Understanding the Difference Between SSI and SSDI, including DAC
The distinctions between Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) are very important. Navigating the complexities of these two programs is crucial for individuals seeking financial assistance due to disability, and for parents of children with disabilities who are trying to establish Special Needs Trusts or Medicaid eligibility. Below are the key differences and some guidance on determining whether someone is receiving SSI or SSDI or DAC.
SSI (Supplemental Security Income):
SSI is a needs-based program designed to provide financial assistance to disabled individuals with limited income and resources. Key points to understand about SSI include:
- Eligibility Criteria: Individuals must have a qualifying disability, be aged 65 or older, and meet strict income and resource limits.
- Financial Assistance: SSI provides a monthly cash benefit to help cover basic needs such as food, shelter, and clothing.
- Medical Eligibility: SSI recipients are not required to have a work history, but they must meet the Social Security Administration’s (SSA) definition of disability.
SSDI (Social Security Disability Insurance):
SSDI is an insurance program that provides financial support to individuals with disabilities who have a substantial work history. Key features of SSDI include:
- Eligibility Criteria: To qualify for SSDI, individuals must have a qualifying disability and have accumulated sufficient work credits through their employment history.
- Work Credits: Work credits are earned based on the amount of income subject to Social Security taxes. The number of credits needed for eligibility varies based on age and other factors. Typically 40 credits are required, equivalent to 10 years of creditable work experience.
- Financial Assistance: SSDI provides a monthly benefit amount based on the individual’s average lifetime earnings before the onset of the disability.
Disabled Adult Child Benefits (DAC)
Many adults with disabilities qualify for SSDI based on their parent’s work record through the Disabled Adult Child (DAC) Program , and often these same adults were receiving SSI until one of their parents retired or died, thus entitling the adult child to receive DAC, which is typically higher than SSI.
To qualify for DAC, the adult child must:
(1) have a qualifying disability;
(2) be single and not legally married;
(3) have a disability that manifested before age 22;
(4) have a parent with sufficient work credits for retirement benefits; and
(5) have a parent who is either:
- permanently disabled and receiving SSDI; or
- retired and receiving regular Social Security retirement benefits (sometimes called RIB — Retirement Insurance Benefits); or
- deceased.
If the parent retires or becomes disabled, the child who is disabled is entitled to receive 50% of the parent’s Social Security benefit.
If the parent has died, the child who is disabled is entitled to receive 75% of the what the parent’s Social Security benefit would be if they were still alive.
Determining if Someone is Receiving SSI or SSDI or DAC:
- Checking the Bank Statement Doesn’t Work: Since all of these benefits come from the Social Security Administration, there isn’t an easy way to tell by just looking at the recipient’s bank statement as they all indicate that the payment is from “SOC SEC.”
- Review Eligibility Criteria:
- If the individual with disabilities has limited income and resources and has not worked or has a limited work history, and does not have a retired, disabled, or deceased parent, then they are likely receiving SSI.
- If the individual with disabilities has a substantial work history and paid Social Security taxes for at least 10 years, they are likely receiving SSDI.
- Examine the Benefit Amount:
- The SSI benefit amount can be found here, but could be lower than this amount by approximately one-third if the recipient is receiving ISM (in-kind support and maintenance), such as housing at no charge from a family member.
- SSDI benefits are calculated based on the individual’s past earnings and vary greatly, so are often significantly higher than SSI payments.
- DAC benefits are calculated based on a percentage of the Social Security or SSDI payments of the retired, disabled, or deceased parent(s), and also vary greatly, but if the amount received is 50% of the Social Security or SSDI payment of the retired or disabled parent, then it is most likely DAC.
- Contact the Social Security Administration or Log in to Your Social Security Account: If in doubt, contacting the Social Security Administration by phone or logging into the individual’s SocialSecurity.gov account on the SSA website will provide specific information about the benefit being received.
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