What Are Work Credits And How Do They Apply to Disability Benefits?

by Jul 4, 2018Disability Benefits

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Work credits are measures of your yearly payroll tax contributions. Work credits apply to disability benefits because the credits are how the Social Security Administration (SSA) determines if you have worked enough to qualify for Social Security Disability Insurance (SSDI). Since SSDI is set up like an insurance program, you have to have insured status to be eligible for benefits. Insured status means you have paid a sufficient amount into the system. It is analogous to paying premiums to a private insurance company. Your payroll taxes serve as your premiums, and only if you have paid your premiums can you make a claim for benefits. Work credits quantify your premium contributions.

Do You Have Work Credits?

During your working years, you build up work credits each year based on your total earnings. If you become disabled and apply for SSDI, the SSA calculates your work credits to determine if you qualify for disability benefits and if so, how much you are eligible to receive.

How Are Work Credits Calculated?

The SSA converts your earnings into work credits. Each year, it designates a certain amount of income as equivalent to one work credit. For the year 2018, you receive one credit for every $1,320 that you earn. Here is the kicker, though: The SSA caps you at four work credits per year. That means once you have earned $5,280, you have maxed out your work credits for the year. Whether you stop working at that point or go on to make another million dollars does not matter as far as Social Security is concerned. You end up with a maximum of four credits for the year either way.

How the Work Credit Cap Affects You

What does the cap mean for your SSDI eligibility? It means that the number of years you spend gainfully employed matters much more than the amount of money you earn each year. A person making $10,000 a year and a person making $10 million a year both accumulate work credits at the same rate.

If the person making $10,000 has worked for 30 years and the person making $10 million has worked only five years, the person making $10,000 is eligible for a much higher SSDI benefit despite significantly lower total earnings. This is because they have racked up 120 work credits (four credits a year times 30 years of work) while the millionaire has accumulated only 20 credits. Meaning how long you work plays a bigger factor than your income.

How Many Work Credits Do I Need to Qualify for Social Security Disability?

When it comes to how many work credits are needed for disability benefits, it varies on your age.

The younger you are, the fewer credits you need. If you are between 21 and 24, you need only six work credits, which corresponds to 1.5 years of full-time work. If you are between 24 and 31, the formula is a little more complex: Subtract 21 from your age, then double the result. So, at age 28, you need 14 work credits (28 minus 21 is seven, seven times two is 14).

Between the ages of 31 and 42, you need 20 work credits, all of them earned during the most recent 10 years. After age 42, simply subtract 22 from your age to determine your required work credits: At 46, you need 24 credits; at 56, 34 credits.

Other Factors Taken Into Account

If you are blind, you might be able to qualify for SSDI with fewer work credits than would typically be required for your age. In the case of blindness or any other unique circumstances, your Social Security disability attorney can review your situation and let you know what your options are.

What if I Do Not Have Enough Work Credits to Qualify for SSDI?

If you lack the work credits to qualify for SSDI, you might be eligible to receive disability benefits under a different Social Security program, Supplemental Security Income (SSI). SSI is a means-tested disability program for the needy. Rather than requiring work credits and payroll tax contributions, it restricts benefits to those with a demonstrated financial need.

How To Be Eligible for SSI

To qualify for SSI, your monthly income and total assets must be below the program’s limits. As of 2018, these limits are $750 a month for income and $2,000 for total assets. However, you do not have to count all of your income and all of your assets toward those totals. You are allowed to exclude certain forms of both unearned and earned income, and you can omit certain assets, too, such as a home that serves as your primary residence and a vehicle that serves as your primary mode of transportation.

Your Social Security disability lawyer can review your financial situation and let you know if you qualify for SSDI, SSI, or both.

Call the Disability Advantage Group, Today for a Free Social Security Disability Case Evaluation

The attorneys at the Disability Advantage Group, focus on helping disabled workers get the Social Security benefits they deserve. We offer a free consultation and case evaluation. To schedule an appointment today, call our office at 865-566-0800.