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How are payments calculated for Social Security Disability Insurance?

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Quick Answer

The calculations used to determine monthly payment amounts for Social Security Disability Insurance, also called SSDI, are based on the applicant's Average Indexed Monthly Earnings, or AIME, and the Primary Insurance Amount, or PIA. The applicant's covered earnings, which reflect the wages that were subject to Social Security tax prior to becoming disabled, are the main consideration in determining the monthly SSDI benefit amount. The monthly SSDI payment, however, can be reduced if the disabled individual is also receiving benefits from another source, such as worker's compensation.

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Full Answer

In order to determine an applicant's AIME, the Social Security Administration, or SSA, will adjust the applicant's lifetime earnings to reflect the wage increases that occurred prior to becoming disabled. This is called indexing, and ensures that the monthly benefit payments reflect the wage increases the applicant received. The SSA reviews up to 35 years of wages to determine the AIME, and the average increase amount is rounded down.

The base amount of the SSDI payment is the PIA. There are three percentages that are applied to the applicant's AIME that will determine the PIA. These percentages are taken from three ranges that are spread across the AIME, and which are updated regularly to correspond to the current national average wage index. Because the top and bottom figures of the three percentage ranges can change, they are called "bend points." A table displaying the current bend points can be found at the SSA website.

The final monthly SSDI amount paid will be based on the amount of other benefits that the applicant may be receiving, and also by the most recent Cost of Living Adjustment, or COLA. The COLA recalculation reflects the yearly cost-of-living increase indicated by the most recent Consumer Price Index, or CPI.

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