How to Insure Your Income: Who is Eligible?
Participation in the program and payment of Social Security taxes is mandatory, unless your occupation or employment is exempt from coverage and the payment of taxes. But -- even though almost everyone pays the taxes -- few people actually receive the coverage.
Statistically, only about one in three Social Security disability claimants ever collects benefits.
This is true for several reasons. First of all, a younger worker who has not achieved a fully insured status and disability insured status (basically 10 years of paying Social Security taxes) cannot qualify.
The requirement that the disability last at least 12 months or end in death eliminates short, non-lifethreatening disabilities. The person who has suffered a mild heart attack and is unable to work for four or five months would not qualify for benefits.
The disability must be so severe that the claimant is unable to engage in any employment that exists in the national economy, regardless of whether such work is available in the immediate area where the claimant lives. This requirement works against the highly educated, highly skilled worker in favor of the less educated, lower skilled worker.
Still, the answer to the question Who's eligible for Social Security disability? is Just about everyone. The list includes:
- common law employers and employees;
- most self-employed persons;
- armed forces personnel; and
- employees of non-profit organizations.
Corporate officers and working owners of companies are considered employees for Social Security tax purposes.
A self-employed person is an individual (or individuals) operating a business or engaged in a profession as a non-incorporated venture. The self-employed person works for himself or herself. This business may be organized as a sole proprietorship or a partnership, or the person may operate as an independent contractor.
A self-employed person does not meet the Social Security requirements of an employee -- but he or she must still pay Social Security taxes ... and therefore can receive benefits.
Professionals -- such as CPAs, doctors, dentists, lawyers, etc. -- usually are self-employed. Other common examples include many ministers, members of religious orders, independent contractors, real estate agents, etc.
A person who is an independent contractor or freelance worker will have no Social Security taxes paid on his or her behalf by an employer. An independent contractor probably will pay Social Security taxes as a self-employed person.
As a general rule, if a family member is employed in the family business, Social Security coverage and taxes are applicable.
An exception is a minor child (under the age of 18) employed by the parent, or a parent of the business owner who performs domestic work in the home of the son or daughter.
Government employees were not covered by Social Security during its early years. However, in the 1980s, a series of reforms moved these workers from various socialized programs into the main Social Security system.
Since 1967, ministers, priests, rabbis and members of religious orders have been covered by Social Security. Members of religious orders must pay Social Security taxes -- provided that they have not taken a vow of poverty.
However, members of the clergy and religious orders may claim exemption from the payment of Social Security taxes based on conscience or religious principles. They will still be able to claim Social Security benefits, including the disability coverage.
Since January 1984, all employees of nonprofit organizations -- school systems, hospitals, churches, etc. -- have been covered by Social Security. Nonprofit organizations are those identified in section 501(c)(3) of the Internal Revenue Code.
