Social Security disability does not offset your pension unless it is based on earnings that were not taxed for the purposes of Social Security. If your pension is based on non-taxed earnings, Social Security may offset a number of your disability benefits. Generally, individuals who have pensions have no problem receiving their full Social Security disability benefits because their pension is based upon covered earnings.
If you are receiving a disability pension from an employer or long term disability company, it is likely that they will offset what they pay you each month once you have been approved for Social Security disability.
If you are receiving a retirement pension from a governmental agency or an employer, it is unlikely that your entitlement to Social Security disability will offset your retirement pension (unless the retirement is based on noncovered earnings, such as federal civil service employees). The same is true if you are receiving a military retirement or disability pension.
Since applying for Social Security disability benefits can be a difficult process, a disability attorney or advocate may increase your chances of being awarded benefits by helping you complete the complex paperwork, ensuring that all deadlines are met, and representing you at a hearing. After submitting their web form, you will receive a FREE evaluation of your disability claim. Disability attorneys or advocates receive compensation if you are awarded benefits. They have no affiliation with the Social Security Administration.
What is Social Security Disability Insurance?
Social Security Disability Insurance (SSDI) is a federally run benefits program that provide aid to people who are unable to achieve gainful employment due to a permanent disabling condition.
SSDI is financed by the Social Security tax. Any person who qualifies as disabled as defined by the Social Security Administration (SSA) and who has sufficient work credits can qualify for SSDI.
Do You Qualify for SSDI?
In order to qualify for SSDI, you must suffer from a permanent condition that prevents you from working. In other words, your disability must have lasted — or is expected to last — a minimum of twelve months and you must be unable to earn an income greater than $1,130 per month (prior to 2016, the standard allowable level of Substantial Gainful Activity was only $1,090 per month).
In addition, an individual must have earned sufficient work credits in order to qualify for SSDI. The normal requirement is a total of 40 credits, 20 of which must have been earned in the 10 years prior to the onset of disability. Usually, this means that a person must have a fairly consistent work history and have worked (and paid Social Security taxes) for a combined five of the ten years before becoming disabled.
These work requirements may be less for younger individuals, as parents’ work credits may be applied to applicants under the age of 22.
Disability Planner: Other Payments May Affect Your Disability Benefits
If you receive other government benefits such as workers’ compensation, public disability benefits, or pensions based on work not covered by Social Security, the Social Security benefits payable to you and your family may be reduced.
Social Security provides disability payments to qualified workers who suffer from disabilities that leave them unable to work. The Social Security Administration calculates how much you receive by looking at your work history, but it reduces the amount if you’ve other forms of income. In particular, certain pension payments will result in a smaller Social Security disability check. Below, we’ll take a closer look at these provisions and how they might affect you.
Disability and Pensions
In most cases, those who are eligible for pensions won’t see any impact on their Social Security disability benefits. The key question is whether you had to pay Social Security taxes on the earnings that allowed you to qualify for your pension. For private businesses and for several government jobs, earnings are subject to tax withholding for Social Security, so any pension you receive will have no impact on your disability benefits.
Certain government employees, especially those who work in state and local government agencies, do not have to withhold Social Security taxes from their employees’ pay. In these cases, the Windfall Elimination Provision will apply to reduce your Social Security disability benefits. Determining the exact amount of the reduction is complicated, as it depends on the number of years you’ve worked at jobs where you paid Social Security as well as the year you became disabled. However, the SSA does provide a table that gives the maximum possible reduction, subject to the overarching rule that your benefits will never fall by more than half the amount of your pension. To illustrate, for those who became disabled in 2015, the maximum reduction is $413 per month for individuals who worked 20 years or less in jobs subject to Social Security taxes. Those who’ve worked for 30 years or more in a Social Security tax-paying job will not see any reduction in benefits because of the provision.
Does your Pension Affect your Social Security Disability Payments?
If you become disabled to the point where you can’t work, you’re entitled to Social Security benefits. Disability benefits are based on the earnings that you received when you were working. However, in the event that you receive a government pension based on income, you did not pay Social Security taxes for, you might receive less in benefits you would have had otherwise.
If you’re a widow or widower who receives a state or local government pension, your Social Security benefits will be offset by 2/3. For example, if you are supposed to receive a benefit of $1,000, the benefit would be reduced by two-thirds and you’d receive a benefit of $434.33. However, your disability pension won’t be affected.
If you worked for a foreign employer before you got on disability benefits, or otherwise didn’t pay into the Social Security system, the pension from that employment may offset your Social Security disability payments. The Windfall Elimination Provision requires the Social Security Administration to give you a lower percentage of your total earnings each month than it ordinarily would unless you have worked for over 30 years in a different job prior to the time you started collecting disability benefits.
If you qualify for the Windfall Elimination Provision, the Social Security Administration calculates different parts of your disability benefits differently. The first $761 of your earnings that your disability benefits are based on is multiplied by 90 percent, the next $3,824 is multiplied by 32 percent and any remaining earnings are multiplied by 15 percent. The Social Security Administration then adds these three totals together to determine your total earnings for benefit purposes.
Pensions only affect your disability payments if you didn’t pay taxes on the job where you earned the pension. In the event that you paid Social Security taxes on your income from the job, the pension will not offset your disability benefits. However, if your disability benefits are based on someone else’s earnings, any pension you receive will offset those benefits.