Disability Insurance Explained U.S.A: What Is It and How Does It Work?

Understand disability insurance in the United States

Being unable to work due to illness or accident can be a difficult reality. In the United States, disability insurance is one of the most important resources for financially protecting workers who face this situation.

But what is this insurance? How does it work? Who is eligible? In this content, you will understand all of this in a clear and objective way. Read on to the end and check out all the details!

What Is Disability Insurance in the United States?

Disability insurance is a financial benefit that provides income to individuals who are no longer able to work due to a serious medical condition. In the U.S., there are two main types of federal disability insurance:

1. Social Security Disability Insurance (SSDI);
2. Supplemental Security Income (SSI).

Both are managed by the Social Security Administration (SSA) but have different eligibility requirements.

1. SSDI: Social Security Disability Insurance

SSDI is intended for people who have worked and paid into the Social Security system over a certain number of years. This means the person must have paid Social Security taxes (known as FICA taxes) through their earnings.

Eligibility Requirements for SSDI:

To qualify, you must have a severe medical condition expected to last at least 12 months or result in death.

You also must be unable to perform any kind of substantial work due to your condition. In addition, you need to have earned a sufficient number of work credits, which are based on your age and years of employment.

Generally, 40 credits (about 10 years of work) are required, though younger workers may qualify with fewer.

How SSDI Payments Work:

The amount you receive each month depends on your average lifetime earnings before your disability began. After being approved, there is a five-month waiting period before you begin receiving benefits.

2. SSI: Supplemental Security Income

Unlike SSDI, SSI is designed for people with very low income and limited financial resources, regardless of their work history. It’s often used by individuals who have not worked long enough to qualify for SSDI but still live with a severe disability.

Eligibility Requirements for SSI:

To qualify for SSI, you must be elderly, blind, or disabled, and meet strict income and asset limits. You must also be a U.S. citizen or lawful resident. The disability criteria are similar to SSDI, your medical condition must prevent you from working.

How SSI Payments Work:

The SSI benefit is a fixed monthly amount, which is adjusted annually. As of 2025, the federal payment for an individual is around $943 per month, although some states add a supplemental benefit to increase this amount.

Key Differences Between SSDI and SSI

While both programs provide support to disabled individuals, the key difference is that SSDI is based on your work history, while SSI is based on financial need. SSDI is funded through payroll taxes, and SSI is funded through general government revenues.

SSDI typically offers higher monthly payments based on past earnings, whereas SSI provides a standard amount regardless of work history.

What If Your Claim Is Denied?

It’s not uncommon for disability claims to be denied on the first attempt. However, there is a structured appeals process, including reconsideration, a hearing before an administrative law judge, a review by the Appeals Council, and finally, a federal court review if needed.

Many claims are approved during the hearing stage, particularly when you have strong medical evidence and legal support.

Finally, disability insurance in the U.S. is a crucial safety net for those who are unable to work due to serious health conditions.

Understanding the differences between SSDI, SSI, and private insurance options can help you or a loved one navigate this challenging situation and secure financial support.

If you are facing a disabling condition, don’t hesitate to seek guidance and begin the application process. Getting informed is the first step to protecting your future. Now that you have a better understanding, why not share this content with someone who needs it?

Written by

Juliana Raquel