SSDI is a program of the Social Security Administration to provide income for people with disabilities.  SSDI often is confused with a different program, Supplemental Security Income (SSI), which is also a program of the federal government for people with disabilities.  The primary differences between these programs are explained below.  

For persons who have a Disability Trust, or who are considering creating a Disability Trust, it is critically important to understand that SSDI is different from SSI, and to know which type of benefit the beneficiary is receiving. The reason that accuracy is so important is that—

  • SSDI does not depend upon having limited assets, and it is not affected by distributions from a Disability Trust
  • SSI does depend upon having limited assets, and it is very affected by distributions from a Disability Trust

Because asset transfers and trust distributions have such different effects upon SSDI and SSI, settlors, beneficiaries and responsible parties should be careful to report accurately whether the beneficiary has SSI, SSDI, or both.  

SSDI and SSI

SSDI is support for a person who has a work history, but no longer can work after becoming disabled.  It is, in effect, early retirement income for someone who medically no longer is able to work.  If the person would be entitled to Social Security benefits upon retirement, SSDI treats them as if they were retired when they become disabled before retirement age.  In fact, when a person who is receiving SSDI reaches age 66, the SSDI automatically converts to ordinary Social Security income.  

SSI, by contrast, is support for a person who is disabled, but simply does not have enough income from all other resources to survive.  It is “means-tested.”  Eligibility depends not only upon disability, but also upon showing that one’s income from all other sources is less than the benefit amount.  That amount for an individual living alone in 2020 is $783/month.  If a person has some income from other sources that is less than the SSI benefit amount, SSI will pay the difference between the person’s income and the SSI benefit amount.  A person who qualifies for SSDI, but the amount that SSDI pays is less than the SSI benefit, that person will qualify for both programs, and will receive two separate checks from the Social Security Administration.

Knowing the Difference

Unfortunately, government reporting does not do a good job of distinguishing the type of benefits when sending annual benefit statements.  The same form, SSA-1099, is used to report any benefits paid by the Social Security Administration, whether it consists of ordinary retirement income, SSDI income and SSI income.  This form does provide any information about the program that paid the benefits.

Benefit award letters usually will be slightly more clear.  If you are receiving ordinary Social Security retirement income, the title will be “Social Security Income.”  If you are receiving SSDI, the title will be “Social Security Disability Income.”  If you are receiving SSI, the letter will be entitled, “Supplemental Security Income.”  

It usually is a good idea to find the original award letter, in order to confirm the type of Social Security income that you are receiving.