SSI vs. SSDI
On August 14, 1935, President Roosevelt signed into law the Social Security Act in an effort to overcome the devastating poverty of the Great Depression. The Act committed the federal government to assist the elderly, unemployed, orphans, and people who were blind.
The Act has been amended many times since. For example, Social Security Disability Insurance (SSDI) was established in 1954. The federal government availed health care benefits through the Medicare program to SSDI beneficiaries in 1972. The Supplemental Security Insurance program (SSI) was created in 1974 to assist disabled individuals based on need.
Today the Social Security Administration (SSA) continues to offer SSDI and SSI for persons who are disabled and who meet other eligibility criteria. Many people often become confused about how the eligibility requirements, benefits, and funding sources of these programs differ. Eligibility for these programs are based on the Social Security Administration's definition of disability. There are three distinct elements to the SSA definition. First, you must have a medically determinable physical and/or mental impairment. Second, the impairment must be expected to last at least 12 months or to result in death. Third, you must be unable to do substantial and gainful activity as a result of that impairment.
Supplemental Security Insurance is based on an individual having a disability that affects their ability to work and the financial need of that person. Someone over 65 years of age can also qualify if they have the financial need.
What is financial need? This is determined by the amount of income and resources (assets) a person has available. SSI provides a monthly check for a disabled person who has little in the way of income and resources and limited or no employment history. To qualify for SSI you may not have more than $2,000 in non-exempt resources (ex. money in bank accounts, cash value of life insurance policies, etc.). Exempt resources include the value of a vehicle and the value of a home (if the person is using it as their primary place of residence). An SSI beneficiary can earn only $65 per month before their cash benefit is affected. Any earnings over the allowed $65 will result in the Social Security Administration recouping one dollar for every two earned from the beneficiaries monthly benefit check.
With SSI the value allowed for a vehicle is $2000. This amount can be waived if it is proven that a more expensive vehicle is needed to keep medical appointments. This can occur if a wheelchair lift or other medically related apparatus for a vehicle is needed to assist the person receiving the benefit. A situation where reliable transportation is needed for medically related appointments requiring a drive of considerable distance can also lead to the $2000 vehicle limit being waived.
Individuals who receive SSI and are homeowners will not have the value of a home held against them if they reside at the property. An example where home ownership becomes an issue is when the SSI recipient is placed in a supported residential program prior to disposing of any owned property. At that point the person does not live at the property and the value of the property will be held as a non-exempt resource. With the non-exempt resource level being only $2,000, they would lose their SSI eligibility until the property is sold and the money from the sale is spent down to the $2,000 limit.
Individuals receiving SSI benefits are also eligible for Medicaid. Earnings do not affect the Medicaid eligibility unless it is at a level that would stop the SSI cash benefit.
Social Security Disability Insurance (SSDI) is based on a worker's lifetime average earnings covered by Social Security. This is determined by the amount that has been paid into FICA over the history of employment. Worker's compensation payments and/or public disability benefits (e.g. civil service disability benefits) may reduce the payment amount. Unlike SSI benefits, other income or resources (assets) do not affect SSDI.
SSDI recipients become eligible for Medicare after 24 consecutive months of disability. Medicaid can also be obtained for an SSDI beneficiary if needed. This is available as "Aid to the Disabled" (AD) Medicaid. AD Medicaid is often referred to as Medicaid with a spend-down. A spend-down occurs when the amount of a person's income (including SSDI payments) exceeds the Medicaid income requirements. The person receiving AD Medicaid would need to spend money on medically related expenses every month that is equal to the amount of income they receive over the Medicaid allowable income amount. The beneficiary's Medicaid will become active only after the spend-down has been met in any given month.