For an adult retiree or someone 62 or older who is eligible, Social Security can mean a lot financially, allowing for retirement. But what if your circumstances change after you’ve begun receiving those benefits? What if you become disabled? Will this affect your current benefits? They’re good, important questions, and the answers could make a big difference to your financial well-being.
In this blog post, I’ll guide you through what happens if you become disabled when you’re already on Social Security, what could happen to your benefits, and how you can stop that from happening.
What You Need to Know About Social Security Disability Benefits
But before we dive deep into what happens if you are on Social Security and you become disabled, it’s important to learn a little bit more about the ins and outs of Social Security benefits and disability. Below are the two main types of Social Security benefits relevant to our discussion:
Social Security Retirement Benefits
Retirement benefits are for people who have reached full retirement age (66 or 67, depending on the year you were born) or have decided to take early benefits, as early as 62.
Social Security Disability Insurance (SSDI)
This is available to those who are unable to work due to a long-term or severe disability. SSDI benefits are funded by your past work and payroll tax payments (FICA).
The more important question to ask is – can both programs exist for the same person?
Can You Get Disability If You Are on Social Security?
Should you already be receiving retirement benefits from Social Security, and you then become disabled, you cannot switch to or add SSDI benefits. Here’s why:
Once you begin to collect Social Security retirement benefits, you are essentially no longer eligible for SSDI, since you cannot collect both at the same time. The point of SSDI is to help provide an income for those who are disabled and can no longer work, but have several years of earnings ahead of them before they hit retirement age.
But there’s an exception to this rule for those who are younger than full retirement age (which is typically 66 or 67). If you are not full retirement age and you are receiving early retirement benefits, becoming disabled could make you eligible for something called retirement rollover well-being.
Retirement Roll-Back Explained
Retirement Roll-Back It means that the Social Security Administration (SSA) can recalculate and change your early retirement benefits into disability benefits, if you qualify for SSDI. This manoeuvre can be financially advantageous, given that disability benefits are computed as though the recipient were collecting a full retirement benefit. Early retirement benefits, on the other hand, are smaller, and the reduction is permanent.
For example:
Say you claim early retirement benefits at 62 and receive 75% of what you expected to get at full retirement age.
If you subsequently qualify for SSDI based on retirement roll-back, the SSA can “roll back” the amount of ongoing SSDI benefit payable to you to the amount you would receive at your full retirement age, rather than at the reduced rate payable when you are considered to be “young” for SSDI purposes.
That makes the prospect of seeking disability benefits worth considering, even if you already are receiving early retirement payments.
If You’re Older Than Full Retirement Age
If you are over your full retirement age and become disabled, there is no extra provision available to claim SSDI. SSDI benefits convert fully to Social Security retirement benefits at full retirement age anyway, so there is no reduction past that age. The disabled no longer consider disability benefits separate from retirement benefits.
When Becoming Disabled Can Cut Into Medicare
Becoming disabled can also allow you to access Medicare sooner than would otherwise be the case. People become eligible for Medicare at 65, but SSDI recipients can generally get it after a wait of 24 months if they have disabilities that meet Medicare’s standards.
But if you already receive Medicare as part of a retirement package from Social Security, your situation is probably not going to change. If you’re disabled, there’s generally no extra Medicare benefit beyond what you’re entitled to receive due to your age.
Other Financial Goodies to Think About
And while SSDI may not be an option for people on Social Security, there are agencies and programs that can help you cope with the financial pressure a disability can bring. The following are a few worthwhile ones:
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State Disability Programs – Certain states provide short-term or long-term disability help for their residents.
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Employee Disability Plans – If you were working and purchased a private long-term disability policy, you can collect from that policy.
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Supplemental Security Income (SSI) – SSI is also a national disability program, but it is based on income and resource qualifications, excluding eligibility for SSDI. If you are not in a position to afford the cost, this might be one solution.
What to Do if You Become Disabled
If you become disabled after already receiving Social Security retirement benefits, do the following:
Step 1 – Alert Social Security promptly
The first thing that you should do is inform Social Security right away.
Contact the Social Security Administration as soon as possible to start the process of finding out your options. Telling them at the outset about your change in circumstances allows them time to review your case.
Step 2 – Get Your Documents Together
If you are applying for SSDI or a rollback of your retirement benefits to disability benefits (if you’re under full retirement age), you will need to provide extensive medical evidence. This could include:
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Diagnostic test results
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Specific physician narratives on the severity and day-to-day impact of your disability
Step 3 – Speak with a Benefits Counselor or Attorney
The rules about Social Security and disability benefits can be confusing, especially if your circumstances exist in a gray area. You may want to talk to a specialist in Social Security representation.
Step 4 – Discover More Resources
If SSDI is not available, research other support programs, such as Medicaid, SSI or state-level disability benefits, that may offer some financial support.
Looking Ahead to Your Financial Future
And it is prudent to prepare for eventualities, such as disability. Here are a couple of long-term strategies to make sure you’re covered no matter what life throws you:
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Purchase Long Term Disability Insurance – This can provide you with an extra income stream if you are unable to earn a paycheque.
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Remain Current on Social Security Regulations – The rules and requirements change periodically. Be sure to check SSA resources or plan to attend information sessions regularly to get updates.
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Emergency Savings – It is a good idea to set up a financial safety net for things that may come up like medical bills.
Do Something Before It’s Too Late
A disability while on Social Security shouldn’t have to be endured in confusion and economic peril on your own. Understand how these systems operate, become more aware of your options and become an active partner to greatly reduce the stress involved with this life-changing event.
If you or someone you know is worried about handling Social Security or disability income, consider contacting your local SSA office to find the best solution based on your individual circumstances.
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