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If you get Social Security Disability Insurance (SSDI) and another benefit related to a work injury or disability, you want to know how they work together. This article explains when other benefits reduce SSDI and when they don’t.
Yes, getting certain other benefits can reduce your SSDI payment through an SSDI offset. Workers’ compensation, other public disability benefits, and some state temporary disability payments can reduce SSDI.
Private short-term or long-term disability insurance, Veterans Affairs (VA) disability benefits, and Supplemental Security Income (SSI) do not reduce SSDI payments.
An SSDI offset is when the SSA reduces SSDI because you also receive certain other payments for disability or a work injury. The offset is about the maximum combined total you can get from these sources, based on a formula.
You may notice an SSDI offset when your SSDI amount is lower than expected or when it changes after another benefit starts or stops. Typically, you get an SSA notice before the change.
While offsets reduce your payment amount because of federal rules, SSDI benefit deductions are for payments like Medicare premiums and past-due government debts.
Money may also be taken from an SSDI benefit for overpayments, but that’s considered payment recovery.
When you get hurt on the job or sick related to work, you may get workers’ compensation in regular payments or a lump sum settlement. The federal government only allows you to get 80% of your average pay before becoming disabled from SSDI and workers’ compensation combined. Your SSDI will have a workers’ compensation offset if the benefits’ total exceeds 80% of your previous average wages.
Public disability payments are disability benefits from a federal, state, or local government program. Examples can include disability payments connected to a state, county, or city employer, or a government disability program tied to public employment.
Some state temporary disability programs count as public disability benefits for the SSDI offset. Rules vary by program, so the safest step is to confirm with the SSA whether your specific payment counts.
Private disability insurance, including short-term disability (STD) and long-term disability (LTD), typically doesn’t reduce SSDI. When SSDI payments start, your long-term disability payments will likely go down. You may have to repay some LTD benefits as well but the money is typically taken from your past due benefits. How your LTD works depends on the policy. Talk to your insurer if you have questions.
VA disability compensation is awarded when a person has an injury or illness stemming from military service. SSDI payments and VA compensation do not affect each other. You can get both benefits if you qualify for both. Learn more about getting VA disability compensation and SSDI.
You can qualify for SSI while receiving SSDI if your SSDI payment is very low. SSI doesn’t reduce your SSDI payment, but SSDI can reduce your SSI payment because it’s a needs-based program for people with limited income and assets. All income and gifts and some living arrangements affect SSI payments.
Under the SSDI 80% rule, the combined total of your SSDI benefits, family benefits, and workers’ compensation (or other public disability benefits) can’t be more than 80% of pre-disability earnings, also called average current earnings (ACE). The SSA has more than one ACE calculation and uses the method that produces the highest average for you.
When the combined total is over the 80% cap, the SSA reduces SSDI. The agency reduces family benefits first, which may be zeroed out. Then it reduces your benefit if the total is still over the 80% cap.
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Get EvaluationIf you get a workers’ comp settlement while receiving SSDI, the SSA prorates the lump sum into a monthly amount for the offset calculation based on the settlement terms. How your SSDI payment is affected depends on how the settlement agreement is written.
If the agreement prorates your lump-sum settlement over your lifespan, your SSDI payment could go up. If the settlement says the sum is prorated over a couple of years, your SSDI payment may stay the same or go down.
Two people with the same lump sum may have different monthly workers’ compensation payments because lump sum proration can change the offset calculation.
Example: If a settlement is treated as replacing $1,000 per month for 24 months, the SSA counts $1,000 per month during that period for the SSDI 80% rule calculation.
Documented medical, legal, and other expenses related to the workers’ compensation or public disability claim that you paid or incurred can be excluded from the total settlement amount before the SSA’s 80% calculation.
Other benefits reduce SSDI only while you get workers’ compensation or public disability benefits, or until prorated settlement terms end. If either benefit payment changes, the offset changes. The offset ends when SSDI converts to retirement benefits at full retirement age.
Sixteen states and Puerto Rico have reverse offset plans that allow the states to reduce workers’ compensation or public disability payments rather than the SSA reducing disability benefits. The reverse offset states are Alaska, California, Colorado, Florida, Louisiana, Minnesota, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Washington, and Wisconsin.
Start by gathering records that show the affected payment amounts and dates. These include:
Having these documents on hand helps you discuss changes to your SSDI or public disability payments with the SSA or with the appropriate state agency.
You’re required by law to report workers’ compensation and other public disability benefits to the SSA. Report when other benefits are awarded, end, or when benefit amounts change. You must also report lump sum settlements and costs to exclude.
If the SSA doesn’t get information about other benefits, it may overpay you and recover the overpayment(s) from future SSDI benefits.
If you haven’t been approved for SSDI or SSI yet or were denied, Advocate can help. Our disability specialists know what the SSA needs to see for an approval.
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Get EvaluationNo. You only have a workers’ compensation offset when the combined benefit total is over the 80% cap.
Yes. You can receive both at the same time.
No. Your LTD payment may be reduced when you start getting SSDI though.
No. VA disability compensation and SSDI are separate programs with different eligibility rules. Payments from the two programs don’t affect each other.
No. When you reach full retirement age, offsets end.
Most likely if your SSDI payment has been capped because of the 80% rule.
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