by Marc Maurer, Susan Gashel, and James Gashel
From the Editor: These authors need little introduction to Monitor readers. Marc Maurer has been an NFB leader for decades, serving as President for twenty-eight years. James Gashel is well known for leading our governmental relations efforts for more than thirty-three years. Susan Gashel is a lawyer practicing in Honolulu, where she retired from the state of Hawaii as a deputy attorney general in 2012. In her law practice she represents blind people and state agencies throughout the United States and Canada, specializing in Social Security and Randolph-Sheppard matters. Contact information for all three is included at the end of this article as well as information as to how to reach our national office with Social Security concerns. Here is the article:
Want to get the most out of Social Security? Not sure about your current situation? We know the law, and we may be able to help. The matter described below is one of many examples.
Let's say you are age twenty. Having once been twenty we know that planning your eventual retirement is last on your list of priorities. We knew about Social Security, but how much would we get? We had no clue, and we really didn't care much either.
Little did we know. Maurer and Gashel were blind long before they were twenty. How could this fact affect our Social Security at retirement? Who knew; we didn't, but we do know now. Here's why being blind can be an important factor in your favor.
The amount of each person's Social Security benefit is not a crap shoot; it's based on your lifetime earnings and calculations made by Social Security personnel. Everyone's amount is individually determined. There is no flat-rate benefit.
The calculations made to determine your Social Security benefit are prescribed by law. Retirement benefits are computed in most cases with formulas applied to the highest thirty-five years of earnings. Thirty-five years must be used, with some exceptions, even if there are no (or very low) earnings in some years. Exceptions may be made for anyone who becomes disabled before retirement and for people who qualify for child care drop-out years. Most wages until you reach age sixty or become disabled are indexed to reflect the relationship between your individual wage and the average wages of all workers during the years you worked. Wages received during retirement are not indexed. All wages, both indexed and actual, are averaged to obtain a monthly amount. Four-hundred-twenty (420) months are used when the number of years is thirty-five.
Disability before retirement can make a difference. For example, after having worked enough to have insured status under Social Security, all years when a person is blind, whether working or not, may be set aside from the person's earnings record. Imagine that. Take someone who is blind from childhood and works for a year-and-a-half before age twenty-eight. The individual would have "disability insured status” under Social Security. Once insured, people who are blind never lose insured status.
A "period of disability" under Social Security can begin for anyone who is both blind and has worked enough to have insured status by paying into Social Security; for example, a year-and-a-half of work anytime up to and including age twenty-eight. Persons not yet blind or not yet insured by age twenty-nine need a year-and-a-half plus one more quarter of work to be insured under Social Security while age twenty-nine. The number of quarters needed for insured status goes up by one for each year after age twenty-eight but stops when insured status is achieved. Once achieved, a blind person's period of disability can begin, even if the individual is working and not receiving cash benefits. One quarter of coverage is earned whenever you earn $1,470 in 2021, and $5,880 for four quarters, no matter when earned during the year.
This term "period of disability" may also be called a "disability freeze," a "freeze period," or a "DIB freeze." No matter the name, the effect of the freeze is the same.
Remember the rule above about thirty-five years used to compute retirement benefits? All years within a period of disability can be subtracted from this number if the result would be a higher benefit. Therefore, if our mythical applicant, blind from childhood, works enough to achieve insured status upon reaching age twenty-eight and remains blind until retirement, thirty years can be subtracted, so only the highest five years, not thirty-five years, are then used to compute retirement benefits. The years within a period of disability can't be used to compute the worker's average earnings. Only years before the period begins, and years after the period ends at and after retirement age can be used. But don't worry, the period of disability won't be applied if the benefits are higher without it.
There is no limit on earnings at full retirement age under Social Security. Therefore, our mythical blind person can continue to have regular earnings while still getting Social Security. This is recommended since the years worked beginning at retirement can be used to compute the average wages. These wages earned during retirement are almost always higher than the individual would have had during many years before age twenty-eight, thirty, or even older.
The effects of using a period of disability before retirement can be dramatic. Three examples make the point. Compare the following, but remember that all benefits are computed based on individual facts, which can lead to very different results.
Betty, John, and Bill were all born in January 1954. They each had earnings beginning in 1975. The amount each of them earned every year was identical until they reached retirement age, age 66 in 2020. According to Social Security, their identical earnings were considered to be average. Betty and John still have the same average earnings during retirement; Bill does not. Betty and Bill are sighted and never disabled. John has been blind since childhood. We compute their benefits below using the detailed benefit calculator provided by the Social Security Administration, Office of the Chief Actuary.
Betty, John, and Bill all applied for retirement benefits, and each received approximately $1,871, beginning January 2020. Bill stopped working when retired and has had no more earnings. All future increases he will get will be cost-of-living adjustments only.
Betty, (sighted and never disabled) and John (blind since childhood) each earned $55,000 in 2020 and $55,500 in 2021. Betty's estimated benefit beginning January 2022 is $1,910. John, by comparison, can expect to receive $4,423.30. Neither estimate includes the December 2021 cost-of-living increase.
The increases for both Betty and John result mostly from their earnings during retirement. John's is much higher than Betty's, however, due to his previous period of disability, which ended at retirement. In fact, only the earnings John has had during retirement, no earnings before retirement, are counted for a two-year average. Betty has no period of disability. Therefore, her benefits are based on a thirty-five year average.
We didn't think so, but it really can pay to be blind. The only difference between Betty, John, and Bill is John's blindness. Blindness starting in childhood with work at age twenty-one and twenty-two give John entitlement to a period of disability beginning January 1, 1977. His retirement benefit beginning January 2022 can be computed with only two years (not thirty-five years), his earnings in 2020 and 2021 being counted in the average.
Not all examples are exactly as favorable for applying a period of disability. For example, if John became blind not in childhood but at age twenty-eight, his retirement benefit in January 2022 would be about $2,078, much less than being blind from childhood, but still $168 per month higher than Betty gets based on exactly the same earnings. An individual's age, when blindness was first found documented at the youngest age possible, and work (best at a young age) to earn insured status are the most important variables. Part-time work in the summer or while in school can count.
To take maximum advantage of these variables, every blind person, working or not, should be sure that a period of disability has been determined and is on file with the Social Security Administration. This has already been done for anyone who has received (or is receiving) Social Security Disability Insurance cash benefits based on the individual's own earnings and not on earnings of a parent. However, the beginning of the period of disability used to award cash benefits may not be the earliest that could be documented. This should be reported to Social Security and corrected when applying for retirement or before.
Blind people who have never received disability insurance (especially those who have been blind for many years), should contact Social Security to apply for a period of disability based on blindness. If you are working, you can still be eligible for a period of disability to be established without receiving cash benefits. If you are not working (or not working very much), you may be eligible to have a period of disability established and also to get cash benefits.
In all cases, it is important to get the period of disability established and documented. To have the greatest effect, you want the record to show the earliest date when blindness was found. You can still get this determination even if you are applying many years after becoming blind by filing a Disability Insurance application to get a period of disability established, to begin at any time in the past up to your full retirement age, but, after you reach retirement age, you only have twelve months to file an application for a prior period of disability. Don't forget that twelve-month deadline.
Want to know more? Contact the authors with questions or for further assistance:
Email Marc Maurer: [email protected]
Email Susan Gashel: [email protected]
Email James Gashel: [email protected]
Email our national office: [email protected]