Social Security Disability Insurance

Social Security Disability Insurance is a payroll tax-funded federal insurance program of the United States government. It is managed by the Social Security Administration and designed to provide monthly benefits to people who have a medically determinable disability that restricts their ability to be employed. SSDI does not provide partial or temporary benefits but rather pays only full benefits and only pays benefits in cases in which the disability is "expected to last at least one year or result in death". Relative to disability programs in other countries in the Organisation for Economic Co-operation and Development, the SSDI program in the United States has strict requirements regarding eligibility.
SSDI is distinct from Supplemental Security Income. Unlike SSDI where payment is based on contribution credits earned through previous work and therefore treated as an insurance benefit without reference to other income or assets, SSI is a means-tested program in the United States for disabled children, disabled adults, and the elderly who have income and resources below administratively mandated thresholds. A person of any income level found disabled by the SSA can receive SSDI.
Informal names for SSDI include Disability Insurance Benefits and Title II disability benefits. These names come from the chapter title of the governing section of the Social Security Act. The original Social Security Act of 1935 did not include disability insurance. After two decades of policy discussion, disability benefits were introduced through the Social Security Amendments of 1956, which was signed into law by President Dwight D. Eisenhower on August 1, 1956. These amendments authorized monthly payments for permanently and totally disabled workers over 50 years old beginning in July 1957. Beginning in 1960, eligibility for disabled workers was extended to individuals of any age.

Beneficiaries

Number and Trends

At the end of 2020, there were 9.7 million Americans receiving benefits from the SSDI program. This included 8.2 million disabled workers, 1.4 million children of disabled workers, and 0.1 million spouses of disabled workers. Children and spouses are sometimes referred to as auxiliary beneficiaries because they receive benefits based on their relationship to a disabled worker, not because they are necessarily disabled.
The number of beneficiaries grew rapidly between 1990 and 2010 before leveling off and then declining in recent years. Two schools of thought developed to explain the rapid growth in the program during the 1990s and early 2000s. According to David Autor and Mark Duggan, policy changes and earnings patterns were responsible for the growth. With regard to policy, Autor and Duggan argue an SSDI reform act loosened the disability screening process, leading to more SSDI awards and shifting their composition towards claimants with low-mortality disorders such as mental illness and back pain. With regard to earnings patterns, Autor and Duggan argue SSDI benefits rose in value relative to what recipients would have earned from employment, prompting greater numbers of individuals to seek benefits. The second school of thought on program growth in the 1990s and early 2000s emphasized demographic factors such as population growth, aging of the baby boom generation into their disability-prone years, growth in women's labor force participation, and the increase in Social Security's full retirement age from 65 to 66.
The number of disabled workers peaked in 2014 at 9.0 million and has declined in each year since, reaching 8.2 million individuals in 2020.
Concerns about the Disability Insurance Trust Fund's solvency arose from rapid program growth in the 1990s and early 2000s. In response, Congress temporarily reallocated a portion of payroll taxes from the Old-Age and Survivors Insurance Trust Fund to the DI Trust Fund. A 2020 report projected depletion in 2065, followed by a 2021 analysis projecting depletion in 2057. However, the 2024 analysis projects the DI Trust Fund will be able to pay full benefits through the end of the 75-year projection period.
In addition to disabled workers, the Social Security program also pays benefits to disabled widows and disabled adult children. These beneficiaries are often analyzed along with disabled workers because the same definition of disability is used in the eligibility process. However, disabled widow benefits are paid out of the Old-Age and Survivors Insurance Trust Fund and disabled adult children may be paid out of the OASI or DI Trust Fund depending on whether the adult child qualifies because a parent is deceased or retired or whether a parent is disabled. In 2019, there were 1.14 million disabled adult children and 0.25 million disabled widows receiving benefits.

Characteristics

Social Security disability beneficiaries have high poverty rates relative to other Social Security beneficiaries. About 24 percent of disabled workers have family income below the official poverty level in the United States compared to only 7.1 percent of retired workers. About 31 percent of disabled widow beneficiaries and 36 percent of disabled adult children are poor. In total, 2.4 million disabled worker, widow, and adult child beneficiaries are poor. In addition, about 38 percent of Social Security disability beneficiaries experience material hardship, defined as having low or very low food security or an inability to pay utility bills or housing costs.
About 72 percent of Social Security disabled workers are between the ages of 50 and 66 and about 28 percent are under the age 50. Twenty-four percent of disabled workers are African American.
As expected from a program that is restricted to persons with severe disabilities, Social Security disability beneficiaries, relative to the general working age population in the United States, have very high rates of health problems and very high rates of hospitalization and medical visits.
The work capacity of Social Security disability beneficiaries has been the subject of several studies and policy debates. Some have argued, despite their impairments, many disabled beneficiaries could return to work whereas others have argued the work capacity of Social Security disability beneficiaries is very limited due to the wide distribution of severe health problems among the population.

Monthly benefit amounts

In 2024, the average monthly benefit amount paid to disabled workers was about $1,581. Approximately 17 percent of disabled workers received a monthly benefit that was under $1,000.
The monthly benefit amount a disabled worker receives depends on the person's earnings in Social Security covered employment prior to becoming disabled. For each disabled worker, a Primary Insurance Amount is computed that depends on the worker's past earnings, wage growth in the economy prior to the worker's disability onset, and a benefit formula that gives greater relative weight to low earners. The disabled worker receives a benefit equal to 100 percent of the PIA. An eligible spouse or child can receive 50 percent of the PIA as a benefit amount but total payments to a family are subject to a maximum.
Monthly benefits in the Social Security program have three general features. They replace a larger share of past earnings for low earners and they are increased with price inflation once a person is on the benefit rolls. Initial benefits are computed using wage indexing, which allows for initial benefits to reflect wage growth in the economy that occurred during the worker's career.
Monthly benefit amounts for disabled adult children depend on the earnings in Social Security covered employment of the retired, disabled, or deceased parent and amounts for disabled widows depend on the earnings of the deceased spouse.

Application, initial determination, and appeals

Application

An application must be filed with the Social Security Administration before an individual can receive SSDI. Individuals can apply for SSDI by:

Calling SSA's national toll-free number or
Contacting a local Social Security office or
Submitting an online application

SSA will determine whether the applicant is "insured" for Social Security disability benefits. Generally, this depends on whether the applicant has worked "long enough – and recently enough - and paid Social Security taxes" on earnings. With regard to disabled widow or disabled adult child Social Security benefits, however, the applicant does not have to be insured based on the individual's own employment history. Rather, in those cases, the deceased spouse or the parent of the disabled adult child must have worked in Social Security employment and achieved the required insured status.
SSA will also determine whether the individual is performing substantial gainful activity, which means earning above certain levels. If the individual is performing substantial gainful activity, then the application for disability is denied.
If the applicant is found to be insured for Social Security benefits and not performing substantial gainful activity, SSA will send the application to the Disability Determination Service agency in the applicant's state. The state DDS, which is under contract with SSA, will make a determination of whether the individual is disabled or not. The state DDS must follow federal rules regarding the definition of disability under the Social Security Act when making this determination.

Initial Determination

The determination of a disability claim is based on a five-step sequential evaluation process, which examines medical and other evidence. For adults, the sequence is:
Medical evidence that demonstrates the applicant's inability to work is required. If the DDS lacks sufficient medical evidence to decide a claim, it may schedule a consultative examination. A third‑party physician or psychologist, paid by DDS, will examine the applicant and produce medical documentation to supplement records the applicant's treating sources did not provide. The applicant may meet a SSA medical listing for their condition and be awarded benefits. If their condition does not meet the requirements of a listing, their residual functional capacity is considered, along with their age, past relevant work, and education, in determining their ability to perform either their past work, or other work generally available in the national economy. The RFC is an assessment of an individual's work capacity given their impairments.
Determination of RFC—made in step 4 of the sequential evaluation process—often constitutes the bulk of the SSDI application and appeal process. An RFC is assessed in accordance with Title 20 of the Code of Federal Regulations, part 404, section 1545 and is generally based upon the opinions of treating and examining physicians, if available.
RFC is classified according to the five exertional levels of work defined in the Dictionary of Occupational Titles, which are: Sedentary, Light, Medium, Heavy, and Very Heavy. For example, an individual's RFC may indicate, at most, the individual can perform medium work, given the individual's impairments. If the RFC of an individual equals or exceeds the job requirements of the individual's previous work, the claim is denied on the basis that the individual can return to former work. If the individual's RFC is less than the requirements of former work then the RFC is applied against a vocational grid that considers the individual's age, education and transferability of formerly learned and used skills. The vocational grid then guides whether an allowance or denial of benefits should occur.