Social Security Disability Insurance (SSDI) is a federal insurance program that provides benefits to qualified workers who can no longer work. To be eligible, you must be insured under the program and meet the Social Security Administration's (SSA’s) definition of disabled. (Learn more about filing for Social Security disability.)
Your benefit amount is based on your covered earnings (the wages that you paid Social Security taxes on) prior to becoming disabled. However, your benefit payment may be reduced if you get disability payments from other sources, such as workers' comp.
How Are My Benefits Calculated?
The SSA uses your Average Indexed Monthly Earnings (AIME) and Primary Insurance Amount (PIA) to calculate your benefits. The formula Social Security uses is quite complicated, and most people won't be interested in trying to calculate their benefits on their own, especially because Social Security can give you an estimate.
To give you an idea of what you might receive, for 2013, the average SSDI benefit amount is $1,132 per month, but you can receive anywhere up to $2,533.
If you're interested in how Social Security calculates your AIME and PIA, here's how.
Average Indexed Monthly Earnings
First, the SSA must determine your AIME. To do this, the SSA will adjust, or index, your lifetime earnings to account for the increase in general wages that happened during the years you worked. This is done to make sure that the payments you get in the future mirror this rise.
The SSA will use up to 35 of your working years in the calculation. The SSA then takes the years with the highest indexed earnings, adds them together, and divides them by the total number of months for those years. The average is then rounded down to reach your AIME.
You can see an example of how the SSA calculates an AIME on its website.
Primary Insurance Amount
Your Primary Insurance Amount (PIA) is the base amount of your benefits. The SSA uses the total of three fixed percentages of your AIME to determine your PIA. The dollar amounts that result from the calculation are called “bend points.” Bend points are changed each year to reflect the national average wage index.
The PIA for someone who became eligible for SSDI in 2013 is the sum (total) of the following:
- 90% of the first $791 of average indexed monthly earnings
- 32% of the average indexed monthly earnings over $791 through $4,768, and
- 15% of the average indexed monthly earnings over $4,768.
If the sum of the percentages isn’t a multiple of $0.10, it will be rounded to the next lower multiple of $0.10. You can see the table of bend points for past years on the SSA's website.
Amount of Disability Backpay
By the time they get their approval letter from Social Security, most disability applicants are eligible for back payments of benefits. The number of months of back payments you'll receive will depend on when you applied for SSDI and the date the SSA decided you became disabled (called your “established onset date,” or EOD.) The amount of your backpay depends on your monthly benefit amount.
In addition to getting payments going back to your application date, you can get up to 12 months of retroactive payments for the year prior to your application date (or your protective filing date, discussed below) -- if you were disabled that long ago. You cannot get benefits for before your EOD (again, your disability onset date).
Five-month waiting period
Once you are approved for benefits, there is a five-month waiting period, starting at your disability onset date, before you can be paid benefits. This means that, to receive the maximum amount of backpay (going back for the 12 months before your application date), you must have an EOD of at least 17 months prior to your application date (or your protective filing date).
Protective Filing Date
You can establish a "protective filing date" (PFD) by making a written statement to the SSA that you intend on filing for disability benefits. A PFD is also established when you begin an online application, even if you don’t complete it.
If you want to learn more, read our article about back payments.
Offsets for Other Disability Income
Some disability payments, such as workers' compensation settlements, can reduce your benefit amount. These are called “offsets.” Most other disability benefits, however, such as veterans benefits or payments made by private insurance, do not affect your benefit amounts.
Cost of Living Adjustment (COLA)
Every year everyone's Social Security benefits are recalculated to adjust to the increasing cost of living. COLA amounts are determined by increases in the Consumer Price Index (CPI).