What the Heck are Frozen Quarters?

If this sounds like something for coin collectors in Alaska, bear with us here…

Ever you wonder why a person who is already receiving a private disability payment should apply for Social Security disability benefits, here are some facts. These other disability payments might be coming from workers compensation, the VA, a private long term disability plan, or even a settlement from an injury lawsuit. There are several factors that make concurrent Social Security disability eligibility beneficial.

• We each pay in to the Social Security system, buying what are called “covered quarters”. If you earn $980 in a quarter in 2009, you buy coverage for that quarter. These covered quarters maintain your eligibility for Social Security disability, much as an insurance policy payment would.

• A worker needs coverage in 20 out of the last 40 quarters (5 out of the last 10 years) in order to be eligible for disability payments, with some exceptions for very young workers.

• If you have been found disabled by Social Security, the quarters for which you get benefits are called “frozen quarters,” and do not count against you as uninsured time periods, either at retirement or for future disability claims.

• Typically other private disability programs pay benefits, but no FICA taxes. No “quarters” are purchased because no FICA taxes are paid, and Social Security disability eligibility can lapse.

• Other disability programs may not provide medical insurance coverage. The Medicare benefits that come with Social Security disability benefits may cover some unreimbursed medical expenses, and last longer.

• If you stop working and paying FICA taxes, your eligibility for Social Security disability lapses after five years, like an insurance policy would terminate for lack of payment. This means that you cannot draw disability payments, no matter how many years you worked prior to that. (There are exceptions if your disability onset can be shown to be within the covered period.) Your Social Security taxes remain in your account until retirement.

This could also reduce the eventual amount of your retirement benefit, because there would be a long period with no covered quarters.

Social Security is calibrated to calculate appropriate offsets – to workers comp, state benefit programs and VA benefits. Private disability programs usually require an application for Social Security disability and then do their own offsets. A disabled person should always apply for every available benefit.