend point, you multiply by 90%
    • For earnings that fall between the first and second bend point, you multiply by 32%
    • For earnings that are greater than the second bend point, you multiply by 15%

    When you sum the results of these three calculations up, the result is your primary insurance amount . This is also known as your full retirement age benefit.

    Your FRA benefit will be reduced or increased based on the age at which you file for retirement benefits.

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