Social Security Benefits Handbook online edition 
What You Want To Know - What You Need To Know

Chapter Six Insured Status, The Work Requirement

Section 601 -   The Work Requirement in General

      To qualify for a Social Security benefit, either you or the person on whose earnings record you claim benefits must have worked a certain amount of time in employment covered by Social Security.  Almost all employment in the U.S. is now covered.  The work requirement is called "insured status."

      There are different kinds of insured status depending on the type of benefits being claimed.  "Fully insured" status (Section 602) is required for most benefits.  "Currently insured" status (Section 603) is required for Young Widow(er)s (Section 204.5) and surviving children (Sections 205.1-205.4).  A special "disability insured" status (Section 604) is required for Disability Insurance Benefits (Section 203). 

      Dependents and survivors are eligible based on relationship to an insured worker.  There is no work requirement for them.  The person on whose account benefits are claimed must meet the applicable insured status requirement. 

      The eligibility requirements for the different kinds of benefits are listed in Sections 202-208.  Each listing states the insured status requirement for the particular benefit. 

      The insured status requirement does not affect the amount of the benefit.  It sets a minimum work requirement which must be met before any benefit is payable.  Once this minimum is met a benefit amount is computed based on average earnings (see Chapter 7). 

      If you have insured status on your own and also qualify as a dependent or survivor, you may be entitled on both accounts (see Chapter 3). 

      Insured status is gained by earning Quarters of Coverage (Section 605.1).  These are calendar quarters for which credit now is given based on certain minimum earnings during the year.

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 Section 602 -     Fully Insured Status

       Fully insured status is required for most benefits.  To be fully insured for retirement benefits you must earn 40 Quarters of Coverage (Section 605.1). For Survivor and disability benefits you must earn one Quarter of Coverage for every year after the year of attainment of age 22 up to and including the year you become disabled (for Disability Insurance Benefits) or die (for Survivor Benefits).  Note that there is an additional requirement for Disability Insurance Benefits (see Section 604), and that certain Survivor Benefits do not require fully insured status (see Section 603).   

      Social Security rules provide that you attain your age on the day before your birthday.  If your birthday is on January 1, you attain age 22 in the year before that birthday for purposes of figuring the insured status requirement. 

      To collect wife's/husband's, widow(er)'s or child's benefits you do not have to meet the work requirement yourself.  Instead, you must be the wife, widow or child of a worker who meets the requirement. 

      The minimum number of Quarters of Coverage required in any case is six.  The maximum is forty. 

            Here is an example of how the above rules work:  John was born August 11, 1950.  He became disabled on June 5, 1994.  We add 22 to the year of birth (22 + 1950 = 1972).  John attained age 22 in 1972.  We subtract 1972 from the year of onset of disability (1994 - 1972 = 22).  John needs 22 Quarters of Coverage (Section 605.1) to meet the fully insured part of "disability insured" status (Section 604). 

      See Charts 2 and 3 in Appendix  2 for Quarters of Coverage required for Disability/Survivor Insured Status and special Disability Insured Status.


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Section 603 -     Currently Insured Status

       This type of insured status requires fewer Quarters of Coverage (Section 605.1) than fully insured status (Section 602).  However, only some kinds of benefits can be based on currently insured status.  These are Surviving Childs Benefits (Sections 205.1-205.4), Mother's/Father's Benefits (Section 208 - also called Young Widow(er)'s Benefits) the Lump Sum Death Benefit (Section 208), and Medicare for kidney failure cases (Section 207.2).

       A worker must earn at least six Quarters of Coverage (Section 605.1) within the thirteen calendar quarter period ending with the calendar quarter of death.  The calendar quarters are as follows:  first quarter - January, February, March; second quarter - April, May, June; third quarter - July, August, September; fourth quarter - October, November, December.

       To determine this period, take the quarter and year of death, subtract three from the year; the period begins with the quarter of the resulting year which corresponds to the quarter of death.  For example, Jim died on May 15, 2005.  This is in the second quarter of 2005.  We subtract 3 from 2005, which equals 2002.  The thirteen quarter period begins with the second quarter of 2002 and ends with the second quarter of 2005.  If Jim earned six Quarters of Coverage (Section 605.1) during that period, including the beginning and ending quarters, he is currently insured.

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Section 604 -     Disability Insured Status

       Eligibility for Disability Insurance Benefits (Section 203) requires a special "disability insured" status.  You must be fully insured (Section 602) and meet a second requirement of recent Quarters of Coverage (Section 605.1).  This second requirement is different depending on when you become disabled.

       If you become disabled in or after the calendar quarter you reach age 31, you must have at least twenty Quarters of Coverage (Section 605) during the 40 calendar quarter period ending with the quarter your disability begins (see Section 505).  To determine this period, subtract 10 from the year the disability begins and begin with the first quarter after the quarter in the resulting year which corresponds to the quarter of onset of disability.  The calendar quarters are as follows:  first quarter - January, February, March; second quarter - April, May, June; third quarter - July, August, September; fourth quarter - October, November, December. 

      For example, John becomes disabled on September 5, 2007.  This is the third quarter of 2007.  Subtracting 10 from the year brings us to 1997.  The corresponding quarter of that year is the third quarter.  The 40-quarter period begins with the first quarter after the corresponding quarter.  Therefore the period begins with the fourth quarter of 1997 and ends with the third quarter of 2007.  If John has 20 Quarters of Coverage within this period, including the beginning and ending quarters, he will meet the second part of the "disability insured" status requirement. 

      Sometimes the requirement is referred to as the "five year" rule or the "five year out of ten year" rule.  This is somewhat misleading.  Although 20 quarters is five years and 40 quarters is ten years, the legal requirement is based on quarters, not years.  The 20 quarters required do not have to be consecutive, they can be spread out.  The 40-quarter period does not always correspond to the beginning and ending of calendar years.  This rule is more accurately called the 20/40 rule, i.e. 20 quarters required in the 40-quarter period. 

      If you become disabled before the calendar quarter of your 31st birthday, there is an alternative to the 20/40 rule.  Instead, you must have one Quarter of Coverage (Section 605.1) for every two calendar quarters in the period beginning with the calendar quarter after the quarter of your 21st birthday and ending with the quarter of onset of disability (see Section 505).  If the number of quarters in this period is an odd number, use the next lower even number.  A minimum of six quarters of coverage is always required.  Quarters of Coverage earned before age 21 may be used if this is required to meet the requirement. 

      If you were disabled before age 31 and received benefits based on the alternative to the 20/40 rule just discussed, but then your disability ceased and you become disabled again after age 31, you will meet the disability insured status requirement even if you cannot satisfy the 20/40 rule if you have at least one Quarter of Coverage for every two calendar quarters beginning with the quarter after attainment of age 21 and ending with the quarter of the new onset date.  You exclude any quarter wholly or partially within the prior period of disability, except the beginning or ending quarters if they are Quarters of Coverage. 

      In all cases, you must be fully insured (Section 602).


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Section 605.1 -   Quarters of Coverage in General

       A Quarter of Coverage is a calendar quarter for which credit is given by Social Security for purposes of deciding if a person has worked long enough to qualify for benefits (see Section 601).  A minimum amount of wages from covered employment or self-employment income must be earned to get credit.  Almost all employment and self-employment is now covered by Social Security.  The amount of earnings required to get credit has changed.  The rules are discussed in the following sections of this chapter.


Section 605.2 -   Quarters of Coverage - Pre 1978
                  for Employees

      In years before 1978, you receive a Quarter of Coverage for each calendar quarter during which you were paid $50 or more.  It doesnt matter when the wages were earned.  The Quarter of Coverage is assigned to the quarter in which the wages were paid to you.  However, if you were paid maximum yearly earnings subject to Social Security, (the FICA maximum), you are given credit for the four quarters of that year, even if the earnings were paid in less than four quarters.  The yearly FICA maximums are listed at Appendix 3.  

      There is a special rule which applies to farm workers for years before 1978.  Instead of the $50 per quarter rule, a farm worker received one Quarter of Coverage for each $100 in cash wages paid during a year, without regard to the quarter in which the wages were paid.  Quarters of Coverage were assigned beginning with the last calendar quarter and then counting backward.

       Beginning with 1978, the rules for all employees have been changed (Section 605.3).  The rules have always been different for the self-employed (Section 605.4).


Section 605.3 -   Quarters of Coverage - After
                  1977 for Employees

       Beginning with 1978, Quarters of Coverage are assigned based on total yearly earnings instead of earnings paid within a calendar quarter.  A certain amount has been designated for each year and one Quarter of Coverage is credited for each multiple of that amount which is paid within the year.  These amounts are listed in Appendix 2, Chart 1.  

      Example:  John was paid $800 in 1984, when the required multiple was $390.  He is credited with two Quarters of Coverage because his earnings are at least two multiples of $390, but less than three multiples.  Jim was paid $1,600 in 1984.  He receives four Quarters of Coverage because his earnings are at least four multiples of $390. 

      No more than four Quarters of Coverage are given for one calendar year.  A Quarter of Coverage cannot be assigned for any quarter which has not yet started, nor for any quarter which begins after the workers death.


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Section 605.4 -   Quarters of Coverage for the

       The method of determining Quarters of Coverage for self-employed individuals is different than it is for employees.  Before 1978 the self-employed person received four Quarters of Coverage for a year if the net earnings from self-employment were $400 or more.  If the net earnings from self-employment were less, the self-employed did not receive any Quarters of Coverage.  It was all or nothing.  Beginning in 1978, the rules changed.  For 1978 and all later years, a self-employed person receives Quarters of Coverage based on the amount of total yearly earnings in the same way as an employee (Section 605.3).  However, the self-employed individual must still meet a minimum of $400 in net earnings from self-employment to receive any Quarters of Coverage.   

      For example, John works as a plumber for the Smith Plumbing Company.  He earned $350 in 1978 in wages.  He receives one Quarter of Coverage, because this is more than the minimum required earnings for one Quarter of Coverage as discussed in Section 605.3.  Joe however, is a self-employed plumber.  His net earnings from self-employment in 1978 were $375.  He receives no Quarters of Coverage even though his net earnings from self-employment are greater than the minimum earnings required for an employee.  If he earned $400 in self-employment income in 1978, he would receive one Quarter of Coverage.  If he had earned $400 in net earnings from self-employment in 1977, he would have received four Quarters of Coverage. 

      If you are both self-employed and an employee, add your total earnings as an employee and your net earnings from self-employment to determine how many Quarters of Coverage you will receive using the rule described in Section 605.3.  However, to count any net earnings from self-employment into the yearly total they must be at least $400.  If the net earnings are less, they are not added in at all.  For example, Joe is both self-employed as a plumber and works as an occasional employee of Smith Plumbing Company.  In 1978 he had $400 in net earnings from self-employment and $350 in wages.  Combining the two sums equals $750.  

    Using the rule described in Section 605.3, he earns three Quarters of Coverage.  If the earnings and self-employment income were reversed, the outcome would be different.  If he had $400 in wages but only $350 in net earnings from self-employment, he would receive only one Quarter of Coverage.  The net earnings from self-employment are less than $400.00 and do not get added in at all; only his wages count.  Because his wages are only one multiple of the minimum required for 1978 ($250) he receives only one Quarter of Coverage


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