How Is the Amount for Social Security Disability Calculated?

Lloyd King Law Firm PLLC Feb. 21, 2023

Paper cut out of person in wheelchair next to gavelSocial Security Disability Insurance (SSDI) is a program administered by the Social Security Administration (SSA) to provide benefits for those who have been paying into the system and suffer a mental or physical condition that keeps them from working. The disabling condition must be one that will last at least 12 months or until death, and to qualify for SSDI, the person must have been paying into the Social Security trust fund through payroll or self-employment taxes. 

In 2022, there were roughly 7.8 million persons who received disability benefits from the Social Security Administration. The cash payments – at $144 billion-plus – totaled about 2 percent of the federal budget. Benefits are paid from the SSDI trust fund, which is separate from the much larger retirement and survivors trust fund. 

Those who are suddenly unable to continue performing the duties of their job due to a disabling condition, and who have been paying Social Security taxes, will often need to rely on the SSDI program to help them with the basic needs of life when suddenly faced with a loss of income. The question on any applicant’s mind will be, “How much will I receive each month?” 

The answer is that, in basic terms, your SSDI monthly payment will be determined by your number of working years and your average monthly income, which is adjusted for historical wage growth. 

Applying for SSDI can be a challenging proposition, as more than half of first-time claimants are rejected. And, many of those who are approved must undergo exams by SSA-approved physicians. It can be an overwhelming experience. 

If you’re seeking SSDI benefits in or around Raleigh, North Carolina, contact me at the Lloyd King Law Firm PLLC. I am a former Social Security Disability Judge who understands from the inside how the system works. I can help you prepare a claims package that will be complete and compelling. I also serve clients in Roanoke Rapids, Fayetteville, and Greensboro. 

How Does the SSA Determine Monthly Benefits? 

The SSA uses a similar formula for calculating SSDI as it does for someone seeking retirement benefits. The major difference is that your disability may strike you before you even reach retirement age, thus affecting the earnings used in the calculation.  

For retirement calculations, the SSA uses what it calls your average indexed monthly earnings (AIME), which summarizes up to 35 years of your earnings to come up with what is called the “primary insurance amount” (PIA). The SSA takes the years with the highest earnings and divides that sum by the number of months represented to come up with the AIME. The average figure is rounded down to the next lower dollar amount. 

The indexing of the average gets a bit confusing. An attorney can help you understand the process in more detail and advocate for fair SSDI benefits.  

How SSDI Determinations Differ 

When it comes to SSDI, the administration will still start by determining your AIME. Instead of using 35 years of income, however, they count the number of years you worked from age 21 until you became disabled and then throw out the first five years. 

What they do to determine your AIME again gets a bit complicated as the calculation of your primary insurance amount is based on what are called “bend points.” Bend points change yearly to reflect the national average wage index. In 2023, the bend points used to figure your PIA are based on: 

  • 90 percent of the first $1,115 of your average indexed monthly earnings 

  • 32 percent of your AIME over $1,115 through $6,721, and 

  • 15 percent of your AIME over $6,721 

The bend points are designed to give lower-wage earners a higher proportion of benefits than higher-wage earners. In addition, only earnings up to $160,200 annually are counted in 2023. The figure is adjusted annually for inflation. The average SSDI benefit in 2023 is estimated at $1,483 a month, with a cap of $3,627. 

How Other Benefits May Affect Your Amount 

If you receive other public benefits such as workers’ compensation or short-term state disability, your SSDI amount may be reduced to reflect that. If you have private or employer-sponsored long-term disability (LTD) insurance, that will not affect your SSDI, but your LTD insurer will likely reduce your monthly benefits using your SSDI payment as an offset. 

When Does SSDI Become Effective? 

Once approved, you will face a five-month waiting period before the benefits begin, but you should qualify for up to 12 months of “backpay” dating from your established onset date (EOD). The onset date is when you first became disabled and could no longer perform your duties at work.  

To help solidify your EOD, you can establish a protective filing date (PFD) by sending a written statement to the SSA that you intend to file for benefits even before you actually submit your claim. 

Speak With an Experienced Attorney 

The claims process for SSDI is challenging, and the denial rate is high, sometimes as much as 70 percent of new claims. You need to have supporting documents and medical evidence to justify your claim of disability. 

If you’re looking to file an SSDI claim in or around Raleigh, North Carolina, contact me, so I can help you assemble a package that will help speed the process and overcome the many hurdles the system may throw your way. I can be reached at the Lloyd King Law Firm PLLC. Call with all your SSDI questions and concerns.