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Fact Sheet: Disability Q's and A's

Published: May 2001
What is the Social Security disability insurance (DI) program?

Social Security disability insurance (DI) pays monthly benefits to workers who are no longer able to work due to a severe illness or impairment that has lasted or is expected to result in death or to last at least 12 months. It is part of the Social Security program that pays benefits to the vast majority of elderly Americans. Benefits are based on the disabled worker's past earnings and are paid to the disabled worker and his or her dependent family members. In order to qualify, a disabled worker must have worked in jobs covered by Social Security.

What is Supplemental Security Income (SSI)?

Supplemental Security Income (SSI) is a means-tested federal program that pays monthly benefits to low-income aged, blind and disabled individuals. For adults, it uses the same test of disability as the DI program. (For children, the standard is based on the ability to perform age-appropriate functions.) In order to qualify, the individual must have very low income and limited assets.

How many working-age adults have disabilities?

  • 28.8 million have a functional limitation or disability – an impairment which limits their ability to perform various activities, for example, a job, housework, seeing, hearing, bathing, keeping track of bills, and the like (Survey of Income and Program Participation, 1997)
  • 16.8 million have a work disability – an impairment which limits their ability to perform a job (Current Population Survey, 2000)

How many receive Social Security or SSI disability benefits?

  • 8.5 million working-age adults receive DI or SSI. Of these:
    - 5.0 million disabled workers receive DI
    - 0.9 million people receive Social Security as disabled widow(er)s or adult children with disabilities
    -2.6 million working-age adults receive SSI disability benefits only (Social Security Administration, December 2000)

How much are typical benefits?

The average disability insurance benefit paid to a disabled-worker beneficiary is $786 per month (as of December 2000), or about $9,400 per year. The following table shows pre-disability earnings levels and the amount of those earnings replaced by the DI benefit:

Annual Earnings Level
(Lifetime Average)
Percentage Replaced
by DI Benefit
$15,000 56%
$30,000 43%
$50,000 35%
$75,000 28%

The Federal SSI benefit is $530 per month in 2001 or about $6,400 per year. The benefit represents about 70 percent of the federal poverty threshold. Individual recipients may receive less than this amount if they have other income; they may receive more if their state supplements the basic benefit.

Who pays for Social Security disability benefits and SSI benefits?

DI and SSI are financed separately:

  • Social Security disability insurance is paid for by workers and their employers. It is financed from part of the FICA payroll tax. The Social Security tax is 6.2 percent of a worker's wages up to $80,400 in 2001, paid by the employee and employer, each (for a combined total rate of 12.4 percent). Of that 6.2 percent, 5.3 percent pays for Social Security retirement and survivor's benefits and 0.9 percent pays for disability insurance. (An additional 1.45 percent tax is paid by the employee and employer, each, on all wages, for Medicare hospital insurance.) In addition, a portion of the income tax paid on benefits is directed to the DI trust fund.
  • Supplemental Security Income is financed from federal general revenues (i.e. personal and corporate income taxes, federal excise taxes, the estate tax, etc.). It is not financed from Social Security payroll taxes.

How much do these programs cost?

In fiscal year 2000, the DI trust fund paid out $54.2 billion in benefits for disabled workers and their families. The administrative cost of paying these claims was $1.6 billion, or about 3.0 percent of benefit costs.

In fiscal year 2000, SSI disability benefits for persons aged 18-64 were $17.9 billion.

Which agencies administer DI and SSI?

Both programs are administered by the Social Security Administration (SSA), which assesses the severity of the disability, determines eligibility, and issues monthly checks. Initial determinations are made by state agencies under contract with SSA. The cost of administering DI is financed from Social Security payroll tax revenues; the cost of administering SSI is financed by general revenues.

What is the test of disability used for these programs?

The same test of disability for adults is used for DI and SSI. The law states:

The term “disability” means --
Inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months...

[The impairment(s) must be] of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy... (Social Security Act, Section 223(d)(1)(A) and (2)(A))

SSA defines “substantial gainful activity”(SGA) in regulations. In 2001, the threshold for performing SGA is earnings of $740 per month for non-blind individuals.

What are the most common types of disabilities among beneficiaries?

Of the 4.9 million disabled workers receiving DI at the end of 1999, mental disorders were the primary diagnosis for 32 percent (5 percent had mental retardation and 27 percent had other mental disorders). Musculoskeletal conditions were the primary diagnosis for 23 percent, while "other" conditions accounted for the remaining 45 percent. Common diagnoses in the "other" category were diseases of the circulatory system (11 percent), of the nervous system and sense organs (10 percent), of the blood and blood-forming organs (5 percent), the respiratory system (3 percent) and cancers (3 percent). Many disabled workers have from multiple conditions.

Among SSI adult disability beneficiaries, the most common type of disabilities are mental disorders (34 percent) and mental retardation (24 percent).

Do disability beneficiaries receive health insurance?

DI beneficiaries receive Medicare benefits after a 29-month waiting period from the onset of their disability. It is the same Medicare benefit package as that of retirees age 65 and older. It pays for hospital care and doctor visits but does not cover out-patient prescription drugs or long-term care. Family members are not eligible for Medicare. Some beneficiaries may have employer-sponsored health insurance from their prior employment or through their spouse, or may purchase it privately. In most states, SSI disability recipients are automatically eligible for Medicaid benefits. Medicaid covers more health care services than Medicare, including prescription drugs and long-term care.