Social Security Disability Insurance: Entitlement or Benefit?


When The Social Security Act of 1935 established the Social Security Administration (SSA), its purpose was the provision of public assistance for the aged, blind and dependent children. The program contained no provisions for people suffering from disabilities that prevented them from earning a living. One of the primary reasons for this omission was the fear of the potential cost.

After much public and private discussion, in 1956, the Social Security Administration proposed adding an income replacement program for disabled workers. The legislation was greatly debated on the Senate Floor, primarily for the fact that the federal government could not afford another assistance program in the already stretched federal budget. In order to provide income replacement for individuals affected by a disability, the Social Security Act Amendments of 1956 included the establishment of the Disability Insurance Trust Fund.

The Disability Insurance Trust Fund is a separate fund in the United States Treasury. The trust fund provides automatic spending authority to pay monthly cash benefits to disabled-worker beneficiaries and their spouses and children. With such spending authority, the Social Security Administration does not need to periodically request money from the Congress to pay benefits.

This fund was established to provide a benefit for US workers, a benefit that they had actually funded themselves. As a result, the government merely collects and disburses the money — much like a private insurance company would.  Currently, workers pay a tax of 0.9 percent of their wages up to $113,700, and their employers pay an equal amount. These tax contributions go directly into the Disability Insurance Trust Fund. If the worker is self-employed, he or she pays both the employee’s and the employer’s tax. The workers are, in fact, “investing” a portion of their paycheck as protection for themselves and their family in case one day they become too disabled to earn a comparable wage.

As a result, a person who qualifies for Social Security Disability Insurance must meet several qualifications in their work history to collect this benefit. He needs to have worked long enough to have contributed a specific amount to the Social Security system through Federal Insurance Contributions Act (FICA) taxes. The SSA calculates this amount by using work credits. Workers can receive a maximum of four work credits each year. The exact amount of work credits the worker earns each year will depend on employment activity and the amount of earnings. In 2017, a worker must earn $1,300 to earn one work credit. In order to qualify for Social Security Disability benefits, a person will generally need to have earned a total of 20 work credits, although there are age exceptions to this rule.

This design of Social Security Disability Insurance prevents it from becoming a form of “public assistance” or an “entitlement” provided solely by the federal government.  Workers who become disabled have paid into the Disability Insurance Trust Fund throughout their working years.  The collection of benefits works essentially like any private insurance company policy would.  Workers pay in. Then, they receive benefits if qualified. Thanks to this approach, SSDI is currently able to support 8.9 million disabled workers.