SSD or SSDI, better known as Social Security Disability Insurance, is a federal institutional insurance program run by the U.S. government and funded by payroll taxes. The Social Security Administration manages this program to provide monthly health benefits to people with a specified medical disability that prevents them from working.
Temporary or partial benefits or services do not manage Social Security Disability Insurance. It is governed by a law that only pays full benefits in cases of severe disabilities lasting about one year or those who are hopeless. Regarding the disability programs of other countries belonging to the Organization for Economic Cooperation and Development, better known by its acronym OECD.
Application, Initial Determination and Appeals
Too often, some people confuse Social Security Disability Insurance with Supplemental Security Income, or SSDI and SSI. But, they contain several differences, such as SSI being more of an income substantiation program for the disabled in the United States. SSDI, on the other hand, is based on benefits earned from previous work pay, much like Social Security retirement benefits. Under U.S. disability law, legitimately disabled children, adults, and seniors who earn below means-tested income can receive SSDI.
Application
Before a person can receive SSDI, he or she must apply with the Social Security Administration (SSA). This necessary application can be made in one of two ways:
- They can call the SSA’s national number, which is toll-free at 1-800-772-1213.
- Another option is to contact your local Social Security office.
- And if that doesn’t work, you can submit an online application.
The acceptance of your application will depend on the SSA verifying that the person is insured, meaning that benefits will be given if the applicant has worked long enough. Also, they will check to see if the person has recently paid Social Security taxes. There are cases where a widow or widower or a child with a disability can receive Social Security disability benefits without having any work history. It will only be verified that the applicant’s spouse or deceased parent was employed by a company, institution, business, or company linked to Social Security and that he or she has met the requirements.
The application’s acceptance procedure by the SSA will be determined if the applicant has not committed any substantial gainful activity; if so, the application will be rejected in its entirety. If the applicant is clean and meets all the requirements, the SSA will proceed to forward the application to the Disability Determination Service agency, known as DDS. This state program must follow federal law regarding disability under the Social Security Act in making its decision.
Initial Determination
The program’s determination of Social Security benefits for applicants is based on a thorough and sequential medical and another evidence review. In the case of individuals of an adult age, the following is considered:
- It is evaluated and verified if the applicant performs any substantial gainful activity. If he/she is, his/her application will be automatically rejected, and if he/she is not, he/she will be allowed to continue with the following evaluations.
- If the applicant’s disability is severe, the evaluation sequence will continue, but if it turns out that it is not, then it will be denied.
- An important question will be evaluated: Can the applicant continue to perform previous jobs? If the answer is yes, the application will be denied; if no, the check will continue.
- Another question to be evaluated is: Can the applicant work in any other economic field? If the answer is yes, the application will be denied; if the answer is no, the application will continue with the procedure.
One of the essential requirements for the applicant is to demonstrate an inability to work. It is also possible that the applicant may be required by the program to go to an outside physician to obtain necessary medical documentation. This is often done to supplement the evidence, which the treatment sources do not provide.
The applicant must comply with the SSA medical list for benefits to be provided. If the applicant’s condition does not meet the listing requirements, the applicant’s residual functional capacity, also known as RFC, will be considered. This, along with his or her age, education, prior relevant work, and period will be used to define his or her ability to work in the previous job or other currently available employment.
This definition of the RFC is one of the significant parts of the SSDI application and appeal process. It is evaluated based on Title 20, Code of Federal Regulations, Part 404, Section 1545. In general, the RFC corroborates the opinions of treating and examining physicians. It also determines the degree of exertion that workers may have, based on the Dictionary of Occupational Titles: sedentary, light, medium, heavy, and very heavy.
Appeals
The Social Security Administration provides for three different levels of administrative appeal if a state DDS denies an applicant from the outset. As a first level, the applicant may request reconsideration of the initial decision, which a different DDS worker will review. If, at this stage, the claim is denied, the applicant may opt for a hearing before an Administrative Law Judge or ALI. ALIs are federal employees of the Social Security Administration.
The last level occurs if the claim or application is denied at this stage. If this happens, the applicant may request a new review of the case by the Social Security Administration Appeals Council. In this case, administrative appeals have the advantage that they are not at all adversarial, which means that the applicant can present new evidence of the case.
After exhausting the entire administrative appeals process, the applicant may take the case to federal court. If the federal court concludes that SSA’s procedures and policies for the required changes, as they relate to the applicant, are inconsistent with federal law or the U.S. Constitution, it may take the case.
How to understand payroll taxes?
Each employee at the end of the year must submit the W-2 form to diagnose the tax and salary statement, including tips and other remuneration paid. To transfer withholding voucher reports from Form W-2 to the Social Security Administration, employees must use Form W-3.
Federal income tax
To calculate federal income taxes, you must file using Form W-4, the national income tax withholding method, and the employer’s withholding certificate. The employer must generally withhold federal income tax from the employee’s wages.
Social Security and Medicare taxes
Generally, the employer withholds part of the Medicare and Social Security taxes from its employees’ wages and then pays its employer’s share of those same taxes. Both Medicare and Social Security taxes are at completely different rates. Only Social Security taxes are capped at the wage base, i.e., the maximum taxable wage for the year. Therefore, the amount of Medicare and Social Security tax withholding, multiplied by each payment, must be determined based on the employee’s tax rate.
Additional Medicare tax
Employers must withhold 0.9% of the additional Medicare tax on the employee’s compensation and wages. Withholding of the extra Medicare tax must be made when wages over $200,000 are paid to employees. This continues to be withheld each time payments are made until the end of the year, and there is no employer contribution for the additional Medicare tax.
Federal Unemployment Tax (FUTA)
Better known as FUTA, employers must pay or cancel the Federal Unemployment Tax. This tax is separate from federal income tax and Social Security and Medicare taxes. The FUTA tax must be paid out of the employer’s funds; however, employees do not pay this tax, which is not withheld from their pay.
Payroll Taxes
The responsibilities and duties of an employer are essential in the administrative arena. Ensuring that taxes are withheld and paid and that the people who work are classified as employees or self-employed is all the employer’s job.
As business owners or managers in some jobs, it is customary to miss some details and make small mistakes. An example of this is when a self-employed person is classified as a part-time worker, meaning that the number of hours worked, for the most part, is not a reason to determine whether a person is self-employed or an employee.
Payroll Tax Obligations
The employer is liable for various state, federal, and local taxes. If you have employees, the duty is to withhold multiple taxes from their paychecks. Preceding all of these, including hiring employees, it is vitally important that the quasi-employer contains an employer identification number, which is included in the following payroll taxes.
- Federal income tax withholding
- Medicare and Social Security taxes
- FUTA or Federal Unemployment Taxes
Usually, the employer must withhold federal income tax from the employee’s wages and then calculate how much to withhold from each wage payment. The employee’s W-4 form must be used for this activity. In the case of Social Security and Medicare taxes, these must be paid on the benefits received, based on the Social Security Contributions Act (FICA), by each worker and his or her respective family.
This Social Security tax is paid on benefits under FICA, that is, the part of the insurance that is paid for longevity, disability and survivors. On the other hand, the Medicare tax is also spent on benefits under FICA but has a share of hospital insurance. A portion of these taxes is withheld from the employee’s wages, and the employer must pay an amount similar to what is withheld.
In the case of the federal unemployment tax, it is a segment of the state and federal program under the Federal Unemployment Tax Act or FUTA. It pays unemployment compensation to employees who lose their jobs. FUTA tax is paid separately from Medicare and Social Security taxes and withholding tax. Another fact about the FUTA tax is that employees do not have to pay this tax, much less have it withheld.
