WHO PAYS FOR SOCIAL SECURITY BENEFITS?

Social Security benefits are paid out of two trust funds: the Disability Trust Fund and the Retirement Trust Fund, both administered by the Social Security Administration, part of the US government. These funds collect money from workers and their employers.

The Social Security Trust Funds collect a special tax from every worker and employer. The tax is authorized by the Federal Insurance Contribution Act (FICA). In 2017, there are an estimated 171 million workers paying FICA taxes. The current Social Security tax is 6.2 percent of their wages, up to $127,200 in wages. In addition, workers pay 1.45 percent of wages for Medicare tax. There is no limit on Medicare tax, so workers pay 1.45 percent on every dollar they earn. Employers match the taxes, making the total tax on wages 15.3 percent.

If an individual is self-employed, he or she pays both parts of the tax (the full 15.3 percent), which is called a "self-employment tax."

The government divides this money between two trust funds. From time to time, Congress switches money from the Retirement Trust Fund to the Disability Trust Fund, as needed.

Social Security disability is really a self-financed program. It does not depend on revenue from the general budget of the United States. Expenditures (benefits) from the trust funds do not increase the national debt and are not considered part of the annual budget of the US government.

Social Security disability insurance (SSDI) is truly an insurance policy issued by the US Government to workers. The insurance is mandatory, most workers cannot opt out of it. The next time you receive a paycheck, look at your list of withholdings. You will see "FICA" listed with an amount. This is the combined deduction to cover the Social Security and Medicare tax you are required to pay. Remember that your employer paid that identical amount, also. After you work enough to have "insured status," you can file for disability benefits if you meet Social Security's strict definition of "disability." However, if you have not worked enough (haven't paid sufficient FICA taxes) to be insured, you cannot file a claim for SSDI benefits.