An overview of America’s Disability Insurance Program
The Social Security Administration was formed on August 14, 1935, as part of Franklin D. Roosevelt’s post-Depression “New Deal.” It was designed to provide retirement benefits for American workers. The first Social Security office was opened in 1936 in Austin, Texas, and the number of offices has grown considerably to the current 1,230 Social Security field offices throughout the United States. In addition to geographical expansion, the Social Security Administration has expanded its programs. After 20 years of Congressional discussion and debate, the Social Security Disability Insurance (SSDI) program was signed into law in 1956. The SSDI program is an insurance program that protects American workers from financial ruin if they become medically disabled – that is, unable to work.
American workers pay into the Social Security Disability Insurance plan through mandatory wage withholdings via Federal Insurance Contributions Act taxes, more commonly referred to as FICA taxes. Both employees and employers currently pay 6.2% of gross wages into the FICA program, which funds two important trusts: the Old-Age and Survivors (OASI) Trust and the Disability Insurance (DI) Trust. These are separate accounts managed by the United States Treasury. Disability benefits are paid to eligible individuals from funds withdrawn from the Disability Insurance Trust. Collectively, the retirement and disability program are officially called the Retirement, Survivors and Disability Insurance (RSDI) programs.
Eligibility requirements and the definition of being “disabled” have changed considerably since the inception of the SSDI program. For example, at the beginning of the SSDI program, only individuals aged 50 or greater were eligible, and children of disabled workers were not eligible for any benefits. However, despite these changes, the basic “deal” remains the same: if you work, you are insured for disability benefits. These benefits include monthly financial payments as well as access to Medicare. The average monthly financial benefit is approximately $1,165 in 2015 and the maximum amount for an individual is $2,663.
Supplemental Security Income (SSI)
In 1974, an additional disability program was created. This program is called Supplemental Security Income (SSI). This program is a welfare program that provides benefits to (1) people aged 65 or greater who do not qualify for Social Security retirement benefits due to insufficient work history (they did not “pay in”); (2) disabled people who do not have enough work history (they did not “pay in”) the required work credits, and (3) blind people who do not qualify for the main Social Security Disability Insurance plan because they did not “pay in.” Because SSI recipients do not need work history to qualify and it is a need-based program, they must meet specific resource and income limitations in order to establish and maintain eligibility. Eligible individuals qualify for monthly financial benefits as well as Medicaid insurance. The federal standard rate for SSI recipients in 2015 is $733.00. It is important to note that the SSI program utilizes the same process and definition to determine whether an individual is medically disabled. Effectively, the SSI program “piggybacks” off the Social Security Administration infrastructure that is in place to make non-medical and medical determinations regarding eligibility, as well as for general program administration. Currently, there are approximately 5.6 million SSI beneficiaries in the U.S.
Social Security is the largest social program in the United States
Over time, the Social Security Administration, based in Woodlawn, Maryland, has grown into a massive federal agency. It is the largest social program in the Unites States by far, consuming nearly 40% of United States federal government funds while providing income to 64 million individuals, 14 million of whom receive benefits under the Social Security Disability Insurance program.