What Is My Primary Insurance Amount and How Is It Calculated?
Your Primary Insurance Amount is the monthly benefit you receive if you are found to be medically disabled
If you are eligibile to receive Social Security Disability Insurance (SSDI) benefits, your monthly benefit amount will be based on your Primary Insurance Amount (PIA). Social Security uses a complex formula to determine exactly how much you will receive based on both your PIA and Average Indexed Monthly Earnings (AIME).
Average Indexed Monthly Earnings
Your AIME takes up to 35 of your working years and indexes those earnings based on prevailing wages in the years in which those earnings were generated. It adjusts your income for the level of inflation to standardize your earnings over time. SSA then uses the years in which you reported the highest indexed earnings, adds those earnings together and then divides the earnings by the number of months it took to generate those earnings.
For example, if your highest indexed earning years were $40,000 in 2009, $45,000 in 2010 and $50,000 in 2011, SSA would sum up those earnings (for a total of $135,000) and then divide by 36 months, to arrive at Average Indexed Monthly Earnings of $3,750 per month. So this is where a strong earnings history comes into play in determining your monthly benefit amount under the SSDI program. The higher your highest earnings, the higher your AIME, which is the primary input to the PIA formula.
Primary Insurance Amount
The Primary Insurance Amount (PIA) simply takes your AIME and multiplies it by three separate “bend points.” So for all Average Indexed Monthly Earnings up to $826, SSA takes 90% of these earnings. For earnings between $826 and $4,980, it takes 32% of these earnings. For earnings above $4,980, it takes 15 percent of these earnings. The sum of these three calculations is your Primary Insurance Amount, more commonly referred to as your PIA.
Using the above example, with an AIME of $3,750 per month, your PIA would be: 90% of $826 plus 32% of $2,924, or $1,670 per month. This would be your monthly benefit if you are found to be medically disabled! This amount would be increased by the Cost of Living Adjustment (COLA) that every Social Security beneficiary receives annually to reflect the level of inflation. This ensures your purchasing power is maintained even in the face of inflation.
3 ways to find out your monthly benefit amount
- Create an account on Social Security Administration’s website.
- Visit your local Social Security Field Office and request a copy of your earnings statement, which will indicate your monthly benefit under the disability program as well as the retirement program.
- Contact Social Security Administration’s customer service at (800) 772-1213 and request your monthly benefit amount under the disability program.
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