How to Estimate Potential SSD Benefits

Qualification for SSD: The First Step

The SSD claims process begins by establishing whether or not a person is even entitled to receive SSD. The Social Security Administration (SSA) lays out specific guidelines as to who can apply. For instance, if someone has never been employed, he has no work history. Therefore, if he submits an SSD claim, he is likely to be denied because he has not paid into social security through his taxes. (As a side note, this is a good reason not to work “under the table” to avoid paying taxes, because the SSA will have no record of steady employment.)

The same is true for a woman in her 40s who can show only three years of employment; she could not have earned the 40 credits needed toward SSD. The SSA requires at least 20 credits amassed in the past 10 years, and 20 credits on top of those. Up to four credits may be accrued annually; as of 2018, the figure was set at $1,320 per month and in 2019 will jump to $1,360.

Of course, qualification for SSD is not necessarily this cut-and-dried for younger employees. The SSA has a sliding scale of earned credits necessary for application for those who could not have accrued 40 credits. Thus, someone injured in his mid-20s might still qualify for SSD even without the full 40 credits.

Another consideration to determine SSD eligibility is whether the disability is even covered by the SSA. The disability must leave the claimant unable to perform the same type of job she did prior to the injury for at least a year. Additionally, if the SSD applicant is trying to make ends meet at another job, her income must be less than the substantial gainful activity cap.

Confusing? A bit, especially for those unaccustomed to the system. That’s part of the reason many individuals turn to lawyers familiar with SSD before submitting a claim.

Estimating Benefits: The Second Step

This second stage in the claims process involves figuring out how much to expect in possible SSD benefits if a claim is approved.

When estimating SSD benefits, individuals should set realistic expectations. According to the SSA, the average disabled worker will receive $1,234 per month in 2019. This amount translates to a little less than $15,000 annually. Consequently, many individuals may want to use this as a set-point so they aren’t anticipating too much or too little.

At the same time, potential SSD claimants should keep in mind that they might receive a lump sum in the form of a back payment, or retroactive benefits. Back payments may be calculated from the onset of the disability to the approval of an SSD claim or from the date the SSD claim was filed until it was approved. Though this amount would be given just once, it could help pay off any debts accrued during the initial period of disability.

How are regular monthly SSD benefits calculated by the SSA? As the SSA’s benefits estimator calculator shows, the most important factors are length of work and income level. In other words, the exact type of disability does not make a difference as long as it falls within the parameters of disabilities accepted by the SSA. This sometimes  comes as a surprise to individuals who feel more significant long-term injuries will be compensated at higher rates than injuries with a statistically higher likelihood of partial or full recovery. Ultimately, the severity of the disability does not matter; work history does.

While having an online calculator does help, it’s important to understand the calculations used by the SSA to come to a final number:

• Taking the case of a 50-year-old woman who becomes disabled after working her entire adult life, the SSA would first subtract 22 from her age. In other words, 50 minus 22, which equals 28. Then, the SSA would divide the number 28 by five, which--when rounded down--is five. The number five would then be subtracted from 28, leaving 23. (If she had a few “lean” salary years, those would not detract from her overall average, thanks to removing 20 percent, or one-fifth, of her work history.) Thus, the SSA would only consider the woman’s 23 top-earning years to estimate a monthly SSD benefits payout average.

Looking for a less formulaic way to calculate potential monthly SSD benefits? Just estimate 40 percent of current monthly earnings. Therefore, a person making $3,000 monthly with at least 40 work credits might expect around $1,200 monthly from SSD benefits. It’s not an exact measure, by any means, but it is a decent starting point for budgeting purposes.

Moving Forward With a Better Understanding of Potential SSD Benefits

Although the SSA does its best to streamline the SSD system, including adding pages and pages of information to its website, the system can be tough to understand. This is especially true for individuals and their families dealing with the financial and emotional ramifications of a primary or secondary wage earner’s disability.

Rather than wading through paperwork alone, potential SSD claimants should seriously consider talking with an attorney from the beginning. Most lawyers offer free consultations, which are intended to help individuals get a better sense of what to expect from the SSD application process (and whether they are likely to get approved in the first place). Having a conversation with a legal professional can also assuage fears and provide much-needed education on the finer points of estimating SSD benefits.