What would you do if you were unable to work because of an injury or illness? If your employer doesn't offer disability insurance, then Social Security Disability Insurance (SSDI) is a great option for self-employed people. This blog post will discuss the four basic things that everyone should know about SSDI.
The Basics
SSDI is a federal insurance program that provides monthly income for people who cannot work because of their medical condition. The basic qualifications are: you must have earned enough Social Security credits and be able to prove your illness or injury prevents you from working in any job, not just the one you've held previously. You also need to meet the requirements for age and citizenship.
For the past few years, Social Security has been paying an additional amount to beneficiaries who work while receiving SSDI benefits, this is called "cash diversion," but it does not apply if you live in California or New Jersey (there are some exceptions). You can find out more about entitlements here: SSD entitlements, especially if you are in need of SSDI attorney service at the moment. Other important things to know about Social Security Disability Insurance are: the benefits from SSDI can be paid until you reach full retirement age, and if your monthly benefit amount is less than a certain level (which varies based on where you live), then your spouse or children may receive Supplemental Security Income.
How It's Paid
Once your claim is approved, you will receive a letter stating how much money you can expect to receive each month. But the first check probably won't be for your full benefit amount because of something called "back pay." This means that once Social Security approves your application they have to go back and look at every day since the date on which you became disabled or stopped working (whichever occurred later) until now. If this period includes more than three months before you applied, then those benefits are paid in addition to what Social Security owes you from when it began sending checks.
If there's any time during this process where no one has contacted either you or us about SSDI claims, don't worry! We're happy to call them ourselves and get the process started.
What You Can Expect To Receive
SSDI payments are made through the third week of each month, and this amount will remain steady for as long as you receive benefits. The first thing that is deducted from your check is something called Medicare Part B premiums (if you're already receiving Social Security retirement or disability benefits). These deductions continue with other medical costs such as prescriptions, co-pays, deductibles, etc. Once these expenses have been paid there's usually enough left to pay rent/mortgage and utilities. Any money left over at the end of the month can be saved if needed. However, what we've found in our experience working with clients on SSDI claims is that most people don't spend much time thinking about how they'll spend their monthly benefit amount. The key to successfully managing SSDI payments is to take the time to create a budget that includes all of your expenses, then work with us or another financial professional to make sure you stick within those guidelines.
The other thing worth mentioning here is something called "Benefits Planning" which can be an amazing tool for people who are receiving Social Security Disability Insurance but still have some money left over at the end of each month after paying bills and saving up enough in case of emergency. Benefits Planning helps you find ways to reduce certain costs (which frees up more cash) without having any negative effect on your life, such as making it harder for family members or friends to help out if needed because they don't know how much money you have.
The best time to start looking into this is when your monthly benefits are just beginning or soon will be, since it can take some time to finalize plans for things like estate planning, buying long-term care insurance, creating a special needs trust, etc. If you'd ever like us to review your current plan and make suggestions about how Benefits Planning could work better in the future, feel free to let us know.
Managing Your Benefits
Once you've applied for SSDI, it's important to let Social Security know right away if your condition changes in any way. This means that no matter how small the change is (for example, if you injured yourself or started having symptoms related to a different medical problem) make sure to report this information. You should also keep us informed about things like hospital stays, surgery, and doctor visits so we can help adjust benefits accordingly.
This might sound scary at first since people worry they'll be cut off from their benefit payments when reporting such news — but rest assured: we only want what's best for our clients! The reason why is because certain rules are governing who is eligible and ineligible for SSDI which determines whether someone will continue receiving their monthly benefit amount. For example, if someone is hospitalized for over 90 days in a row they will no longer be eligible to receive SSDI payments. However, many other things can affect whether or not someone's benefits will stop, so please feel free to let us know what you're experiencing and we'll do our best to figure out the rules!
These were four important factors that need to be considered before applying for Social Security Disability Insurance (or Supplemental Security Income). Knowing all of these details ahead of time makes it easier for our agency or another financial professional assisting with SSDI claims to help maximize potential earnings while making sure you keep up with medical costs.
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