Breaking Down the Differences Between SSI, SSDI, and Social Security

Posted on June 22, 2020

The federal government provides financial assistance to people who are retired or unable to work because of physical or cognitive challenges. It’s not easy wading through all the different programs available, especially if you’ve recently sustained catastrophic injuries in an accident and have never looked into them before. For example, the names of three major government benefits programs look alike — Social Security, SSI, and SSDI — but they are actually very different. Below, we break down the benefits of each of these programs and their eligibility requirements. Should you have any questions about government benefits in the context of a lawsuit, we welcome you to give us a call.

Social Security

Who Qualifies: Social Security pays monthly benefits to retirees, people with disabilities, and surviving dependents of workers who have died. 

You pay Social Security taxes out of your paycheck, which then go into a fund for beneficiaries. When you retire and want to collect Social Security, your monthly benefit amount will be based on your highest 35 years of earnings. You can start receiving benefits as early as age 62. However, you can also wait to receive benefits up until age 70. The longer you wait, the higher your monthly benefit will be for the rest of your life. 

SSI: Supplemental Security Income

Who Qualifies: Beneficiaries of SSI include the elderly, blind, and those with a disability — meaning a long-term condition that prevents them from working. 

SSI helps eligible individuals meet basic needs for food, clothing, and shelter. The program is a means-tested program. In other words, a person must stay under a certain income threshold in order to maintain eligibility for benefits. (Certain assets, like an individual’s home and automobile, are not counted.) So a sudden influx of income, such as a settlement from a personal injury lawsuit, can disqualify them for SSI. That’s why beneficiaries must plan carefully if they are going to receive a recovery from a personal injury lawsuit. 

There are some settlement planning tools that allow injured plaintiffs to keep their SSI benefits and still get the most out of their settlement. For example, a special needs trust uses a portion of the settlement proceeds for items that SSI doesn’t pay for. This type of trust may be a consideration if you are currently receiving SSI or anticipate needing these benefits and are approaching a settlement.

SSDI: Social Security Disability Insurance

Who Qualifies: SSDI pays benefits to individuals who cannot work because of a medical condition. In some cases, this program also provides financial assistance to the family members of those individuals. To qualify as an SSDI beneficiary, a person must have worked in a job covered by Social Security. Then, he or she must have developed a disability as defined by the Social Security Administration. Only people who are unable to work for a year or more because of their condition will generally qualify for SSDI benefits. Those benefits usually continue until a person is able to work again on a regular basis. For those who are able to transition back to work, special rules called work incentives provide continued benefits and health care coverage.

The important distinction between SSI and SSDI: SSDI will pay benefits to you and your dependents if you worked long enough and recently enough and paid Social Security taxes on your earnings. SSI pays benefits to disabled adults and children who have limited income and resources. More on these two programs here.

We hope this guide helps to clarify the differences between these federal government programs, and who may qualify for what. If you have any questions about your current qualifications and how a lawsuit settlement may affect these, feel free to reach out.