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"D" is for "definitely different: SSI vs. SSDI

For those of us who grew up on Sesame Street (before CGI), "D" is for "definitely different" when it comes to Social Security's two cash benefits for people with disabilities. SSI is Supplemental Security Income. SSDI is Social Security Disability Insurance.

SSI is what is, perhaps disparagingly, known as "welfare" or "public aid." A person qualifies for SSI because he or she cannot earn very much money and doesn't have very much money. In addition, the person must have a situation that genuinely limits her/his capacity to work: you have to be over 65 or blind or have a disability. You may qualify for SSI regardless of whether you yourself, or any person of whom you are a dependent, has paid into the Social Security system.

Because of this, SSI has more restrictions. For example, once you qualify and start receiving the benefit, any unearned income you get over $20/month reduces your SSI benefit dollar for dollar. If you have a bank account that pays you $25 of interest (unlikely these days, I know) you lose $5 of your SSI benefit for that month. Any money your earn reduces your benefit by 50 cents on the dollar after the first $65. So if you get a freelance gig in the same month and make $200, your benefit will be reduced by another $67.50.

Because SSI is welfare, your "countable resources"--basically cash and equivalents like investments--are limited to $2,000. If you have more, you lose your benefits. Some assets, like a home, personal items and a car, are not countable. More on that in another blog.

SSDI is an earned benefit, as the name suggests. If you yourself worked enough and paid Social Security (FICA) taxes and you have a disability, then you have earned the right to draw benefits. You may also receive benefits if you can claim them as an auxiliary on the record of another worker--typically a spouse or parent,

As long as you remain below the earnings threshold that defines "having a disability," any money you earn will NOT reduce your SSDI benefit. No amount of unearned income will have any impact on the benefit, and your assets do not limit your eligibility. As long as you previously worked enough or had a spouse or parent who did, you could be a millionaire with substantial investment income and still draw SSDI.

"D" is also for "desirable." Perhaps "decidedly" so. As you can see, SSDI carries less restrictions. And it has the potential to be larger than than SSI. You don't have to worry about applying for the right benefit--your intake interview is an application for both and, if you end up qualifying for both, the administration will give you whichever one is more beneficial. Just be clear on which one you receive, so that you can follow the rules. If you only qualify for SSI, however, you can still work to earn the credits to transition to SSDI. The younger you are, the less credits needed, If a parent or spouse starts to draw their benefits, make sure you go in to claim yours,

(Image is for fair-use only. Blog is for educational purposes.)

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