Ask Rusty – How Does Social Security Disability Work With Private Disability Insurance? – AMAC





Dear Rusty: If someone is collecting long-term disability through their company and the company says the employee must also apply for social security, how does that work? Does the amount of Social Security decrease from the amount the person would normally receive in retirement? Is the long-term disability for life or only until retirement age? What about that person’s spouse? Would it have an impact on them? Signed: Concerned

Dear concerned: It is common for private long-term disability (LTD) insurers to require you to apply for Social Security Disability Insurance (SSDI) benefits. As a general rule, the private LTD benefit will be offset (reduced) by the federal SSDI benefit.

The amount of the SSDI benefit, if awarded, will be the full Social Security benefit earned up to the time the recipient becomes disabled and unable to work. This means that someone on SSDI before full retirement age (FRA) receives their FRA amount sooner (FRA is between 66 and 67 depending on the year of birth). The SSDI benefit will be based on the disabled person’s income history, with no reduction for claiming before full retirement age. SSDI will automatically convert to regular SS retirement benefits at the same amount when FRA is reached. Thus, getting SSDI does not decrease the person’s FRA benefit amount; rather, they get their FRA amount sooner.

Social Security disability benefits last for as long as you remain disabled or until your full SS retirement age. To be eligible, the disability must last at least one year and the disability must render you unable to perform significant work. You must also have worked recently (usually at least 5 of the past 10 years) to maintain your eligibility, and you must have paid Social Security FICA payroll taxes (or self-employment taxes) on your work earnings. Only very limited work income is allowed when collecting Social Security disability insurance benefits, and Social Security may periodically require confirmation of continued SSDI eligibility.

Applying for SSDI is a relatively simple process that can be done online at www.ssa.gov/applyfordisability, or by calling SS directly at 1.800.772.1213. Depending on the nature of the disability, it usually takes 3-5 months to get a determination and, if SSDI is approved, there is a 5 month wait for benefits to begin. If the SSDI request is initially denied (approximately 65% ​​of all initial requests are), you can seek several levels of redress, starting with a simple request for reconsideration by Social Security, followed, if necessary, by a hearing before an independent administrative judge, a review by the SSDI Appeals Board, or even an appeal to the Federal Court. Hopefully, if the applicant is now on private long-term disability, the SSDI application will initially be approved.

As to whether the spouse of someone on SSDI is affected, much depends on the age of the spouse and how the spouse’s own SS pension benefit compares to the disabled partner’s SSDI benefit. Benefits for a spouse are available from age 62, but the spouse’s personal FRA benefit amount (from their own lifetime earnings record) must be less than 50% of the disabled partner’s SSDI amount for get a helping hand from the disabled spouse. Otherwise, the fact that one of the marriage partners receives SSDI will not affect the other partner’s Social Security personal retirement benefit.

This article is intended for informational purposes only and does not represent legal or financial advice. It presents the opinions and interpretations of AMAC Foundation staff, trained and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other government entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or write to us at [email protected].











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About Antoine L. Cassell

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