Background
HISTORY
The Social Security Act was signed into law in 1935. It established a system of retirement benefits for older persons and their survivors. With respect to a disability program, despite discussion about the need for a disability insurance program at that time, it was not included in the original Social Security Act. For twenty years there was a long discussion in both Congress and the executive agencies regarding a program for disabled workers. A series of incremental, compromise laws in 1952 and 1954 paved the way for the final passage of SSDI in 1956, which in itself was a compromise; the legislation limited benefits to individuals fifty and older, and included benefits for adult disabled children of retired or deceased insured workers, if the child was disabled before age 18; it did not, however, include benefits for the dependents of disabled workers. Other provisions in the 1956 amendments included a 6-month waiting period for receipt of disability benefits and an insured status requiring a recent and substantial attachment to the work force, both of which still exist today.
The Social Security Amendments of 1958 expanded Social Security coverage to include benefits for dependents of disabled workers. Further changes were made with the enactment of the Social Security Amendments of 1960. These amendments removed the minimum age requirement of 50 years for disability insurance beneficiaries. The amendments also established a 9-month trial work period during which a disabled beneficiary could test their ability to work without suffering a loss of benefits.
The next major legislative change was the Social Security Amendments of 1965, which, among other changes, deleted the requirement that the impairment be of “long-continued and indefinite duration” and substituted in its place a requirement that the impairment “be expected to last for a continuous period of not less than 12 months.” The size and complexity of the program has continued to grow due to various demographic factors. Because of the increase of women in the workforce, more women than ever are now eligible for benefits. Also, the aging of the Baby Boomer generation, combined with an increase in the retirement age, has led to an increase in the disability rolls. SSA has reported that these changes represent a peak, and that it does not expect the program to continue to expand.
WHO ADMINISTERS THE PROGRAM
The Social Security Administration, an independent federal agency, administers the SSDI program.
FUNDING
The Social Security system is funded through payroll taxes, known as the Federal Insurance Contributions Act (FICA), which is imposed on both employees and employers. Both the employer and the employee pay 6.2% on the first $168,600 in 2024 of an individual’s earned income in a calendar year. This earned income limit, known as the Social Security Wage Base, goes up each year based on average national wages. Self-employed individuals pay the full 15.30%.
In addition to the Social Security tax, individuals pay 1.45% on all earnings for Medicare coverage. Those with higher earnings pay an additional Medicare tax; for more information refer to
A special trust fund, the Social Security Trust Fund, was created for these dedicated tax revenues. The Social Security Trust Fund has two separate components: the retirement trust fund and the disability trust fund. Contrary to popular belief this money is not put in trust for the individual employees who are paying into the system, but is used to pay existing beneficiaries. Any excess is invested in U.S. Treasury bonds and is in reserve in the Social Security Trust Fund, which will be used to pay future benefits.
Summary of the Social Security Disability Insurance Program
OVERVIEW
Social Security Disability Insurance provides a monthly cash benefit to the disabled or blind worker and their dependents. Eligibility is based on whether the worker is insured under the Social Security system (has earned sufficient Social Security credits or quarters of coverage) and whether the worker meets Social Security’s disability or blindness standard. These criteria are detailed below under Qualifying for Social Security Disability Insurance.
Benefits are based on payroll tax contributions that the worker makes during their working life. Application for SSDI can be made at a local Social Security office or online. In addition, beneficiaries are required to prove they continue to meet the disability standard through periodic Continuing Disability Reviews.
Other Benefits under Social Security Disability Insurance Program
In addition to cash benefits, disabled beneficiaries are entitled to vocational rehabilitation services, employment services and benefits planning through the State vocational rehabilitation agency (ACCES-VR in NYS) or with a private sector Employment Network provider who contracted with SSA. See below, Returning to Work, State Vocational Rehabilitation Agencies and Returning to Work, Ticket to Work Program for more information.
In addition, after 24 months of entitlement to SSDI cash benefits, beneficiaries are entitled to Medicare and automatically enrolled into Medicare Part A and Part B. See below, Description of Social Security Disability Insurance, Benefit Package.