What are “quarters of coverage” or “credits” and how do I earn them?

This concept applies only to Social Security Disability Insurance (SSDI). Quarters of coverage or credits are the “building blocks” Social Security uses to find out whether you have the minimum amount of covered work to qualify for Social Security benefits. If you stop working before you have enough credits to qualify for benefits, your credits will stay on your record. If you return to work later, you can add more credits so that you can qualify. No benefits can be paid if you do not have enough credits.

You can earn up to a maximum of four quarters or credits for each year by working in jobs covered by Social Security or by operating your own business as a self-employed person, as long as you pay tax into the Social Security system.

Starting in 1978, employers report earnings just once a year. Credits are now based on your total wages and self-employment income during the year, no matter when you do the actual work. You might work all year to earn your four credits, or you might earn enough for all four in a much shorter length of time, for example, a month or a couple of months of work.

The amount of earnings it takes to earn a credit changes each year. In 2015, you earn one credit for each $1,220 of your earnings. So if you have earned at least $4,880 during the year, you get the maximum four credits.

During your lifetime, you will probably earn more credits than the minimum number you need to be eligible for benefits. If eligible for Social Security benefits, your monthly benefit amount is derived from your average earnings over your working years. (NOTE: You do not earn credits for pension payments or for interest or dividends on savings and investments. You do not pay Social Security tax on that kind of income.)

About your credits for last year and this year. When the Social Security Administration prepares a Social Security Statement at your request, your earnings for last year may not be on record yet and this year’s earnings will not be reported until next year. Therefore, Social Security uses the earnings information you gave them on your request form to assume that you have up to additional eight credits for those years (one to four credits per year, depending on the earnings amount). Social Security uses your latest posted earnings for either last year or the year before to give you these credits. If you do not have any earnings on record for either year, or you do not tell them about your earnings on your request form, SSA does not give you any assumed credits for this period.