Federal and state governments across the United States sponsor disability programs for individuals who cannot work due to various illnesses and injuries. Both levels of programs provide disability benefits to replace the incomes lost by workers over temporary or permanent periods of time. However, there are several differences between the two types of disability programs including how payment amounts are determined, eligibility requirements and how they are funded. Not all states provide disability insurance for their workers.
Social Security Disability
Social Security disability is an entitlement program, which means that all U.S. citizens are eligible to receive coverage as long as they meet the requirements. Individuals receive payments for 12 months and longer; some could receive payments for the rest of their lives. This program doesn’t charge premiums to applicants in exchange for coverage or pay benefits for short-term or partial disabilities. The SSA is real strict when it comes to disabilities; more than 60 percent of first-time applicants are denied coverage.
There are disability plans at the state government level as well. Five states – California, Hawaii, New Jersey, New York and Rhode Island – sponsor short-term disability programs for their workers. These plans are funded by payroll taxes and benefit periods generally last for several months to a year. These are public disability programs, which mean eligible applicants are offered coverage regardless of their medical conditions.
There are eligibility requirements that individuals applying for Social Security and state disability insurance programs must meet. Applicants for Social Security must have disabilities that last longer than one year or have medical conditions that are terminal. The disabilities must prevent workers from doing their previous jobs or any other work. They must have paid into Social Security when they worked to be eligible as well. For state disability insurance plans, workers must have sustained their disabilities outside of work; job-related illnesses or injuries are covered under workers compensation insurance. Workers must have earned enough wages and have medical conditions that last or cause them to miss work for a week or more. Qualifying wage amounts and disability lengths vary by state.
Benefits and Taxation
Social Security benefits are based on the workers’ employment histories, which include how much they’ve earned and how long they’ve worked. Eligible individuals are mailed benefit information each year detailing how much they would get if they were to become disabled. The average benefit amount as of 2011 is $1,063. Benefit payments for state disability benefits vary. For example, New Jersey workers receive two-thirds of their pre-disability salaries up to a maximum of $559 per week and California workers get 55 percent of their wages replaced by disability benefits. As for taxation, Social Security benefits are taxed if the applicants’ household incomes exceed the program's limits. State benefits, however, are not taxed by the Internal Revenue Service.
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