How Social Security Disability Benefits Are Calculated
If you’re thinking about applying for Social Security Disability (SSD) benefits, you might be asking yourself, “How are my benefits calculated?” While the process can seem complicated at first, understanding it becomes much simpler with proper guidance and information.
At Gordon, Wolf & Carney, we understand that this process can feel overwhelming, and that’s why we’re here to help. Our award-winning attorneys have over 100 years of combined legal experience, enabling us to help clients resolve and recover damages related to a variety of tort, contract, and disability issues. Located in Towson, Maryland, we serve clients nationwide.
Let's examine the key factors to consider when calculating SSD benefits.
Understanding SSD Benefits
The Social Security Administration (SSA) calculates SSD benefits using a formula to determine the Primary Insurance Amount (PIA). Simply put, your PIA is the monthly amount you’d receive if you’re found eligible for benefits. SSA uses your lifetime earnings record, specifically the work credits and the taxable income you’ve earned, to calculate your SSD benefits.
It’s important to understand, though, that your disability benefit isn’t based on financial need like some other assistance programs. Instead, it’s tied directly to your work history and your contributions to the Social Security system through payroll taxes.
The amount you receive can also be influenced by the age at which you become disabled and start claiming benefits. Additionally, there are limits to the amount of earnings you can receive while receiving SSD benefits, known as substantial gainful activity (SGA) thresholds.
It’s helpful to regularly review your Social Security statement to make sure your earnings and contributions are accurately recorded.
How Work Credits Come Into Play
Your work credits are the foundation of your SSD eligibility. You earn work credits based on your annual wages or income from self-employment. The number of work credits required to qualify depends on your age and the onset of your disability. Generally, most applicants require 40 credits, with at least 20 credits earned within the 10 years preceding the onset of the disability. However, younger workers may qualify with fewer credits.
Work credits, however, are just one piece of the puzzle; SSA rules can sometimes be challenging to interpret. If you’re unsure about whether you qualify or how to proceed, we can help clarify the process to make sure you receive every benefit you’re entitled to.
Average Indexed Monthly Earnings (AIME)
Once the SSA determines that you’re eligible for SSD benefits, they’ll calculate what’s known as your Average Indexed Monthly Earnings (AIME). This figure is based on your lifetime earnings, adjusted for inflation. The SSA calculates your AIME by averaging your earnings over your highest-earning years, so those years you worked hard and earned more could improve your final benefit amount.
It's essential to understand how your AIME is calculated and to verify the accuracy of your earnings record. Mistakes could reduce your benefit amount, which is why you must take a proactive approach. We help clients review their Social Security Administration (SSA) statements and earnings records, identify discrepancies, and correct any errors promptly.
The Benefit Formula
Once your AIME is determined, the SSA applies a formula to calculate your Primary Insurance Amount (PIA). This is done by breaking your AIME into three brackets, with different percentages applied to each portion. These brackets change annually, so it’s important to stay up-to-date with the current brackets.
The totals from each of these calculations are added together to determine your PIA. This is the amount you would receive in SSD benefits before any deductions, such as Medicare premiums or other withholdings.
Factors That May Impact Your Benefits
While your PIA forms the basis of your SSD benefit, additional factors may affect your monthly amount. For example, if you’re receiving workers’ compensation or other public disability payments, this could offset your SSD benefits. Likewise, family members may also be eligible for benefits based on your record, which can affect your total payments.
Your Trusted Partners in Financial Stability
The process of calculating Social Security Disability benefits and dealing with the SSA system can feel like a full-time job in itself. From making sure you meet the requirements for eligibility to verifying the accuracy of your earnings history to fighting through appeals if necessary, it’s easy to get lost in the red tape.
If you're in this situation, please get in touch with our experienced attorneys. We’ve helped people in circumstances just like yours to move forward with confidence. Whether you’re contemplating filing your initial claim, verifying your benefits have been calculated correctly, or in need of assistance with an appeal, Gordon, Wolf & Carney is here to support you.
Located in Towson, Maryland, our firm serves clients in Maryland and nationwide. Wherever you’re located, we can guide you through the process. Call now to schedule a consultation for SSD benefits. Your financial stability is too important to leave to chance.