Social Security Disability – Benefit Offsets

Some Social Security Disability benefits can affect amounts recovered under other federal, state, and/or private benefit policies. First, amounts received under Title II can affect a claimant’s eligibility for SSI benefits under the federal statutes or can at least reduce those amounts to a smaller amount.

Benefits paid under Title II of Social Security can also affect how much a claimant receives under a private or employer-provided long-term disability plan. The amount reduced on each plan is different due to the fact that they are separately written contracts, but usually there is a large offset for Social Security Disability benefits.

As far as workers’ compensation, some states reduce the amount of state workers’ compensation benefits provided if the claimant has been deemed disabled under Social Security Disability. There is a calculation and offset that considers the amount received from Social Security and the amount to be received under the state workers’ compensation system and it is therefore correspondingly lowered. Tennessee, however, does not allow workers’ compensation insurance companies to benefit from a claimant’s Social Security Disability.

Tennessee does allow for language to be placed into workers’ compensation settlements and judgments to protect from a corresponding offset of Social Security Disability benefits.

The social theory behind workers’ compensation and Social Security Disability are replacement of lost wages for injured workers. The Social Security Administration does not want to put a worker in a position where he earns more by not working than he would if he returned to the job pool. Therefore, the regulations contain a regulation that have a calculation that looks at total monthly benefit and reduces disability benefits if a certain threshold is met. This is commonly called the Social Security Offset and it usually applies to workers’ compensation benefits paid periodically or considered to be paid periodically. A representative must first understand the monthly calculation and then understand how to lessen or alleviate the offset.

Generally, an offset applies when the combined payment of Social Security Disability and workers compensation exceeds 80% of the workers’ Average Current Earnings (ACE). 42 U.S.C. § 424(a); 20 C.F.R. § 404.408. ACE is determined by looking at three calculations used to approximate the claimant’s usual earnings. 20 C.F.R. § 404.408(c)(3). The most advantageous to the claimant is used.

The workers’ compensation law of the State of Tennessee allows the creation of a fiction that aids the representative in maximizing the “total pie” of benefits to be received. T.C.A. § 50-6-207(6). The lump-sum or amortized award is spread out into monthly amounts for the rest of the claimant’s projected life expectancy to lessen the offset by the SSA by getting it near or under the 80% monthly amount.


If you need more information about a Social Security Disability/SSI, personal injury, EEOICPA, long or short-term disability, VA disability, Railroad Retirement Board disability, or a workers compensation matter, please contact the Law Offices of Tony Farmer and John Dreiser for a free case evaluation. We can be reached at (865) 584-1211 or (800) 806-4611 or through our website. Our office handles claims throughout East Tennessee.




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