Before applying for Social Security Disability, many claimants question how much they will receive monthly and how disability benefits are calculated. In this post, we’ll walk you through the calculations the Social Security Administration (SSA) uses for their Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) programs.
How Are Disability Benefits Calculated?
No matter the program, disability benefits consist of two types of payments: a lump sum disability back payment and ongoing monthly benefit payments. This blog post describes how the SSA calculates monthly disability payments. Click here if you’d like to learn more about how the SSA calculates disability backpay.
How Social Security Calculates SSI Disability Benefits
The process for calculating monthly benefit payments for the SSI program is straightforward. Each year, SSI establishes monthly maximum Federal payments. Those amounts increase every year with Social Security’s annual cost-of-living adjustments.
In 2022, the monthly maximum Federal amounts for the SSI program are $841 for an eligible individual, $1,261 for an eligible individual with an eligible spouse and $421 for an essential person. Click here to view the 2022 Social Security Disability benefits pay chart.
But there’s more to the equation than just finding your monthly maximum payment category. Since SSI is needs-based, once an eligible claimant determines their max payment, they also need to consider any additional countable income they receive that SSA may subtract against their monthly maximum payment.
The SSA defines countable income as “anything you receive during a calendar month and can use to meet your needs for food or shelter.” Countable income may be in cash or in-kind which means not in cash – akin to someone offering you food or a free place to stay. The SSA also maintains a list of income exclusions that are not subtracted from the SSI monthly payment.
You can see the simple calculation for monthly SSI benefits illustrated below.
How Does SSA Calculate SSDI Benefits?
Social Security’s SSDI program is a work-based insurance program. That means that if you qualify for SSDI, your monthly payment calculation will be unique to you since it contains your prior earnings history. SSDI claimants with larger prior earnings have paid more into the system and therefore receive higher monthly benefits. Those who qualify but have lower earnings receive less.
As of 2022, the average monthly SSDI disability payment is $1,358 (up from $1,282 in 2021). But the range of SSDI payments is broad with SSA’s maximum monthly SSDI payment equaling $4,194 per month or $50,328 per year.
To calculate your monthly SSDI benefit, Social Security indexes your highest 35 years of earnings adjusted for inflation. SSA calls this your Average Indexed Monthly Earnings (AIME). Eligible children qualify under their parents’ work history.
If you do not have 35 years of work history, Social Security calculates your AIME by subtracting 21 years from your current age. Then, they subtract one-fifth of that amount or a maximum of five years, whichever is less, to determine how many years of earnings to use for your AIME.
Next, the SSA uses the PIA formula to calculate your estimated monthly SSDI payments. The percentages of the PIA formula stay the same but the dollar amounts in the PIA formula increase annually to account for annual average wage increases.
Example of SSDI Monthly Benefit Calculation
In the example below, we’ll assume that our eligible individual became disabled at 52 years of age. Because they don’t have 35 years of prior earnings, we’ll assume SSA calculates their AIME first by subtracting 21 years from their current age of 52. That equals 31 years. Then, the SSA multiples 35 years by 1/5 or .20 which equals 7 years. That number is higher than the maximum of 5 years in SSA’s AIME guidelines above. So, we’ll subtract 5 years instead.
SSA will determine this individuals AIME over a 26 year (31-5) work history period. Since we don’t have real earnings in this example, we’ll assume the AIME calculates out to be $2,500 per month. Next, we need to plug this $2,500 AIME into the PIA formula as shown below:
2022 PIA Dollar Amounts: #1 = $1,024, #2 = $6,172
PIA Formula = (Dollar Amount #1 x .9) + ( (AIME – Dollar Amount #1) x .32 )
= ($1,024 * .9) + ( ($2,500-$1,024) x .32 )
= $921.60 + ($1,476 *.32)
= $921.60 + $472.32
= $1,393.92 <—– This is your estimated monthly SSDI payment.
Important Note: If you receive income from other sources, like a workers’ compensation program, a portion of those benefits may be subtracted against your SSDI payment. Happily, pension payments, private insurance payments, VA disability benefits, state government and SSI benefits DO NOT affect your SSDI payments in any way. Various rules apply so keep the SSA informed of any conflicts and consult a qualified disability lawyer if you have questions.
Disability Lawyers in Greensboro, NC
Collins Price, PLLC, a North Carolina Social Security Disability law firm, produced this blog post. We hope it was informative and helpful to you in navigating the Social Security disability process. Many claimants prefer to work with a disability lawyer to reduce the confusion and complexity of applying for disability or appealing denied benefits.
If you are unable to work due to severe physical or mental limitations, we encourage you to contact our disability lawyers in Greensboro, NC. There is no obligation to hire our firm and no fee for our services unless we win your claim.