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Social Security -- the social insurance program designed to provide financial security to lower-income retired workers, survivors of deceased workers, and the disabled -- can be a critical source of income for millions of individuals in the U.S.

But the truth of the matter is that the Social Security can be downright confusing to many. And if you don't understand the regulations that guide who qualifies and how much they qualify for, you'll never be able to maximize its benefits.

Over the past two weeks we've simplified the basics of how workers qualify for the retired worker benefit -- which receives the vast majority of Social Security funding -- and looked more closely at how a worker would qualify to protect their family with Social Security survivor benefits (or even qualify as a beneficiary themselves). Today, we'll examine the last key way to receive Social Security benefits: by claiming disability.

Social Security disability statistics
Before we dive into who qualifies for disability payments and how much those beneficiaries will be paid, let's briefly look at what sort of benefits disabled workers, as defined by the Social Security Administration, are expected to receive as a whole.

According to the SSA, in 2014 more than 59 million Americans will receive about $863 billion collectively in Social Security benefits. In December 2013, roughly 8.8 million disabled workers received benefits, as did 2 million dependents of those disabled workers. If this data from December were to hold true throughout 2014, 16% of the aforementioned $863 billion -- that's about $138 billion -- would be expected to go toward disability benefits this year.

Now that you have a better idea of the size of the benefit pool, let's take a closer look at how a person would qualify for disability benefits, according to the SSA.

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Source: International Labour Organization via Flickr.

Disability benefits: Do I qualify?
As you might imagine, the SSA's definition of who qualifies for disability benefits is strict, because the agency would prefer that people who are disabled are ushered back into the workforce as soon as reasonable. In other words, the SSA won't indefinitely pay disability benefits to those who don't truly need it.

However, before a worker can even find out whether or not they're considered "disabled" by the SSA, they need to know if they've collected enough working credits to receive benefits.

Step 1: Do I have enough working credits to qualify?
Workers can qualify for full disability benefits if they've collected 40 working "credits." Based on 2014's figures, a working credit is earned with each $1,200 in income, up to a maximum of four credits per year. Put another way, workers who generate $4,800 in earnings in 2014 have earned their maximum four credits for the year. If they do this over the course of 10 years, they'll hit the 40-credit requirement for disability benefits.

But, as the SSA also notes, the chance that a 20-year-old worker will become disabled before reaching full retirement age is about one-in-four, so some workers may not be able to reach 40 credits. In these situations the SSA relies on two tests known as the "recent work" test and the "duration of work" test. As the test names would imply, these tests measure whether or not you were working prior to your disability and for how many years you've worked over the course of your lifetime prior to claiming disability.

For someone younger than age 24, having worked one-and-a-half out of the past three years is enough to meet the "recent work" test. If you're between the ages of 24 and 31, the SSA requires you to have worked half the time from age 21 until the quarter of your disability. Persons older than 31 must have worked for five of the 10 years prior to the disability claim.

For the "duration of work" requirement, those younger than age 28 who become disabled generally need only a year-and-a-half of work to qualify. Although I want to be clear that this table does not cover all situations, it will give you a general idea of what length of employment history is required to pass the SSA's "duration of work" test.

Age You Became Disabled

Duration of Work Required

Before age 28

1.5 years of work

Age 30

2 years

Age 34

3 years

Age 38

4 years

Age 42

5 years

Age 44

5.5 years

Age 46

6 years

Age 48

6.5 years

Age 50

7 years

Age 52

7.5 years

Age 54

8 years

Age 56

8.5 years

Age 58

9 years

Age 60

9.5 years

Source: Social Security Administration.

If a worker passes both "tests," or has 40 credits into the system, then he or she is eligible to receive disability benefits -- if he or she is actually disabled, that is. 

Step 2: Am I disabled?
As you might imagine, this is a tricky point for the SSA, as it needs to be established that a worker is totally disabled and incapable of working. The SSA is very clear that partial disability or short-term disability (i.e., one that would last a year or less) is not grounds for Social Security disability benefits.

In judging whether an applicant is disabled, the SSA has three criteria that must be met:

  1. You are incapable of doing the same type of work you had been doing prior to your disability.
  2. Your disability prevents you from entering a new field of work.
  3. Your disability is expected to last for longer than a year or is anticipated to result in your death. 

How does the SSA determine whether you meet the above criteria? Per its website the SSA evaluates your answers to five questions:

  1. Are you working?
  2. Is your condition "severe?"
  3. Is your condition found in the list of disabling conditions?
  4. Can you do the work you previously did?
  5. Can you do any other type of work?

Though we just covered the basics of the last two questions above, keep in mind that with regard to the first question ("Are you working?"), no person making more than $1,070 per month through work will qualify for disability payments. The other questions are fairly straightforward, with certain diseases (e.g., various types of cancer) leading to an automatic disability approval due to their severity.

How much will I receive in disability benefits?
If you've been approved for disability benefits -- which, as you can see based on the criteria above, may not be easy -- you can expect to receive your first payment six months after your claim has been approved. As with the retired worker benefit, your disability benefit is calculated by the average of your lifetime earnings as covered by Social Security.

If you're disabled when you reach your full retirement age, your benefits check will remain the same, but you'll simply begin receiving retired worker benefits instead of disability benefits.

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Source: Dominik Golenia via Flickr

Can any of my family members qualify for my disability benefits?
Another question commonly asked by those who qualify for disability payments is whether or not their immediate family can also qualify. The answer is yes: Spouses, ex-spouses, and children may be eligible to receive up to half of your disability payment.

As with survivor benefits, in order to be eligible, spouses must either be caring for your child who is under 16 years of age or be at least 62 years of age themselves.

Ex-spouses also need to be at least 62 years of age in order to qualify. In addition, the marriage between you and your ex-spouse must have lasted for at least 10 years, your ex-spouse must still be unmarried, and he or she may not be eligible for a higher benefit payment based on his or her work history. If these criteria are met, your ex-spouse is eligible for disability benefits, too. 

Finally, unmarried children are eligible to piggyback your disability benefits if they are:

  • Under the age of 18;
  • A full-time student between the ages of 18 and 19 who is not in college; or
  • Older than 18 and have a disability that began before age 22.

The sum of total benefits paid out to you and your family members will max out at between 150% and 180% of your own disability benefits payment.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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