How are SSDI payments calculated?

Social Security Disability is where you qualify for monthly payments due to eligible disability preventing you from working and earning the yearly quarters (or number of hours accumulated over a specific period of time) necessary for Social Security Benefits. There is a specific process needed to qualify, however this process is here to not only provide security, but also to protect you. In this article, we will unpack what this looks like in reference to understanding how to calculate your SSDI payments and the formula needed to ensure you are on the right path.

Each month, your payment is based on the average of your lifetime earnings before you became disabled. Your specific type and severity of disability does not weigh in on the final outcome, however payments from other sources can absolutely factor in. With Supplemental Security Income, you will notice that your benefits are paid to you when you are disabled and unable to work, but it is based on limited income and resources. But with Social Security Disability, you are required to have worked and paid Social Security taxes for a specific length of time. Currently, the average SSDI payment is on average $1,165, with the highest month’s payment being $2,663 per month.

How do I calculate my payments?

Now let’s take a minute and see what it looks like to calculate your Social Security Disability with covered earnings. Let’s assume you are eligible for SSDI Benefits, then you can count on the amount you receive each month to be based upon your average lifetime income earned before your disability began. This is the total sum your benefit amount is based off of. However, your monthly payment may be reduced if you are receiving disability payments from other sources, which we will discuss in the following paragraph. To put this simply, your Social Security Disability benefit amount is not based upon how severe your disability is, and unlike with Supplemental Security Income, you cannot be denied SSDI because you have too much income or too many resources for funds, meaning assets.

What are “covered earnings”?

So, your earnings must be covered under the Social Security program for you to have credit towards the amount of your Social Security Disability benefits you will receive. Simplified, your “covered earnings” are the personal wages you have received from jobs that have paid into Social Security. Let’s say you have a paycheck where the money was withheld for “Social Security Taxes” or “FICA”, then the wages you received from that job are considered “covered earnings” and will completely count towards calculating your benefit amount. Nearly all of your wages collected will be considered “covered earnings”.

Average Index Monthly Earnings

Finally, you can now see that your SSDI monthly payments will be based on the average of your covered earnings over a period of years, which is known as your Average Index Monthly Earnings (AIME). A formula will be applied to your AIME to calculate your Primary Insurance Amount (PIA), which is the basic figure the Social Security Administration uses to set your actual benefit amount.

Will payments from moth other disability sources affect my calculated amount?

What happens if you have disability payments from other sources? Well, if you receive benefits from private sources, like possibly a private pension or private insurance benefits, these will not go against you or affect your SSDI benefits. It is important to note here, however, that if you do receive public disability benefits, this may very well affect your SSDI benefits as they will not pay you twice for the same thing from the same source. An example would be that if you were injured on a job and are receiving Workers’ Compensation Benefits, it may reduce the amount of SSDI benefits you receive. Another example that can potentially affect your SSDI benefits, is if you are being paid for non-job related benefits from the federal, state, or local government. Specifically, temporary disability benefits paid by the state, military disability benefits, and stare or local government retirement benefits that are based on disability. However, some public benefits are not counted towards your overall average. If you receive SSI or Veterans Administration benefits, those will not count against you.

Finally, because the interaction between Workers’ Compensation and other public disability benefits that may reduce your SSDI amount, Social Security Disability benefits have a distinct ability to be complicated and different depending on the state you reside in. It will be in your best interest for you to take extra care to look into your specific state’s requirements for any additional information that relates to your specific disability situation. If you do qualify for more than one public disability benefit, you may find additional security in hiring an experienced and licensed attorney to make sure you do not miss out on any of your specific benefits you are entitled to.

Conclusion

In conclusion, when you combine the total amounts you are receiving from Social Security Disability and all other public disability benefits, they cannot exceed more than 80% of the average amount you earned before you became disabled. If they do, the excess amount is deducted from you Social Security Disability benefits.