The Social Security Administration (SSA) considers depression to be a disability as defined under the American Disabilities Act (ADA)
. You may qualify for SSDI benefits and work accommodations if depression prevents you from either doing the type of work that you previously did or adjusting to other work.
Here’s what to know about what kinds of depression qualify for SSDI benefits and work accommodations and how to apply.
Work accommodations for depression
Under the ADA, you have the right to reasonable accommodations to help you do your job
. Some examples of possible accommodations include:
Altered break and work schedules.
Specific shift assignments.
Quiet office space or changes to create a quiet work environment, such as noise-canceling headphones, room dividers and soundproofing.
Changes in supervisory methods.
Permission to work from home.
It’s illegal for your employer to fire you due to a mental health condition, but make sure to ask for accommodations as soon as possible before your job performance suffers.
SSDI benefits for depression
The SSA pays disability benefits to people with qualifying conditions to replace the income they are unable to earn.
The amount of money that you will receive each month is based on your previous earnings and how much you’ve paid toward Social Security taxes.
Disabled workers receive an average monthly benefit of $1,483, according to a March 2023 report from the Center on Budget and Policy Priorities
.
The maximum SSDI payment that someone can earn in 2023 is $3,627 a month.
What type of depression qualifies for disability?
Depressive, bipolar and related disorders are on the SSA’s Listing of Impairments and are considered disabilities that can prevent substantial gainful employment. In other words, if your depression is severe enough that it prevents you from working and operating at your full capacity, then there is a reasonable chance that Social Security will consider it to be a disability. Here are the standards to qualify:
Medical documentation of five or more of the following symptoms:
Depressed mood.
Diminished interest in almost all activities.
Appetite disturbance with change in weight.
Sleep disturbance.
Observable agitation or retardation.
Decreased energy.
Feelings of guilt or worthlessness.
Difficulty concentrating or thinking.
Thoughts of death or suicide.
Also, extreme limitations in one of the following areas of mental functioning:
Understanding, remembering or applying information.
Interacting with others.
Concentrating, persisting or maintaining pace.
Adapting or managing yourself.
Or proof that your depression is “serious and persistent,” which the SSA considers as lasting for at least two years. You’ll also need evidence of the following:
Medical treatment that is ongoing and helps reduce the symptoms.
A limited ability to adapt to changes in your environment or additional demands.
You’ll also need to have earned enough “work credits” to be considered insured for SSDI benefits. This typically means that you worked for at least five out of the last 10 years, though younger workers can qualify with fewer credits.
How to apply for SSDI
You can apply for SSDI online, through your local Social Security office or by phone.
You’ll need to gather information on your medical and work histories.
After filing your application, you have the right to be informed of the SSA’s decision and the right to appeal that decision within 60 days. It normally takes around six months to receive an initial decision from the SSA.
How likely is it that the SSA will approve my SSDI application?
An average of 21% of applicants are awarded SSDI benefits with their initial application
. After appeals, an average of 31% of applicants are awarded benefits.
Frequently asked questions
How much does it cost to hire a Social Security disability attorney?
If your SSDI application is approved, then your disability attorney will be paid 25% or $7,200 of your retroactive benefits, whichever amount is less.
Is there a waiting period for disability benefits?
There is a five-month waiting period for Social Security disability benefits, meaning you’ll receive your first benefit in the sixth full month after the date that SSA finds your disability began. If you were previously disabled within the last five years, the waiting period is waived.
Can you work at all if you are receiving disability benefits?
You are allowed to return to work while receiving SSDI benefits. Social Security has special rules and several programs that allow recipients to work and still receive benefits, including the Ticket to Work program and a nine-month Trial Work Period.
Insurance offers a vital safety net, protecting you against financial loss if something bad happens. One unexpected event — like a car accident, an emergency room visit or a storm that damages your home — could easily wipe out your savings. Insurance helps you manage the risk of a financial disaster. Let’s look at some basic types of insurance and when you might need them.
Medical insurance
Medical insurance helps cover your expenses if you’re hit with a big health-related bill. It’s also frequently used to pay for routine preventive care. The basic types of medical insurance are:
Health insurance
Even if you’re young and healthy, you need health insurance. If you don’t have insurance and you’re not covered by a program like Medicare or Medicaid, you’ll likely have to pay 100% of your health care costs out of pocket. Hospitals typically charge uninsured patients anywhere from two to four times what they’d charge an insurance company or public program.
Often, uninsured people must pay upfront to receive care.
Many people receive health coverage through their jobs. If you don’t work for a company that offers health insurance or you’re self-employed, you can shop for a plan on the Health Insurance Marketplace using healthcare.gov.
Dental insurance
Dental insurance pays for most preventive and basic dental care, like cleanings, checkups and fillings. If you need a major procedure, like a root canal, many plans will only pay around 50%. Still, dental insurance is often worth the cost if you take advantage of preventive care.
Vision insurance
Vision insurance pays for a portion of basic eye care, including eye exams, eyeglasses and contact lenses. If you don’t wear eyeglasses or contact lenses and only require an occasional eye exam, vision insurance may not be worth the cost.
Property and casualty insurance
Property insurance protects the things you own, like your house or car. Casualty insurance protects your assets in case you’re found legally liable for an injury or property damage. These two types of insurance are frequently lumped together in a single policy.
Homeowners insurance
Homeowners insurance helps you pay for repairs and replacement costs if your home is damaged by certain disasters, like a fire, or you’re the victim of vandalism or theft.
Most policies help pay for temporary housing if you’re unable to live in your home due to a covered loss. Your homeowners insurance can also help pay to defend you or cover medical bills if someone is injured on your property.
Though homeowners insurance isn’t required by law, your lender will probably require it if you have a mortgage. Even when it isn’t required, you don’t want to skip homeowners insurance due to the exorbitant costs of a major repair or rebuilding your home altogether.
Renters insurance
Your landlord probably has insurance on the property you rent, but most landlords’ policies only cover damage to the building and not your personal belongings. Renters insurance helps pay for the cost of replacing your belongings, like your furniture, clothing and electronics. It also offers liability protection and assistance with temporary housing costs if your unit becomes uninhabitable.
Some landlords require renters to have insurance. Even when it isn’t required, renters insurance is a wise choice, and it may cost less than you expect. The typical monthly premium for renters insurance ranges from $8 to $21, depending on your state.
Auto insurance
An auto insurance policy can financially protect you in the event of an accident, or if your car is stolen. Almost every state requires a minimum amount in order to drive legally. These minimum requirements include liability insurance, which pays for injuries or property damage you cause if you are at fault in an accident.
Most insurance companies offer optional types of car insurance coverage that can provide additional financial protection. For example, many insurers offer rental reimbursement, which pays for a rental car if yours is in the shop for a covered claim.
Pet insurance
Any pet parent who believes they wouldn’t be able to afford a major vet bill out of pocket should shop for pet insurance. Veterinary bills can add up quickly when your furry friend is sick or injured. For example, the cost of canine intestinal blockage surgery could be anywhere from $800 to $7,000, according to the Canine Journal.
Flood insurance
Most water damage caused by flooding isn’t covered by a standard homeowners insurance policy. That’s a serious concern for homeowners given recent severe weather events like Hurricane Ian in Florida, record-breaking rain in Montpelier, Vermont, and historic flash floods in Kentucky. You’ll need separate flood insurance to cover these types of damages.
Your lender will require flood insurance if you live in a FEMA-designated “special flood hazard area.”
But even when it’s not mandatory, homeowners should assess their flood risk to determine if a separate policy makes sense.
Umbrella insurance
An umbrella insurance policy kicks in if you’re responsible for damages or injuries that exceed the limits of your other policies, like homeowners and auto insurance. It often pays for your legal costs as well. Umbrella insurance isn’t legally required, but if you own property or have significant assets, consider an umbrella policy for additional protection.
Other types of property and casualty insurance
You may need other types of property and casualty insurance based on your situation. For example, earthquake insurance is probably necessary if you live near a fault line, as standard homeowners and renters policies don’t cover earthquake-related damage. If you own a boat, snowmobile, golf cart or all-terrain vehicle, you’ll need power sports insurance. Landlord insurance is a must if you own a property that generates rental income.
Life insurance
Would your death place a financial burden on others? If the answer is yes, then you need life insurance. If you’re not sure, ask yourself the following:
Does your partner or spouse rely on your income?
Do you have children or other dependents who rely on your income?
Could someone else inherit your debt, like a co-signer or joint account owner, or your spouse if you live in a community property state?
Would your funeral place a financial burden on loved ones?
Do you own a business that employs people that would likely fail in your absence?
If you answered yes to any of these questions, life insurance is a must. In most situations, term life insurance will be sufficient to meet your needs.
Disability insurance
A 20-year-old worker has about a 1 in 4 chance of becoming disabled before reaching retirement age.
Qualifying for Social Security Disability Insurance (SSDI) can be difficult, given that only 21% of initial claims were approved on average between 2010 and 2019.
Disability insurance replaces part of your income if you become unable able to work due to an illness or injury. Many employers offer disability insurance, but if you’re self-employed or your employer doesn’t offer coverage, consider buying individual short-term and long-term policies.
If you’ve already qualified for Social Security Disability Insurance (SSDI), you can earn up to $1,050 a month without triggering the income programs that could affect your benefits. If you’re still applying for benefits, you generally won’t qualify for disability if you make more than $1,470 a month ($2,460 if you’re blind)
.
The Social Security Administration (SSA) has several work incentive programs to help disability recipients continue working. These include a trial work period (TWP), where there’s no earnings limit for nine months, an extended period of eligibility (EPE), which allows you to earn under the SSA’s limit for 36 additional months, and a Ticket to Work program, which offers free employment services.
Here are the rules for SSDI and how to work part time without losing your disability benefits.
Rules for receiving disability benefits
You can still work part time and receive SSDI benefits if you don’t meet the SSA’s requirements for “gainful” employment, according to Aleyda Toruno, a Work Incentives Planning and Assistance (WIPA) coordinator with Disability Rights California.
The SSA uses earnings guidelines called substantial gainful activity (SGA) to determine whether someone’s disability qualifies them as needing additional benefits.
The SGA for 2023 is $1,470 per month ($2,460 if you’re blind), meaning that if you earn more than that, you likely won’t qualify for benefits.
“The rules for part-time work or return to work differ for a person who is still attempting to prove disability versus a person who has already been deemed disabled under Social Security’s programs,” says Jennifer Cronenberg, senior counsel and director of legal information at the National Organization of Social Security Claimants’ Representatives (NOSSCR).
“Anyone who is already receiving SSDI benefits who returns to any type of work should report their earnings to SSA immediately,” Cronenberg says. This is to avoid overpayment; they should also report a decrease or cease in work to avoid underpayment.
Work incentive programs
The SSA has three programs called work incentives to support disability recipients in returning to work. These can be “pathways for disability benefits recipients to test their ability to return to work without immediately losing their benefits,” Cronenberg says.
Trial work period
A trial work period allows a disabled person to test their ability to earn an income on their own for a set amount of time
.
You’ll trigger a TWP automatically if you start earning over $1,050 per month while already receiving SSDI.
A TWP allows you nine months, not necessarily consecutive, in a rolling 60-month period in which you can earn any amount of money and still receive your full SSDI benefits.
You must still meet the definition of a disability and report your earnings to the SSA to qualify for a TWP.
“Earning well above SGA during a TWP could trigger a continuing disability review (CDR) with SSA, whereby they may determine that you’re no longer disabled and terminate your benefits,” Cronenberg says.
Extended period of eligibility
When the nine months of a TWP end, an extended period of eligibility gives you 36 more months to continue working and collecting SSDI.
Your income must stay below the SGA limit for the year ($1,470 for 2023, $2,460 if you’re blind) during an EPE.
Your benefits will be suspended if you earn above SGA during the 36-month period, but they can be reinstated if your earnings dip below SGA again.
If you earn above SGA but have other work incentives that apply, you can continue receiving benefits, Toruno says. For example, any work expenses that a person incurs because of their disability — such as transportation to and from work or specialized work equipment — are deducted from their earnings
.
Ticket to Work program
The SSA’s Ticket to Work program connects SSDI recipients with free employment services such as career counseling and job placement to help them return to work
.
Ticket to Work provides services instead of placing earnings limits. It’s “something that a person who is receiving SSDI can participate in if they would like help returning to the workforce, with the goal of reducing their need for SSDI,” Cronenberg says.
The SSA won’t conduct a CDR (and potentially suspend your benefits) while you’re participating in Ticket to Work.
Anyone receiving SSDI and interested in working qualifies as long as they are still disabled.
Frequently asked questions
What is a work incentive?
The SSA offers work incentive programs to help SSDI recipients return to work. A trial work period and extended period of eligibility allow you to continue to earn income, and the Ticket to Work program offers education, training and rehabilitation programs for individuals who need help looking for or staying in work.
Does SSI offer the same work incentives as SSDI?
SSI offers its own set of work incentives and programs that come with different rules and stipulations than SSDI. You can learn more on the Social Security website.
What happens if I lose my job while I’m on a trial work period?
If you start earning money that triggers a trial work period and then lose your job, you’ll keep your benefits. If you lose your job within your 36-month extended period of eligibility, you’ll need to contact the SSA to have your benefits reinstated.
Will I lose my Medicare coverage if I lose SSDI benefits?
No, you’ll still receive free Medicare Part A coverage for at least 93 months after your trial work period if you stop receiving SSDI payments because of your earnings. This is one of SSA’s work incentives. You’ll still need to pay a premium to receive Medicare Part B.
Social Security Disability Insurance (SSDI) isn’t the only benefit you can claim if you have a disability. You can qualify for other benefits while receiving SSDI, including Supplemental Security Income, Medicare, Medicaid, private and employer disability insurance, disability benefits from the Department of Veterans Affairs (VA), food and heating assistance and more.
Other federal programs
Supplemental Security Income
Supplemental Security Income (SSI) is a Social Security Administration (SSA) benefit program that provides a financial benefit to adults and children with disabilities and nondisabled adults older than 65 with limited income and resources
. Many people who receive SSDI are also eligible to receive SSI payments.
Medicare
Receiving SSDI makes you eligible for Medicare. There are a few exceptions, but typically, a 24-month waiting period for Medicare starts when you first receive SSDI
.
Medicaid
Medicaid is a health care program that provides medical coverage to low-income adults, children, older adults, pregnant people, and people with disabilities. The program is funded jointly by state and federal governments and administered by individual states.
If you receive SSI, you may automatically be eligible for Medicaid. In many states, the SSI application is also a Medicaid application, but in some states, you may have to apply separately for Medicaid and SSI.
Food and energy benefits
If your income is limited, you may be eligible for benefits that help pay for necessities like food and heat. These include:
Supplemental Nutrition Assistance Program.SNAP benefits supplement the cost of groceries for low-income families. These benefits are disbursed on an electronic benefits transfer (EBT) card that works like a debit card in authorized food stores. Those receiving SSDI or SSI may also be eligible to receive SNAP.
Low Income Home Energy Assistance Program. This federally funded program subsidizes heating, cooling and other energy costs. If you receive certain benefits, including SNAP and SSI, you may be automatically eligible for LIHEAP.
Veteran benefits
If you’re a disabled veteran, you may qualify for a Veterans Affairs disability benefit. The amount you receive depends on how severe your disability is and whether you have dependents. VA disability and SSDI are not affected by one another, and you may be able to receive both benefits.
Nongovernment benefits
Private insurance benefits
If you bought disability insurance from a private insurer before becoming disabled, you may be eligible for monthly payments of a certain percentage of your wages. Private insurance payments don’t affect your SSDI; you can receive both benefits.
Employer-provided benefits
Workers’ compensation. Most businesses are required to provide some wage replacement, medical treatment and disability compensation if you become disabled because of something that happened while working. Receiving workers’ compensation will only reduce your Social Security disability payments if the combined amount of these benefits is more than 80% of your average earnings before you became disabled
.
Disability insurance. Many employers in the private sector offer workers short- or long-term disability insurance. These plans can pay a percentage of your salary if your disability prevents you from working. Short-term plans typically pay for three months to a year, while long-term policies can pay from 90 days to years or even for life.
Government employees. Government and civil service positions may also offer disability insurance. The Civil Service Retirement System (CSRS) covers most civilian federal employees, providing disability, retirement and survivor benefits. State governments also may provide disability benefits for their employees.
Tax benefits
People with disabilities may be eligible for certain tax breaks and benefits:
Reduced or waived income tax on your SSDI income. If you don’t have other substantial income besides your SSDI and your total provisional income totals less than $25,000 annually (or less than $32,000 for joint filers), you won’t owe any income tax on your SSDI. If you exceed these limits, you’ll still only owe income tax on up to 85% of your SSDI, depending on your income. SSI benefits are not taxable.
Earned income tax credit. The EITC is a tax break for low-income families and individuals (including those with disabilities). This credit can reduce what you owe in income taxes or increase your refund amount. SSI, SSDI and military disability pensions don’t count toward your income when you claim an EITC
.
Extra tax exemptions or deductions. The IRS offers an increased standard deduction for those who are legally blind and other tax breaks for those with physical or mental disabilities.
How to increase your SSDI benefit
There are a few ways to increase your SSDI benefit:
Your spouse, minor child or adult child, who became disabled before age 22 may be eligible to receive benefits on your record, which increases your total family income. You may also qualify for survivor’s benefits on a family member’s record if your eligible spouse, dependent parent or child has died.
Request to have your benefit recalculated if you feel the amount of your SSDI is incorrect and the SSA didn’t include all your income in its calculations.
Frequently asked questions
How long will it take to begin receiving my SSDI benefit after applying?
If your application is approved, you must wait five months before you can begin receiving payments, so you should receive your first payment in the sixth full month after the SSA learns of your disability. If you previously received SSDI benefits, the five-year rule can waive this waiting period.
Can I get SSDI and a Social Security retirement benefit at the same time?
In most cases, if you’re receiving SSDI, you can’t also receive Social Security retirement benefits. When you reach full retirement age, your SSDI will automatically convert to a retirement benefit.
How can I find out what disability benefits are available where I live?
One of the most comprehensive listings of benefits nationwide, including those for people with disabilities, is benefits.gov. This online tool allows you to tailor your search by the desired benefit type and state. The National Council on Aging also offers information on a variety of benefits. You may also want to contact your state or local government to learn about benefits programs specific to your area.
If I receive private disability insurance payments, will this reduce my SSDI?
No. Any disability payments you receive from private sources (such as private insurance or pensions) don’t affect your SSDI.
Anxiety can be considered a disability. If you have severe anxiety symptoms that prevent you from working and you meet certain criteria, it’s possible to qualify for Social Security Disability Insurance (SSDI) benefits.
Applying for disability benefits takes time, though, and most claims are denied. To increase your chances of getting approved, you’ll need to show robust medical documentation. Consider getting an experienced disability lawyer to help you put together a strong case.
Managing your wealth is hard. Zoe Financial makes it easy.
Find and hire fiduciaries, financial advisors, and financial planners that will work with you to achieve your wealth goals.
Paid non-client promotion
Work accommodations for anxiety
The Americans with Disabilities Act (ADA) requires that reasonable accommodations be made in the workplace (assuming the employer is able to do so) for employees with disabilities, including mental health conditions and anxieties
. Common accommodations for workers with anxiety might include:
Quieter workplace environments.
The ability to work from home.
Flexible scheduling to allow for medical appointments.
If your employer refuses to provide reasonable accommodations for anxiety, this could be considered discrimination. If you believe you’re being discriminated against on the basis of disability, you can file a complaint with the U.S. Equal Employment Opportunity Commission within 180 days of when the discrimination occurred. You might be entitled to a remedy such as a reassignment, promotion or back pay.
What type of anxiety qualifies for disability benefits?
Your anxiety needs to be found to be a medically determinable impairment of your daily life in order to qualify as a disability for SSDI, says Amanda J. Bonnesen, an attorney with Berger and Green Attorneys at Law, an injury and disability law firm based in Pittsburgh.
The Social Security Administration’s definitions
The Social Security Administration (SSA) will first consider whether your supporting medical documentation aligns with the adult medical listing for anxiety in the SSA Blue Book
, the guide that lists medical specifications to qualify for disability.
For anxiety disorders: Patients must display several overlapping symptoms, starting with three or more of the following:
Irritability.
Difficulty concentrating.
Restlessness.
Easily fatigued.
Muscle tension.
Sleep disturbance.
For anxiety that’s medically diagnosed as agoraphobia or a panic disorder: The condition must cause a person to have a disproportionate fear or anxiety about two separate situations (like interacting with other people and using public transportation) and/or cause persistent panic attacks.
Along with those indicators, you’ll also have to show either
:
Certain functional limitations.
Or a history of having a serious or persistent anxiety disorder for at least two years and receiving treatment for it.
Your work history
If your medical records don’t exactly match the criteria in the Blue Book, the SSA will move on to analyze your work history. That usually includes consulting with vocational experts, physicians and/or therapists to formulate what they see to be a person’s functional limitations, and whether or not the condition is impacting the ability of a person to do their job.
A disability attorney will typically try to get a claim approved “by showing that even though a client is in treatment, the best functionality this person is going to have still prevents this person from attending work regularly,” Bonnesen says. “Or, if they do attend, they’re not able to stay on task, maybe requiring moments to leave work to gather themselves, or to leave altogether because of their symptoms.”
How likely is it that the SSA will approve my SSDI application?
The likelihood of your SSDI application being approved depends greatly on the details of your specific case.
For claims filed from 2010 through 2019, 31% of disabled-worker applications were granted benefits
. As of December 2021, about 4% of SSDI recipients received benefits due to “other mental disorders,” a category that includes anxiety.
“The problem is, at every stage of the game there’s a human being on the other end making that decision,” Bonnesen says. “So unfortunately, as much as they try to make it objective with rulings, laws and federal codes, there’s still a human being interpreting it. There’s no way to take the subjectivity completely out of it.”
Julie Burkett, an attorney who serves on the board of directors for the National Organization of Social Security Claimants’ Representatives (NOSSCR), says she recently had two decisions handed down regarding anxiety disorders in the same week, one that was approved and one that was denied.
The likelihood of getting a claim for anxiety approved? “It’s possible, but not a given,” she says.
SSDI benefits for anxiety
How much income a person can bring in through SSDI is dependent on several factors.
“What Social Security will do is analyze your earnings history pooled through the IRS,” Bonnesen says. Social Security then uses its own formula to calculate a monthly benefit.
Of those awarded benefits, payments typically amount to more than part-time wages but not as high as a full-time salary, Bonnesen says. In June 2023, Social Security paid approximately $1,483 per month to disabled workers
. This, it’s worth noting, is barely above the federal poverty level.
How to improve your chances of qualifying for SSDI
Applying for SSDI can be a challenging task. There are a few things you can do to help improve your chances of qualifying.
Try every recommended treatment
The SSA is looking for medical conditions where the person is doing everything medically recommended to get better and the treatments are just not helping them stabilize, says Bonnesen. Someone who drops out of treatment or only sees a primary care physician — as opposed to therapists and specialists — won’t be considered, she notes.
Communicate clearly and frequently with your medical team
Be sure to communicate all of your symptoms with your doctors and therapists.
“Don’t assume or take for granted that the first time you tell them something, that will carry through,” Bonnesen says. “Be vocal the whole time, or your records won’t reflect what you’re suffering with.”
Follow your doctor’s orders
If your doctor recommends a course of action or treatment for your condition, you’ll want it documented that you’re doing what they recommended, says Burkett.
Avoid alcohol and recreational drugs
If you drink or use recreational drugs and have anxiety, the SSA will need to determine whether you’d still suffer from anxiety without the interference of those substances. This makes the process more difficult.
Get to know the parameters for continuing to work
Anyone looking to apply for SSDI should understand the rules regarding working and receiving benefits.
“A person cannot be working full time. That’s the whole standard,” Bonnesen says. “Social Security compensates individuals who are unable to work full time, on a consistent and ongoing basis, due to a condition lasting or expected to last 12 months or longer.”
Since the application process can take a while, people can work part time, within certain limits, while waiting on their decision. That’s typically under 40 hours a week, with gross monthly earnings that are less than a certain amount. For 2023, someone earning over $1,470 per month (or $2,460 if they’re blind) won’t be considered for SSDI
.
Once your application has been accepted, there is a trial period of nine months allowed for someone to receive full benefits and test their ability to work, regardless of how much they make.
Get a lawyer
If it seems like qualifying for SSDI requires jumping through a lot of hoops, that’s because it does.
“Representation can help so much, because it allows an individual to focus on what they need to do with their health team, rather than worrying about paperwork with the administration or deadlines or gathering records,” Bonnesen says.
Look for a disability lawyer with experience working on claims like yours, with a high rate of successful outcomes. Disability lawyers work on contingency, meaning they won’t be paid unless your claim is approved. The SSA also sharply limits how much disability lawyers can charge in fees.
Frequently asked questions
If I’m denied SSDI once, can I reapply?
There are four ways to appeal an SSDI denial:
A reconsideration of your original claim by a person who was not involved with the original claim.
A hearing by an administrative law judge.
A review by the appeals council.
A federal court review, which can only take place if you disagree with the appeals council or your request was denied by them.
If you do plan to appeal a denial, you have 60 days from when you receive notification of your denial to do so.
What records do I need to share with the SSA to qualify for SSDI?
The more information you can gather to file your SSDI request, the better your chances are of succeeding.
The SSA recommends getting together a “substantial” history of treatment from your physician and qualified mental health professionals. That includes therapy notes, hospitalization records, psychological tests, reports from your doctors and, if relevant, work history reports.
What if my anxiety keeps me from being able to handle everything I need to do to apply?
Look for an experienced disability lawyer who has worked on anxiety claims in the past. They can help with meeting deadlines and completing the application process.
Medicare is the United States’ federally administered health care program.
The program was established in 1965 for the purpose of paying certain health care expenses for people age 65 and over, as well as for other select individuals, such as those who have end stage renal disease.
When originally established, there were only two parts. These were Part A for hospitalization coverage, and Part B for doctors’ services. Over time, the Medicare program has been expanded to offer additional coverage and choices for its enrollees.
We understand that any type of insurance coverage, from the best car insurance companies, best life insurance coverage, or best burial insurance for seniors, can be quite confusing. Remember, we are here to help!
How Coverage Works
The Medicare program today is divided into four parts, and each of these covers a different area. These parts include:
Part A – Hospital Coverage. Part A coverage will help an enrollee pay for inpatient care in a hospital or in a skilled nursing home facility. It also covers some types of home health care, as well as some hospice care. In most cases, there is no cost for participating in Part A.
Part B – Medical Coverage / Doctors’ Care. Part B helps to pay for doctors’ services, as well as for a variety of other medical services and supplies not covered in Part A. Those who are enrolled in Part B will be required to pay a monthly premium. In 2015, most people pay a premium of $104.90 per month. This can vary, however, based upon the individual’s income and on whether they file their tax return jointly with a spouse or as a single individual. This article goes in depth about the income limits and fees that high earners -“Medicare IRMAA brackets“- may have to pay regarding Part B and Part D coverage.
Part C – Medicare Advantage / Managed Care. Part C is also referred to as Medicare Advantage. It provides a managed care approach to delivering Medicare-covered services, such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Those who are eligible for Parts A and B may alternatively choose to receive all of their services through a Medicare Advantage provider organization under Part C. The premium one pays for Part C will depend upon the plan that is chosen, as well as on the enrollee’s geographic location. You can learn more about this coverage HERE.
Part D – Prescription Drug Coverage. Part D helps to pay for prescription drugs doctors prescribe for the treatment of a patient. The premium charged for a Part D policy will depend upon the prescriptions you are taking, and thus, the actual plan that is chosen.
Recipients of Medicare, also referred to as beneficiaries, are able to choose coverage via the Original plan – which is actually Parts A and B – or they may choose Part C – which is Medicare Advantage.
Who Qualifies?
In order to be eligible, an individual must have lived in the United States for at least 5 continuous years, and also be a permanent resident of the U.S.
In addition, qualified recipients of benefits must be at least 65 years of age or over, or have a specific type of qualifying disability.
For a person to be considered permanently disabled, they must be entitled to receive benefits from Social Security, and they must have been receiving those benefits for a minimum of two years.
An individual who is diagnosed with end stage renal disease and who also requires kidney dialysis or a kidney transplant may also be considered eligible for benefits from the program.
With the high costs of health care it makes sense for those eligible for Medicare to take advantage of this government administered health care program.
Adults Over 65
Most adults in the United States are eligible for Medicare when they turn 65. Individuals must be U.S. citizens or permanent residents and enroll in the Medicare program to qualify.
Individuals who are already receiving Social Security benefits will be automatically enrolled in the Medicare program. Approximately three months before their 65th birthday, an enrollment package will be sent and must be completed to activate coverage.
Medicare Part A, which covers hospitalizations, requires no payment. However, adding Part B – which is for doctors visits, outpatient procedures, or additional coverages, such as prescription drug coverage, does cost money. The premium is determined based on income level. So, individuals must decide what plan is best for them when enrolling and what they can afford to have.
Individuals with Disabilities
Medicare coverage is also available to individuals with disabilities regardless of their age. Once an individual has been collecting social security disability payments for twenty-four months, they become eligible for Medicare during the 25th month.
An enrollment package will be sent a few months before a person becomes eligible for Medicare coverage. If a person with Social Security disability does not receive the enrollment package, they should contact their local social security office to request a packet.
Like an individual who is over age 65, disabled persons who have been getting Social Security disability payments are automatically eligible for Medicare. There is no reason to decline coverage, as Medicare Part A costs nothing and covers hospital care and nursing facility care.
However, if a disabled individual would like, they can decline Medicare Part B coverage, which would require premium payments. There is a card that comes with the enrollment package that the individual can mail back declining Part B coverage.
Who Does NOT Qualify for Medicare
People who are not already receiving Social Security benefits will need to contact their local Social Security office to apply for Medicare coverage. This should be done three months before the individual’s 65th birthday.
The enrollment period begins in the three months before the month of the 65th birthday and ends three months after. If one enrolls during this time frame, there is no cost for enrollment and coverage should begin at the start of the 65th birthday month or shortly thereafter (if one applies after their birth date).
If, however, one does not apply during that enrollment period, then fees apply. So, it is important to apply on time, and as close to the three month prior date as possible. This will ensure everything is done correctly and coverage starts at the beginning of the individual’s birth month.
How to Enroll
To begin receiving benefits, an eligible individual must enroll through the office of Social Security. There is only one exception to this rule, in that those who are already receiving benefits through Social Security or the Railroad Retirement Board are automatically enrolled when they turn age 65.
All other potential recipients must submit an application for coverage during the open enrollment period. This period of time begins three months prior to the applicant’s 65th birthday and it ends seven months after.
Those who do not enroll in Part A and/or Part B when they are originally eligible are allowed to alternatively enroll between January 1 and March 31 each year. For those who do, their coverage will begin on the following July 1.
Medicare is Not Medicaid
Because their names sound so similar, people can oftentimes confuse Medicare with Medicaid. These two programs, however, are not the same. Medicaid is a joint state and federal program that provides medical assistance to those who meet very specific low income requirements.
In addition to medical necessity, a person must be considered at his or her state’s poverty level in terms of income and assets for Medicaid qualification purposes.
Through the Social Security Act, those who have income and resources not considered to be sufficient enough to meet the cost of their needed medical care, as well as certain long-term care needs, can qualify for Medicaid’s benefits. Therefore, Medicaid is considered a “means” tested program.
When determining which assets “count” toward qualifying for Medicaid, funds and property are divided into three different classes.
These include the following:
Countable Assets – Countable assets include any personal assets that the individual either owns or controls. These funds are required by Medicaid to be spent on the applicant’s care before he or she will be able to qualify for Medicaid’s benefits. Some examples of countable assets may include cash, stocks and bonds, and deferred annuities (provided that the annuities have already been annuitized).
Non-Countable Assets – Even though non-countable assets are still acknowledged by Medicaid, the particular types of assets are not necessarily utilized when making a determination regarding an applicant’s eligibility for Medicaid benefits. Non-countable assets can include household belongings, such as furniture, appliances, term life insurance policies, a burial plot owned by the Medicaid applicant, and the applicant’s primary residence – as long as the value of the home does not exceed a certain amount.
Inaccessible Assets – Assets that are inaccessible are those considered to be resources that would have had to be spent on a person’s care; however, the assets have instead been transferred to another individual or into a trust. This transfer has therefore made the asset inaccessible. With inaccessible assets, Medicaid has the right to review the applicant’s financial records at the time that the application for benefits is made. In most cases, if assets were transferred within a certain amount of time prior to a person’s application, Medicaid may deem the individual as being disqualified from receiving benefits – at least for a certain period of time.
What is Supplemental Insurance and What Does It Cover?
Medicare supplement insurance plans are a type of insurance coverage supplemental to what Medicare covers. This type of coverage can pay for some – or in some cases, all of the copayments and/or deductibles so that the enrollee does not need to pay such expenses out-of-pocket.
Medigap insurance is specifically designed to supplement Medicare’s benefits, and it is regulated by both federal and state law. A Medigap policy must be clearly identified as being Medicare Supplement insurance, and it must provide benefits that help to fill in the gaps in Medicare’s coverage.
Although the benefits are identical for all supplement plans of the same letter (i.e., all Plan A policies offer the same coverage options), the premiums may vary from one insurance carrier to another, as well as from one geographic area to another. There are even three states that do not use the letter system, but have different ways of designating their plans.
What is Medicare Advantage and How Does It Work?
A Medicare Advantage (MA) plan, similar to an HMO or PPO, is type of Medicare plan available to those who are eligible for “Original Medicare”, or Parts A and B. This option is also referred to as Part C. These plans are actually offered by private insurance companies approved by Medicare.
When an individual joins a MA Plan, Medicare pays a fixed amount of their premium every month to the companies that offer these plans. These companies are required to follow strict rules on coverage.
Each of the Advantage Plans are allowed to charge different out-of-pocket costs, and they may also have different rules as to how enrollees can receive their services. For example, some plans may require participants get a referral before going to a specialist. And, these rules may change every year.
MA Plans also have an annual cap on how much participants will pay for their Part A and Part B services throughout the year. This annual, maximum out-of-pocket amount can differ from plan to plan. You can get a full understanding of how MA plans can be a benefit to you HERE.
How to Find the Best Coverage
When seeking Supplemental or Advantage coverage, it is best to work with a company that has access to more than just one insurer.
That way, you can obtain information on numerous different benefits and quotes to see what your options are and what benefits are available to you.
When you’re ready to begin the process, you can use the form on this page and a top independent agent will work with you to get the best policy at the best rates.
Disability insurance is the most underrated type of insurance, and one that I routinely would see clients skip. Who ever thinks they will become disabled?
Hard truth – According to some statistics from the Council for Disability Awareness, 1 in 4 workers who are 20 years old will be disabled before they retire. That’s a shocking number for most people to consider. If you can’t perform your job, you can’t earn money, and that’s where a disability insurance plan can save the day.
The best disability insurance companies make it easy to get a quote online. Below you can quickly get a quote from top rated disability insurance companies we recommend, or keep reading to learn more about disability insurance and its uses.
Table of Contents
Quotes From Top Rated Disability Insurance Companies We Recommend
.pwrapperwidth:100%;margin:1em 0 2em.progressive-containerwidth:100%;border:2px solid #e8e8e8;position:relative;margin-top:-1px.progressive-container .prowdisplay:flex;flex-direction:row;flex-wrap:wrap;align-items:center.progressive-container .pcolumnflex-basis:100%;padding:16px!important.progressive-container imgwidth:100%;margin:10px auto.progressive-container ulpadding:0;font-size:12px;margin:0.progressive-container .company-ratingcolor:#1261c9;text-align:center;font-weight:400.progressive-container .summarypadding-left:16px.progressive-container .counterposition:absolute;top:-2px;float:left;left:-2px;background-color:#1261c9;color:#fff;padding:4px 6px;font-size:12px.progressive-container .counter.graybackground-color:#ededed;color:#000.progressive.blue-buttonfont-size:14px;text-align:center;width:100%@media screen and (min-width:577px).progressive-container .pcolumnflex:1@media screen and (max-width:576px).progressive-container ._25flex:5@media screen and (min-width:577px).progressive-container ._25flex:2.5.progressive-container ._50flex:5.progressive-container .lg-order-1order:1.progressive-container .lg-order-2order:2.progressive-container .lg-order-3order:3@media screen and (max-width:576).progressive-container ._25flex:5span.five-starscolor:#ffab00
#1
Quotes from the top disability carriers to ensure you find the best rates
Helps thousands of consumers apply for disability insurance each year
Rated Excellent on TrustPilot
Benefit terms range from 3 months to age 67
Choose your waiting period
Multiple riders add flexibility to your policy
#2
Benefit periods from as little as 2 years or all the way to retirement age
Family care benefit provides coverage for up to a year if policyholder has to take off work to care for a child, spouse, or parent
10% discount to business owners and an additional 10% to preferred occupational classes.
Offers the option of Full Coverage for Mental/Nervous disabilities or a 10% discount for a 2 year limitation.
Rated A (Excellent) by A.M. Best for financial strength
What is Disability Insurance?
The idea behind disability insurance is simple.
It operates similar to a traditional life insurance plan, but instead of paying out upon your death, it pays out if you become disabled.
Coverage for these plans can vary in the size. Just like with other kinds of insurance plans, every disability policy is different.
If you already know what you want and just want to browse different rates from several carriers, click here.
Some plans are going to replace 45 %of your income, while others are going to give more replacement at 65%.
The more replacement coverage you want, the more you’re going to pay for your plan.
The Differences with Workman’s Compensation
When an employee suffers an injury on the job, oftentimes their employer will compensate them through worker’s compensation.
It is important to understand the difference between disability insurance and worker’s compensation – because the two are not the same thing.
The key difference between workers’ compensation and disability insurance is that workers’ compensation (or workers’ comp) pays for injuries that are work-related. Employers will obtain workers’ comp insurance in order to pay for incidents that occur on the job.
If workers sustain injuries on the job, it is oftentimes up to the employer to pay for the person’s medical bills, as well as for the individual’s lost wages if the employee must take time off work because of the injury.
An employee who collects payment via workers’ comp will typically, however, not have a long-term disability, but rather a temporary injury from which he or she will soon return.
On the other hand, disability insurance pays for a percentage of a person’s earnings if the insured is not able to work due to an injury or illness – regardless of whether that injury or accident happened at work or elsewhere.
In addition, if the disability insurance policy is an individual policy (versus an employer-sponsored group plan), the insured will be covered under the policy regardless of who he or she is employed through.
According to the Council for Disability Awareness, less than 5 percent of disabling accidents and illnesses are work related.
This means that the other 95 percent are not – and that these other 95 percent are also not covered by workers’ compensation insurance.
What About Social Security Disability Benefits?
It can be extremely difficult to qualify for Social Security’s disability benefits. For example, Social Security will only pay benefits if a person is considered to be totally disabled. This means that the individual cannot do work that they did previously, nor can they do other jobs either.
In addition, the person’s disability must have lasted, or be expected to last, for at least one year or result in death.
An individual must also have collected enough work credits in order to qualify for Social Security disability benefits.
You can take a look at the 2019 Social Security Administration limits and rates for OASDI and social security here.
The number of credits will be dependent on the age that the individual is when he or she becomes disabled.
With that in mind, the importance of disability insurance becomes even more clear.
This type of insurance can provide you with the additional funds that you need to help pay living expenses – without the need to dip into savings, retirement assets, or worse yet – use credit – for the purpose of paying day to day bills until you are back on the job.
If Social Security deems that a person’s situation qualifies, there is still a five month waiting period before benefits are paid.
This, too, can create a financial hardship for many people in terms of paying living expenses – especially if there are added medical costs due to the illness or injury that has been suffered.
So, we know Social Security won’t give the money you need and workman’s comp probably won’t cover it, so now what?
This is why you should explore a private disability insurance policy.
Types of Disability Insurance
The two main types of coverage are long-term disability and short-term disability.
You can probably guess from the name, but short-term policies are designed to cover employees for a much shorter time, anything shorter than two years.
Long-term disability, on the other hand, is built for anything past two years. A long-term disability insurance policy could continue to pay out for the rest of your life if it’s needed but typically runs from 5-10 years.
Some of the common causes for short-term disability insurance include:
having a baby
a severe illness
a major injury.
Long-term disability could include a lot of things, but some common causes are:
cancer
muscular disorders
cardiovascular complications
or serious injuries
Long-Term Disability vs. Short-Term Disability
Aside from the obvious, there are a few key differences between long-term disability and short-term disability.
One of those is the waiting period for a payout.
With short-term, policyholders can start receiving weekly checks as quickly as a 1 to 7 days after you file a claim for the policy.
With a long-term disability insurance policy, on the other hand, it can be anywhere from 90 days to 180 days.
If you’re looking at the cost difference between the two plans, short-term policies are going to be significantly more affordable than its long-term counterpart. Long-term plans can give you years more coverage which could translate to thousands and thousands of additional coverage from the insurance company.
Another key difference between the two kinds of plans is how you can get the coverage.
A lot of companies offer their employees short-term disability insurance, but almost no companies have a long-term disability insurance program.
If you want to get the long-term coverage, you’ll have to purchase a plan through a private insurance company. If your company offers any type of short-term disability insurance, you should always enroll in the program.
Group, Individual, Multi-life
Inside of the two main types of disability insurance are several “sub-types” of coverage.
One of those is group coverage.
These are policies which are offered through an employer and are offered to all the employees. Group coverage could be either short-term disability or long-term disability.
Employer-sponsored short-term plans are designed to pay for any disabilities which occur outside of the workplace. Short-term disabilities are much more common than long-term disabilities which could impact you for the rest of your life.
Individual Disability Insurance
If your company doesn’t have any sponsored plans, you can purchase a private policy through an insurance company.
You’ll be required to answer some medical questions and depending on the plan, take a medical exam.
Multi-Life Disability Insurance
When you’re shopping around for a disability insurance policy, you’ll probably come across plans being sold as “multi-life plans.”
The idea of these plans is to get several key people in a business (think of several doctors in a practice) to all apply at the same time with their plan.
The insurance company markets these policies as multi-life so they can offer simpler underwriting processes and pass some of the savings onto the policyholders.
Is Group Disability Enough?
For the employees who are lucky enough to get disability insurance through their employer, you still might be lacking. Just because you have a plan through your job, it might not be enough.
Let’s say you’re not able to go to work because of an accident. You can’t get to your job and pull in your paycheck, are you going to be able to pay for all of your monthly bills without having to make any extreme sacrifices.
To determine if your group disability insurance is enough, you’ll need to do some basic math.
Look at your plan and see how much coverage it provides.
For this example, let’s say it pays 50% of your salary. Now, take a look at your bills and expenses.
If the total of those numbers is more than 50% of your income, then your group disability isn’t enough.
If you’ve crunched the numbers and came to the jarring realization your group plan isn’t enough, the best choice is to purchase an additional individual plan.
Both of the policies can work together, and your individual plan can pick up the slack left behind.
What’s the Difference Between Owner-Occupation and Any-Occupation?
One of the most important things to understand about disability insurance plans are the differences between an owner-occupation plan and an any-occupation plan.
They may sound the same, but they completely change how your plan operates and the coverage it will give you.
First, let’s look at owner-occupation (sometimes called own-occupation protection). Policies with this protection will only pay out if you can no longer to the duties and tasks required to you by your job.
If you’re an electrician, but you can not do the simple tasks required on a day-to-day basis, then an own-occupation plan will pay you the benefits.
Any-occupation policies will only pay the benefits of the plan if you can no longer perform any occupation based on your education and work experience.
As you can tell, any-occupation policies have much stricter rules on the circumstances in which they will pay the policyholder.
Type of Disability Insurance
Description of Disability Insurance
Short-term disability insurance
Provides coverage for a limited period of time, usually up to 6 months, and replaces a portion of your income if you are unable to work due to illness or injury.
Long-term disability insurance
Provides coverage for a longer period of time, typically until retirement age, and replaces a portion of your income if you are unable to work due to illness or injury.
Group disability insurance
Provided by an employer as part of a benefits package, group disability insurance offers coverage to all employees and may be offered as short-term or long-term disability insurance.
Individual disability insurance
Purchased by an individual, this type of disability insurance offers customized coverage and can be either short-term or long-term disability insurance.
Own-occupation disability insurance
Offers coverage if you are unable to work in your specific occupation due to illness or injury, even if you are able to work in a different occupation.
Any-occupation disability insurance
Offers coverage only if you are unable to work in any occupation due to illness or injury.
Residual disability insurance
Offers coverage if you are able to work but have a reduction in income due to illness or injury.
How Much Does Disability Insurance Cost?
Now for the part everyone wants to know, how much is a disability insurance plan going to cost you?
Well, there are a lot of different factors which are going to affect how much the premiums are. It’s difficult for me to give an exact number without knowing your exact situation.
For example, the age of the applicant is going to play a major role in the premium rates. If a 25-year old applies for a policy, it’s going to be significantly cheaper than a plan for a 45-year old.
The general rule of thumb for disability insurance is the premiums are going to be anywhere from 1% to 3% of your gross income.
If you are making $100,000, you can budget for $1,000 – $3,000 every year.
As I mentioned, there are dozens of different factors which will completely change how much you pay.
If you’re a smoker, then you’re going to pay much more for your plan.
If you have a riskier job, you’re going to pay more.
The rule of thumb is exactly that.
How Much Disability Insurance Do You Need?
I alluded to the amount of disability insurance earlier in this article, but now let’s take a hard look at how much coverage you should have.
Not having enough disability insurance protection could cause some serious financial strain if something were to happen.
First, let’s look at your living expenses. If you don’t already have a budget, take some time to look at all of your monthly bills (power bill, water bill, mortgage payment, etc.) and your spending (groceries, gas, etc.).
On top of those monthly expenses, add in a few “unexpected” bills as well. You never know when something is going to break or an extra bill is going to pop up.
You want to have some cushion in your budgeting. Otherwise, you end up living paycheck-to-paycheck.
After you have the monthly expenses number, you can do some subtracting.
If you aren’t working, your expenses are going to look very different than they do now. For example, if you aren’t driving to work every day, you probably won’t be spending as much on gas.
You won’t be spending money on work clothes, and you will probably cut out some additional “entertainment expenses” as well.
Now you have a new number, your monthly expenses minus some tweaks.
The next number you want to add to the equation is any income you’ll make from other sources besides your disability insurance plan.
This category can include any money from your investments, money from your spouse or partner’s job (or a second job if they decide to add another job) and any additional disability income you may qualify for.
If you’re the main income earner in your home, then having disability insurance is one of the most important purchases you can make.
Key Man
For most people, they purchase disability insurance for their family and loved ones. for others, they buy a plan to protect their business.
If you’re one of the foundational workers in your business (ex. an owner, CEO, etc.), then you should consider buying a disability insurance policy for your company.
Key man plans operate a little differently than a traditional disability policy. With these policies, the business pays the premiums for the plan, and if something were to happen to you and you couldn’t perform your job, then the business is going to get the money from the payout.
These policies are a way for the companies to protect themselves against financial struggles if a key person in the business were unable to work because of illness or injury.
The company can use this money to outsource those duties or to hire someone to replace the key person while they are out with the disability.
Disability Insurance for High Income Occupations
There is a certain group of people which disability insurance could have some serious problems.
If you are a high-income earner, the standard disability insurance policy simply may not be enough. Just about every insurance company which sells one of these plans is going to have an income limit.
Regardless of the percentage they replace, they are not going to offer more than that limit.
Typically, these are doctors or lawyers who own their own firms, for example.
Some policyholders may find the insurance company’s limit is below the 60% they offer in income insurance.
If you’re one of these people, there are some things you can do to get the protection you need, regardless of how much money you make every year.
One option is to choose a company who offers higher limits. Each company has different coverage limits on their policy. We can help you shop around until you find one with a high enough limit for your needs.
Another route is to buy two separate plans from different companies. Sure, you’ll pay more in premiums every month, but you’ll have the protection in place if you ever need it.
Where to Get a Disability Insurance Quote
You now know the basics of disability insurance coverage, it’s time to go out and find a policy of your own.
There are more than 40 insurance companies which sell these plans. As I mentioned, they are all different. Some are going to have higher limits, offer a larger percentage, or have cheaper rates.
You need to find a company which suits your needs.
Before you pick a company, compare the rates and plans from several companies. You don’t buy the first house you see, why would you buy the first policy you find?
Sure, you can use your own time to contact those 40+ companies individually, or you can use a tool which will do the dirty work for you.
If you’ve decided you want to get disability insurance or supplement the coverage you already have from work, check out PolicyGenius. They are one of the few companies out there which can gather quotes from dozens of companies for disability insurance, all in one place.
PolicyGenius allows you to tailor your quotes to exactly the kind of policy you’re looking for; the perfect amount of coverage with the proper waiting period.
They know shopping for insurance isn’t easy, but they make it as quick as possible.
FAQs – Best Disability Insurance Quotes
How can I get the best disability insurance quotes?
To get the best disability insurance quotes, it’s important to shop around and compare policies from different insurance companies. You can request quotes online or by speaking with a licensed insurance agent. Be sure to provide accurate information about your occupation, income, and health to receive an accurate quote.
What factors can affect the cost of disability insurance?
The cost of disability insurance can be affected by several factors, including your age, occupation, health status, and the type and amount of coverage you select. Policies with longer benefit periods or more comprehensive coverage may be more expensive.
How much disability insurance coverage do I need?
The amount of disability insurance coverage you need depends on factors such as your income, monthly expenses, and savings. A general guideline is to have enough coverage to replace 60% to 80% of your income, but this may vary depending on your individual circumstances.
Social Security Disability Insurance (SSDI) benefits may be taxable if half of SSDI income plus any additional income exceeds $25,000 for single filers and $32,000 for joint filers
. The amount you pay depends on your total income and tax bracket. You may also owe state taxes.
How to calculate whether your SSDI benefits are taxable
To find out whether your SSDI is taxable, add the following two figures:
If the total exceeds the limits listed below, your benefits could be taxable.
If your tax status is:
Then your benefits may be taxable if half your benefits plus your other income exceeds:
Single, head of household, or a qualifying surviving spouse
Married filing jointly
Married filing separately and you lived apart from your spouse for the entire year
Married filing separately and you lived with your spouse at any time during the tax year
What is the tax on SSDI benefits?
Generally, as your total income increases, the percentage of your Social Security income that’s subject to federal taxes will increase as well
. The maximum percentage of Social Security income that’s subject to tax is 85%.
The amount of tax you’ll owe on that portion of your Social Security income depends on your tax bracket. Your income from all taxable sources and any tax deductions you qualify for determine which tax bracket you’re in.
Depending on where you live, you might also owe state taxes on your benefits. Tax rates and potential exclusions or deductions for Social Security income vary from state to state. Some states don’t have income taxes.
Taxes on SSDI back payments
The Social Security Administration (SSA) takes months to process SSDI applications
. The minimum waiting period is generally five months. If the SSA denies your application, you may appeal; an eventual approval can stretch your waiting period to more than a year.
In all of these instances, the SSA may send you a payment that covers the time it was processing your application. That lump sum amount is taxable.
A large payment could trigger an unexpectedly large tax bill. You pay taxes on the back payment for the tax year in which you receive it, even if a portion of the payment was for a previous tax year
.
Although you can’t amend a prior year’s tax return for this, the Internal Revenue Service gives you the option to calculate what you would have owed if the back payments occurred in the prior tax year. If that results in a lower tax bill, you can pay that lower amount instead.
Inside: Are you confused about how gross pay and net pay are calculated? This guide will clear everything up. Learn about the different deductions that are taken from your paycheck, as well as the tax rates that apply to your gross pay.
This is one of the most confusing questions for many people.
So, if you are wondering what the difference between gross pay and net pay, you are in the right place.
In order to become financially stable, you need to have a tiny amount of financial literacy.
If you’re like most people, you probably think of your “gross pay” as the amount of money you make before taxes are taken out. But in reality, gross pay is your total compensation from your employer before any deductions are made.
So what is “net pay,” then? Net pay is the amount of money that actually goes into your bank account or paycheck after all of those deductions are made.
Now you want to which one is more important between gross pay and net pay.
The answer is: it depends! If you’re trying to save money or make a budget, then net pay is probably more important to you. But if you’re trying to figure out how much taxes you’ll owe at the
We will dive into all of the details, you will not ever be confused again.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is gross pay?
Gross pay is the total amount of money earned by an employee before any taxes or deductions are taken out. It’s important to know your gross pay as it determines your overall income and can impact your taxes and benefits.
This is the total amount paid by your employer.
Knowing your gross pay is crucial for financial planning and paying taxes.
How can I calculate my gross pay?
To calculate gross pay, you need to know your hourly wage or salary, any overtime pay, bonuses, and additional reimbursements for work-related expenses.
For hourly workers, multiply the hourly wage by the number of regular hours worked within a pay period and include the overtime pay rate for any extra hours.
For salaried workers, multiply the gross monthly income by 12 to find the annual gross salary.
To calculate a paycheck, start with the annual salary amount and divide it by the number of pay periods in the year.
Find out 5000 a month is how much a year.
What deductions are taken out of gross pay?
Gross pay refers to the total amount of money an employee earns before any deductions are taken out.
As such, there are no deductions.
Learn what is annual income.
How are taxes calculated on gross pay?
Gross pay is the amount an employee earns before taxes and deductions are taken out by their employer.
Understanding taxes on gross pay is essential, as it affects an employee’s take-home pay and tax liability.
Taxes that are deducted from gross pay include FICA payroll taxes, federal and state income tax withholding, along with any state-mandated programs like this Colorado Paid Sick Leave.
To calculate taxes on gross pay, an employer uses a formula that subtracts all taxes and deductions from the gross pay amount. Learn how much you should withhold on your taxes.
Common issues that may arise during tax calculation include incorrect tax withholding and not considering voluntary pre-tax deductions. Understand why do I owe taxes this year.
Wealth Building and Tax Reduction Secrets from an IRS Insider
The ninth edition shows you how to save thousands of dollars―legally and ethically!―during tax time.
It offers proven methods for taking advantage of the tax system to get a yearly subsidy of $5,000 or more back from the IRS―and bulletproof your records forever.
How to Build Massive Wealth by Permanently Lowering Your Taxes
For U.S. taxpayers, you will find helpful tips in this new edition to help you apply the new tax incentives to your situation.
Tax breaks are not only for the rich. It is for everybody! You just have to take time and learn it.
What is net pay?
Net pay refers to the amount of money an employee takes home after all deductions and taxes have been taken out of their gross pay.
This is the money left over that you can spend, save, and invest.
Thus, you will be able to budget by paycheck like a pro!
How to calculate net pay?
Calculating net pay is crucial for accurate and compliant payroll management.
Here is a step-by-step guide on how to calculate net pay:
Determine the gross pay based on hours worked or salary divided by the number of pay periods in the year.
Subtract mandatory deductions, including health insurance premiums, federal, state, and local income taxes, payroll taxes, and court-ordered wage attachments.
Subtract voluntary deductions, such as employee contributions to a 401(k) or other retirement plan as well as any flexible spending account.
The resulting amount is the employee’s net pay.
Learn about annual net income.
What deductions are taken out of net pay?
Net pay refers to the amount of money an individual receives after taxes and other necessary deductions have been subtracted from their gross pay.
It is a crucial factor in determining an individual’s income, as it represents the actual amount of money they take home.
There are various deductions that are commonly taken out of net pay, including mandatory and voluntary deductions.
Mandatory deductions are made in accordance with the law, while voluntary deductions are ones that employees have the freedom to opt out of.
The mandatory deductions include:
Federal, state, and local income taxes
Social security taxes
Medicare taxes
Local state or municipal taxes
Other common voluntary deductions from gross pay include:
Health insurance premiums (if signed up on a company plan)
Retirement contributions
Health savings account contributions
Flexible spending account contributions
Dependent Care FSA
Is gross before or after taxes?
Gross pay is BEFORE taxes.
Gross pay is the amount earned before taxes and other deductions are taken out. Taxes are then calculated based on the gross pay amount and deducted to arrive at the net pay. This means that gross pay is always before taxes.
Understanding the difference between gross pay and net pay is important to effectively manage finances.
Gross pay may seem like a large amount, but it is important to consider the impact of taxes and other deductions on the final amount received.
What is the difference between gross pay and net pay?
Gross pay and net pay are two important terms that employers and employees should understand.
Gross pay refers to an employee’s total earnings before any deductions are taken out, while net pay is the amount an employee takes home after deductions such as taxes, benefits, and garnishments have been subtracted.
Here are some key differences between gross pay and net pay:
Gross pay includes all earnings, such as wages, salary, reimbursements, commissions, and bonuses, while net pay is the actual amount of the paycheck after deductions.
Employers are responsible for deducting necessary expenses from an employee’s paycheck and making payments to the appropriate accounts before issuing the check or depositing the net pay into the employee’s bank account.
Gross income determines an individual’s federal income tax bracket and borrowing capacity, while net pay presents disposable income.
When budgeting for the year, starting with gross wages requires subtracting the total of taxes and other deductions to compute the actual amount left to spend from each paycheck.
Understanding the difference between gross pay and net pay is crucial for effective budgeting and financial planning.
Employers must ensure proper employee taxes are collected and paid to the government, while employees need to know their take-home pay to manage their expenses.
How do gross pay and net pay work?
Gross pay and net pay are two important terms in the payroll world that employees should understand to manage their finances effectively.
Gross pay is the total amount of pay while net pay is the amount of money you have to spend each month.
Understanding the difference between gross and net pay can help employees and employers avoid confusion and manage their finances better.
What is better gross pay or net pay?
One term is not “better” than the other as they each have different meanings.
When you increase your gross pay, your net pay will rise as well.
Here is how to use gross pay to your advantage:
Provides a clear understanding of the employee’s total compensation
Helps employees plan for future expenses
Can be used as a basis for negotiating salary increases
Figure out the amount of taxes you are required to pay.
Here is how to use net pay to your advantage:
Reflects the employee’s actual take-home pay
Helps employees budget for their expenses
Provides a clear understanding of the impact of deductions on their pay
Can be difficult to compare with other job offers that list gross pay
Overall, net pay is better for employees as it reflects their actual take-home pay and helps them budget for their expenses.
However, it’s important for employees to understand both gross pay and net pay to make informed decisions about their compensation.
Why do you receive more gross pay than net pay in your paycheck?
Employees receive more gross pay than net pay in their paychecks because gross pay is the total amount of money an employee earns before any deductions are taken out.
This includes an employee’s salary, wages, commissions, and bonuses.
On the other hand, net pay is the actual amount of money an employee takes home after taxes, benefits, and other mandatory deductions have been subtracted from their gross pay. These deductions can include federal and state taxes, Social Security contributions, health insurance premiums, and retirement plan contributions.
Therefore, employees receive more gross pay than net pay.
Learn is social security disability income taxable.
FAQs
Overtime wages are included in gross pay when an employee works more than their regular hours and earns additional compensation for the extra hours worked.
This is the case for nonexempt employees who are entitled to overtime pay under federal or state law.
Net income is the take-home pay or the money that you earn on payday, which is why it may be best to focus on that number when creating a budget.
This number helps you determine how much you have to spend, save, or invest.
By tracking your expenses and using budgeting techniques like budgeting with percentages or the 50/30/20 rule, you can manage your finances effectively and make the most out of your net income.
Remember, creating a budget is about being realistic and disciplined with your spending habits, so make sure to adjust your budget accordingly as your income or expenses change.
The tax rates for gross pay depend on the specific taxes being withheld, such as federal income tax, Social Security tax, and Medicare tax.
Federal income tax rates vary depending on the employee’s income level and filing status, with higher earners generally paying a higher percentage of their gross pay in taxes. Click here for the latest federal income tax brackets.
Social Security tax is a flat rate of 6.2% for the employee on the first $$160,200 of gross pay earned. Your employer must match the same contribution. (source)
Medicare tax is a flat rate of 1.45% on all gross pay with the employer matching the same percentage, with an additional 0.9% tax for high earners. (source)
Employees need to understand their tax liability based on their gross pay to accurately calculate their net pay and avoid any surprises come tax time.
Now, you Know the Difference between Gross and Net Pay
Understanding deductions and their impact on net pay is crucial for employees to accurately budget and plan their finances.
Since you know the difference between gross and net pay, you can make sure that you are getting the right amount of money in your paycheck.
Be sure to check your pay stubs carefully to make sure that all of the deductions are correct. If you have any questions, be sure to ask your human resources department.
Know someone else that needs this, too? Then, please share!!
People with limited income and limited resources who are also 65 or older, blind or disabled.
The SSA describes SSI as “an assistance source of last resort.”
People who become completely unable to work for a year or longer due to a disability.
What are the work requirements to qualify?
None. Past and current employment don’t affect benefits.
Before you turn 24 you need approximately 1.5 years of work in the three years leading up to your disability.
Between age 24 and 31 you’ll need to have worked for about half the time between turning 21 and developing a disability.
When older than 31 you’ll need to have worked for approximately five or more years in the 10 years leading up to developing a disability.
What counts as disabled?
You have an impairment that prevents you from being employed, that will likely last at least 12 months or that will likely lead to death.
You have a medical condition that prevents you from doing your current job, and you can’t transition to a new job. You expect to be disabled for at least one year. Short-term and partial disabilities typically don’t count.
When can I get benefits?
SSA pays benefits as soon as the month after you submit your application or the month after you meet the eligibility requirements, whichever is later.
You won’t receive payments for any time prior to submitting your application, even if you met all other eligibility requirements.
A five-month waiting period before benefits begin is typical.
You could receive back payments for up to 12 months before you apply.
How much can I get?
In 2023, the maximum monthly benefit for an individual is $914. For a couple, it’s $1,371.
Income from other sources can lower those amounts.
Your benefit is based on your work history. First, SSA calculates an index of your average lifetime monthly earnings, taking into account inflation, your age, time spent caring for children and other factors.
If your application is approved, you’ll receive a percentage of your average monthly earnings. The benefit formula uses bend points, similar to the one used for Social Security retirement benefits. That means people with higher average earnings receive a lower total percentage compared to those with lower earnings.
Can my benefits change?
Yes. Factors that can change your benefit include a change to your medical condition, income, living situation, family composition or status as a student.
Yes. If your medical condition changes, or if you are able to return to work, your benefits may end. SSDI has a program where you can test your ability to work without losing your benefits. SSDI payments convert to Social Security retirement payments when you reach full retirement age.
Can other benefits or income affect my benefit amount?
Yes. Income from other sources, including Social Security retirement income, pensions, earned income and unemployment benefits can reduce SSI.
Yes. If you earn income from a job, you likely don’t meet the disability definition.
Other sources of income that may reduce SSDI benefits include: workers’ compensation payments and disability payments from a state or local government.
The sum of your SSDI benefits, workers’ compensation and other government disability payments can’t be more than 80% of your average earnings.
Are benefits affected by assets I own?
Yes. You won’t be eligible for SSI if the value of everything you own, including stocks, cash and property, exceeds $2,000 ($3,000 for couples). Exceptions to the limit include a home you live in, household goods, burial plots, your wedding ring, one vehicle, property you use in your business or for work, and up to $100,000 in an ABLE account.