Like many federal programs, Social Security Disability has many rules and regulations governing its administration. Knowing how the Social Security Administration calculates Social Security Disability (SSD) benefits can save you time and stress if you need to apply.
Understanding Eligibility
The government uses the amount you have worked and the nature of your disability to determine SSD eligibility. If you are eligible for benefits, the government decides your monthly payments by your average lifetime earnings since the time of your disability. Typical payments range from $700 to $1,700 each month. The government may reduce your payments if you receive disability benefits from other sources.
Calculating SSD Payments
The Social Security Administration uses a complex formula to calculate each individual's benefits. Every case is unique, and so is the amount of money you may receive. The office bases the formula for your benefits on how much you have paid into the Social Security system. The payroll taxes that the government deducts are called "covered earnings."
The Social Security Office calls your average covered earnings over a set period your average indexed monthly earnings (AIME). Then, the SSA applies a formula of fixed percentages to your AIME based on your income. This determines your primary insurance amount (PIA) – the amount you receive in Social Security benefits before retirement age.
To stay on top of your covered earnings history, check your Social Security Statement, which the SSA sends out every five years. The SSA's website also allows you to check your statement online. This is valuable information if you need to file for SSD benefits later.
Reduced Payments
Disability payments that you receive from private insurance companies for long-term disability will not have an impact on your SSD benefits. However, suppose you also receive government-regulated benefits such as worker's compensation or temporary disability from the state. In that case, you will not receive more than 80% of the average amount you earned before your disability from the combined benefits. In addition, the benefits you receive from Supplemental Security Income (SSI) and the VA will not affect your SSD benefits.