If you are unable to work for an extended period of time due to illness or injury, your income will almost certainly be dented. And years with little or no income can reduce or even eliminate future Social Security retirement benefits, which are based on your lifetime earnings history.
That’s why the Social Security Administration (SSA) has established a mechanism called a “disability freeze,” which mitigates the impact of today’s disability on your benefits tomorrow.
A disability freeze prevents Social Security from counting your income during the years when a medical condition limits your ability to work. Those years are not included in your benefit calculation, so you will not be fined for a period that you are unable to work.
How a disability freeze works
To understand how a freeze works, it helps to know the basics of how retirement benefits are calculated. Social Security takes your 35 best-earning years, adjusts them for historical wage growth and leads to an average monthly income. (The SSA only considers income up to an annually adjusted maximum, which is $142,800 in 2021.)
Social Security then applies a formula to that monthly average to determine your basic benefit — the amount you qualify for if you apply at full retirement age (66 and 2 months for people born in 1955 and gradually increasing to 67 for people born in or after 1960). If you qualify for Social Security Disability Insurance (SSDI), your top-earning years are also used to calculate those payments.
More earning years lead to a higher benefit. Likewise, years of disability can lower your benefits because you probably don’t earn much during that time. Even if you continue to work, Social Security sets strict limits on how much you can earn and still collect SSDI (unless you participate in an SSA incentive program to return to work).
Since your employment history is also a factor in whether you qualify for benefits at all, a long period of disability can jeopardize your entitlement to retirement benefits.
The disability freeze ensures that you don’t pay a price in future benefits for those years with little or no income. In most cases you will be eligible for a freeze if you meet these criteria.
- You’ve worked enough and paid enough in Social Security taxes to qualify for SSDI.
- You applied for SSDI either during a period of disability or no more than 12 months after the disability has ended (meaning that the SSA has determined that you can return to work). In the latter case, the freeze would relate to the previous period, when you were unable to work.
- You meet (or met) Social Security’s definition of “disability: a medical condition” that prevents you from doing most work for at least a year or that results in death.
If your SSDI claim is approved, the SSA will automatically apply the freeze from your “start date” – the date you are determined to be incapacitated, based on the medical evidence you provide. The freeze ends two calendar months after the month in which your disability ends or in the month before you reach full retirement age, whichever comes first.