Social Security Disability payments are based on a person’s past earnings or financial need. As a result, many SSD beneficiaries believe the monthly payments they receive are fixed. However, as any Social Security attorney in Chicago knows, SSD benefits are regularly tweaked to reflect economic changes. The national average wage index is one important factor that the Social Security Administration uses to adjust SSD payments each year.
The national average wage index reflects the average of all wages that are federally taxed as income. The SSA calculates this index every October. Then, the SSA compares the current index to the indices for past years. The difference between these indices is one variable the SSA uses when adjusting the following figures:
- The amount of earnings a worker needs to receive a quarterly credit. The amount of credits earned determines whether a worker qualifies for Social Security Disability Insurance benefits.
- The amount of work that constitutes “substantial gainful activity.” People who engage in SGA cannot qualify for SSD benefits. Beneficiaries who engage in SGA may lose their benefits if they prove themselves capable of maintaining this level of work.
- The maximum family benefit. This is the highest total amount a worker’s immediate dependents or surviving family members can collect.
- The primary insurance amount. This is the benefit a person receives upon retirement. This amount is also used as part of a weighted formula to calculate a person’s SSD benefit amount.
Indexing ensures that the benefits workers receive reflect the worth of their past earnings. This is just one measure the SSA employs to allow workers with disabling physical or mental conditions to receive appropriate coverage.
Each year, the SSA also makes cost-of-living adjustments. These accommodate increases in necessary expenses, such as housing, resulting from inflation. From 2014 to 2015, the averaged disabled worker’s benefit increased $19 because of COLA.
This adjustment is based on each year’s Consumer Price Index. The COLA is determined in October and applied starting in January of the following year. This adjustment automatically applies to all previously determined benefit payments, as any Social Security attorney in Chicago could confirm.
These considerations underscore why predicting future benefits can be challenging for SSD beneficiaries and applicants. The SSA uses special rules to count workers’ past income and weighted formulas to determine benefit payments. Wage indexing and COLA may further influence payment amounts.
People seeking SSD benefits can calculate their projected benefits through the SSA’s website. Alternately, applicants can refer to earnings statements from the SSA for direct estimates of future benefits. A Social Security attorney in Chicago may also be able to advise applicants on assessing their entitlement to benefits.