The following article was published in the August 2011 edition of the Promulgator, a publication of the Lafayette Parish Bar Association.
When Should Injured Clients Apply for Social Security Disability Insurance Benefits?
Matthew D. Lane, Jr.
If you represent injured clients in connection with either Workers' Compensation or personal injury claims, the question of whether and when a client should apply for Social Security Disability Insurance Benefits ("Disability Benefits" or "Benefits") is sure to arise. This article briefly addresses several significant, albeit relatively obscure, federal statutes and regulations that should be considered in deciding when to file an application for Disability Benefits under Title II of the Social Security Act (the "Act"). The Act provides for payment of Disability Insurance Benefits, and just like an insurance contract, the Act has strict parameters limiting coverage. Failure to consider these parameters can cause an applicant to be time-barred from receipt of Benefits, to sacrifice a period of entitlement to Benefits, or to experience a lengthy delay in Medicare eligibility.
Title II of the Social Security Act, 42 U.S.C. § 401, et seq., provides for payment of Disability Benefits to individuals who are disabled within the meaning of the Act and who are insured under the Act by virtue of their contributions to the Social Security trust fund through Federal Insurance Contributions Act (FICA) taxes. In general, to be found disabled under the Act, a claimant must be unable to perform his or her past work or a significant number of other jobs in the national economy because of medically-determinable mental or physical impairments that will last for at least one year. 42 U.S.C. § 423(d); 20 C.F.R. § 404.1520. If it appears likely that a client's injuries will keep him or her out of work for a full year, the question then becomes when he or she should file an application for Benefits.
Workers remain eligible for Benefits for only a limited period of time after leaving the workforce. 20 C.F.R. § 404.130. To be eligible for Benefits, a worker must be insured under the Act. Attaining disability insured status for those over 31 years of age requires 20 quarters of coverage out of the 40 calendar quarters before they became disabled. Id. A worker maintains eligibility for Benefits through consistent employment and payment of FICA taxes, but even with consistent employment for the 5 year period prior to being injured, a worker maintains eligibility for Benefits for a maximum of 5 years after leaving the workforce. Id. The eligibility period may be shorter for workers who become disabled under the age of 31, have a previous period of disability, have not maintained consistent employment, or have not consistently paid FICA taxes. If there is any doubt about how long your client remains insured for Benefits, the client can inquire as to the duration of his or her disability insured status at the local Social Security Administration (SSA) office.
Workers who file for Disability Benefits more than 17 months after becoming disabled may sacrifice one or more months of Benefits due to restrictions on retroactive Benefits. Disability Benefits can be paid up for up to one year prior to the application date. 42 U.S.C. § 423(b). In addition, there is a 5-month waiting period following the date of disability during which Disability Benefits are not payable. 42 U.S.C. § 423(c)(2). In other words, for the first 5 months after a worker is deemed disabled, no Benefits are paid. Benefits start in the sixth full month of disability. The 5-month waiting period operates with the one-year retroactivity period to create the 17-month filing benchmark, which can cause unaware applicants to sacrifice benefits to which they would otherwise be entitled. For example, an insured worker who sustains disabling injuries on January 1, 2011, and who files an application for Benefits no later than 17 months thereafter could begin receiving Benefits on June 1, 2011. In contrast, if the same worker files an application 24 months after the injury, or on January 1, 2013, the worker could begin receiving benefits only as of January 1, 2012. In the second example, the worker sacrificed 7 months in Benefits due to the delay in filing.
If an injured worker is receiving Workers' Compensation (WC) benefits, then Disability Benefits otherwise due for the same period may be offset or reduced. 20 C.F.R. § 404.408. The application of the offset provision is a fact-specific inquiry that depends on the worker's past earnings and the amount of WC being received. Regardless of whether a worker's Disability Benefits would be offset by receipt of WC, it remains important to establish the earliest possible disability onset date with SSA to avoid jeopardizing your client's eligibility for Medicare.
Medicare is government health insurance available to those over 65 years of age or who are disabled under the Act. After receiving Disability Benefits for 24 months, workers are eligible for Medicare. 42 U.S.C. § 426(b)(2)(A). Of course, due to the 5-month waiting period for receipt of Disability Benefits, eligibility for Medicare begins 29 months after the established onset of a worker's disability. Thus, even if the WC offset may reduce a worker's monthly Disability Benefits, it is still important to timely file in order to start the clock on the 29-month waiting period for Medicare eligibility.
In conclusion, in advising disabled clients when to apply for Social Security Disability Insurance Benefits, it is important to know when their disability insured status expires, that filing for Benefits more than 17 months after becoming disabled may lead to the loss of a period of Benefits, and that even if subject to offset, establishing eligibility for Disability Benefits commences the lengthy waiting period for Medicare eligibility. If you have questions about a client's potential eligibility for Benefits or when to apply, feel free to contact the author at email@example.com or (337) 593-4139.