Social Security Retirement Benefits (SSA Retirement)
The most well-known benefit is clearly SSA Retirement, monthly cash payments that most of us will be using in our retirement years. The budget shortfall in the SS Trust Fund is overstated by media, but in 2034 benefits are projected to be decreased by 21% if things don’t change somehow, and down by an additional 5% by 2092.
SSA Retirement can be claimed as early as age 62 if earned income is below $17,640/yr, with $1 of benefits being decreased for every $2 of earnings above that threshold.
Full SSA Retirement is available between ages 66 and 67, depending on the year of one’s birth. Younger people’s full retirement age is closer to 67.
Married couples have significant benefits when it comes to SSA Retirement. A person can apply for benefits based on their spouse’s earnings record after certain triggering events, such as: retirement of both spouses or death of one spouse (after the surviving spouse turns 60, is disabled between 50-60, or continues to care for a child). Children and Disabled Adult Children (DAC) can also receive benefits based on a retired, disabled or deceased parent.
File and Suspend for married couples – this was a loophole that the Obama administration closed (mostly). A person would file for spousal benefits after age 66 but not file for his/her own benefits. That way, a person could collect half of a spouse’s benefit while waiting for super-charged retirement at 70. This strategy is unavailable to most people now.
Tip/Trick: File and suspend is still available for people who turned 62 before January 2, 2016!!! At 70 years old the strategy is moot by definition, so there are about five years left for some Baby Boomers to use File and Suspend. It can mean as much as $65,000 in “free money” and is a perfectly legitimate process.
Social Security Disability Insurance (SSDI)
SSDI is essentially a Long Term Disability policy that almost all of us are forced to pay for through payroll taxes. There is a five-month waiting period for benefits, and payment for any given month is made in the following month, meaning that most people are eligible for their first payment in the seventh month after they become disabled. There is no exception to this waiting period. “Disabled” is defined as the inability to perform substantial gainful activity (SGA) due to a severe impairment that is expected to last more than 12 months or result in death (same definition as for SSDI). A person generally earns eligibility for SSDI by earning work credits in 5 out of the last 10 years before becoming disabled, and earning work credits in 10 total years in their lifetime (this rule varies by age and other factors). Eligibility for SSDI, so long as the claimant has the necessary credits, is a Five Step Process:
Step One: Is the claimant earning SGA? Note that this is the first step, and if the answer is yes then a claimant is denied regardless of their medical condition. If a claimant is working and earning more than $1220/month in 2019, the application will almost always be denied. There are exceptions and offsets that are too complex for this discussion, but they rarely apply. If a claimant is not earning SGA, the process continues to Step 2, if they are, the application is denied.
Step Two: Does the claimant have a severe impairment that is expected to last 12 months or more or result in death? “Severe impairment” is a very low bar to get over because the medically determinable impairment must only have more than a minimal effect on any one of a claimant’s working abilities (sitting, standing, walking, concentrating, following instructions, etc.). The difficulty is usually in the 12 month requirement – for example, a claimant was treated for breast cancer for 11 months, during which time she could not get out of bed and had multiple surgeries. In the 12th month she made a complete recovery and started looking for work. This claimant is not disabled. If there is a severe impairment, the process continues to Step 3, if not, the application is denied.
Step Three: Does the claimant meet/equal a Listing? The Adult Listings of Impairments are a group of illnesses, injuries and conditions that make a claimant automatically disabled if the claimant passes Steps One and Two. These “Listings” are extremely rare and difficult to meet/equal.
Between Steps Three and Four, SSA determines a claimant’s Residual Functional Capacity (RFC) – to what extent can the claimant perform Work Related Activities? For example, SSA determines a claimant can lift and carry 10 pounds frequently and 20 pounds occasionally throughout a typical workday. There are numerous work related activities, and SSA makes a determination for all of them, then continues to Steps Four and Five (if necessary).
Step Four: Can the claimant perform Past Relevant Work (PRW)? This Step is fairly self explanatory, if the answer is yes then the claim is denied, if no then the process continues to Step Five.
Step Five: Given the claimant’s age, education and work history, can he/she perform any other job that exists in significant numbers in the national economy? This step is what makes the SSA disability definition so arcane and narrow. A person under 50 must prove that they cannot do any unskilled job that exists in significant numbers in the United States. The claimant has the burden throughout the process, but SSA has the burden of naming the job(s) that a claimant can perform at Step Five.
Tip/Trick: Throughout the Initial Application and Reconsideration process, SSA will attempt to get all of the claimant’s medical records for free. Ultimately it is the claimant’s burden to get supporting medical evidence, but SSA has an excellent, streamlined process that is usually successful. At the hearing level, SSA will not attempt to get medical records, thus the claimant or claimant’s attorney is solely responsible absent some kind of unusual situation.
Supplemental Security Income (SSI)
SSI is in essence a federal welfare program for the Aged, Blind, or Disabled. “Aged” means 65 or older, “Blind” is a complex regulatory definition not appropriate for this presentation, “Disabled” is defined as the inability to perform substantial gainful activity (SGA) due to a severe impairment that is expected to last more than 12 months or result in death (same definition as for SSDI).
The financial requirements for SSI are difficult to remain within – countable income must not exceed $771/month (Single) or $1157/month (Married Couple), and countable resources must not exceed $2,000 (Single)/$3,000 (Married Couple) on the first of any given month.
Medicaid is a tag-along with SSI, but many people are dual-eligible, meaning that they receive SSA Retirement Benefits/SSDI and SSI. Often that means they are Medicare and Medicaid eligible.
Tip/Trick: I get calls from attorneys and claimants who are often afraid that they or their clients will lose Disability benefits due to an inheritance, judgment or settlement. The first question I ask is: “How much is the monthly benefit?”, the answer to which can usually tell me right away whether the person is receiving SSI or SSDI. SSDI is not means-tested, so an inheritance, judgment or settlement will not affect SSDI benefits. SSI, on the other hand, will almost surely be discontinued after a large windfall. If the answer to “How much?” is over $771 for a single person, that person is not receiving SSI.
Resources: CFR; POMS (SSA Policy); Hallex (SSA ALJ Policy/Procedure); Get What’s Yours by Laurence J. Kotlikoff, et. al;