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  • Writer's pictureChris Stein, CFP®

Waiting for Credits to be Applied

This week we received a question about the timing of becoming “insured” in the Social Security system.  Reaching insured status grants you the eligibility to receive benefits.  There are actually three versions of insured status.  Explaining the differences probably warrants its own blog post, so for purposes of answering this person’s question I will just state that they needed 4 more quarters of coverage (credits) to become eligible to file for disability benefits (SSDI).  The question is as follows…

I became disabled in March of 2017 and applied for benefits. I was 59 years old at the time. During the past ten years, I worked part of the time at a government job where no social security was deducted and also was unemployed for two years due to having cancer the first time. This made me short 4 credits to be fully insured when I applied. My 2017 wages had to be included to give me those remaining 4 credits.

I earned enough money in the first quarter of 2017 to meet the credit requirement and then had to stop working due to cancer treatment. However, my caseworker at Social Security told me I had to wait until the last quarter of 2017 before I was fully insured. Therefore, he changed my Disability date to October 1st, 2017. I was approved quickly because of my illness, but was told I then had a 5 month waiting period before I would receive any benefits.

My question is this: Since I became disabled in March of 2017 and since I earned enough money in the first quarter of 2017 to meet the credits for that year, should I have had to wait until October 1st to even qualify? As it stands now I have not been able to work for 10 months and now have to wait two more months before I get benefits. Was this calculated properly?”

The short answer is yes, this was calculated properly.  While you do not provide quite enough information to verify that you actually needed the 4 additional credits, if we assume that part is accurate (which is likely), you are essentially running into a timing issue related to when they technically grant you the credits earned from working.

How Credits Work

In 2017 a worker needed $1,300 of covered employment earnings to receive a quarter of coverage “credit”.  Prior to 1978 you had to earn this amount in each of the 4 quarters of the year to earn your 4 credits.  This rule was deemed unfair to seasonal workers so in 1978 they changed to rule to allow earnings from anytime during the year to count for earning your 4 quarters of coverage for the year.

Technically though, they still grant you the credits on a quarterly basis.  This means that if you have enough dollar earnings to qualify, you are granted your first credit in the first quarter of the year (January through March), then your second credit on April 1st, your 3rd on July 1st and your 4th on October 1st.  This explains why they set your disability date to October 2017.  That was the first month you became eligible to claim a disability benefit.  Then they apply the 5 month waiting period, so they do not pay you for October, November, December, January or February.  Your first benefit month is March, 2018, and as you may know from reading our blog, benefits are paid one month in arrears, so your March benefit is paid to you in April.

Hopefully this clears things up for you and verifies that in this case, your Social Security caseworker appears to have processed things properly.

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