Bar News - March 19, 2014
Elder, Estate Planning & Probate Law: SSDI or SSI? What a Difference a “D” Makes
By: Ann N. Butenhof and Judith L. Bomster
Scene: Attorney’s Office.
Q: Does your son receive government benefits?
A: Yes. He gets Social Security.
Q: Does he receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI)?
A: I’m not sure – aren’t they the same?
This scenario occurs in lawyers’ offices every day – clients simply do not know or are mistaken as to which public benefits they are receiving from the Social Security Administration (SSA). Unfortunately, being confused about these two very different programs can jeopardize proper planning for an individual with disabilities.
Although SSI and SSDI are administered by the same federal agency and use the same definition for determining medical eligibility, they are otherwise very different programs. This article offers a brief summary of the different eligibility requirements and benefits for these two important governmental assistance programs.
Social Security Disability Insurance
SSDI is a cash assistance program administered by the SSA for people who have a sufficient work history and are either blind or disabled. An individual is considered disabled for purposes of SSDI eligibility if she or he is incapable of performing any “substantial gainful activity” due to a severe physical or mental impairment that has lasted, or is expected to last, at least 12 consecutive months or to result in death.
Federal regulations provide a list of certain impairments and illnesses considered to be of such severity as to entitle an individual to a presumption of disability for SSDI medical eligibility. Even without a “listed impairment,” an individual is considered disabled if he or she has a “medically determinable” impairment equal in severity to those listed, or suffers from several physical or mental conditions which, when combined, are considered equivalent to those listed impairments.
With respect to whether a qualifying impairment renders an individual disabled and unable to work, federal law provides that individuals who have demonstrated an ability to earn in excess of $1,070 per month in wages are considered to have engaged in “substantial gainful activity” and, by definition, are not disabled. Therefore, in most cases, someone who earns income in excess of $1,070 per month will not be entitled to SSDI, even if he or she has a “listed impairment” or disabling conditions that equal a qualifying impairment. This earned income limit is higher for people who are blind.
In addition to meeting the criteria for being considered disabled and showing an inability to engage in substantial work, people between the ages of 31 and 65 who are seeking SSDI benefits based on their own work history must have worked for five out of the last 10 years, or 20 out of the last 40 quarters, prior to the onset of disability. Fewer work quarters are required for workers younger than 31, but the same standard of disability applies.
If someone with disabilities has worked the requisite number of quarters, SSDI provides monthly cash benefits to the worker and his or her eligible dependents. The benefit amount is the same amount the worker would have received if he or she retired at full retirement age. Disability benefits terminate, however, when an individual returns to work or reaches a normal retirement age and becomes eligible for Social Security Retirement Income (SSRI).
SSDI is also available to certain individuals with disabilities who do not have a work history of their own but have specified relationships to workers who are disabled, retired, or deceased. For example, SSDI may be paid to a person who was disabled prior to age 22 and if the person’s parent is retired, disabled or deceased, or to a disabled widow or widower age 50 or older.
Since SSDI is only paid to those individuals who have worked and paid into the Social Security system over a certain period of time (or to their eligible disabled relatives), SSDI actually is an insurance program, not a welfare program. A person’s assets or unearned income have no relevance when determining eligibility for receipt of SSDI benefits. SSDI recipients who are eligible for benefits for at least 24 months also are entitled to medical insurance under the Medicare program.
Supplemental Security Income (SSI)
SSI is another cash assistance program administered by the SSA, which is available to financially eligible individuals who are blind or disabled, or elderly. Since SSI is based on financial eligibility and not work history, it is a welfare program, not an insurance program. The same definition for disability applies to SSI and SSDI, but individuals who are medically eligible for SSI generally have insufficient work history to meet the requirements for SSDI.
To be financially eligible for SSI, a person must be both “income eligible” and “resource eligible.” To be income eligible, an individual’s “countable income” must be less than the “standard of need,” which is $741per month in 2014.
Countable income includes earned and unearned income, as well as the value of “in-kind support and maintenance” provided to the individual, such as payments by a family member or a trust for food, utilities or rent, subject to certain limits. Gifts of cash received by the individual are counted as unearned income. The first $20 of income received each month is not counted toward income eligibility. In addition, with respect to earned income, the first $65 each month is not counted, and one-half of the earnings over $65 in any given month is not counted.
Countable income also includes “deemed” income, which means the income of certain household members such as a spouse or the parents of a minor child is counted as income to SSI applicant. Individuals with “countable resources,” including bank accounts, stocks or IRAs, of $2,000 or more are not eligible for SSI. Generally, transferring resources to other individuals or a trust will affect SSI eligibility. However, the transfer of resources to a special needs trust that conforms to the requirements of 42 USC § 1396p(d)(4) may be a useful tool in attaining SSI eligibility for a person with excess resources.
Unlike SSDI recipients, most individuals receiving SSI will not be entitled to Medicare coverage, because they have not sufficiently paid into the federal system through wages. In most but not all states, SSI recipients automatically are eligible for Medicaid benefits. In a minority of states, including New Hampshire, applicants must file an independent application for Medicaid.
Some individuals may receive both SSI and SSDI, which often is not readily apparent from the SSA paperwork. This might occur when an individual’s monthly SSDI payment is below the standard of need, currently $741. If the individual also meets the SSI resource and income standards, he or she could apply for SSI benefits to supplement the SSDI payment, thereby bringing the total monthly payment up to $741. In cases involving dual eligibility, individuals must meet both SSI and SSDI rules to remain eligible for both programs.
Another variation in benefits allocation may occur when an individual receives more than one SSDI payment – the first would be based on the individual’s own work history, and the second might be based upon the employment history of a deceased, disabled or retired parent. When receiving two SSDI payments, an individual need not meet resource or unearned income limitations. On the other hand, that same individual may need medical services not otherwise provided by Medicare or private insurance, and therefore might need Medicaid benefits which, like SSI, have strict income and resource limits for eligibility.
Ann N. Butenhof and Judith L. Bomster are partners at Butenhof & Bomster in Manchester.