If you've spent most of your life working in one of the few industries that doesn't require the withholding of Social Security and Medicare taxes for its employees, you may be concerned about the eventual impact of this exclusion on your retirement benefits. Most employers whose employees aren't required to pay in to the Social Security disability and retirement system have created retirement income alternatives (like pensions or other defined benefit plans) to ensure that these employees aren't left high and dry when they can no longer work due to age. However, for those disabled before retirement by illness or injury, these options may come as a cold comfort. What disability benefits are available if you've never paid Social Security taxes? Read on to learn more about your options.
Who qualifies for SSD?
Social Security Disability (SSD) is a disability income program designed to help compensate those who are unable to perform any "substantial gainful activity." SSD is only available to those who have worked a specific number of years (and paid Social Security taxes during this time). Generally speaking, to qualify for SSD after you've become disabled, you'll need to have earned at least 40 credits (at a rate of 4 per year). Employees who earned at least $4,880 in 2015 should have earned their maximum 4 credits for this calendar year. However, those who are disabled before age 42 can generally receive SSD with only 20 credits, while those disabled before age 62 should be able to qualify for SSD with on a pro-rated number of credits based on age.
Because these benefits (like Social Security retirement benefits) are based on your work years and earnings record, the more you earn, the higher your potential benefit may be. For those worried about their ability to work much longer (but who are not yet permanently disabled), switching to a job that deducts Social Security and Medicare taxes could help provide you with an additional layer of financial security to protect against disability.
Do you have any options if you're disabled but haven't paid Social Security taxes in the past?
If obtaining a Social Security-covered job is no longer an option for you, you may still qualify for another type of disability benefit -- Supplemental Security Income (SSI). This benefit is designed to help fill the gaps by providing disability income to those who aren't able to work but have worked in a non-covered job in the past (or who have been disabled since a young age and cannot hold down gainful employment). However, because this benefit isn't based on earnings, but on available assets (and inability to work), the amount you'll receive through SSI is usually lower than the amount you would receive through SSD.
Not every disabled individual who doesn't qualify for SSD will be able to receive SSI. This program is meant to help the most needy, and the Social Security Administration has put strict asset limits in place to help cut down on allegations of fraud. In general, to qualify for SSI payments, you'll need to have less than $2,000 in "countable assets" (excluding certain larger assets like a home or car), or less than $3,000 in available assets if married. If your assets are above this level but you fear your inability to work will quickly impoverish you, you may be able to qualify for temporary benefits while you transfer some of these assets out of your name (either to another family member or to a special needs trust). Your SSI payments should then continue through retirement as an alternative to Social Security retirement income.
If you have any questions, you should reach out to a social security attorney. Click for more info.