BLOG: WHAT ARE EARNED CREDITS AND INSURED STATUS?
Earned credits are units of money that you and your employer paid into the Social Security System to receive your Social Security Retirement, Survivors, or Disability Insurance (RSDI) Benefits. These payments give you an ‘insured status’.
As a general rule, a maximum of 4 credits can be earned in any given year. In 2015 a credit was earned for every $ 1220.00 contributed. In 2019 an individual received 1 credit for every $ 1,360.00 of wages earned for a maximum of 4 credits per year.
For persons who become disabled before they reach 24, they must have 6 credits in the three years preceding their disability. For persons between 31 and 42, they need 20 credits. At 50, 28 credits are necessary. At age 58, 36 credits are necessary. At 62, 40 credits are needed.
There are different kinds of insured status.
FULLY INSURED STATUS
To have a fully insured status the individual must
1. Have one credit for each calendar year since 1950; OR
2. If the individual turned 21
a. after 1950; AND
b. they have at least 1 calendar credit for each year since they turned 21 up until
i. The year before they turn 62; or
ii. The year before they die; or
iii. The year before they became disabled.
You do not need any credits for the year you became disabled. That means if you became disabled on December 31, 2018, the very last day of the year, and you made NO payments to Social Security the entire year, Social
Security would not consider any part of 2018 in determining whether you have sufficient credits.
CURRENTLY INSURED STATUS
To have a currently insured status, the individual must have at least 6 credits during the full 13 quarters (52 months, 4.3 years) before
a. they die;
b. became entitled to disability benefits;
c. became entitled to retirement benefits.
Any part of a quarter that includes a period of disability is not counted.
The first or last part of the period of disability may be counted if it is used as a qualifying credit.
DISABILITY INSURED STATUS (THE 20/40 RULE)
1. The individual has 20 paid quarters in a 40-quarter period.
2. The 40-quarter calendar period ends when the period of disability begins.
The person must have a minimum of 6 credits.
If you became disabled before the quarter you turned 24, you must have 6 credits in the 12 quarter period ending in the quarter that your disability began.
EARNED CREDITS versus QUARTERS OF COVERAGE
Before 1978, the ‘quarter of coverage’ (QC) was the basic unit of Social Security earnings used in determining the worker’s insured status.
The social security administration credited an individual with a QC for each calendar quarter if a person earned
a. $ 50.00 in wages;
b. $ 100.00 per year as an agricultural worker;
c. $ 400.00 in annual net earnings from self-employment;
d. A person was credited with at least $ 100.00 of self-employment income.
In 1978, the Social Security wages began to be reported annually. The Social Security Administration began to credit an individual with a QC for each part of their total covered earnings in a calendar year.
A MININUM OF 6 QCs AND A MAXIMUM 40 QCs ARE REQUIRED FOR A PERSON TO HAVE AN INSURED STATUS FOR THEIR RSDI BENEFITS.