Social Security & You: Older people and Social Security disability

I often feel guilty if I write a column that essentially repeats information I've given in past columns. But readers often remind me that I shouldn't worry about that. For example, today, I got an email that said something like this: "I know you've covered this topic before. But I've forgotten most of what you said, and now we are at the point where it applies to us, so could you repeat it?"

He was talking about senior citizens and Social Security disability benefits. Specifically, he said his wife has been getting disability benefits since her late 50s. As she is now reaching age 65, he asked when she should file for "real Social Security."

Let me make a couple of points about that question. First of all, disability benefits are "real Social Security." They are just as real as retirement benefits, widows benefits or any other kind of Social Security.

But of course, I knew what he meant. He was asking when his wife could file for Social Security retirement benefits. The answer is that she does not need to. Social Security disability benefits automatically convert to retirement benefits when a person reaches full retirement age.

This means a couple of months before this guy's wife reaches her full retirement age, or FRA, she will receive a letter from the Social Security Administration telling her that she is being switched, at least on the SSA's books, from the disability program to the retirement program. Other than that, the changeover will essentially be invisible to her, primarily due to the fact that her benefit amount remains the same. Why? Because a disability benefit pays the same rate as a full retirement-age benefit.

Here is another lesson gleaned from this guy's email. In his initial question, he told me that his wife was currently getting "SSI." I was sure he was mixing up terms, so I wrote back and said, "I'll bet your wife is getting Social Security disability benefits and not SSI." He quickly responded and said that I was right.

People frequently confuse Social Security disability benefits with Supplemental Security Income (SSI) benefits, but there is a huge difference. SSI is a federal welfare program that pays a small monthly stipend to poor people who are over age 65 or disabled. On the other hand, Social Security disability benefits are paid to people, rich or poor, as long as they have worked and paid taxes for a sufficient amount of time.

One reason many people confuse these two programs has to do with their abbreviations. Social Security disability benefits are frequently referred to as SSDI, or Social Security Disability Insurance, whereas SSI disability benefits are referred to as SSID.

Other frequent questions I get from senior citizens have to do with their possible eligibility for Social Security disability benefits. Here are some ground rules that vary depending on your age.

If you are over your full retirement age, forget about it. Once you reach that age, disability benefits are no longer payable. To put that another way, the retirement benefit you are getting pays the same rate as any disability benefits you might be due.

If you are under age 62 and disabled, then you should definitely file for Social Security disability. There is information about how to do that later on in this column.

If you are over 62 and not yet on Social Security, then you should file for retirement and disability benefits at the same time. The Social Security Administration can start your reduced retirement payments immediately. That way, if your disability claim is eventually approved, they will switch you to the higher disability rate.

But if you are between age 62 and your full retirement age and are already getting Social Security retirement benefits, you may or may not want to file for disability payments. The closer you are to your full retirement age, the smaller your disability boost will be. You may decide it's just not worth all the hassle.

Why? Your disability rate (normally equal to your full retirement age benefit) must be reduced for every month you've already received a Social Security retirement check. You will eventually reach a point where you simply gain very little by filing for Social Security disability.

Here is a quick example. Sam filed for retirement benefits at age 62. His benefit was reduced by roughly one-half of 1% for each month he was under his full retirement age. He is getting 75% of his FRA rate. At 65, he had a heart attack. If he files for disability benefits and his claim is approved, his regular disability rate, again equal to his FRA benefit, must be reduced by about one-half of 1% for each month he's already received a retirement benefit. At age 65, he's received 36 retirement checks, so his disability rate must be cut by about 18%. So instead of a 100% disability rate, he'd get about 82%. Sam would have to decide if it is worth all the hassle of filing for disability just to get bumped up from his current 75% rate to 82%.

What's the hassle? First, you will fill out a bunch of paperwork. The primary piece is a form that asks you to describe your disability and how it prevents you from working.

That same form also asks you to list your medical providers. The government can't make a decision about your case without having the evidence to back up your claim.

The SSA contracts out disability decisions to an agency in each state that is staffed with doctors and other medically trained personnel. They are the folks who decide if you meet the legal definition of "disability" for Social Security purposes. In a nutshell, the rules say that your impairment must keep you from doing any kind of work for which you are suited for at least 12 months.

There is a pretty good chance you will be asked to go to a Social Security doctor for additional evaluation. Make sure you don't miss that appointment.

Your disability claim will usually take about three to six months to process. If it's approved, you'll start getting disability checks six months after they say your disability began. That six-month waiting period is built into the law.

If your claim is denied, you will have to decide if it is worth it to appeal. If you decide to do that, the first appeal is usually just a review of your case by the state agency that made the first decision. If your claim is denied again, you can file for a hearing before a Social Security judge. Due to backlogs, those hearings can take about a year to set up.