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D. Social Security Disability Program

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Educational Objective
  • II.H.1. Be able to identify the Social Security system's requirements to be currently insured vs. fully insured for disability and survivors' benefits: a. The minimum requirement for workers under age 24 to obtain currently insured status is 6 credits in the last 3 years. b. Beginning at age 24, additional credits are required to obtain currently insured status based on the worker's age at the time of disability. c. 40 credits is the requirement for fully insured status in order to obtain retirement and premium-free Medicare Part A benefits, and eligibility for Medicare Part B.

Social Security, also known as Old Age Survivors Disability Insurance (OASDI), is a federal program enacted in 1935 to protect eligible workers and their dependents against financial loss due to old age, disability, or death. With few exceptions, nearly all individuals are covered by Social Security.

Social Security uses the Quarter of Coverage (QC) system to determine whether an individual qualifies for benefits. The type and amount of benefits available are determined by the number of credits, or QCs, a worker has earned. Anyone working in jobs covered by Social Security, or operating their own business, may earn up to a maximum of 4 credits per year of work.

The term fully insured describes someone who has earned 40 quarters of coverage — the equivalent of 10 years of work — and who is therefore entitled to Social Security retirement benefits, premium-free Medicare Part A, and survivor benefits. An individual entitled to premium-free Medicare Part A is automatically eligible for Medicare Part B as well, though a monthly premium applies.

An individual can instead attain currently insured status (sometimes called partially insured), which qualifies for certain benefits, by having earned 6 credits during the 13-quarter period ending with the quarter in which the insured:

  • Dies;
  • Becomes entitled to disability insurance benefits; or
  • Becomes entitled to old-age insurance benefits.

For younger workers, the number of credits required to qualify for disability benefits differs by age, according to a table established by Social Security. Generally, an individual needs 40 credits, at least 20 of which must have been earned in the 10 years before the disability. In other circumstances, the required number of credits varies by age:

  • Before age 24: a person can qualify with only 6 credits earned in the 3 years prior to the start of the disability
  • Ages 24–31: a person can qualify with credit for having worked half of the time between age 21 and the start of the disability — for example, someone disabled at age 27 would need 12 credits (3 years' worth), out of the prior 6 years (between ages 21 and 27)
  • After age 31: the number of credits required varies further, but at least 20 of those credits must have been earned in the 10 years immediately before becoming disabled
AgeCredits Needed
31–4220
4422
4624
4826
5028
5230
5432
5634
5836
6038
62+40

Disability Credits Needed by Age

Educational Objective
  • II.H.2. Be able to identify the types of benefits paid and the insured status required for the following types of benefits: a. Survivor: income benefits (spouse and minor children, and the effect of the "Blackout Period") and lump-sum death benefit. b. Disability income. c. Retirement income.
Conditions for PaymentPaid ToType of Payment
Retirement benefit: Fully insured status and age 66* (or reduced benefits at age 62)Retired individual and eligible dependentsMonthly benefit equal to the primary insurance amount (PIA)
Disability benefit: Fully insured status and total and permanent disability prior to the retirement ageDisabled worker and spouse and eligible dependentsMonthly disability benefit after a 5-month waiting period
Survivor benefit: Worker's deathSurviving spouse and dependent childrenLump-sum burial benefit if fully or currently insured; monthly income payments if fully insured

*The current full retirement age is 66, and is gradually increasing to age 67.

Survivor benefits are death benefits paid to a worker's surviving spouse and dependent children under specified circumstances. A lump-sum burial benefit is available for a spouse living with the worker at the time of death, or a spouse or child who is eligible for Social Security in the month of the worker's death. Monthly income payments may also be paid, in the event of a fully insured (covered) worker's death, to:

  • A surviving spouse, with limited benefits available at age 60, and full benefits payable upon reaching full retirement age (which varies by year of birth)
  • A surviving or divorced spouse caring for minor children under age 16 or disabled children — sometimes called a parent's benefit. Once the minor reaches age 16, the parent is not eligible for Social Security benefits again until retirement or age 60 — a gap known as the "Blackout Period"
  • Dependent parents, age 62 or older
  • Unmarried children under age 18, or up to age 19 if they are full-time elementary or secondary (high school) students

Social Security is funded by taxes imposed on a worker's earned income — a payroll tax paid by all employees and employers, including self-employed individuals. The tax applies to a certain percentage of the employee's income, called the taxable wage base. The employer deducts the tax from the employee's paycheck and contributes an equal amount. Part of the tax funds OASDI under FICA (the Federal Insurance Contributions Act), and part funds Medicare; self-employed workers pay an amount equivalent to both the employee's and employer's share.


Key Takeaways
  • Social Security (OASDI) protects eligible workers and dependents against financial loss from old age, disability, or death; eligibility is tracked in quarters of coverage (credits), up to 4 per year
  • Fully insured status requires 40 credits (10 years of work), and grants retirement benefits, premium-free Medicare Part A, and survivor benefits; Part A entitlement brings automatic Part B eligibility
  • Currently insured status requires 6 credits within the 13-quarter period ending with the quarter of death, disability entitlement, or old-age entitlement, and qualifies for a narrower set of benefits
  • Disability credit requirements scale with age at disability onset: 6 credits/3 years before 24; credit for half the time worked between 21 and disability from 24–31; at least 20 of the required credits from the last 10 years after 31
  • Retirement, disability, and survivor benefits each carry their own insured-status conditions, payees, and payment types, including the PIA-based monthly retirement benefit and the lump-sum/monthly survivor benefits
  • The "Blackout Period" is the gap in a surviving spouse's benefits between when the youngest child turns 16 and when the spouse turns 60 (or reaches retirement age)
  • Social Security is funded through FICA payroll taxes split between employer and employee (or paid fully by the self-employed), covering both OASDI and Medicare