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Primer on Disability Benefits: Social Security
Disability Insurance (SSDI) and
Supplemental Security Income (SSI)
Scott Szymendera
Analyst in Disability Policy
May 21, 2009February 2, 2010
Congressional Research Service
7-5700
www.crs.gov
RL32279
CRS Report for Congress
Prepared for Members and Committees of Congress
c11173008
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Primer on Disability Benefits: SSDI and SSI
Summary
Generally, the goal of disability insurance is to replace a portion of a worker’s income should
illness or disability prevent him or her from working. Individuals may receive disability benefits
from either federal or state governments, or from private insurers. This report presents
information on two components of federal disability benefits, those provided through the Social
Security Disability Insurance (SSDI) and the Supplemental Security Income (SSI) programs. The
SSDI program is an insured program that provides benefits to individuals who have paid into the
system and meet certain minimum work requirements. The SSI program, in contrast, is a meanstested program that does not have work or contribution requirements, but restricts benefits to
those who meet asset and resource limitations.
The SSDI program was enacted in 1956 and provides benefits to insured disabled workers under
the full retirement age (and to their spouses, surviving disabled spouses, and children) in amounts
related to the disabled worker’s former earnings in covered employment. The SSI program, which
went into effect in 1974, is a needs-based program that provides a flat cash benefit assuring a
minimum cash income to aged, blind and disabled individuals who have very limited income and
assets.
To receive disability benefits under either program, individuals must meet strict medical
requirements. For both SSDI and SSI disability benefits, “disability” is defined as the inability to
engage in substantial gainful activity (SGA) by reason of a medically determinable physical or
mental impairment expected to result in death or last at least 12 months. Generally, the worker
must be unable to do any kind of work that exists in the national economy, taking into account
age, education, and work experience.
Both programs are administered through the Social Security Administration (SSA) and therefore
have similar application and disability determination processes. Although SSDI and SSI are
federal programs, both federal and state offices are used to determine eligibility for disability
benefits. SSA determines whether someone is disabled according to a five-step process, called the
sequential evaluation process, where SSA is required to look at all the pertinent facts of a
particular case. Current work activity, severity of impairment, and vocational factors are assessed
in that order. An applicant may be denied benefits at any step in the sequential process even if the
applicant may meet a later criterion.
The SSDI program is funded through the Social Security payroll tax and revenues generated by
the taxation of Social Security benefits, portions of which are credited to a separate Disability
Insurance (DI) trust fund. In contrast, the SSI program is funded through appropriations from
general revenues.
This report will be updated as warranted.
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Primer on Disability Benefits: SSDI and SSI
Contents
Social Security Disability Insurance ............................................................................................1
Supplemental Security Income ....................................................................................................1
Type of Benefits and Average Benefit Levels...............................................................................2
SSDI.....................................................................................................................................2
SSI........................................................................................................................................2
Eligibility Requirements .............................................................................................................3
Definition of Disability .........................................................................................................3
SSDI.....................................................................................................................................3
SSI........................................................................................................................................4
Disability Determination Process ................................................................................................6
Program Financing Information...................................................................................................7
SSDI.....................................................................................................................................7
Tables
Table 1. Reasons for SSDI Worker Benefit Termination, 20052008 .....................................................4
Contacts
Author Contact Information ........................................................................................................8
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Primer on Disability Benefits: SSDI and SSI
G
enerally, the goal of disability insurance is to replace a portion of a worker’s income
should illness or disability prevent him or her from working. Individuals may receive
disability benefits from either federal or state governments, or from private insurers.
This report presents information on two components of federal disability benefits, those provided
through the Social Security Disability Insurance (SSDI) and the Supplemental Security Income
(SSI) programs. The SSDI program is an insured program that provides benefits to individuals
who have paid into the system and meet certain minimum work requirements. The SSI program,
in contrast, is a means-tested program that does not have work or contribution requirements, but
individuals must meet the asset and resource limitations. To receive disability benefits under
either program, individuals must meet strict medical requirements.
Social Security Disability Insurance
The SSDI program is a part of the Old Age, Survivors, and Disability Insurance (OASDI)
program administered by the Social Security Administration (SSA). The disability insurance
portion of OASDI was enacted in 1956 and provides benefits to disabled workers under age 65
the age of
65 (and to their spouses, surviving disabled spouses, and children) in amounts related to the disabled
disabled worker’s former earnings in covered employment. The SSDI benefits, like those of the
Old Age
and Survivors Insurance (OASI), are meant to replace income from work that is lost by incurring
incurring one of the risks the social program insures against. Funding for the SSDI and OASI
programs is
primarily through a payroll tax levied on workers in jobs covered by Social Security,
and the
benefits are based on an individual’s career earnings. At the end of March 2009, December 2010,
nearly 9.4
7 million disabled workers and their dependents were receiving SSDI benefits.1
Supplemental Security Income
The SSI program, which went into effect in 1974, is a means-tested program that provides cash
payments assuring a minimum income for aged, blind or disabled individuals who have very
limited income and assets.2 This program is often referred to as a “program of last resort” since
individuals who apply for benefits also are required to apply for all other benefits to which they
may be entitled, such as Social Security retirement or disability benefits, pensions, or
unemployment benefits. Although the SSI program is administered by SSA, it is funded through
general revenues—not payroll taxes. The federal benefit provided through this program, unlike
through the SSDI program, is a flat amount (adjusted for other income the individual may have),
and is not related to prior earnings. In addition to the federal SSI payment, many states provide
additional supplements to certain groups or categories of people. At the end of MarchDecember 2009,
nearly 7.47 million individuals received SSI payments. Of these, nearly 6.25 million were entitled to
benefits on the basis of disability or blindness.3
1
Social Security Administration, Number of Social Security Recipients at the End of Mar.December 2009, 20092010,
http://www.ssa.gov/cgi-bin/currentpay.cgi.
2
See CRS Report 94-486, Supplemental Security Income (SSI): A Fact Sheet, and CRS Report RS20294, SSI Income
and Resource Limits: A Fact Sheet, both by Scott Szymendera.
3
Social Security Administration, SSI Monthly Statistics, MarchDecember 2009 (Washington: GPO 20092010), Tables 1 and 2.
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Type of Benefits and Average Benefit Levels
SSDI
SSDI benefits are based on the worker’s past average monthly earnings, indexed to reflect
changes in national wage levels (up to five years of the worker’s low earnings are excluded). 4 The
benefits are adjusted annually for inflation, as measured by the consumer price index for workers
(CPI-W).Consumer Price Index for Urban
Wage Earners and Clerical Workers (CPI-W).5 Benefits are also provided to dependents (such as
spouses or children), subject to
certain maximum family benefit limits. Disability benefitsBenefits may be offset if
the disabled worker is
simultaneously receiving workers’ compensation or other public disability
benefits. In addition,
individuals who receive SSDI benefits also receive Medicare benefits after a
24-month waiting
period.
At the end of March 2009December, the average monthly SSDI benefit was $1,061.86064.31 for disabled workers;
$284.75,
$287.14 for spouses of disabled workers;, and $318.2402 for children of disabled workers.56
SSI
The basic federal SSI benefit is the same for all beneficiaries. In 20092010, the maximum SSI
payment (also called the federal benefit rate), regardless of age, is $674 per month for an
individual living independently or $1,011 per month for a couple living independently. Federal
SSI benefits are increased each year to keep pace with inflation (as measured by the CPI-W). The
7.
The monthly SSI benefit may be reduced if an individual has other income or receives in-kind (noncash
(non-cash) support or maintenance. States may voluntarily supplement this payment to provide a
higher benefit level than that specified in federal law.
SSI recipients living alone or in a household where all members receive SSI benefits are also
automatically eligible for Supplemental Nutrition Assistance Program (SNAP, formerly food
stamps) benefits and are generally eligible for Medicaid.68
Individuals may receive SSDI, SSI based on disability (or blindness or age), or both (some may
also receive other benefits). The amount of the SSI benefit may be adjusted based on receipt of
other income, such as SSDI benefits (the SSDI benefit is not reduced if the recipient also receives
SSI benefits, because SSDI is not means-tested).
At the end of March 2009, the average monthly federally administered SSI payment amount was
$476.90 for all recipients; $567.50 for children under age 18; $492.50 for adults age 18-64; and
$393.50 for adults age 65 and older.7
4
The basic benefit formula for SSDI benefits is similar to the benefit formula for Social Security Old Age and
Survivors benefits. The worker’s past annual covered earnings are indexed to reflect changes in national earnings
levels. A formula which provides a higher replacement rate for low earners is then applied to these averaged earnings.
5
There is no cost-of-living adjustment (COLA) for 2010. For additional information on the Social Security COLA, see
CRS Report 94-803, Social Security: Cost-of-Living Adjustments, by Gary Sidor.
6
Social Security Administration, Number of Social Security Recipients at the End of Mar.December 2009, 20092010,
http://www.ssa.gov/cgi-bin/currentpay.cgi.
67
There is no COLA for SSI benefits in 2010.
8
In California, SSI recipients are not eligible for SNAP benefits and instead receive a higher monthly SSI benefit.
Specific Medicaid eligibility criteria are set by the states. For additional information, see CRS Report RL31413,
Medicaid - Eligibility for the Aged and Disabled, by Julie Stone.
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At the end of December 2009, the average monthly federal SSI payment amount was $476.30 for
all recipients, $583.60 for children under the age of 18, $495.30 for adults aged 18-64, and
$365.80 for adults aged 65 and older.9
Eligibility Requirements
Definition of Disability
For both SSDI and SSI disability benefits, “disability” is defined as the inability to engage in
substantial gainful activity (SGA) by reason of a medically determinable physical or mental
impairment expected to result in death or last at least 12 months. Generally, the worker must be
unable to do any kind of work that exists in the national economy, taking into account age,
education, and work experience.
The definition of disability for disabled children receiving SSI benefits is slightly different from
adults. Instead of demonstrating work limitations, children are required to demonstrate that they
have “marked or severe functional limitation,” and in addition, they are subject to slightly
different criteria for the medical listings.
SSDI
To be eligible for SSDI benefits, a worker must be (1) insured, and (2) disabled according to the
definition of disability. To be insured, a worker must have worked a minimum amount of time in
employment covered by Social Security (similar to eligibility for OASI benefits). However, for
disability benefits, if an individual does not have 40 quarters of coverage (generally about 10
years), he or she must have one quarter of coverage (one quarter of coverage is equal to $1,090 in
2009 and indexed to the annual increase in wages) for each year after 1950 or from age 21 up to
the onset of disability. In addition, a recency of work test requires the worker to have 20 quarters
of coverage in the 40 quarters preceding the onset of disability (generally five years of work in
the last 10). Workers under the age of age 31 need to have credit in one-half of the quarters during the
period between when they attained agethe age of 21 and when they became disabled (a minimum of six
six quarters is required).
Once an individual’s application for SSDI benefits has been approved, he or she will receive
benefits after a five-month waiting period from the time the disability began, and will receive
Medicare coverage 24 months after SSDI eligibility begins. Disability benefits will continue as
long as the individual remains disabled, or until he or she reaches the full retirement age
(currently agethe age of 65 and six months for workers born in 1940) when the benefits automatically
convert to retired worker benefits. SSA periodically conducts continuing disability reviews
(CDRs) to determine whether an individual is still disabled. How often the beneficiary’s medical
condition is reviewed depends on how severe it is and the likelihood it will improve. The SSDI
award notice explains when the first review is expected.. If medical improvement is expected, the
first review will be six to 18 months after first receiving disability benefits. If medical
improvement is possible, the case will be reviewed about every three years. If medical
9
Social Security Administration, SSI Monthly Statistics, December 2009 (Washington: GPO 2010), Table 7.
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improvement is unlikely, the case will be reviewed only about once every five to seven years. If
the beneficiary has received SSDI benefits for at least 24 months, a medical review will not be
initiated solely on account of work activity.
(...continued)
7
Social Security Administration, SSI Monthly Statistics, March 2009, (Washington: GPO 2009), Table 7.
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As shown in Table 1, of the individuals whose SSDI benefits are terminated, the majority are due
to factors other than medical recovery. In 20072008, of the 522,308563,314 disabled workers’ benefits that
were terminated, 47.148.3% were because of conversion to retirement benefits and 39.538.3% were due to
the individual’s death. Another 3.9% of those terminated had a medical improvement, while 6.4%
whereas
6.7% had earnings from work above the substantial gainful activity earnings limit.
Table 1. Reasons for SSDI Worker Benefit Termination, 2005
Reason for Termination
2008
Number of
Workers
Percent of
Terminations
Total terminations/ suspensions
522,308563,314
100.0%
Attainment of normal retirement age or election of reduced retirement
246,006
47.1272,061
48.3%
Death of beneficiary
206,032
39.5215,445
38.3%
Medical improvement
20,59221,902
3.9%
Work above SGA
33,381
6.437,711
6.7%
Other
16,297
3.1%195
2.9%
Reason for Termination
Source: Social Security Administration, Annual Statistical Report on the Social Security Disability Insurance Program,
20072008, (Washington: GPO 20082009), Table 50.
SSI
To receive SSI aged benefits, an individual must be at least 65 years old. To receive SSI disability
benefits, an individual must meet the same definition of disability that applies under the SSDI
program (see the section below on the “Disability Determination Process”). To qualify for SSI
benefits because of blindness, an individual must have visual acuity of 20/200 or less with the use
of a correcting lens in the person’s better eye, or tunnel vision of 20 degrees or less. In addition to
age, disability, or blindness, an individual must meet income and resource tests to qualify for SSI
benefits. An SSI recipient must also (1) be a citizen of the United States, or if not a citizen, (a) be
a refugee, asylee, or victim of trafficking who has been in the country for less than nine years,8 or
10
or (b) be a “qualified alien” who was receiving SSI as of August 22, 1996, or who was living in the
the United States on August 22, 1996, and subsequently became disabled; (2) be a resident of one of
of the 50 states, the District of Columbia or the Northern Mariana Islands, or a child of a person in
in the military stationed outside the United States;911 (3) apply for all other benefits to which he or she
may be entitled; and (4) if disabled, accept the vocational rehabilitation services that are offered.
The countable resource limit for SSI eligibility is $2,000 for individuals and $3,000 for couples.
These amounts are not indexed for inflation and have remained at their current levels since 1989.
8
10
Under Section 402(a)(2) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, as
amended [8 U.S.C. § 1612(a)(2)], the time limit for SSI eligibility for refugees, asylees, and victims of trafficking is
nine years during FY2009 through FY2011. After FY2011, this time limit reverts back to seven years, the limit in place
before the enactment in 2008 of the SSI Extension for Elderly and Disabled Refugees Act (P.L. 110-328). For
additional information on the SSI eligibility of refugees, asylees and victims of trafficking, see CRS Report RL33809,
Noncitizen Eligibility for Federal Public Assistance: Policy Overview and Trends, by Ruth Ellen Wasem.
911
SSI benefits are not available to residents of Puerto Rico, Guam, or the United States Virgin Islands. Residents of
these jurisdictions are eligible to receive federal benefits from their commonwealth or territorial government under
provisions of Titles I, X, XIV, and XVI of the Social Security Act. These benefits are administered by the Department
of Health and Human Services.
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she may be entitled; and (4) if disabled, accept the vocational rehabilitation services that are
offered.
The countable resource limit for SSI eligibility is $2,000 for individuals and $3,000 for couples.
These amounts are not indexed for inflation and have remained at their current levels since 1989.
Some resources are not counted in determining eligibility for SSI. Among the excluded resources
are: an individual’s home; a car used for essential transportation (or, if not essential, up to $4,500
of its current value); property essential to income-producing activity; household goods and
personal effects totaling $2,000 or less; burial funds of $1,500 or less; and life insurance policies
with total face values of $1,500 or less.
Two types of income are considered for purposes of determining SSI eligibility and payment
amounts: earned and unearned. Earned income includes wages, net earnings from selfemployment, and earnings from services performed. Most other income not derived from current
work (including Social Security benefits, other government and private pensions, veterans’
benefits, workers’ compensation, and in-kind support and maintenance) is considered “unearned.”
In-kind support and maintenance includes food, clothing, or shelter that is given to an individual.
If an individual (or a couple) meets all other SSI eligibility requirements, his or her monthly SSI
payment equals the maximum SSI benefit minus countable income.
Not all income is counted for SSI purposes, and different exclusions apply to earned and
unearned income. Monthly unearned income exclusions include a general income exclusion of
$20 per month that applies to non needs-based income. Food stamps, housing and energy
assistance, state and local needs-based assistance, in-kind support and maintenance from nonprofit organizations, student grants and scholarships used for educational expenses, and income
used to fulfill a plan for achieving self-support (PASS) are also excluded from unearned income.
Once the $20 exclusion (and any other applicable exclusion) is applied to unearned income, there
is a each dollar for dollar reduction in SSI benefits (each dollar of countable unearned income
reduces the SSI benefit by one dollar).
Monthly earned income exclusions include any unused portion of the $20 general income
exclusion, the first $65 of earnings, one-half of earnings over $65, impairment-related expenses
for blind and disabled workers, and income used to fulfill a PASS. As a result of the one-half
exclusion for earnings, once the $65 exclusion (and any other applicable exclusion) is applied to
earned income, SSI benefits are reduced by $1 for every $2 of earned income. In 2009, the
monthly earned income amount at which an individual with no unearned income and no special
earned income exclusions no longer qualifies for a federal SSI payment (not including any state
supplement) is $1,433 (also called the earned income “breakeven” amount); the monthly earned
income amount at which a couple no longer qualifies is $2,107. The earned income breakeven
amount may be lower for SSI recipients with unearned income and those who do not live
independently; it may be higher for those who receive special earned income exclusions related to
a PASS or to work.
In some cases, the income and resources of non-recipients are counted in determining SSI
eligibility and payment amounts. This process is called “deeming” and is applied in cases where
an SSI-eligible child lives with an ineligible parent, an eligible individual lives with an ineligible
spouse, or an eligible non-citizen has a sponsor.
In contrast to SSDI, the majority of adults who have their SSI disability benefits terminated are
terminated because of having too much income. Unlike SSDI benefits, SSI benefits may be
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suspended for one month, and paid in the next depending on an individual’s income or
resources.10
10
Benefits are terminated if benefits have been suspended for at least 12 consecutive months.
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Disability Determination Process
The application process for SSDI and SSI disability benefits is very much the same. Although
SSDI and SSI are federal programs, both federal and state offices are used to determine eligibility
for benefits. An individual applies for benefits at a local SSA office where they are interviewed to
obtain relevant medical and work history and to see that required forms are completed. The case
may be denied at that point because the applicant does not have SSDI insured status or is earning
too much money from work (work above the SGA earnings limit) in the case of Social Security
disability cases, or is above the income and resource limits in the case of SSI disability cases—
otherwise it is forwarded to the state disability determination service (DDS) for a medical
determination.
The medical determination for both types of disability benefits is made on the basis of evidence
gathered in the individual’s case file. Ordinarily there is no personal interview with the applicant
on the part of the state personnel who decide the claim.
The DDS determines whether someone is disabled according to a five-step process, called the
sequential evaluation process. Current work activity, severity of impairment, and vocational
factors are assessed in that order. An applicant may be denied benefits at any step in the
sequential process even if the applicant may meet a later criterion. For example, a worker that
meets the medical listings for disability but earns an amount exceeding the SGA earnings limit
would be denied benefits at Step 1. The five steps are as follows.
:
12
•
Step 1. Work test. Is the individual working and earning over SGA ($9801,000 per
month for a non-blind individual or $1,640 per month for a blind individual in
20092010)? If yes, the application is denied. If no, the application moves to Step 2.
•
Step 2. Severity test. Is the applicant’s condition severe enough to limit basic life
activities for at least one year? If yes, the application moves to Step 3. If not, the
application is denied.
•
Step 3. Medical listings test. Does the condition meet SSA’s medical listings, or
is the condition equal in severity to one found on the medical listings?1113 If yes,
the application is accepted and benefits are awarded. If no, the application moves
to Step 4.
•
Step 4. Previous work test. Can the applicant do the work he or she had done in
the past? If yes, the application is denied. If not, the application moves to Step
5.12
•
Step 5. Any work test. Does the applicant’s condition prevent him or her from
performing any other work that exists in the national economy? If yes, the
application is accepted and benefits are awarded. If no, the application is denied.
1114
Benefits are terminated if benefits have been suspended for at least 12 consecutive months.
13
The medical listings can be found in the Social Security Administration publication Disability Evaluation Under
Social Security, available at http://www.ssa.gov/disability/professionals/bluebook. This publication is commonly
referred to as the SSA Blue Book.
1214
Cases of children applying for SSI benefits are not subject to the work test but instead to a test of functional capacity.
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•
Step 5. Any work test. Does the applicant’s condition prevent him or her from
performing any other work that exists in the national economy? If yes, the
application is accepted and benefits are awarded. If no, the application is denied.
Program Financing Information
The SSDI program is primarily funded through the Social Security payroll tax, a portion of which
is credited to a separate Disability Insurance (DI) trust fund. By contrast, the SSI program is
funded through appropriations from general revenues.
SSDI
The payroll tax is a 15.3% tax on earnings that is split equally between employees and employers.
Payroll tax revenues are used to pay benefits under the Social Security OASDI program and the
Medicare Hospital Insurance (HI) program. The Social Security portion of the payroll tax is
12.4% (6.2% each per employee and employer) on earnings up to the taxable maximum
($102,000 in 2008). Of the 12.4%, 10.6% is paid to the OASI trust fund and 1.8% is paid to the
DI trust fund. In addition to these payroll tax contributions, the DI trust fund receives some
revenue from the taxation of Social Security benefit payments. These combined revenues are
invested in non-marketable government bonds, which earned an effective annual interest rate of
5.2% in 2008.1315
The resources in the DI trust fund are used to pay SSDI benefits and the costs of SSDI benefits
and program administration currently exceed trust fund revenues. Under current projections, this
trend will continue until the DI trust fund is exhausted in 2020.1416 As higher rates of disability
generally occur after agethe age of 50, the aging of the baby boom generation is a significant factor
in the
projected exhaustion of the DI trust fund.
The SSI program is financed through the general revenue of the United States. Appropriations for
SSI benefits and program administration are considered mandatory spending. In FY2009, the SSI
program spent an estimated $44.58 billion on federal benefits and $3.3 billion on administration
beneficiary
services, administration, and research. 15
1317
15
Data taken from the Social Security Administration Office of the Chief Actuary and is available at
http://www.ssa.gov/OACT/ProgData/effectiveRates.html.
14
16
The Board of Trustees, Federal Old Age and Survivors Insurance and Federal Disability Insurance Trust Funds, The
2009 Annual Report of the Board of Trustees, Federal Old Age and Survivors Insurance and Federal Disability
Insurance Trust Funds, Washington, DC, May 2009, p. 56. The projected data of trust fund exhaustion is determined
using the “intermediate” assumptions in the 2009 Annual Report.
1517
Social Security Administration, FY 20102011 President’s Budget: Key Tables, n, May 2009, Table 6,
http://www.ssa.gov/budget/FY10KeyTables
FY11%20Key%20Tables.pdf.
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Author Contact Information
Scott Szymendera
Analyst in Disability Policy
sszymendera@crs.loc.gov, 7-0014
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