One of the most common questions I am asked is “What is the difference between SSI and Disability?” This is an important question that can have a significant impact on the amount of benefits awarded, or even whether there is an award at all.
I like to explain “disability” benefits (also called SSDIB or OASDI) as an insurance program. When you have money withheld from your paycheck for Social Security, these payments act like insurance premiums. The amount that you pay into the program throughout your working life determines the amount of benefits that you may receive.
The important thing to remember about these payments is that for disability purposes, your insurance coverage can expire. From the date that you become disabled under the medical rules, SSA will look backward ten years (which is equal to forty “quarters of coverage”). Within that ten year period, you have to have twenty quarters (five years) of coverage. To oversimplify, if you haven’t worked within the five years before you became disabled, you are not covered for disability benefits. It doesn’t matter that you worked for many, many years prior to the end of your working days; you still have to be covered during that period to receive benefits.
These rules result in seemingly harsh results for stay at home parents or someone caring for sick relatives, who often lose their coverage. It also makes life more difficult for folks who file their claim for disability several years after the onset of health problems.
Supplemental Security Insurance (“SSI”) does not require quarters of coverage. The financial eligibility for SSI is based on poverty. If you have very little income and very few assets, you may be eligible. The maximum amount of assets that you can own and be eligible is $2,000 for an individual and $3,000 for a couple. Fortunately, the home in which you live and your vehicle do not count toward that asset cap. There are more exemptions listed here: https://www.ssa.gov/ssi/text-resources-ussi.htm. Unfortunately, any pension or retirement assets do count toward the asset cap.
Income eligibility for SSI is more complicated. There is a list of exempt income at https://www.ssa.gov/ssi/text-income-ussi.htm, along with some other information about the program. To oversimplify, most non-work income acts as a dollar for dollar offset from SSI benefits. So, if you have a small retirement benefit of $200 per month each and every month, your SSI would be reduced by $200. If you are able to work for limited hours, then your work income acts as a fifty percent reduction in SSI. So, if you earn $300 per month, your SSI would be reduced $150. (There is also a $65 monthly waiver from work income, not included in this explanation, just to make things more complicated).
In 2021 the base SSI amount is $794. Check here for the amounts for other years https://www.ssa.gov/OACT/COLA/SSI.html.
The distinction between these programs is sometimes difficult to identify because most folks apply for both benefit programs at the same time. The Social Security Administration is pretty good about inquiring if you want to apply for both of them. Many folks with whom I speak don’t remember applying for both programs.
The other thing that may be confusing is that medical eligibility for both programs is the same. If you are sick or disabled enough for one program, then you are sick or disabled enough for the other. The difference is in the financial eligibility. You must meet the financial eligibility for one or the other, regardless of how sick or disabled you are. In other words, if you do not have the quarters of coverage to be eligible for disability insurance, and you have too many non-exempt assets to be eligible for SSI, then you will not be eligible for either program despite the severity of your health problem.
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