Social Security Withholding and Earnings

When young people are just starting out with their first job, they’re not too concerned about retiring or future disability. They just want that first paycheck. The big payday comes and they stare in horror at the amount of taxes taken out of their measly earnings. And there’s this “FICA” tax—what’s that? They can’t see into the future to realize that they might need those retirement and Social Security Disability Benefits in the future.

FICA taxes include 12.4 percent for Social Security taxes, half paid by the employer, half paid by the employee—this is the OASDI portion—Old-Age, Survivor, and Disability Benefits, and go into the Social Security Trust Fund. The other 1.4 percent is for Medicare. These payroll deductions haven’t changed since 1983, but when you’re just starting out, it’s painful!

Fast forward 25 years. Things are good. You have a great job, terrific spouse, and the best kids in the country. Then, you’re involved in a car accident or a work accident or you’ve inherited your father’s bad back, and suddenly, you can’t go back to work. Or your doctor tells you that your broken leg isn’t healing properly after six months and it’ll take at least another six months before you’ll be able to return to the workforce. Or, even worse, you’ve been diagnosed with an aggressive form of cancer that’s terminal. That’s where Social Security Disability Insurance, also referred to as SSDI, can help you and your family.

Social Security Disability Insurance Basics

Here are some basic things to know about Social Security earnings, retirement, and the Social Security Disability Insurance programs. Nearly everyone who works pays into Social Security through FICA taxes. These payroll deductions are similar to “vesting” for retirement, in that you must have enough earnings to be “fully insured” to get retirement benefits. And, of course, you must have reached retirement age, which depends on when you were born. “Fully insured” for retirement means you have 40 quarters of coverage over your work life, beginning in the calendar year after you turn 21 and ending with the year before you reach age 62. Four quarters in each year equals 10 years of earnings. Of course, there’s a minimum in order to have a quarter count. Currently, the minimum is $1,320 per quarter, so, if you earn more than $5,280 in a year, you have four “covered quarters” of earnings. If you’re confused by these earnings requirements, you’re not alone. Social Security went to computers to calculate insured status correctly.

The Social Security Disability Insurance program is like other insurance plans. You pay premiums and you have insurance coverage. With SSDI, your “premiums” are paid by those payroll deductions made to Social Security. Of course, the earnings requirements are different to be “fully insured,” because, in many cases, younger claimants didn’t have time to work 10 years. So, if you’re over age 31, you’re insured if you have 20 covered quarters in the last 10 years. There are special rules for those under 31. When you stop working, you’re still covered for a certain period of time, but your insured status will expire, so it’s important to apply for Social Security Disability Insurance Benefits promptly. Also, SSDI benefits are only payable one year prior to the date an application is filed. So, filing an application timely is important!

There are two requirements to qualify for SSDI. The first is being “fully insured,” like we discussed above. The second is being “disabled,” that is, having a medical impairment that prevents you from working for at least 12 months or is likely to result in death. SSDI requires that you can’t perform your past work or any other work. And, unlike other disability programs available, it’s 100 percent or nothing. You have to be completely unable to perform any job that you qualify for in order to be found “disabled” by the Social Security Administration for this disability program.

An illustration I’ve used is this: say, you’re a newly-minted rocket scientist and you worked your way through school in your dad’s construction company, where you had killer carpentry skills. Now you’ve been working eight years as a rocket scientist, and you get hurt, maybe a head injury, and you can no longer think the big thoughts required in your job. Even though you can’t do rocket scientist work, Social Security may find you can perform your past work as a carpenter. Yes, it pays a small percentage of your usual income, and it’s not the skilled work you’re used to doing, and you’re still paying off student loans for your rocket scientist degree, but those are the regulations. The Regulations have to be strict to make sure all beneficiaries are indeed disabled.

Supplemental Security Income

The SSDI program makes payments to beneficiaries based on a percentage of income. For those individuals who don’t have the required earnings for SSDI or for disabled workers with low earnings, Supplemental Security Income (SSI) is a needs-based program that can add to your monthly income. Programs include SSI for the Disabled, for the Blind and for the Aged, and each state has different income levels to qualify for SSI benefits. Although there’s no earnings requirement for SSI, the requirements to be found “disabled” are the same as SSDI.

A Finding of Disabled

We’ll talk about the application process, but first, let’s delve a little deeper into how an individual is found to be disabled for Social Security Disability Insurance Benefits. After it’s determined a claimant is “fully insured,” making a finding of “disability” is also a two-fold process. First, you have to have a “severe” medical condition. In this case, “severe” is a medical impairment that limits your ability to perform basic work-related activities. Those activities can be sitting and standing, lifting and carrying, walking on flat surfaces or climbing stairs, concentrating on your work, understanding and following instructions, or anything else you might imagine doing in a work setting. Once it’s established that you have a “severe” medical impairment, the “Listings of Impairments” comes into play.

Social Security Regulations include a list of specific impairments and problems that accompany those impairments that are considered disabling. If you have one of these medical conditions, and they’re serious medical impairments, you should get a Notice that says you’re disabled. The Regulations aren’t the easiest to navigate, but the Listings are in Appendix 1 to Subpart P (Subpart P covers SSDI), Part 404.

So, what if your severe medical impairment doesn’t exactly match any of the impairments listed in Appendix 1? Well, then there’s always Appendix 2, which is where the vocational regulations are laid out. This is a little more confusing.

A little more about the vocational requirements to be found disabled and eligible for Disability Benefits. Like we talked about above, you have to be unable to perform any work for which you’re qualified. Social Security will consider your impairments and the limitations imposed by those impairments and make a decision as to whether, despite those limitations, there is other work you’re capable of performing. They’ll also consider your age, education, and past “relevant” work, that is, work you’ve done over the past 15 years. Then they’ll make their decision based on all the medical evidence, forms you’ve completed, and the SSDI Regulations.

How to Apply for SSDI

Filling out all the forms required to apply for SSDI can seem daunting, but just take one step at a time. You’ll find the required forms on Social Security’s website at www.ssa.gov/benefits/disability.

First, you’ll need to check your Social Security Benefits Earnings Record, making sure each of your jobs and all of your earnings are listed and correct. You can register for a My Social Security account at SSA.Gov/myaccount or go to your local Social Security Office. This is also a good time to get your Social Security information updated with any name changes. Just bring the proper paperwork to the SSA, including picture identification (which you’ll need to enter the Office) and any documentation of name changes, like marriage licenses, divorce decrees, or court orders, and W2’s for any employment information and earnings that’s incorrect. (It’s not a bad idea to do this, even if you’re not disabled. Identity theft in the form of someone else using your Social Security Number to work will be obvious.)

Second, and most important, completing the Application. Social Security Regulations state that, even though a person is “eligible” for social security disability benefits, they cannot receive those benefits until they file an application. Make sure all your information is correct: your SSN, address, alternate contact information, and whether someone else can discuss your claim with Social Security Staff.

Along with your application, you’ll need to complete an Adult Disability Report, and you’ll need to gather information about your past work, the dates of your employment, employers’ names, and types of duties you performed. You’ll need to explain what your medical impairments are and how they limit your ability to work. Be specific and straightforward. People who don’t know you and your situation will be reviewing your claim. They have a huge number of claims to get through each day, so you want explain clearly why you can’t go back to work.

You don’t have to collect all your doctors’ records, the Agency will do that, just make sure you have a good address and phone number for all your doctors, beginning about two years prior to the date you can no longer work. If you’re filing for a child or young person who’s alleging a mental health disability that was well-documented by school records, then try to get those. Summer breaks can make it difficult to get records and cause delays.

Even if you’re not required to complete a Function Report – Adult (SSA-3373-BK), it’s not a bad idea to download a copy to review. It explains exactly what areas are considered when applying for SSDI Benefits. A Work History Report (SSA-3369-BK) just goes into more detail than what is contained in the Adult Disability Report.

You’ll also need your banking information so payments can be deposited directly into your checking or savings account.

Now comes the hardest part: waiting for a decision. About 50 percent of all initial applications for SSDI are approved. That’s only a statistic; each case is different and is evaluated individually, but it’s a universal truth that it seems to take forever.

During this time, keep any scheduled doctor’s appointments, and attend all physical therapy or occupational therapy or counseling sessions. Take your medications as they’re prescribed and let your doctor know if you’re having side effects.

Don’t Take “No” For An Answer!

If your claim for disability is denied, file an appeal. In some areas, that’s a Request for Reconsideration, and the paperwork includes any updates to the previous information you filed with your application. You only have 60 days to file the Reconsideration, so don’t wait!

If your Reconsideration claim is denied, and only about 15 percent of Reconsideration Requests are approved, or if you’re not required to file a Request for Reconsideration, then it’s time to file a Request for Hearing Before an Administrative Law Judge. Again, you only have 60 days to file your Request for Hearing, and that time goes by quickly.

Representatives and How They Can Help

This is a good time to consider hiring a professional claimant’s representative. Social Security Regulations state that all claimants can be represented by an attorney or non-attorney to help with their claims. An experienced representative can help you navigate the confusing parts of the Social Security Disability Insurance program and its regulations. They understand the requirements to be eligible for SSDI and can answer your questions.

An experienced attorney, familiar with Social Security Regulations and the Hearing process, has represented claimants in Social Security Hearings and is well-versed in what each ALJ expects during a hearing. They’ll be able to order any additional updated medical records, submit briefs explaining your disability and how the combination of your disability and vocational factors meet the requirements for SSDI benefits, and attend the hearing.

Most professional representatives will have you sign a fee agreement which, along with an Appointment of Representative form, is a contract allowing the Social Security Administration to discuss your case with him or her. Even if the representative works with a law firm, your Agreement is with your representative only. As far as getting paid, if you sign a fee agreement, which is a formal program for paying representatives, you’re agreeing to the representative being paid 25 percent of your past-due benefits or $6,000, which ever amount is less. If your representative requests medical records to submit to your claim file and the doctor’s office or hospital requires payment, it’s likely going to be your responsibility to pay for those records.

Who attends the SSA Hearing?

The Administrative Law Judge, a vocational expert, and maybe a medical expert, especially if your disability involves a rare or technical medical impairment, and a hearing reporter. Your hearing may be via video, or one of the attendees might be by video.

The Social Security Administration appoints “Administrative Law Judges” (ALJs) to make decisions about claims before the Administration. These ALJs are limited by law to Social Security program matters, but they’re “real” judges, and their decisions are binding on claimants. At the hearing, sometimes the Judge asks questions first, then the representative, who’ll make sure to ask questions that show your disability and the limitations it causes. Some Judges prefer the representative ask questions, and then they’ll ask more questions.

Expert witnesses may be called on to testify at the hearing. The most common witness is a “vocational expert.” His or her resume will be in your claim file (also called an “exhibit” file), and you’ll see that, most of time, their regular job is finding work for people with injuries. Some vocational experts work with employers to find jobs through workers compensation claims, and you might have had some previous contact with the vocational expert. If this is the case, be sure to let your representative or the Hearing Office Staff know. The vocational expert is supposed to be impartial and testify about a hypothetical worker. He can’t do that if he already knows you and your information. So, speak up if you know that expert witness.

It’s unusual to have medical expert at Social Security Disability hearings these days, but if your disability is rare or requires a specialist, the Hearing Office staff will obtain one to appear at your hearing. Again, the expert’s resume will be one of the exhibits, and you should let the Hearing Office staff know if you’ve ever been seen by the expert.

The “court reporter” is a private, contracted individual, not a Social Security employee. They really can’t help with paperwork and they don’t make decisions, they don’t work with the judge apart from the hearing—they don’t even work in the Hearing Office. Their job is to take notes during the hearing and run the recording equipment. If you need help with paperwork or have a question about your claim, call the office and ask to speak to the Legal Assistant who works with the Judge.

Questions, Questions at the Hearing!

Your hearing will be scheduled and a Notice of Hearing will be sent in the mail at least 20 days prior to the date of the hearing, unless you’ve waived your 20 days’ notice. It’s important to (1) check with your representative to make sure they got a copy and; (2) return the Acknowledgment of Receipt indicating whether you’ll appear at the hearing. Double-check the location of the hearing to make sure it will be held where you expect.

There’s one thing that’s important to remember for your hearing. Don’t be nervous! You know the answers to all the questions that will be asked of you. Also, it’s your day in court. You’ve waited a long time to be face-to-face with someone in Social Security who wants to know your story. It’s not the time for having a stiff upper lip. Tell your story!

At the hearing, you’ll be asked questions about your medical impairments, how they limit your daily activities, and why you believe you can’t return to work. You’ll be asked to describe your past work and how your medical condition prevents you from performing those job duties. The ALJ will also be interested in how you get along with family members and friends. These questions sound familiar because it’s the same information that was requested in the forms you completed along with your application.

Then, the vocational expert (VE) will testify. The ALJ will ask questions about your prior work, was it skilled or unskilled, and the physical exertion required to do the job—sedentary, light, medium, or heavy. The Judge will pose questions about a “hypothetical” individual, not about you specifically. According to Social Security Administration Regulations, the VE can’t testify about you specifically. So, the Judge will provide information about this “hypothetical” worker, who bears a striking resemblance to you. The worker will be of the same age, have the same education and past work, and have work limitations due to medical or mental impairments. These limitations are called “residual functional capacity,” (RFC) and the ALJ has reviewed all the written evidence in your file and takes into account your testimony at the hearing before making an assessment about the RFC. The vocational expert will offer his opinion about the types of work that are available to an individual with the limitations defined by the ALJ. He or she may also testify regarding the numbers of those jobs available and of the total available jobs, what percentage those numbers represent. The VE may also be questioned by your representative, who will add some limitations about the hypothetical worker from your testimony.

Then the hearing’s over. Again, the hardest part is waiting for a decision. Depending on the workload of the Hearing Office, it can take a long time to get a decision. The ALJ might decide to send you out for another examination, or there might be additional medical records that need to be requested. These things take additional time, too. Your representative can give you an idea of how long it takes the ALJ to issue a decision.

Notice of Favorable Decision

Fast forward (again!) to the date you receive your decision. Your local SSA Office also receives a copy, along with your representative. If your decision is favorable, you’ll likely have more paperwork to complete before your SSDI Benefit payments can start. Your monthly income from SSDI will be considered in calculating the amount of any Supplemental Security Income payments. For SSDI, there is a five-month waiting period from your established onset date. That means if you were found disabled as of January 1st, your benefits will be paid from May 1st. There’s no waiting period for SSI benefits. It usually takes four to six weeks for payments to begin. You’ll receive notices letting you know the amount of your first payment, which will include a portion of your back pay, and when you can expect your monthly payments. If you signed a fee agreement, 25 percent of your past due benefits will be withheld to pay your representative. Again, these points can be a little confusing, and a representative can come in handy to explain disability benefits, when to expect payments and for what period.

Unfavorable Decision and Appeals Process

If your decision was unfavorable, read it carefully. The decision will explain why the ALJ decided your condition did not meet the requirements for SSDI. You can appeal the ALJ’s unfavorable decision by completing the proper form that’s available online or at your Social Security Office. The Appeals Council will review your Appeal form, along with the ALJ decision and your claim file. Be specific about why the ALJ’s decision is wrong. Don’t send the Appeals Council a rant about the ALJ and the Agency. Try to be objective. Again, this is where a professional representative is extremely helpful. They have the skills to read the decision, review your claims folder again, and explain clearly why your condition is disabling. The Appeals Council can take one of three actions. They can deny your Appeal, saying there was no error in the ALJ decision. They can find that the ALJ decision was wrong, and that your medical impairments and vocational considerations are disabling, and issue a favorable decision, overruling the ALJ decision. They can say the ALJ decision contained errors and “remand” the case, sending it back to the ALJ with a notice laying out those errors that the Judge has to correct. In that case, you’ll likely be scheduled for another hearing and have another decision issued.

If the second decision issued is still unfavorable, your representative can file a lawsuit in Federal Court against the Social Security Administration. The Court of Appeals will either agree with the unfavorable decision or send it back to Social Security for more action.

So, hopefully, you’ll have a better understanding of Social Security, how your Social Security Taxes get into the Social Security Trust fund, and how SSDI and Supplemental Security programs work. There are a lot of Regulations covering the SSDI program and this article is only a brief overview.