Some of the most impactful work we do involves setting up financial protections for disabled individuals. Part of that process includes exploring federal income benefits, but many people don’t realize that there are two available programs: SSI and SSDI. If you have a disabled child, knowing whether they are or should be on SSI or SSDI can significantly impact the planning you do for them.

What is SSI?

Supplemental Security Income, or SSI, is what we call a “means-based” program. When a program is means-based, the eligibility requirements are based on your ability to support yourself financially. Many states, Iowa included, base their Medicaid eligibility rules on the SSI limits, so you may already be familiar with the proscribed asset and income amounts.

Note that the SSI income limit for a married person is 150% of the limit for a single person. Also note that the Medicaid income limit in Iowa is 300% of the SSI individual income limit.

If the Social Security Administration approves your SSI application, the payments will begin as of the month you submitted your application, and the amount is based on whether the applicant is married or single. This means the applicant might receive a substantial first check representing payment of benefits due for the period the application was pending. After the first payment, SSI is paid monthly.

What is SSDI?

Unlike SSI, Social Security Disability Insurance is a program that is funded by your payroll withholdings. Because this is an insurance program, the eligibility tests are not “means-based” like they are with SSI. Instead, SSDI eligibility is based on work history and type of disability.

You cannot be considered disabled for purposes of SSDI if you are over age 65; in that situation, you would just get your normal Social Security payment. If you are under the age of 65, the Social Security Administration will consider whether you meet the definition of disabled. This is a lengthy process and requires extensive medical records. In fact, if you have seen a doctor regularly as result of your disability, the odds of SSDI approval go up considerably.

You work history dictates whether you are even covered by the SSDI program. In order to receive benefits, you must have earned a certain number of “work credits.” The number of credits you need is based on your age – younger people need fewer credits than older people. Fortunately, your work history can be used to obtain eligibility for your spouse as well as your dependent children who are over the age of 18.

Once you are determined to be eligible for SSDI, you have to wait five months before you may receive a payment. And, just like with Social Security, the size of that payment will be based on your earnings record.

Why it Matters

It’s really important to know the difference between SSI and SSDI when it comes to planning. At a minimum, your attorney will need to know which program is involved because it affects how they deal with housing for your disabled beneficiary.

Without getting into the nitty gritty details, if your plan documents state that the disabled beneficiary’s housing will be paid for, that payment must be counted as income for purposes of SSI eligibility. This would reduce the beneficiary’s SSI benefit, potentially to zero!

In addition to the planning reasons for knowing whether SSI or SSDI is involved, it’s important to know which program your beneficiary is on because they might be able to receive additional funds if they change programs (switching from SSI to SSDI) and there may be additional benefits available to them through other programs. For example, SSI recipients are also eligible for health insurance coverage through Medicaid and may be able to receive food stamps as well.

Conclusion

If you or a loved one is receiving SSI or SSDI, make sure you know which one. That way your attorney can draft the plan documents that will work for your situation. To learn more about the differences between SSI and SSDI, check out this fact sheet from the Social Security Administration.