How much you earned throughout your lifetime before your disability is the key factor in determining your disability payments. Although the severity of your disability does not affect this amount, income from other sources can.
Unlike the supplemental security income (SSI) which is purely a need-based benefits programe, the social security disability insurance programme requires a claimant to have worked and earned under substantial gainful activity, with enough work credits having paid enough FICA taxes throughout their lifetime.
Average Indexed Monthly Income (AIME) 2021
The Average Indexed Monthly Income is used to determine the Primary Insurance Amount (PIA) used by the Social Security Administration to assess the amount of SSDI benefits a claimant could be paid.
How does the AIME work?
The AIME uses a complex formula to index an individual's life time earnings and determine its average. It takes into account the 35 years of highest amounts of income an individual worked, all the way to 60 years of age. It indexes those top-earning years by factoring in wage growth and inflation levels over all those years and determine the average monthly figure.
In short, the AIME seeks to approximate an individual worker's lifetime of earnings based on today's wage benchmarks.
[In order to determine AIME, the Primary Insurance Amount (PIA) is split into three parts, which are then computed together to find average amount for AIME]. Then predetermined percentages are applied to each past, starting from 90% for the first $996, then 32% from earnings over $996 but under the amount $6002 and then a chunk of 15% from the amount above $6002.
For example, if Julie's AIME as a claimant is $6500 then her PIA would be calculated by determining 90% of the first $996 which is $896.4, then next 30% from next amount above $996 but under $6002 which is $5006 that is $1501 then 15% of the next amount above %6002 but under $6500, i.e, 15% of $498 which is $74.7. Hence, the total PIA for Julie's SSDI paycheck as a claimant would be 2472. However, the SSA adjusts this amount to the lowest multiple of $0.10, hence it makes the PIA amount to approximately $2500.
AIME Calculation
The Social Security Administration uses the 1978 New Start Method, Title II of the Social Security Act to calculate the PIA. Every new calendar year, each covered worker with wages up to the Social Security wage base (SSWB) is recorded.
If you're unsure whether your income limits are enough for the PIA or want to determine the amount of SSDI according to your AIME, you can contact our disability attorneys for legal help.