SSI vs. SSDI: Understanding the Key Differences in Social Security Disability Programs

By Markets Fool.com

Image source: www.stockmonkeys.com.

Continue Reading Below

The Social Security Administration (SSA) offers two types of disability benefits: SSI, which stands for Supplemental Security Income, and SSDI, which is Social Security Disability Insurance. While both of these programs are designed for disabled individuals, their eligibility requirements and benefits differ significantly. Here's a rundown of these two programs, and what you should do next if you think you're eligible.

The biggest difference
The most notable difference between the two disability benefits programs is how benefit eligibility is determined.

Specifically, SSI is based on need. In order to qualify for SSI benefits, your income and resources must be below a certain amount. You are eligible for SSI regardless of whether or not you worked and paid into the Social Security system.

On the other hand, SSDI is based on your work record, just like Social Security retirement benefits. In order to qualify, you need to have worked for a minimum amount of time depending on your age when you become disabled, and your benefit amount can be higher or lower depending on your income history and work duration.

Aside from this major difference, each program has its own qualifications and application procedures.

Continue Reading Below

How to qualify for SSI
For both programs, you need to establish that you have a disability, but SSI has a slightly broader definition. Specifically, SSI is available to people who are disabled, blind, or over 65. SSDI doesn't consider non-disabled senior citizens, since this group would qualify for Social Security retirement benefits on their work record, making SSDI eligibility a moot point.

In addition, SSI qualification is based on your resources. Specifically, if your resources (the things you own) are worth more than $2,000 for an individual or $3,000 for a couple, you're considered to be ineligible. This amount includes most personal property, but excludes certain items, such as your primary home.

There are also strict income requirements for SSI eligibility. When determining your benefit eligibility, the first $65 in wage income you earn each month is excluded. Over that amount, every two dollars you earn will result in a one-dollar reduction in your monthly benefit.

For the complete details on SSI eligibility, check out this guide from the SSA.

How to qualify for SSDI
Qualification for SSDI is primarily based on two things: Documenting a disability, and an evaluation of your work history. For qualification purposes, a disability is defined as a medical condition expected to last longer than one year and/or result in death. More on that in a minute.

The first step in qualifying is your work record, and the SSA looks at your recent work history and how long you've worked. As far as recent work history is concerned, here's what the SSA will look for:

Age When You Become Disabled

You'll Need This Much Recent Work History

Less than 24

1.5 years of work during the three years prior to becoming disabled

24-30

Work during half the time during the period between turning 21 and the quarter in which you became disabled

31 or later

Five years of work out of the 10-year period prior to becoming disabled

Data source: SSA.

In addition, the SSA looks at your total duration of work. The required duration ranges from 1.5 years for people who became disabled before age 28 to 9.5 years for people who become disabled after age 60.

There is also an earnings test, if you're still working. Basically, if you're still able to work, and you earn over a certain amount, you aren't considered disabled. For 2016, the earnings limit is $1,130 per month from work, or $1,820 for blind applicants. Applicants with monthly earnings below the threshold can still be considered.

Once eligibility based on the work record has been established, the SSA looks deeper into the applicant's disability. They'll ask the following questions in order to make their determination:

  1. Is your medical condition "severe"? (Meaning that it limits your ability to do basic work activities.)
  2. Does it meet or equal the severity of a listed impairment?
  3. Can you do the work you did before?
  4. Can you do any other type of work?

Difference in benefits
SSI pays out a standard benefit amount for everyone, since it is solely based on need. This benefit amount can be reduced if a recipient's need is smaller -- such as by earning income, as I discussed earlier. As of this writing, the maximum federal SSI monthly benefit is $733 for individuals and $1,100 for couples. In addition to this amount, most states add a supplementary SSI payment.

SSDI is based on work records, so benefits can vary dramatically. The Social Security Administration uses a weighted formula to calculate disability benefits, but if you want an estimate, the best place to get one is on your Social Security statement. You can view your statements by creating an account on www.ssa.gov, and in addition to your eligibility and estimated disability benefit, you'll find lots of other useful information about your Social Security status.

Image source: Author.

The next step
Finally, another major difference is the way you apply for each program. SSDI is the easier of the two to apply for, and you can do so online at www.socialsecurity.gov. SSI is slightly more complicated, so you'll need to apply in person at your local Social Security office or over the phone.

With both programs, the SSA will review your application and supporting documents and make a decision as to whether or not you qualify as disabled, and if you do, whether or not you're eligible for benefits. Both programs will inform you of their decision in writing, and the letter they send will show your benefit information, as well as how to appeal if you don't agree with the decision.

The article SSI vs. SSDI: Understanding the Key Differences in Social Security Disability Programs originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.