The Social Security Administration’s disability insurance program is funded by FICA (Federal Insurance Contribution Act) taxes. Since most of us pay into the program through taxes withheld from our paychecks, we naturally assume that when and if we become disabled, the insurance benefits will be available to us. In essence, we purchased the insurance policy, so if needed, we can draw the benefits, right? Due to a little-understood provision of the disability insurance program’s qualifications rules, though, simply having paid into the system is not enough to qualify a worker to make a claim. In fact, the availability of benefits depends not only on having contributed a sufficient amount in taxes, but also having contributed recently enough to qualify.
In the context of disability benefits, though, you may lose the right to file altogether if too much time passes between your last year of employment and your filing date.
Although the requirements vary based on the worker’s age (with younger workers requiring fewer credits), most of us we must have earned a total of 40 work credits to qualify to file a claim for benefits. A “work credit” is earned by making a certain amount of money, which amount changes from year to year. In 2018, for example, you earn one work credit for each $1,320 of wages or self-employment income. You can only earn a total of four work credits in any one year. In 2018, then, simple multiplication tells us that once you have earned $5,280 in wages or self-employment income, you have earned all the work credits to which you are entitled for this year.
If you need 40 credits to qualify to draw benefits, then you must have earned four work credits per year, every year over a ten year period. Or, if you worked less than the full four-credit amount in any year, then you must have worked over an even longer period to accumulate the requisite 40 credits.
And now comes the tricky part: to be entitled to draw benefits, 20 of your total 40 work credits must have been earned in the ten years immediately preceding your filing for benefits. Again, doing a little simple math, a very simple rule of thumb is that you must have worked five out of the ten years preceding your filing. In the context of Social Security retirement benefits, the benefit amount is increased if a worker waits until full retirement age to file. In the context of disability benefits, though, you may lose the right to file altogether if too much time passes between your last year of employment and your filing date.
Remember that this article only addresses the issue of work credits and whether a person is entitled to even make a claim to draw benefits from the system – even if you meet all these qualification rules, you still have to prove that you are disabled. Are you confused yet? The bottom line is that ensuring that you have the requisite number of work credits, within the requisite period, can be every bit as important as the medical evidence of your disability. The timing of a disability claim is critical, and waiting to file can be fatal to your claim.
Don’t wait. Contact us today for a free consultation. You could be losing benefits by not applying NOW.