What are the basics of Social Security and SSI Disability?

What Is Social Security Disability Insurance? What is SSI?

Social Security Disability Insurance (SSDI) is one of the three basic protections provided by Social Security. The other two are Old Age Insurance and Survivors Insurance (OASI).

When a worker’s earnings are stopped  because of a severe impairment, the worker and eligible family members can receive monthly cash benefits from SSDI. Benefits continue until the individual dies or is able to work again. The disability, and the inability to work must last or be expected to last for at least a year or result in death.

The Social Security definition of disability is very strict. Workers are only considered disabled if they cannot do any  full-time work in the economy because of their medical condition(s). The disability, and the inability to work must last or be expected to last for at least a year or result in death.  If you used to be a surgeon and now you can be a clerk, Social Security does not consider you disabled, although private Long term disability insurance programs would.   It is not a matter of whether you can do your previous job, but whether you can do any work at all.  The disability standard is the same for SSI.

Who Pays for SSDI? Workers and their employers pay a percent of the worker’s wages into OASDI.  Employers and employees split the tax. For both of them, the current Social Security and Medicare tax rates are 6.2% and 1.45%, respectively. So each party pays 7.65% of their income, for a total FICA contribution of 15.3%  14.6 million self-employed workers pay 12.4 percent (6.2 percent as employer and 6.2 percent as employee.) The IRS taxes 1099 contractors as self-employed. If you made more than $400, you need to pay self-employment tax. Self-employment taxes total roughly 15.3%, which includes Medicare and Social Security taxes. Your income tax bracket determines how much you should save for income tax.

In 2020, the maximum earnings subject to the Social Security payroll tax increased by $4,800 to $137,700—up from the $132,900 maximum for 2019.