With each paycheck you receive, you can expect a certain amount to be subtracted for Social Security taxes. When you are old enough to retire, you can essentially start earning this money back for all your years of hard work and paying your taxes.
However, what happens if you become disabled before you reach retirement age and are no longer able to work? Thankfully, Social Security Disability Insurance (SSDI) is available for qualifying individuals whose disability prevents them from working.
If you are eligible for SSDI benefits, understanding and calculating the amount you are entitled to receive each month can be challenging. The California disability attorneys at The Law Offices of Dr. Bill LaTour can help make the stressful process easier for you and your family. Keep reading to better understand how your covered earnings affect your disability benefits.
Understanding Covered Earnings
Covered earnings refer to any past wages that paid into Social Security. For example, if your previous paychecks have shown money that was withheld for “Social Security” or “FICA,” the wages you made at that job are considered ‘covered earnings.’
To be counted as covered earnings, your wages must be covered by the Social Security program. Today, almost all types of wages are covered earnings, including self-employment income. Notable examples of non-covered earnings include wages from railroads and certain state and local government jobs.
How Covered Earnings Affect Your Social Security Benefits
Many individuals applying for disability benefits make the mistake of believing the amount they should receive is based on the severity of their disability. This is not true.
If you are eligible for SSDI benefits, the amount you receive each month is mainly determined by your covered earnings before your disability began.
In order to receive SSDI benefits, applicants are required to have worked and paid into Social Security for a certain amount of time. If you have limited work history or have never paid Social Security taxes, you will have a little amount of covered earnings and will likely not qualify for SSDI to begin with.
Calculating Your SSDI Benefits
After the Social Security Administration (SSA) has determined that you meet their definition of disabled, they will then use two formulas to calculate your specific benefit amount. The SSA’s formulas are outlined below:
Average Indexed Monthly Earnings (AIME)
This is your average covered earnings over a set number of years. The SSA adjusts or “indexes” your earnings to account for general wage levels during the years you were employed. This ensures that your future benefits will reflect the rise in living costs that happened while you were working.
Primary Insurance Amount (PIA)
The SSA will then use your AIME to calculate your PIA, which is the basic amount of your SSDI benefits. However, your actual monthly benefit amount can be set lower than the PIA depending on whether or not you receive disability benefits from other sources.
The Social Security Administration offers a detailed explanation of the AIME and PIA if you would like further information on how the formulas are used to determine your monthly disability benefits. The SSA also provides online calculators, so you can get an estimate of your benefits.
Should you qualify for SSDI benefits, calculating the amount you will actually receive can be complex and frustrating. An experienced attorney who is familiar with the Social Security system can help you with the application process and determine how much you can expect if you are approved.
Additional Income That Can Reduce Your Disability Benefits
As mentioned above, receiving benefits from other sources can potentially reduce your disability benefits. Public disability benefits from programs such as workers’ compensation, for example, can lower the amount you are entitled to for SSDI benefits.
Your benefits could also be affected if you receive public benefits through the federal, state, or local government, such as temporary disability benefits and state or local government retirement benefits that are based on disability. Some public benefits such as Veterans Administration benefits, however, will not reduce your SSDI benefits.
If you are qualified for multiple public disability programs, it is in your best interest to speak with a lawyer to ensure you receive the maximum amount that you’re entitled to. However, keep in mind that the total amount you earn from SSDI and any other public disability benefits programs can’t exceed 80% of the average amount you earned before you became disabled.
Our Experience, Your Advantage
The Law Offices of Dr. Bill LaTour has helped countless individuals across Southern California through the complex process of obtaining Social Security disability benefits. Our team of legal professionals deals exclusively with SSDI and SSI matters, so we are familiar with the challenges that disabled individuals face when applying or appealing for benefits.
Our knowledge and years of experience can help you and your family overcome those challenges. When it comes to Social Security benefits, consulting an attorney is important because they can ensure you have everything you need to make the disability claims process as smooth as possible.
If you’ve suffered a disabling injury or illness that has left you unable to work, our dedicated California disability attorneys can determine if you’re entitled to receive SSDI benefits and guide you through every step of the way. Our experience will be your advantage.
Consult a California Disability Attorney for Help Calculating Your Monthly Disability Payment
We’ve been helping disabled individuals in the Greater Los Angeles area, the Inland Empire, and Orange County get the disability benefits they need for years. Call Dr. Bill LaTour and his team today at 800-803-5090 or fill out our online form to schedule a free consultation.
