Officially called Social Security Disability Insurance (SSDI), disability coverage is available to U.S. residents with severe health conditions who either haven’t worked or haven’t accrued enough work credits. Unlike Supplemental Security Income (SSI), which is designed for low-income individuals who meet the same requirements, people who apply for SSDI must use all benefits available to them before qualifying for it.
SSDI is funded through employee and employer payroll tax contributions—employees pay a tax of 1.45 percent of their wages up to $132,900, and their employers pay an equal amount. These funds are put into the Disability Insurance trust fund, which is managed by the Social Security Administration (SSA). Subsidized by the federal government, state agencies are responsible for making the preliminary decision on whether or not applicants meet the disability standard.
To qualify for SSDI, you have to be under the age of 65, be unable to perform the work you did previously and have a medically-proven disability that has lasted or is expected to last at least one year. A decision must also be made by the SSA that you aren’t able to adjust to other forms of work because of your medical condition.
There are two types of coverage under SSDI: short-term and long-term disability. Short-term disability coverage lasts from six weeks to up to six months and covers approximately 60 percent of lost income. Its counterpart, long-term disability coverage, usually kicks in when short-term is terminated. It lasts from two years up to retirement or whenever your disability concludes.
Disability Legislative History
The following is a timeline of the establishment of SSDI and legislative updates over the past 84 years:
- 1935 – The retirement insurance program was instituted under the Social Security Act of 1935 but didn’t include provisions for disability insurance. Under President Roosevelt, the SSA was created to administer the program.
- 1950 – The Social Security Act Amendments of 1950 extended coverage under the “Old-age, Survivors and Disability Insurance” program. This Act increased benefits, raised the wage base for tax and benefit computation purposes and established a new contribution schedule.
- 1954 – The Social Security Amendments of 1954 included the enactment of the disability freeze, which was created to protect the benefits of workers and their dependents. It stated that an employee’s disability coverage couldn’t be considered in determining the status of the employee in retirement insurance programs or in average earnings when calculating benefits.
- 1956 – President Dwight D. Eisenhower signed into law the 1956 Social Security Act Amendments, which established the SSDI program. This offered benefits for disabled workers 50-65 years of age, children who were disabled before the age of 18 and the child of a retired or deceased insured employee.
- 1965 – In the Social Security Amendments of 1965, the previous requirement that the impairment must be of "long-continued and indefinite duration" was removed and replaced with one stating that the impairment must "be expected to last for a continuous period of not less than 12 months." The size of the SSDI program expanded notably after this change was enacted.
- 1967 – A new set of amendments instituted benefit payments to widows who were at least 50 years of age or disabled.
- 1972 – The Social Security Amendments of 1972 reduced the waiting time for benefits from six to five months, extended the definition of adult disabled children to individuals disabled before the age of 22, included the creation of the SSI program for the Aged, Blind and Disabled and provided Medicare and Medicaid protection for recipients of Social Security disability.
- 1980 – New amendments capped the amount of family benefits available to the disabled insured workers and their dependents and capped payments received from multiple government programs. Part of the 1980 amendments also established the requirement that the status of those receiving disability must be reviewed at least once every three years.
- 1984 – The Social Security Disability Benefits Reform Act of 1984 effectuated the use of statutory standards to evaluate disability.
- 1994 – Through the Social Security Independence and Program Improvements Act of 1994, the SSA was named an independent agency. This act made into law the requirement that no disability benefits would be paid directly to drug addicts or alcoholics (DA&A) but instead given to a representative of that individual.
- 1996 – The Contract with America Advancement Act of 1996 required new medical determinations for disability beneficiaries affected by DD&A and authorized funding to allow the SSA to continue disability reviews.
- 1999 – Congress enacted the Ticket to Work and Work Incentives Improvement Act of 1999, which incentivized beneficiaries to return to work by enabling them to receive employment, vocational rehabilitation and other support services requisite for them to re-attain or maintain employment, thereby reducing their dependence on the benefits.
- 2006 – The SSDI program celebrated its 50th anniversary and paid benefits to over eight million disabled people and their dependents.
Disability Industry Growth
Even after multiple revisions and modifications, the SSDI program is still going strong. This is good news for the 20 percent of U.S. residents currently living with a disability and the one out of four who will suffer a disabling injury before they retire. The average Social Security disability benefit is $1,065.73 per month or $12,788.76 annually.
The disability insurance industry has grown since 2014 to a predicted revenue of $20 billion in 2019, even though the percentage of applicants for disability insurance has decreased since 2000. A lower level of unemployment means many employers are adding more incentives, such as disability insurance to recruit and retain employees.
MLS Disability Reviews
At MLS, our services let our clients obtain an independent and objective opinion of a claimant's current status of disability, functionality, prognosis, impairment, treatment, maximum medical improvement, pre-injury status and employability for insurance carriers, third-party administrators, employers and risk managers. Our IME and peer disability reviews focus on the employee’s ability to return to work based on medical evidence.
MLS’ independent medical examinations (IMEs) have been utilized by hundreds of individuals and organizations since our inception almost 25 years ago. Our team of experts are part of a qualified network of healthcare professionals throughout the U.S. We’re recognized for our experience and commitment to providing exceptional client service, credible medical assessments and cutting-edge technology.