What is Insured Status Under Social Security?

To apply for Social Security Disability – and this is the difference between Supplemental Security Income (SSI) and Social Security Disability (SSD) – one must be insured.  

Insurance in Social Security is similar to having insurance on your car.  If you have insurance and get into a car accident, you are covered.  If you did not make the payments, the insurance company will not cover you.  It does not matter if you were not at fault, that your injuries are horrific or even that the other driver was a fugitive on the FBI’s most wanted list.  You didn’t pay the premium – you are not covered.  Nothing else matters.   

Social Security Disability also requires payment to get coverage.  You don’t get coverage by directly paying the Social Security trust funds (unless you are self-employed) but you do pay them through your  contributions of FICA taxes.  FICA taxes are what they take out of your paycheck each week to pay for Social Security Disability and Social Security retirement.  It’s not voluntary, it’s taken out automatically.  Your employer matches it in most cases though if you are self-employed you pay both parts.  The amount taken out for Social Security is a flat percentage.  

Unlike Medicare though which also takes out a flat percentage, Social Security is capped so if you make a lot of money, you are only taxed for Social Security purposes up to $160,200 for 2023.  So for every cent you earn up to $160,200, Social Security will take money out of your paycheck.  They will do this for every year that you work.

But Social Security is not just like auto insurance.  With auto insurance you pay year by year for coverage of that year.  The previous years are not important.  But Social Security is based on years of coverage not merely the current year.  You may be covered for years after you stop working for disability and of course Social Security Retirement covers you after you stop working.  

There are two complicated rules for figuring out whether you are covered.  You must be both fully insured and specially insured.  To be fully insured if you are over 31, you must have worked 40 quarters of coverage.  Most people meet that rule easily though I will explain a quarter of coverage in the next paragraph.  The more difficult hurdle is what is commonly known as the 20/40 rule which is you must have worked at the time you became disabled 20 quarters out of the previous 40.  I highlighted “at the time you became disabled” for a reason which will follow but first lets go over quarters of coverage.   

Every year has four quarters, so basically it’s 5 years out of the last 10.  Before the big changes in Social Security in the early 1980’s, you earned a quarter of coverage by working in that quarter of the year.  If  you earned a big enough paycheck in January to March you got credit for one quarter.  If you worked every week from January to March you still got credit for only one quarter.  Like auto insurance, you pay more and then you get more coverage.  Someone who earns more and contributes more FICA taxes will get a bigger disability or retirement check but right now we are only talking about being covered.  But this system was unfair to some people and to all seasonal workers.  

For example, someone who works from mid-March to mid-April got credit for two quarters while someone who worked January through mid-March – that is 12  weeks – only got credit for one quarter.  April to June was the second quarter and by working the last week of March and the first week of April, a worker could get two quarters of coverage.  So someone  who worked as a gardener from Spring to Summer 7 days a week only got two quarters of coverage no matter how long he worked.  This badly affected seasonal workers because there are a lot of people who will work a great deal during the summer and then not work at all during the winter. 

These people were disadvantaged by that system.  To make it more fair, the law was changed.  Now quarters of coverage are based upon how much you earn in that year.  You can get a maximum of 4 quarters of coverage but you earn a quarter by earning at any time throughout the year a certain amount that will vary each year for inflation.  

The amount you must earn per quarter is set late in the previous year usually around November.   Most times it is  adjusted upward though it could be adjusted downward if there was deflation.  For 2023, that amount of money is $1,640.  If you earn $6,560, that is four times that amount, you earn four quarters of coverage.  If you earn less than that amount you might get from no quarters to 3 quarters.  If you earn 4 quarters for 5 straight years, you get credit for  20 quarters of coverage so for that period of time you meet the 20/40 rule.  

But let’s do the math.  You would not only meet it for this year but next year, the year after, the year after that, the year after that and the last year.  Again you have to become disabled while you are insured.  But if you work regularly for 5 years in a row, you are insured for another 5 years in general.  You still must be fully insured – having worked for 10 years in most cases – but as I said, most people meet that rule fairly easily.  

Keep in mind that this test works well if you are in your mid 40’s until mid 60’s.  But what if you get hurt while in the military while in your early 20’s or you are a firefighter who gets badly hurt when only in the mid 20’s.  There are special rules that cover younger employees who get disabled before they are able to work enough years to earn coverage.  These younger people have their own set of rules which are beyond the scope of this little note but be aware that if you are under 31, we know how to figure out if you are insured.

What to do if you are not insured and not eligible? 

A common problem after being told that he is disabled is that a person calls Social Security and is told he is not insured and not eligible. That’s because the clerk looks in the computer and finds your insured status expired a while ago. He may say the date-last-insured (DLI) was 12/31/2019 which means you had to be disabled before December 2019. And if you call in 2023, he may simply tell you that you are no longer insured. That is true but often wrong. You are not currently insured but the issue is not the current status but whether you became disabled while insured and remained disabled.

Let me give you an example.

Let’s say Phil the firefighter had worked for the NYFD from 2000 until he was injured in a fire in 2014. That is 14 consecutive years of work so he is fully insured forever. But does he meet the 20/40 rule?

Well, he did in 2014 when he got injured. And he did in 2015 as well – at that point he had worked in 2010, 2011, 2012, 2013 and 2014. In fact if you do the math as late as 2019 he was both fully insured having worked at least 10 years over his lifetime and met the special insured requirement of having worked at least 5 years (2010-2014) over the last 10 years (2010-2019). He had worked exactly 20 quarters in the first half of that 10-year period which means he was covered for the next five years.

Phil would be eligible for disability benefits if disabled every day until 12/31/19. If he got injured on 1/2/20 he is not insured but if his doctors told him he could not work, he would be disabled from that date until the present no matter what date he applied if he could prove disability from any day before 12/31/19. So if Phil was retired by the NYPD in late December 2014 and his doctors felt he could no longer work a full-time job after that, even if he applies in 2023 he would still be eligible even though he is only insured thru 2019. He has to prove he was always disabled from 2015 on but he is eligible if he can prove it. If Phil had called Social Security on January 1, 2023 and the clerk working there was inexperienced, the clerk mistakenly might have told him that he was not eligible because Phil was not insured anymore.

But the real question is when did you become disabled. If Phil had a non-work-related injury, say a stroke in 2016 after he had retired, and has been disabled ever since because of the stroke, he is insured even though he’s applying in 2023 and hadn’t worked since 2014. As long as you have a disability that begins before the insurance ran out and continues to present, you are insured. But then the big question is can you prove it? That is the subject of a later note.

So if you contact Binder and Binder and I call you – and I call people all the time who contact us – I may ask you when you last worked, when your disability began, whether the doctor who initially saw you is still treating you and a lot of other seemingly unimportant questions. I am trying to find out when you were last insured and whether you can prove disability from that date. You cannot get money all the way back – the law allows you only to get money one year back from the date of your application – but I often have to prove you disabled 10 years ago and continuing to the present. That is why if you are still seeing the same doctor, my job is easier. If the doctor retired or you moved away or you are no longer seeing that doctor, you have made my job harder but we can still win your case.

When you contact the Social Security Administration, ask for a copy of your earnings record. They will send you a copy of how much you earned each year and will tell you when you were last insured – your “Date-Last-Insured” (DLI). If you have that information, getting your case started is a little easier.