What is the 'Disability Insurance Trust Fund'

The Disability Insurance Trust Fund (DI) is the smaller of two funds within the Social Security Trust Fund, established as part of the Social Security Act Amendments of 1956. The vital Old-Age and Survivors Insurance Trust Fund (OASI) is the second and more massive Trust.

The Disability Fund pays Social Security benefits to those who are mentally or physically incapable of gainful employment. Spouses and children of recipients may also receive benefits. 

Breaking Down 'Disability Insurance Trust Fund'

The Disability Insurance Trust Fund collects deposits from the Federal Insurance Contributions Act (FICA) tax and the Self Employed Contributions Act (SECA) tax. These same taxes help to fund the Old-Age and Survivors Insurance Trust Fund. FICA is a deduction from the paychecks of employees which matches the contribution from employers to fund the Social Security Trust Fund. SECA payments are from self-employed business owners, who pay both employee and employer amounts based on their net earnings, into the Fund. The Disability Insurance Trust Fund further funds itself as it uses surplus revenues to purchase interest-bearing government securities, which it holds in the Trust.

Neither Congress nor the President can use the Trust Funds’ receipts and disbursements toward the federal budget. This prohibition is known as a special budgetary status. As the funds raise money from dedicated taxes, there is a fiscal firewall between Social Security funds and federal spending. However, surplus revenue does eventually make its way into federal coffers as the Trust purchases interest-bearing government securities.

A six-member board of trustees oversees the Disability Insurance Trust Fund. The Secretary of the Treasury, Labor, Health and Human Services, and the Commissioner of Social Security fill four seats. The president fills the other two places with Senate-confirmed appointments. The appointed trustees serve four-year terms. The six-member board releases annual reports through the Office of the Chief Actuary which publishes the financial status of the Social Security program. The Social Security Administration (SSA) reviews its finances every year and can alter payouts and eligibility requirements.

A favorite way to measure the health of the Disability Insurance Trust Fund is regarding the year when it would exhaust reserves, given current trends. For example, in 2018, Social Security trustees projected the trust fund to remain solvent until 2032. That’s a significant improvement over the forecast in 2015 when the White House warned that insolvency was imminent.

Applying for Benefits From the Disability Insurance Trust Fund

Individuals may apply for Retirement, Medicare, and Disability benefits for themselves and their spouse and children either at their local Social Security office or online. Further, applicants may call the office at 1-800-772-1213 (TTY 1-800-325-0778). Applicants must have a medical condition which meets the Social Security disability definition and have met work requirements. 

For example, qualifying for disability benefits requires a certain number of work credits. Workers earn credits each year that they earn wages and pay FICA taxes. Credits are necessary for someone to receive Social Security Disability, Retirement, and Medicare benefits. Workers may get a maximum of four credits assigned each year and must earn a minimum amount to earn a credit. In 2018, that minimum amount is $1,320 for one credit. Compare this to 2017 with $1,300 and 2016 with $1,260

Other adjustments to payments and eligibility come in the form of cost-of-living calculations, changing the income thresholds for substantial gainful activity (SGA) and trial work period (TWP), both of which affect eligibility.

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