Controlling the workplace’s benefits, compliance and employee wellbeing can be a complex task, particularly when disability benefits like Social Security Disability Insurance (SSDI) come into the picture. A lot of employers are confused when an employee begins receiving SSDI or declares a desire to apply for SSDI. The most frequently asked questions are whether they can continue to work? Are there any obligations that the business is required to meet under the law? What are the implications of SSDI impacting other benefits programs?
Knowing the fundamentals regarding SSDI in relation to how it interacts with the employment laws as well as benefit plans is essential for any business. This article explains everything employers need to be aware of regarding SSDI, from eligibility and legal compliance to strategies for communication along with workplace rules.
1. Understanding SSDI and Its Purpose
SSDI is a federal program administered through the Social Security Administration (SSA) that provides monthly benefits to those who are unable to work because of a qualifying medical issue which is expected to last at least one year, or even cause death.
Contrary to the Supplemental Security Income (SSI), which is need-based, SSDI is funded through payroll taxes. The eligible workers are able to earn “credits” throughout their working history. When they have met the SSA’s requirements for medical and work to be eligible, they can receive disability benefits.
For employers, this means that SSDI isn’t directly connected to the insurance plans of your company. It’s a federal benefit which is beyond your payroll system. But, it is often associated with other plans sponsored by employers, including the long-term disability insurance (LTD), health insurance as well as return-to-work programs.
2. How SSDI Affects Employment Status
If an employee is accepted for SSDI but it doesn’t mean their employment has to end. Certain employees may be able to continue working part-time or re-enter the workforce based on particular SSA regulations.
The SSA offers the use of a trial work period (TWP), a window during which the beneficiaries are able to test their capacity of working up to 9 months without having to lose SSDI benefits. During this time:
- They are able to earn money with no immediate disqualification.
- SSA supervises their earnings and work activity.
- Following the initial trial, the benefits will continue until the duration of an extended period of eligibility (EPE) as long as the earnings don’t exceed Substantial Gainful Activity (SGA) limit. ($1,550 per month in 2025 for non-blind people).
What employers must be doing:
Maintain accurate records of payroll and inform employees clearly regarding how their earnings could impact SSDI benefits. Employers are not required to report directly to SSA except to do so for tax or benefit reasons.
3. Legal Obligations: ADA and FMLA Considerations
Employers also need to understand the connection of SSDI with workplace law like those under the Americans with Disabilities Act (ADA) and the Family and Medical Leave Act (FMLA).
Under the ADA:
The employees on SSDI are usually considered to be people with disabilities within the ADA definition. This means that employers must offer appropriate accommodations that permit them to fulfill important job duties, unless it creates hardship for the company.
Examples of accommodations are:
- Modified work schedules
- Remote work options
- Modified workloads or assignments to positions that are suitable
- Assistive technologies or ergonomic adjustments
Employers should be interactive with employees in order to establish appropriate accommodations, while ensuring compliance with documentation.
Under FMLA:
If your business employs 50 or more workers, a person suffering from a serious health issue could also be eligible for up to 12 weeks of unpaid and job-protected leaves as part of FMLA. Understanding the ways in which SSDI is interacted with FMLA ensures that employees are treated fairly and in compliance in fair treatment and recovery.
4. Managing Communication and Confidentiality
Employers are often confused about what they are allowed to inquire about a disabled employee’s. The important thing is to be respectful of privacy and ensure the confidentiality of employees..
- Don’t inquire about medical diagnosis or the cause of a disability, unless it’s relevant to the job requirements.
- Store SSDI or medical information separately from HR general files.
- The HR and management teams should be trained on the correct boundaries of communication.
It’s also advisable to maintain an open, respectful conversation. Employees who feel supported are more likely to share important information in the early stages, which allows employers to effectively plan for accommodations.
5. The coordination of SSDI in conjunction with Company Disability Benefits
Many employers provide group long-term or short-term Disability coverage in their benefit package. If an employee begins receiving SSDI, the policy will usually include an offset clause included in the LTD policy. This means:
- The insurance company decreases LTD payouts by the amount it receives from SSDI.
- Employees are generally obliged to file for SSDI in the event that they’re receiving LTD benefits.
Employers must ensure that employees are aware of the overlap between these programs to avoid confusion or excessive payment instances. The coordination between payroll, HR and the insurance company is essential.
6. Supporting a Return-to-Work Transition
A person who receives SSDI could eventually try to return to work whether full-time or part-time. Programs such as the SSA’s Ticket to Work initiative help facilitate this transition by giving beneficiaries support in finding work without losing benefits.
Employers can play a crucial role in the successful reintegration of a person by:
- Offering part-time or flexible roles to fit the individual’s needs.
- Regular check-ins to evaluate the level of comfort and improvement.
- Collaboration in conjunction with counselors for vocational rehabilitation, when appropriate.
This is not just helping employees to regain their independence, but it can also help businesses keep experienced, skilled employees who are already familiar with company procedures.
7. Payroll, Taxes, and Recordkeeping
While SSDI payments are processed directly by SSA, employers must take care of the standard payroll taxes for all wages that an employee earns additionally on SSDI. SSDI is taxable for certain recipients, based on household income total.
Employers must:
- Maintain the routine payroll withholdings for all work completed.
- Accurate documentation of wage (like Forms W-2).
- Encourage employees to speak with tax experts for personal advice on their situation.
From a business perspective, in terms of administration, having an open and transparent system for reporting on payroll can help avoid disputes or miscalculations of benefits later on.
8. Understanding the Limits: When Employees Can and Can’t Work
Employers can be faced with a delicate balance of allowing employees to work and staying within SSDI limitations. It’s important to be aware of SGA thresholds, that define the amount an SSDI beneficiary is able to make before their benefits will be impacted.
For 2025:
- The SGA maximum for individuals who are non-blind is $1,550 per month.
- For those who are blind, the cost is $2,590 per month.
The rate would be a little higher in 2026. If an employee continues to earn over these levels during their trial, SSA may suspend or stop benefits. Employers must ensure that their HR and payroll departments know about these numbers especially for flexible or part-time schedules.
9. Avoiding Common Mistakes Employers Make
Improper management of situations involving SSDI can cause difficulties with compliance or even tensions in working relations. The most frequent mistakes are:
- Assuming that those who are on SSDI can’t work.
- Terminating or reassigning employees without taking part in the ADA process of accommodation.
- The misuse of medical information that is private.
- Inability to coordinate with LTD suppliers or with HR documentation.
Effective training, clear policies within the company and consistent communication are able to stop these issues from growing.
10. Building a Culture of Inclusion and Awareness
Beyond compliance, knowing SSDI helps to achieve a bigger purpose of creating a workplace culture that is tolerant and inclusive. Employers who educate team members and managers about disability rights and SSDI helps to promote:
- More trust and morale among employees.
- Reduced turnover rates.
- A reputation for social responsibility.
Inclusive workplaces have been proven to draw diverse talent to increase collaboration, as well as enhance overall performance. Recognition of SSDI as a part of a larger employee wellness framework shows a company’s commitment to employees, not only policies.
11. The Employer’s Strategic Advantage
From an HR strategy perspective, businesses that manage SSDI issues efficiently can enjoy an advantage in competition. Understanding the nuances of SSDI allows for:
- Cost control.
- More precise workforce forecasting.
- Improved employee retention, even after long-term absences.
Employers who approach SSDI with empathy and structure also minimize the risk of ADA or FMLA violations, protecting the business from costly legal disputes.
12. How Keen Coverage Helps Employers Navigate SSDI and Insurance
KeenCoverage recognizes that the balance between compliance as well as employee care and insurance management isn’t effortless. Our expertise lies in helping businesses:
- Integrate health and disability insurance easily.
- Review and enhance Long-term Disability policies.
- Understand the way SSDI affects the overall strategy of benefit.
- Establish clear communication structures for the HR and management teams.
With our combination of knowledge and concrete solutions, we assist employers safeguard their interests in business as well as their employees’ well-being.
Final Thoughts
Social Security Disability Insurance plays important roles in supporting people who have life-changing health issues, but it also carries obligations for employers. From understanding ADA obligations and payroll rules to coordinating benefits and fostering inclusion, knowledge is the best compliance tool.
Employers who manage SSDI cases with honesty and compassion do not just shield themselves from legal risk but also improve work culture and increase confidence.
The team at Keen Coverage is committed to assist you in making informed choices which balance care, compliance and a business strategy.