July 15, 2024
Understanding the 5-Year Rule for Social Security Disability Insurance
Social Security Disability Insurance (SSDI) serves as a financial lifeline for disabled workers and their families, with 7.4 million Americans benefiting from it in 2023, as per the Center on Budget and Policy Priorities. In contrast to Supplemental Security Income (SSI), which aids individuals with disabilities or the elderly with limited income regardless of their work history, SSDI is a benefit dependent on a worker's prior contributions to the Social Security system through taxes. That includes the individual worker the parent of someone who has a disability prior to 22. Our Special Needs Certified Financial Planners® can discuss your options.
For those contemplating applying or reapplying for SSDI, it's crucial to be aware of two key five-year stipulations: one relates to earning work credits, while the other pertains to the reapplication process for benefits.
Eligibility Requirements for SSDI
To be eligible for SSDI, applicants must have a disability that aligns with the Social Security Administration's stringent criteria. Their income must not exceed the Substantial Gainful Activity (SGA) threshold, set at $1,550 monthly for non-blind individuals in 2024 ($2,590 for those who are blind). Moreover, the qualification hinges on acquiring enough work credits, with recent work history taken into account. The number of necessary credits is determined by the applicant's age at the time of disability onset.
The Work Credit Five-Year Rule Explained
For individuals over the age of 31, the five-year rule regarding work credits is a method to gauge if they have garnered sufficient credits to qualify for SSDI. One can earn up to four credits annually based on their income, with each credit in 2024 requiring $1,730 in covered earnings.
Specifically, those 31 and older need to have worked and earned the maximum four credits yearly for at least five of the preceding ten years. This period must include accrual of at least 20 credits for SSDI eligibility.
Individuals under 31 face a different criterion based on their age. Those under 24 need six credits from the three years prior to their disability. Meanwhile, those aged 24 to 30 qualify if they've worked for half the duration from age 21 until the disability onset. For instance, someone who becomes disabled at 27 should have three years (or 12 credits) of work in the preceding six years.
Reinstating Benefits: The Second Five-Year Rule
A separate five-year rule applies to individuals who previously received SSDI and wish to reapply. Generally, there's a mandatory five-month waiting period before benefits can commence. However, this rule waives the waiting period for those who had been on SSDI or had a recognized disability within five years prior to their latest disability occurrence. This exemption aims to expedite benefit reinstatement, though it's inapplicable if substance abuse contributed to the disability.
Consulting with a lawyer or experienced Special Needs Certified Financial Planner® in disability benefits is advised for those navigating the SSDI application process. They can offer invaluable guidance on qualifying and applying for benefits.
Note: Details and figures are based on the scenario and regulations effective as of 2024.
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