Working and Disability Benefits

Payroll Taxes, Work Credits, Returning to Work After Receiving Benefits, and Money Earned

At its heart, Social Security is founded on a simple principle – you put money in when you work, and when you cannot work you take money out. We’ve all heard of Social Security and know that it provides retirement benefits. While the majority persons receiving Social Security payments receive retirement benefits, Social Security provides benefits in a variety of situations. Social Security provides benefits to disabled persons, spouses and dependent children of Social Security beneficiaries, widows, widowers, or dependent children of a deceased individual, and to other persons in various situations. In all, 45 million Americans receive some form of Social Security benefit.

Social Security is primarily funded through payroll taxes. The money you put into the Social Security system is not put into a personalized account with your name on it. Instead, the money you contribute is put into a massive trust for everyone. From this massive trust Social Security pays out all of its benefits.

On average, about 15 cents of every dollar contributed to Social Security pays benefits to disabled persons and their families. Social Security Disability Insurance (SSDI), the chief Social Security Disability benefit, pays benefits to individuals who become disabled and are unable to work for a year or more. Social Security helps disabled persons return to work, and will continue to pay disability benefits until he or she is able to work again on a regular basis.

Social Security encourages disabled persons to reenter the workforce and its policies give incentives to disabled persons who are trying to make the transition back to work, especially after the Ticket to Work and Work Incentives Improvement Act of 1999. For those receiving Social Security Disability benefits other than SSI (Disability Insurance Benefits, Disabled Widow’s and Widower’s Benefits, and Disabled Adult Child Benefits) full benefits could continue for up to a year after an individual returns to work. Also, if you have to leave your job within the next three years, you can automatically and immediately receive Social Security Disability benefits without having to re-file your claim. The policies regarding returning to work and receiving SSI are different, but still encourage disabled persons to return to work.

Overall, the Social Security policies allow you to return to work, and if you find you cannot work after all, Social Security will allow you to receive benefits as before. These work incentive programs contain a number of special and technical rules that provide cash benefits and Medicare while you attempt to return to work. We can help you understand these rules and use them for your benefit.

To take some relief off your mind any money that you receive as a present or from an investment is not considered money earned. This money (present or investment) will not affect your income limit; however, it always important to get answers from someone with the right answers when you are unsure. Being on disability does not mean you cannot work. You can work for an employer or be self-employed while you are on disability; however, it is important that you do not earn over your income limit for the month you are working or for the year. This could result in lose of benefits. Know what the requirements are before you begin working and keep in mind that the income levels set are adjusted annually.

An earnings record freeze will protect your future Social Security retirement benefit. When you retire, Social Security divides your total FICA contributions by all of the years you were employed and unemployed. If you are disabled and do not have an earnings record freeze, there will be a number of zeros in that equation to bring down that average. If you do have an earnings freeze, however, Social Security will “freeze” your earnings record at the point Social Security determined that you are disabled and will not hold the unemployed time against you when calculating your retirement.

Can I receive worker’s compensation and social security disability? Typically, disability payments other than Social Security disability benefits will not affect your benefits. However, there are two notable exceptions to this rule. If you receive worker’s compensation or another public disability payment, the worker’s compensation or Social Security benefits you and your family members receive could be reduced, depending on your home state. In some states your Social Security Disability benefits will be reduced and in other states you will receive a full Social Security Disability benefit but your Worker’s Compensation benefit will be decreased. Either way, there are usually some extra benefits available through Social Security even if you are on Worker’s Compensation.

Regardless of which benefit your state cuts, the reduction ensures that the combined amount of the Social Security benefit you and your family receive plus your workers’ compensation payment and/or public disability payment does not exceed 80 percent of your average current earnings. Though it might seem odd that Social Security is keeping money from disabled persons, the reason Social Security caps benefit payments is to curtail fraudulent claims. With the caps in place you cannot make more money than you did before by simply being disabled, which leaves little incentive to submit false claims.

What Payments Will Be Considered Workers’ Compensation or Public Disability Payments?

According to Social Security, workers’ compensation is a payment that is made to a worker due to a job-related injury or illness. Workers’ compensation can be paid by federal or state agencies, insurance companies, or employers. On the other hand, public disability payments could be paid under a federal, state, or local government law or plan that pays for injuries and disabilities that are not job-related. Examples of public disability payments include civil service disability benefits, military disability benefits, state temporary disability benefits, and state or local government retirement benefits which are based on disability.

If you can’t find answers to your questions, complete the Free Case Evaluation and a Social Security Disability advocate will contact you to discuss your case.

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