"INSURED" - WHAT DOES IT MEAN?

A disabled worker seeking to receive benefits from the Social Security Administration(SSA) must not only be disabled within the meaning of the law but also “insured”.  One must also be “insured” for retirement purposes but the calculations differ between the two types of benefits. One could be insured for retirement benefits even at an early age and not be insured for disability. This article will address solely the disability insured status requirements.

The formulae for becoming insured is to acquire “Quarters of coverage”. A quarter is represented by a quarter of the calendar year: Jan – Mar, April – June, July – Sept, Oct – Dec.  In order to obtain a quarter, a person must be paid a certain amount of wages during that quarter. The amount necessary is recalculated annually by SSA. To earn a quarter of coverage in 2011 is $1120. If a person earns more than is required for a quarter of coverage the excess can be applied to the next quarter. For example if you earn $2120 in Jan of 2011 then $1000 can be applied to your April – June quarter. It is quite possible for a person to earn an entire year of quarters in just a couple of months!

How quarters of coverage are applied to different individuals:

1.       For most workers to be insured they must meet the “20/40” rule. This means that you must have at least 20 quarters out of the last 40 quarters ending in the quarter that you became disabled.  A good rule of thumb that I use is – work 5 out of the last 10 years to be insured.

2.       A worker who is disabled prior to age 31 is not required to meet the 20/40 rule. This person need only have quarters of coverage in half of the quarters between age 21 and the date of onset of disability. If there are fewer than 12 quarters between age 21 and onset the worker must have 6 quarters of coverage nonetheless.

3.       Workers who are disabled due to blindness fall under a different test.

If a person does not meet the quarters of coverage requirement then they are not “insured” for Social Security purposes. The time when the insured status is expired is called the “Date Last Insured” (DLI).  It is extremely important to be determined by SSA to be disabled before the DLI or you could not be entitled to any benefits despite being severely disabled.  Persons who are not “insured” must rely on meeting the strict income and resource requirements of SSA’s Supplemental Security Income (SSI) provision.