Social Security isn't just for retirees; millions of Americans rely on Social Security to get vital disability benefits for long-term injuries or illnesses. But getting the benefits you deserve can be a lot harder than you'd think. In order to help you avoid some of the most common mistakes when applying for disability benefits, we turned to three of the Motley Fool's most experienced retirement analysts for their views. Look at their observations and then share your thoughts in the comments below.
Keith Speights: You can run into problems collecting Social Security disability benefits by working too much -- and too little. It makes sense that if you're working full-time or close to it that the federal government might question whether disability benefits are warranted. The magic number to keep in mind is $1,090. If you make more than that amount per month, you generally won't be considered for disability benefits (although there are exceptions for self-employed individuals).
Also, note that the Social Security Administration will factor in how much you have worked. Even if you make below the $1,090 per month threshold, you could still be working enough for the government to decide that you don't have a disability severe enough to qualify for benefits.
What about working too little? Many people don't realize that they must have worked a minimum level in the past to qualify for Social Security disability benefits. If you become disabled before you reach age 28, you typically must have worked at least 1.5 years during the three years leading up to your disability. The amount of required past work experience to qualify for Social Security disability benefits increases incrementally based on your age. The minimum work requirement is 9.5 years for individuals who become disabled at age 60 or older.
Dan Caplinger: One of the biggest problems that would-be recipients of Social Security disability insurance face is figuring out what actually qualifies as a disability. According to the Social Security Administration, in order to be disabled, you must not be able to engage in what's referred to as any "substantial gainful activity" because of a medically determinable physical or mental impairment. Moreover, that impairment must last at least 12 months or be expected to result in death.
That in turn raises the question of what a "substantial gainful activity" is. The SSA sees the "substantial" part of the term as referring to work that requires significant mental and/or physical activity to achieve, including both full- and part-time work. In addition, the "gainful" part of the term refers to work that's done in exchange for pay or to earn a profit. In general, if you intend to make a profit from your work, it's not relevant whether you actually do make money from the venture. This ties into what Keith discussed above, where the earnings guidelines for substantial gainful activity are $1,090 per month in 2015 (except those who are blind, who have a higher monthly limit of $1,820). If your earnings average more than the corresponding figure for your disability, then you won't usually get disability benefits.
If you don't meet the definition of disability, then filing for disability benefits is usually a waste of time. By knowing whether your disability will qualify, you can maximize the chances of filing a good claim.
Sean Williams: The waiting period is one of the toughest aspects of applying for Social Security Disability next to what Dan described above. Certain disabilities, such as advanced cancers and advanced kidney diseases, normally mean a very quick approval process. Other disabilities, though, may require research on the part of the SSA and your doctor. In all, Social Security disability claims could take up to, if not longer than, a year to decide.
You might be tempted to file an unemployment benefits claim while you wait for the SSA to make a decision, but this could wind up being a critical mistake.
To be clear, collecting unemployment benefits while waiting for a decision on disability benefits from the SSA isn't illegal, but it'll probably be frowned upon by the SSA, and they can certainly use your unemployment benefits when factoring in their decision on whether to grant you disability pay. In select states, the recipient may be required to pay back unemployment benefits they weren't eligible for.
You see, unemployment benefits are collected by people who are expecting to return to work as soon as possible, and who are actively looking for work. Social Security disability benefits, though, are paid to individuals who are expected to be incapable of working in their prior job or making the transition to a different job for at least the next 12 months. In other words, if the SSA knows you're collecting unemployment benefits, it may just assume you're fully capable of going back to work, and thus wouldn't qualify you as "disabled" by its definition.
This isn't a rule that's written in stone, but if you're applying for disability income through the SSA, you probably shouldn't be collecting unemployment benefits.