Social Security Offset

Overview

The SSA Act ¹ provides in pertinent part that for any month prior to the month in which an individual (other than a disabled widow or a disabled adult child) attains the age or 65/67 (prior to 1981 amendments to the SSA Act this was at age 62):

1. such individual is entitled to benefits under 42 U.S.C. 423, and

2. such individual is entitled for such months, under a workers' compensation law or plan of the United States or a State, or certain public disability benefits required by a Federal, State or local government law or plan on account of his or her own disability or illness, to periodic benefits for total or partial disability (whether or not permanent); then

the total of his or her benefits under 42 U.S.C. 423 for such month and of any benefits under 42 U.S.C. 402 for such month based on wages and self-employment income shall be reduced. This reduction is commonly referred to as the "offset".

The types of concurrently received benefits that can trigger the offset are (a) periodic, as well as, lump sum State or Federal workers' compensation payments ² and (b) certain public disability benefits required by a Federal, State or local government law or plan. ³

Constitutional due process challenges to Social Security Administration (SSA) authority to impose an offset have been unsuccessful. ⁴ Likewise, arguments that workers' compensation settlements that contain provisions that state that they are not an admission of liability and, therefore, not "periodic" workers' compensation benefits have also failed. ⁵

When SSA becomes aware that a Claimant, who is applying for Social Security Disability Insurance (SSDI ⁶ ) benefits is also a concurrent recipient of workers' compensation or other public disability benefits it will request the Claimant complete a "Statement of Claimant or Other Person" affidavit agreeing to pay back any potential overpayment of SSDI benefits resulting from the acceptance of the workers' compensation claim either by Voluntary Agreement or Finding and Award.

Changes in Family Composition or Benefit Rate

When the Claimant's family composition changes the amount of the offset is recalculated as though the new numbers of auxiliary beneficiaries were entitled for the first month the reduction was imposed. ⁷ If the applicable limit, both before and after, the change is 80% of the Average Current Earnings or "ACE" and the limitation or maximum family benefit is in effect both before and after the change, the amount of benefits payable remains the same and is simply redistributed among the new number of auxiliary beneficiaries. ⁸

Likewise, if any workers' compensation lost wage benefits have been discontinued by lapse in time or otherwise, then SSA should be promptly advised so the offset can be recalculated. ^₉ Unless verified by SSA that the Claimant's workers' compensation claim is closed and that no further payments or awards are expected, SSA will assume there will be further workers' compensation payments. ¹⁰

SSA utilizes Form SSA-546 for the purpose of verification of the types, duration and amounts of workers' compensation benefits received by the Claimant. This form is generally sent by SSA directly to the Claimant and the practitioner is well advised to carefully review the contents for accuracy prior to submission to SSA.

SSA also will contact the workers' compensation insurance carrier or other provider of public disability benefits via Form SSA-1709 to verify the type, duration and amount of benefit received by the Claimant. The form is sent by SSA for Claimant's with ongoing periodic payments and also when SSA becomes aware that the workers' compensation case has settled. The practitioner should request the SSA office send back a copy of the completed form. Upon receipt the practitioner should verify the accuracy of the data and report any errors immediately to SSA.

Calculation of the Offset

In most cases, concurrent receipt of workers' compensation or public disability benefits and SSDI will result in some reduction in the monthly SSDI amount. ¹¹ The higher a Claimant's ACE the less likely an offset will result as the offset effect primarily occurs in those cases where the Claimant has relatively low earnings. It is important to remember that the injury or illness that qualifies a Claimant for SSDI and/or workers' compensation benefits does not have to be based on the same injury or illness for offset to apply. ¹²

The SSA Act ¹³ places a ceiling on the Claimant's combined monthly SSDI and workers' compensation or public disability benefit. The statutes provide that where a Claimant is receiving both SSDI and workers' compensation benefits or public disability benefits on account of a disability, his or her SSDI benefits shall be reduced by the amount necessary to ensure that the sum of the workers' compensation or other public disability benefits and SSDI benefits do not exceed 80% of the (a) Claimant's ACE before s/he became disabled ¹⁴ or (b) total family benefit payable to the Claimant and any auxiliaries.¹⁵ This offset is a dollar for dollar reduction in SSDI benefits.

The reduction will last until the month the Claimant reaches age 65/67 (62 if early RIB is taken) or the month the Claimant's workers' compensation and/or other public disability periodic payment stops, lump sum proration ends, SSDI eligibility ceases, or the Claimant dies, whichever comes first. ¹⁶

The offset is designed to eliminate a situation where disabled workers could receive more from the combination of workers' compensation and SSDI than s/he earned prior to the onset of disability. Workers' compensation benefits can be said, therefore, of having the effect of subsidizing SSA with a Claimant's workers' compensation benefit amounts.

As the Supreme Court has explained, by limiting total benefits to 80% of the Claimant's average earnings prior to the disability the SSA Act reduces the duplication inherent in Social Security and workers' compensation benefit programs. At the same time it allows a Claimant to supplement his or her workers' compensation benefits where those payments are inadequate. ¹⁷

Once the practitioner has obtained the Claimant's ACE it is simply a mathematical computation to calculate the offset due to receipt of concurrent workers' compensation or public disability and SSDI benefits.

The practitioner subtracts the amount of the monthly workers' compensation or public disability benefit from the ACE and compares it to the PIA or TFB. If the amount remaining after the calculation is more than either the Primary Insurance Amount or "PIA" or Total Family Benefit or "TFB" then there is no offset. If the amount remaining after the calculation is less than either the PIA or TFB then the practitioner must calculate the proper offset.

Here's an example:

Assume the following:

a. workers' compensation benefit is $400 weekly, therefore using a 4.333 conversion factor the monthly workers' compensation benefit is $1733.20

b. ACE is $4000

c. 80% of $4000 is $3200

d. PIA is $1000 and TFB is $1500

(exclusive of COLAs from Social Security)

To calculate the offset the practitioner would follow the following steps:

Step 1: Subtract the monthly workers' compensation benefits from the ACE $3200 - $1733.20 = $1466.80 rounded to $1467 (maximum combined benefit between SSDI and workers compensation or public disability benefits)

Step 2: Compare resultant to PIA or TFB. In our example $1467-1500 = $-33.00 or a $33.00 monthly offset. Instead of getting $1500 the Claimant receives $1467. If the resultant in Step 1 had been $1500 or greater there would have been no offset.

SSA's Review Role in Determination of Offset The only assured way to determine the impact of apportionment language inserted in a Settlement document is to await determination by SSA since only SSA itself can impose and calculate the actual offset. SSA will not offer advisory opinions as to the impact of settlement language. The practitioner's role is to draft apportionment language within the settlement documents based upon an understanding of the applicable statutes and regulations in an effort to mitigate, if not eliminate, the offset. Under no circumstances should a practitioner "guarantee" the results in advance. The practitioner should carefully review SSA's decision as to the implementation of an offset based upon the settlement documents and, when necessary, appeal an adverse ruling.

Once SSA has made a determination that no offset applies, the decision is arguably res judicata (except within specific time frames) and that determination should not change even when the Claimant settles the workers' compensation case). ^[18] The converse is not true. If SSA applied the offset during the concurrent receipt of entitlement to workers' compensation and SSDI benefits, a settlement of the workers' compensation case could arguably provide a basis for recalculating the offset if those workers' compensation benefits are reclassified. ¹⁹ This could occur if the settlement agreement allocates retroactive workers compensation benefits to a concurrent period of time when the Claimant was receiving SSDI benefits.

1. 42 U.S.C. §424a(a); 20 CFR §404.401(a)(4); 20 CFR §404.408(a)(2)(i); Draper v. Sullivan, 899 F.2d 1127, (11 ^th Cir. 1990)

2.POMS DI 52001.001A.1; POMS DI 52001.005; see also, SSR 71-15a, SSR 71-45a, SSR 74-21c, SSR 81-33, SSR 85-6c, SSR 87-20c, SSR 92-6c

3.20 CFR §404.408(a); 42 U.S.C. §424a(a); POMS DI 52001.001A.1.b

6.The correct technical term for this benefit is Disability Insurance Benefit or DIB

7.POMS DI 52001.560B.1

8.20 CFR §404.408(i); POMS DI 52001.560B.3

9.POMS DI 52001.540

10.POMS DI 52001.120B; POMS DI 52001.125

12.POMS DI 52001.001A.4; Campbell v. Shalala, 14 F.3d 424 (8th Cir. 1994)

13.42 U.S.C. § 424a

14.42 U.S.C. §424a(a); 20 CFR §404.408(c)(i); Richardson v. Belcher, 404 U.S. 78 (1971), 92 S.Ct 254; POMS DI 52001.001A.2

15.POMS DI 52001.505

16.POMS DI 52001.110; POMS DI 52001.112