How to Calculate Social Security Benefits

Posted on 22. Jun, 2013 by in Business

Calculating the social security benefits an individual may be eligible for, after becoming disabled, can be confusing. There are a few simple guidelines however, that will help to determine eligibility and estimate the level of benefits that may be received. Social security disability benefits can be paid as either Supplemental Security Income (SSI) under Title XVI, or Disability Insurance Benefit (DIB) under Title II. The amount of benefits an individual can receive will vary, depending on which program they are eligible for.

Eligibility for SSI requires that a person be mentally or physically disabled and have a low monthly income with little or no assets. The disability must be documented by medical records and severe enough that participation in a Substantial Gainful Activity (SGA) is impossible. Participating in an SGA is usually defined as earning, or having the ability to earn, more than $980 per month. When determining a person’s eligibility, and calculating their social security benefits, the total income for the household they live in is considered. So, a person making less than $980 per month may not qualify if their household income is too high. The maximum benefit for SSI is $674 per month. Individuals that have been awarded SSI benefits are eligible for back pay, to the date they initially filed for disability payments.

Eligibility for DIB benefits is also dependent on proving physical disability. But, unlike SSI, income is not considered. To qualify for DIB, a person must have a documented work history, earning at least 20 work credits out of the most recent 40 available. An individual can earn up to four work credits in a year, so they typically must have worked for at least five of the last ten years. The maximum benefit for an individual awarded DIB is about $2,000 per month. Back benefits may also be awarded, beginning five months after the beginning of a person’s disability. However, back benefits paid under DIB are limited to twelve months before the date disability payments were filed for.

When an individual applies for disability, calculating their social security benefits for SSI and DIB is done separately. If a person is found to be qualified for both, they will receive an award letter listing their benefits under each program. The amount of benefits to be paid will not be the total of the two awards, however, because the benefits offset each other. For example, a person awarded the maximum amount under SSI of $674, and the maximum amount under DIB of $2,000, will receive only $2,000. Also, other disability payments, such as workman’s compensation, will reduce SSI and DIB awards.

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