An Overview of the Government's Social Security Disability Insurance

Having an accident or illness at work or in any place that would render somebody disabled and unable to perform a job is a nightmare for most individuals, especially if these individuals do not have a strong financial background that would support them once their salary stops. This is the reason why a lot of well-informed and educated individuals invest in disability insurance policies for such a situation. Disability insurance policies may be purchased by individuals privately or these policies may be purchased by their employer for them as group policies. Another way of getting covered by disability insurance is through the federal government through their social security disability insurance plan.

The federal government has been aware of the perils that an accident or illness may bring to the productivity of an individual. This is the reason why it enacted two programs under the Social Security Disability Benefits program. The first program, which is called Social Security Disability Insurance Benefits or SSDI Benefits, was authorized by the Social Security Act, Title II to provide all federal workers and/or their families with disability benefits. The second program, entitled Supplemental Security Income Program or SSI program, was authorized by the Social Security Act, Title XVI to give disability benefits to individuals whose income falls below a particular level.

These programs have been in existence for a long time. The Social Security Disability Insurance program of the federal government was set up in 1935 upon realizing the need to provide the elderly employees with benefits upon retirement. A federal retirement fund was set up through the Federal Insurance Contributions Act or FICA which enacted the different schemes in which employees are to remit part of their pay to build up their retirement funds. Salaries of federal employees were deducted regularly with FICA tax so that socialized insurance programs such as the Social Security and the Medicare Programs would be funded. Individuals who do not belong to the federal employee and are classified as self-employed citizens can also contribute and avail of the policy through their federal tax returns.

This socialized insurance program became a success however, it was only limited to retirement benefits and does not include involuntary retirements due to disabilities. That was the reason why the Social Security Disability Insurance was established in 1956. With the SSDI, individuals who were forced to stop working because of a disability may still continue to be covered by the disability insurance just as long as he/she had paid the required number of FICA taxes.

The SSDI was immediately given the main objective of giving disabled employees with a specified percentage of their regular income for the duration that the employee is deemed disabled. The coverage for the SSDI policies are financed mainly by the Social Security taxes which are being paid by the different employees and employers and even by self-employed individuals. Benefits are paid out to disabled employees or to their surviving family members.

It should be noted however, that for an individual to be qualified to receive the benefits of SSDI, he/she must pass the following conditions; (1) the individual should prove that he/she is unable to perform any kind of substantial gainful activity for 12 months or more, and (2) the individual must have paid amount of FICA taxes.