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The budgetary impact of SSDI

On Behalf of | Oct 12, 2023 | Social Security Disability

Social Security has been in the news recently. Many Americans are worried about the program’s solvency and if benefits will still be available when they retire. But these concerns have coincided with confusion over how the program is funded. Social Security Disability Insurance (SSDI) is a frequent focus of confusion. While the Social Security Administration administers it, SSDI funding differs from that of other Social Security programs.

What is SSDI?

SSDI is the disability insurance program established by Social Security in the 1950s. It provides income to those determined to be temporarily or permanently disabled. These payments are sent to individuals who have been working for a period of time.

The Social Security Disability Insurance system helps to keep millions of people out of poverty each year. But its structure is significantly different from that of Social Security. The program is not an entitlement and does not substantially add to the federal deficit. It is not received by every working person and is limited to those who are disabled and meet a strict set of conditions. People who receive SSDI may have their bank accounts monitored and their activities scrutinized for years. Those who receive other forms of Social Security can receive set payments for a period of time with no stipulations attached.

What is its importance to Social Security spending?

SSDI is connected in a few ways to the greater Social Security program. Approximately one percent of the payroll taxes that fund Social Security go towards SSDI. This money goes into a large fund that holds United States interest-bearing bonds. The largest and most well-known part of the Social Security program is the Old Age and Survivors Insurance (OASI) program. This program is funded separately from SSDI and does not have financial connections to SSDI. However, both programs are administered by the larger Social Security Administration.