Spotlight on SSDI

Social Security Disability Insurance (SSDI) is a federal public insurance program that pays a disabled worker regardless of the worker’s income or asset level. In other words, it is not a “means-tested” benefit. Qualifying individuals have worked enough years and meet the definition of “disabled.” These individuals have contributed to Social Security through the FICA tax but are now unable to engage in substantial gainful activity. The medical condition must be expected to last at least one year or result in death. In 2024, the average monthly SSDI benefit was $1,537, and the maximum benefit was $3,822.

There is a specific type of SSDI benefit called the Childhood Disability Benefit (CDB) or sometimes the Disabled Adult Child Benefit (DAC). An adult disabled child may be eligible for Social Security benefits if a parent is deceased or receives Social Security themselves. This is a cash benefit based upon the Social Security contributions of the disabled child’s parent, so long as the child had a disability before age 22. This benefit is not payable until the sponsoring parent retires, becomes disabled, or dies. When the sponsoring parent is retired or disabled, the disabled child receives a payment equal to 50% of the parent’s Social Security amount. When the parent is deceased, the child receives 75%. CDB is an entitlement program and is not means-tested. If an SSI recipient switches to CDB after a parent retires, dies, or becomes disabled, the SSI recipient will continue to receive Medicaid benefits even if income increases past the Medicaid threshold.

Because SSDI and CDB are not means-tested public benefits, eligibility is not based on maintaining limited income or assets, although earned income may cause ineligibility for benefits because of the substantial gainful activity threshold. However, just because an individual receives SSDI or CDB does not automatically mean there are no special needs planning issues. In some cases, an individual will receive both SSDI or CDB and SSI. This is known as being dual eligible. With CDB, the recipient will also have Medicaid eligibility to consider. And even with SSDI, it is possible for individuals to receive Medicaid if their SSDI amount is low. The individual may also receive other means-tested benefits, such as food stamps or housing assistance.