How To Calculate Reduction in Social Security Disability Due To Other Benefits
SSDI benefits will be reduced, or possibly even eliminated entirely, if a disabled person is also entitled to either or both of the following:
- State or Federal workers' compensation payments on account of his or her own injury or illness
- 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 calculate the amount of the reduction:
- Your monthly SSDI benefits, including benefits payable to your family members, are added together with your Workers' Compensation or other public disability payment.
- If the total amount of these benefits exceeds 80% of your "average current earnings," the excess amount is deducted from your SSDI benefit.
- For example, before you became disabled, your average current earnings were $4,000 a month. You, your spouse and your two children would be eligible to receive $2,200 a month in SSDI benefits. However, you also receive $2,000 a month from Workers' compensation. Because the total amount of benefits you would receive ($4,200) is more than $3,200 (80% of your average current earnings), your family's Social Security benefits would be reduced by $1,000. This continues until the month you reach full retirement age or the month your other benefits stop, whichever comes first.
"Average Current Earnings" is determined in three different ways. Social Security uses the highest result. Each of the different methods of calculating Average Current Earnings use your gross pay before deductions, not take home pay. The pay is not limited to the maximum income taxed by Social Security. The methods are:
- The average monthly gross pay during any one calendar year including the year you became disabled and the five calendar years immediately preceding it.
- The average monthly earnings of any five consecutive calendar years after 1950.
- The average monthly earnings of all the years used in determining your SSDI benefit amount.