Element 5: Ensuring Maximum Past Due Benefits Are Paid to Our Clients - The Public Disability Offset
Past due benefits (a.k.a. retroactive benefits) are paid to claimants after a favorable disability determination is reached. It is our job to make sure that our clients receive the maximum benefits they are entitled to under the law. Our office carefully reviews Social Security/SSI Award Notices to watch for mistakes, and to ensure that Social Security correctly computes the amount of past-due benefits.
An award of past due benefits is based on an individual's past FICA contributions, as reflected in one's Certified Earnings Record. Social Security must also consider the amount of monthly "public disability" benefits paid, such as Worker's Compensation or State Disability Insurance (SDI). It is important to carefully review all official Award Certificates because Social Security oftentimes makes errors in computing past due benefits. Social Security mistakes usually occur after incorrect information/assumptions about the exact past amount of (or ending dates of) Worker's Compensation or State Disability Insurance (SDI) benefits paid out.
The general rule is that, in any given month, the combination of Social Security disability benefits (paid to the individual and dependents) and public disability benefits cannot exceed 80% of an individual's "highest average earnings". In general, one looks five years immediately before the beginning year of disability, and 80% of the highest year's earnings is the maximum which can be received. Once a public disability offset begins, the 80% reduction does not include annual Cost-Of-Living Adjustments (COLA), which are passed through to claimants and their dependents without a corresponding reduction in benefits.
By way of example, if an individual's "highest average earnings" was $36,000 in one of the five years preceding the year of disability, this represents $3,000 per month. 80% of $3,000 equals $2,400 a month, which would represent the 80% limit. If a claimant's Primary Insurance Amount (PIA), or monthly Social Security disability benefit, was $1,200, that individual could receive no more than $1,200 in public disability benefits. (i.e.. maximum of $2,400 per month) If that same individual was receiving $1,600 per month in Worker's Compensation, the total individual or family monthly Social Security benefits would be subject to a public disability offset (reduction) of $400, for a payment of $800. ($800 plus $1,600 equals the $2,400 limit)
It is important to recognize that often times the amount of Worker's Compensation benefits change. If they are reduced, and proof is provided to Social Security, an individual could be entitled to a corresponding increase in their monthly Social Security disability payment. Similarly, SDI benefits generally last no more than one year, so providing proof of their termination to Social Security may result in a significant increase in monthly Social Security disability benefits.
The situation is even more complicated if an individual is receiving both Workers Compensation and State Disability Insurance (SDI) at the same time.
Richard A. Gutstadt, Esq.