Friday, May 18, 2012

Social Security Disability Eligibility Through Work Credits

Protect Yourself:  Paying Taxes On Earnings of $4,520 A Year Secures Your Title II Social Security Disability Benefits. 

By Tracey E. Cahn Esq. of Kazmierczak & Kazmierczak, LLP.

As an attorney who works with a disabled clientele, I am writing to urge all of you who are healthy to work, at least part-time. 
Why?  Well, while there are many benefits to working, the sole reason I am encouraging you to work is to ensure that you will be eligible for Social Security Title II benefits if there is a substantial period of disability in your future. 
What are the potential Social Security Disability benefits
1. A monthly income,
2. Medicare after 29 months of disability, and
3.  Additional monthly income for your minor-aged and/or disabled children
The amount you receive may not be enough to live on, but it will be helpful. 

How does it work? 
 In general terms, if you have worked “enough” within five (5) years of becoming disabled, your Application for disability benefits can be considered by the SSA (Social Security Administration). Without “enough” recent work, the application will be denied outright at the very start of the process, without consideration of the nature and extent of your disability. 
What is “enough” work? 
 In 2012, it means earning a little more than $4,500 a year. Social Security awards “credits” for earned taxable income.  The maximum number of credits that can be earned in a year is four (4).  In 2012, for every $1,130 you earn and pay taxes on, you receive one (1) credit; when you earn $4,520 in 2012, you will have earned the maximum number of credits allowed in that year.  Just remember -   You must report your income and pay taxes to get the credits!   
 These credits gradually expire.  The general rule of thumb is that if the  claimant has barely worked in the five (5) years prior to disability, the  likelihood is great that she has a date last insured problem.  (If in doubt,  you can always contact your local Social Security Office and make an  inquiry.)
Is the date last insured important? 
 The date last insured is critical because if you cannot prove that your medical condition has been substantially disabling, since before your date last insured, you will not be eligible for Social Security Disability benefits even if you are now obviously disabled.   The situation is akin to dropping your fire insurance just before your house goes up in flames.  There is no doubt of three things:  1. if you had fire insurance, you would get a check; 2. you no longer have fire insurance; and 3. you will not get a check. 

• Janet last worked in 1999.  She was 30 at the time, and had been working for 12 years.  She had just gotten married, and her husband made a good income.  The couple decided that she had “worked” enough.   In 2006, Janet started to feel unwell.  She started dragging her right foot, her hands were cramping up and she felt tired all the time.  She was diagnosed with multiple sclerosis.  This went on for several years, and Janet continued to decline.  She finally filed for Social Security disability benefits in 2011. 
Is Janet eligible for the benefit?
Short Answer:  No.  Janet will receive a letter from Social Security stating that her date last insured was in December of 2004, and there is nothing to support that she was disabled from working since before that date.
 So what should Janet have done to keep her Social Security Disability Insurance from expiring?  She should have continued to work, at least part-time. The current federal minimum wage is $7.25.  At minimum wage, if one works about 12 hours a week, they will earn the maximum credits Social Security allows per year.  And, even if you cannot work that much, if you can earn even one credit a year, that is still worthwhile as it will prolong the time till your date last insured expires. 
 Since Janet’s husband makes a nice income, and can provide medical insurance for her, does it really matter that she cannot get disability benefits? 
I assert that it does.  Financial independence is always preferable.  While Social Security benefits are not overly generous, they help.  And, then there are the “what ifs”:  
• What if Janet’s husband loses his job, and with that, loses the critical medical insurance she heavily relies on;
• What if their financial situation changes for any number of other reasons? 
• What if they get divorced? 
 Janet and her husband need to protect themselves.  So do you.  Therefore, while you are healthy, do your future self a favor, and find some work that you can do, pay your federal income tax obligation and earn some Social Security credits.