Social Security Disability Offset and Workers Compensation Benefits

A regular question that I receive in my Albany, NY Social Security Law Practice often comes after a client has been approved for benefits.

The question pertains to whether or not Workers’ Compensation benefits have any effect on the amount of Social Security Disability benefits that a claimant can receive.  The answer is “sometimes.”

The term Social Security offset simply means a reduction in Social Security benefits.

An offset or reduction to the Social Security benefit will occur when the total amount of Workers’ Compensation and Social Security payments “exceed 80% of the worker’s average current earnings”, also known as ACE.

The ACE is a number calculated by the Social Security Administration and is usually determined by selecting the highest yearly earnings from the period consisting of the disability onset year or any of the five years immediately proceeding the year of onset.  In short, the ACE is a worker’s highest yearly earnings during a six-year period.

Once the ACE is determined by the Social Security Administration, the offset cap is 80% of that number.

Here is an example of how the offset works:

Carl is an injured worker with an average current earning (ACE) of $1,400.00.  The offset cap amount is 80% of that number or $1,120.00.  Carl collects $150.00 per week in Workers’ Compensation benefits.  This translates into $645.00 per month (4.3 weeks is an average month).  Carl’s monthly Social Security Disability benefit is $647.00.  Using those figures, Carl’s Social Security Disability benefits will be offset or reduced by a total of $172.00 per month.  This figure is arrived at by adding the monthly Workers’ Compensation and Social Security Disability benefits which together total $1,292.00.  That number exceeds the 80% cap of $1,120.00 by $172.00.  This means that instead of receiving $647.00 per month from Social Security Disability Carl will only receive $475.00 per month.

As the Workers’ Compensation benefit fluctuates so will the Social Security offset amount.

Please note that many cases do not involve a Social Security offset.