Senior Living



Social Security and You: Disability Benefits Are Not Welfare

Tom Margenau on

It never ceases to amaze me how millions of misinformed Americans think that Social Security disability benefits are some form of welfare. They think Congress tacked on the program to the original Social Security Act as a kind of afterthought to provide benefits to the poor and indigent. (And the really nasty naysayers out there think it is a program specifically designed for cheaters and deadbeats.)

Even people who get a monthly Social Security disability check are confused. I constantly hear from them with questions similar to this one, which was in my inbox this morning: "I am getting Social Security disability benefits. I just won $5,000 from our state lottery. Will I lose my disability check?" Quick answer: Of course you won't lose your benefits. Let me repeat: Social Security disability is not welfare!

I always tell people to think of Social Security disability benefits as something like an early retirement benefit for somebody with a disabling impairment. In fact, the benefit formulas for the two programs are similar. When figuring a disability benefit, you simply use the year you became disabled instead of the year of retirement in the computation.

And just as you must work and pay taxes to qualify for Social Security retirement benefits, you also must work and pay taxes to qualify for Social Security disability benefits. And just as both rich and poor people can get retirement benefits, rich and poor people can get disability benefits. For example, if Bill Gates had a heart attack today, he could file for Social Security disability benefits tomorrow.

So, where does this notion of Social Security disability as a welfare program come from? One possible answer has to do with confusion between it and another disability program run by the Social Security Administration, Supplemental Security Income. SSI is indeed a welfare program that pays a small monthly stipend to poor people who have little or no income and few assets.

I know from my 45 years of experience that people are always confusing the two programs. But there is a world of difference. To get SSI, you must be disabled and you must be poor. There is no work requirement to qualify for SSI payments. To get Social Security disability benefits, you must be disabled and you must have worked and paid Social Security taxes for a specified period of time that depends on your age.


Social Security disability benefits are funded by a portion of the payroll tax. If you work for wages, 6.2% of your salary is withheld for Social Security taxes. Of that, 5.015% is funneled into the retirement trust fund, and 1.185% is funneled into the disability trust fund. (Those percentages are occasionally adjusted very slightly to shore up one trust fund or the other.)

SSI benefits are funded through general tax revenues -- NOT Social Security taxes. In fact, the Social Security Administration is even reimbursed from the general funds for the cost of administering the SSI program. So, it's important to note that not one nickel of Social Security money is used to pay for the SSI program.

And why else do folks think of Social Security disability benefits as welfare? It's partly because so many people mistakenly believe the program is a refuge for cheaters and scam artists. As one guy recently told me in an email: "We should eliminate benefits paid to people getting disability. We all know this money is handed out like candy to anyone who walks in the door claiming to have a bad back or bum knee. If we cut off their government checks, most of these deadbeats would go out and get a job the next day!"

I'm always puzzled why so many people simply assume that most folks getting disability benefits are pulling a fast one over on the rest of us and have figured out slick ways to scam the system to get something they aren't due.


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