Filing for Disability After Age 62 – How the Numbers Work

Much has been written about the question of whether to take early Social Security retirement at age 62 or to delay Social Security retirement to age 65 or longer. From a purely economic perspective, taking early retirement at age 62 will result in a reduction of your retirement benefits by around 30%.

SSA provides a calculator at https://www.ssa.gov/oact/quickcalc/early_late.html where you can plug in the numbers to see how early or delayed retirement can impact you.

But how does Social Security disability play into this calculation? If you are working at age 62 or beyond and have not claimed early Social Security retirement but you become disabled, does it make sense to pursue disability benefits in addition to (or instead of) filing for early retirement? What are the considerations?

What Happens When You File for Disability After Age 62?

There are a lot of moving parts in any decision you may make about when to claim your Social Security retirement benefit and you should not make that decision based on disability considerations. That being said, here is what I am telling potential clients close to or over age 62 who have not yet filed for early retirement.

If you file for disability at or slightly before age 62, your disability application will give you the option of also filing for early retirement benefits. By choosing this option, your monthly early retirement benefit will start at age 62. Given that disability cases can take two years or longer to be decided (and there is no guarantee that you will be approved), you will not be waiting for your disability decision with no money coming in.

If your disability decision is ultimately decided in your favor, your monthly benefit will be “bumped up” from the early retirement amount to a benefit payment which is roughly equal to your full retirement amount. In addition, you will be paid a lump sum equal to the difference between early retirement and full retirement for the months you have been waiting.

If the difference between early retirement and full retirement is $500 per month and your disability case takes 22 months from application to decision, you would get a lump sum of 500 x 22, which equals to $11,000. And your future retirement Social Security will be at the full retirement amount. You may also become eligible for Medicare earlier than age 65 (Medicare kicks in for SSDI recipients two years after eligibility for first SSDI payment).

If your SSDI case is denied, then you will continue to get your “discounted” early retirement benefit until you die.

In many situations, therefore, there is not much of a downside to filing for early retirement and Social Security disability at the same time. You can also factor in to the calculation that your odds of winning SSD increase after age 55 (see my website about the “grid rules”).

What is Your Date Last Insured and Why is it Important?

If you have made the difficult decision to file for disability because you no longer have the capacity to work even a simple, entry-level job, you need to start the process by filing a disability application with Social Security.

When you call the toll free number or apply online, SSA will ask you if you want to file for Title II disability (SSDI), Title XVI Supplemental Security Income, or both.

I generally advise my clients to file for both. If it turns out that you own assets, or have household income over the SSI limits, Social Security will determine that you are not eligible for SSI and you can proceed with your SSDI case.

Generally speaking, SSDI is a more robust program in that your monthly benefit will likely be higher, you won’t have to worry about assets you own or household income disqualifying you and you will eventually be eligible for Medicare (as opposed to Medicaid, which is associated with SSI).

In order to qualify for SSDI, however, you have to be insured for these benefits. SSDI is, in fact, an insurance program – the premiums you pay arise from the payroll taxes you have contributed over the years. Continue reading →

Reaction to 60 Minutes Disability Segment: Truth or Fantasy?

Jonathan
October 8, 2013
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This past Sunday, 60 Minutes aired a segment called Disability USA, in which correspondent Steve Kroft reported on the “alarming state of the federal disability program” which has exploded in size and is about to run out of money. Kroft interviewed Senator Tom Coburn (who is also a medical doctor), several current and former Social Security employees and former associate attorneys for a national law firm that advertises heavily [1. I have previously written and spoken about Senator Coburn’s efforts to expose fraud and inefficiency in the SSA disability program].

The gist of the story is that hundreds of thousands of able-bodied people have been approved for disability and are costing taxpayers millions of dollars. Further, the story suggested that disability lawyers are culpable in the outsize growth of the disability program because they advertise heavily. Further, there was an implication that at least some disability lawyers game the system with inappropriate and/or illegal relationships with doctors and judges. Several of the judges and SSA employees interviewed opined that the disability program has devolved into a last resort unemployment program rather than one focused on people with serious disabilities.

I have no doubt that fair minded American taxpayers who have no experience with the disability program were and are appalled at a system which appears to be out of control and rife with fraud and manipulation. Continue reading →

Past Due Benefits Paid Up to One Year Prior to Application Date Only

Questions related to onset dates, application dates and the date of first payment continue to be one of the more confusing elements of Social Security disability. A recent question from a blog reader incorporates all of these issues so I thought it might be helpful to use this question as the basis of a blog post:

I STOPPED WORKING IN 2009 I KNOW THIS WILL BE MY ONSET DATE, MY QUESTION IS MY ONSET DATE OF 2009, HOW WILL THIS AFFECT ME WHEN I APPLY FOR SSI BENEFITS SOON, SINCE I DON’T HAVE AN EARLIER ONSET DATE. WILL SOCIAL SECURITY BACK PAY ME FOR 2009 IF I WIN MY DECISION.

Let’s first discuss the question of what is Robert’s onset date. Generally, most claimants choose as their onset date the date that they last worked, and that is a reasonable choice. However, your onset date should be the date that you became unable to work. If, for example, Robert was laid off in May, 2009, and he suffered a major heart attack in October, 2009, the October date would be more appropriate. In theory, you can choose an onset date prior to your last day of work, but doing so is an uphill battle and judges are reluctant to approve a claimant for disability for a time period when he was working full or close to full time.

Generally I advise my clients to choose the earliest possible onset date when their medical condition prevented full time work. Your disability onset should be a date prior to the date that your SSDI insurance runs out. Continue reading →

Appeals Court Awards Claimant 30 Years Worth of Past Due Benefits

Jonathan
November 15, 2011
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A federal circuit court of appeals has awarded a widow 30 years worth of past due benefits on her late husband’s claim. The case involved the claim of Dr. Richard Frusher, a Rhode Island resident who applied for benefits based on mental illness in 1975.

Social Security denied his claim in 1975 and again in 1978. Disheartened, Dr. Frusher and his family gave up.

Fast forward to 2003, Dr. Frusher was approaching age 62 and he applied again, although this time for SSI only since he had long ago run out of SSDI credits. Noting that there was evidence in the file confirming that his mental health issues dated back to the early 1970’s, Dr. Frusher’s lawyer filed an appeal to the Appeals Council arguing that “good cause” existed for the Appeals Council to reopen his 1978 application on the grounds that Dr. Frusher’s schizophrenic condition prevented him from understanding his appeal rights, and that those rights were still available to him. Continue reading →

Can Child Claim Auxiliary Benefits if Disabled Parent Refuses to Apply?

Jonathan
August 17, 2010
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I regularly receive questions about auxiliary Social Security disability benefits. Often these questions are from divorced persons who are struggling with the cost of raising a child, while the disabled, non-custodial parent has not been cooperative with regard to auxiliary benefits.

Recently I received the following question:

i have a 15 yr old son. my ex husband is dying of cancer. he has not applied for ss , so i was told by ss that i cannot apply until my ex does. in the meantime we r struggling. help. -S

Here is my response: unfortunately, there is nothing that S can do unless and until her ex-husband applies for disability benefits. Cancer is a listing level impairment and my experience has been that SSA adjudicators and judges are more likely than not willing to grant benefits. Further, some cancers are included in Social Security’s compassionate allowance program. Even if the cancer is treatable, the treatment protocol often lasts 12 months or longer, so a cancer claimant can usually get a closed period even if on-going benefits are not awarded. Continue reading →

What Does it Mean When a Judge Wants to Change Your Onset Date

As I noted this past November, I am starting to see more instances when a judge will want to change the “onset date” for my client’s disability. What does this mean and should you be concerned?

Your onset date (called your Alleged Onset Date or AOD by Social Security) represents that date that you allege that you became disabled. Usually your AOD will be the day after you last worked, although in some instances I have been able to argue for an AOD that was two or three months prior to my client’s last day of work if my client had changed from full time to part time, if the job had become a “make work” situation or if my client was missing days or parts of days.

Similarly, I have tried cases in which the AOD was several months after the last day of work. This happens when a person is laid off because his employer is cutting staff and the medical evidence shows that the employee’s disability began at some point after the layoff.

In general, however, as rule of thumb, the last day of work is a good choice for your Alleged Onset Date.

Why, then, would a judge change your onset date? Usually, a Social Security judge will try to associate your onset date to a specific medical treatment record. For example, if the basis of your disability is back pain and an MRI showing a herniated disc is dated September 28, the judge may choose September 28 as the onset date. Obviously in this example, your disc was herniated on September 27 and probably on August 27 and July 27 as well, but September 28 is a date on which there is objective evidence of a medical problem consistent with your testimony. Continue reading →

SSI and SSDI During and After Incarceration

Question:

What happens to an individual’s disability benefits when they are convicted of a felony offense and sentenced to a time of incarceration?

Answer: Under Section 404.468 of the Code of Regulations, “No monthly benefits will be paid to any individual for any month any part of which the individual is confined in a jail, prison, or other penal institution or correctional facility for conviction of a felony.” Thus, if an individual receiving disability benefits commits and is later convicted of a felony offense, any disability payments he/she was receiving at the time of his/her incarceration will stop until such a time as the individual is released.

*Please note: both SSDI and SSI payments are subject to termination if an individual is convicted on a felony offense and as a result is sentenced to a period of incarceration. However, auxiliary benefits, those benefits paid to eligible family members, will continue even if the individual is not receiving benefits at the time because of his/her felony conviction and imprisonment.

Restoring SSI and SSDI Benefits After Being Released from Prison

Although an individual may lose his/her benefits during the time of incarceration, benefits can be restored as soon as the individual is released from prison. The procedures for having disability payments reinstated differ slightly according to the type of benefit that an individual was receiving prior to his/her confinement.

Restoring SSI

Depending on the length that an individual expects to be confined, he/she may be able to begin a “pre-release procedure” while still incarcerated. This is completed through a “Pre-Release Agreement” between the jail and the SSA and applies to inmates that have been or expect to be incarcerated for a period of less than one year. Although felony sentences by law carry a prison sentence of more than one year, it is possible that a defendant could be given credit for any time he/she has already served while awaiting trial and/or disposition in their case. An example of a hypothetical situation is as follows:

“John,” a SSI recipient of five years, is convicted on felony theft, which in the state of Georgia is theft of property in excess of $500.00 and is punishable by a possible term of imprisonment of 1-10 years. John was unable to afford bond and as a result spent six months in jail awaiting trial and/or disposition in his matter. John subsequently entered a guilty plea and was sentenced to 15 months in the state penitentiary. At his discretion, the sentencing judge gave John credit for the time he had already served, meaning that John only had nine months remaining. In this particular case, John was able to start the paperwork necessary to reinstate his benefits while incarcerated. Since John was proactive, it is likely that his benefits will start immediately following his release. If John has chosen to wait until his release to start the reinstatement of his benefits, again he would have received payment for any day that he was eligible, but the probability of his checks being delayed would have significantly increased.

Since any SSI award is based on the recipient’s income, individuals presently confined need to know what his/her income will be upon release and what resources he/she will have available. In addition, the SSA will need to know what other persons, if any, will be residing with the defendant following their release. On the day a disability claimant is released from confinement, they are encouraged to go directly to their Social Security office with personal identification and proof of their release.

Restoring SSDI

If an individual is receiving SSDI at the time of his/her incarceration, he/she will remain on the rolls during their jail or prison term, regardless of the length of their sentence. Like with SSI, SSDI payments will stop when a claimant is incarcerated and recipients will need to request reinstatement of their benefits when the time comes to be released from prison.

Although there is no pre-release procedure for SSDI as there is for SSI, jails or prisons that have Pre-Release Agreements for SSI can also use the same form to help SSDI recipients get the reinstatement process started. Those inmates unable to obtain a Pre-Release Agreement form should inquire as to whether the prison staff knows how SSDI payments can be restarted upon their release. If all else fails, incarcerated individuals should seek the assistance of their family members who can contact their local Social Security office for more information. In addition, the Social Security’s website, http://www.ssa.gov/disability/ contains a wealth of useful information.

In closing, it is against the law for any person convicted of a felony and sentenced to a term of imprisonment to continue to receive social security disability benefits during their period of incarceration. Likewise, it is illegal for someone other than the intended recipient to cash a disability check in the name of another person, specifically under the disguise of the individual in prison.

Does LTD Carrier Have a Claim on Auxillary Benefits Paid to Your Kids

I regularly receive questions from unhappy Social Security claimants who are facing the prospect of having to send their lump sum Social Security disability checks to their LTD carriers. Many LTD policies, especially group policies, include provisions that offset LTD payments by any amount received by Social Security. In other words, if the LTD benefit is $1,800 per month and Social Security awards $1,500 per month, the LTD carrier’s obligation becomes only $300 per month once SSDI is awarded.

Since the lump sum payment arises from months in which the claimant was also receiving long term disability, the LTD carrier contractually requires the claimant to turn over his Social Security lump sum payment to the LTD insurance company.

Not surprisingly, folks subject to this type of arrangement are not very happy about it. Why should the LTD carrier swoop in an grab that $25,000 or $30,000 check?

As I noted in a 2007 blog post about LTD offsets to Social Security claims, the LTD carriers justify this money grab by contending that the price of the group LTD policy reflects an expectation of a Social Security offset. In other words, the cost of group LTD insurance would, in theory, be higher if there was no offset.

Whether you believe this or not, I think it is safe to say that group LTD policy handbooks do not feature this offset obligation. Often the first time that SSDI claimants learn that their struggle and stress of pursuing Social Security result in zero dollars is after their SSDI hearings.

Now, apparently, there is a new twist. Continue reading →

Am I Getting the Right Amount of Money – Understanding Social Security’s Date Calculations

I received a question from one of my blog readers asking about date calculations. I wish I could tell you that understanding Social Security’s date calculations and acronyms was easy but I can’ t say that. I will try to offer some explanation about this confusing area.

i got an amended date signed by the judge but the social ser, office only went back to 2005 when i had the hearing and not the amended date that i was told they would go too. can you help me undersatnd this date stuff.
–Sandra

My reponse: Sandra, for sake of this blog post, I am going to talk mainly about SSDI benefits. I’ll touch on SSI but I’ll make SSI date calculations the subject of a later post.

So that everyone is on the same page, when I speak about SSDI, I am talking about Title II disability – the kind of disability that you receive if you have worked and paid money into the system. In order to qualify for SSDI, you have to be “insured” and have enough credits. I am going to assume that Sandra has enough credits and that there is no issue regarding her eligibility for SSDI.

When you apply for SSDI, you will be asked about the “onset date” for your disability. Since you are contending that you no longer have the capacity to work, I usually find that a good onset date is the day that you left your last full time job. You can voluntarily change your onset date – sometimes I discover that my client chose a date that was many months after he was able to work and I amend the onset date to an earlier date. In other cases, I find that my client used an onset date that was two or three years before she stopped working – in that case I might recommend that we amend the onset date forward as it is hard to argue that my client is disabled when she was still working full time. Continue reading →

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