To collect Social Security Disability Insurance (SSDI) benefits, you must, of course, have a qualifying disability, but also have enough work credits under your belt, so to speak. In short, this is a unit the Social Security Administration (SSA) uses to measure your work history and earnings. Most adults need 40 work credits, with 20 earned in the last 10 years, to be considered for this benefits program. Once you pass this initial hurdle, your focus may pivot toward the potential benefit amount itself. Well, for this, please read on to discover the system the SSA uses to calculate SSDI benefits for eligible recipients and how an experienced New Jersey SSDI attorney at The Law Offices of Sheryl Gandel Mazur can prepare you for the extent of financial aid to expect.
Why are SSDI recipients paid differently from one another?
Say that you have an identical physical disability to the one claimed by another SSDI benefits applicant. Even if this is the case, you may be initially surprised to learn that your monthly benefits payments may differ, with you receiving less than they do or vice versa. Well, this can be explained because the SSA does not base the awards given through the SSDI benefits program on the types or severities of claimed disability. Rather, within these submitted applications, they will look at individuals’ prior earnings, credited work quarters, and disability onset dates.
In a more specific example, an individual who paid more into the Social Security system over a longer period of time in the workforce typically receives higher SSDI benefits payouts. This is compared to an individual who experienced a considerable period of part-time earnings or interrupted employment, for instance. Other extenuating circumstances that may skew this payout from one individual to another are receiving auxiliary or dependent benefits, having past workers’ compensation payments, being eligible for government pensions, or having recorded disability offsets, among other things.
What system does the SSA use to calculate SSDI benefits?
In short, the SSA uses your Average Indexed Monthly Earnings (AIME) to determine your Primary Insurance Amount (PIA), which is the essential foundation of your monthly SSDI benefits payments. More specifically, to calculate your AIME, the SSA reviews your highest-earning work years, up to 35 years, and indexes them for inflation. This fundamentally reflects what your wages would be worth in today’s economy.
Then, the SSA converts your AIME total to a PIA. This progressive formula uses what are referred to as “bend points,” which are specific dollar thresholds that determine how much of your AIME is replaced by benefits. Specifically, it may use 90 percent of your earnings up to the first bend point, 32 percent between the first and second, and 15 percent above the second, which are these points adjusted annually for inflation and wage growth. In other words, this formula rewards higher lifetime earnings, but at the same time, it is weighted to give a proportionally higher benefit to lower lifetime earners.
If you wish to gain more clarity on the situation you are dealing with, the best way to get it is by consulting with a competent New Jersey SSDI attorney. Get in touch with our team at The Law Offices of Sheryl Gandel Mazur today.
