TN 1 (12-15)
DI 52101.001 Introduction to Workers’ Compensation/Public Disability Benefit (WC/PDB) Offset Provisions
CITATIONS: Soc. Sec. Act, Section 224(a), 20 CFR § 404.408
Workers’ compensation (WC) provides benefits to workers who are injured on the job, or have a work-related illness. A public disability benefit (PDB) is a disability benefit required by a law or plan of a Federal, State, or local governmental entity.
Workers injured on the job may qualify for Social Security disability insurance benefits (DIB) in addition to benefits received under Federal and State WC/PDB programs. However, the Social Security Act requires that the Social Security Administration (SSA) reduce DIB when the worker is also eligible for periodic or lump sum WC/PDB benefits so that the combined amount of the WC/PDB benefit and DIB do not exceed 80 percent of the worker’s average current earnings (ACE).
Social Security DIB is not reduced if the State WC/PDB law or plan provides for a reverse offset (a reduction by the state of the WC/PDB benefit to a worker also receiving DIB benefits) that is recognized by SSA.
A. Offset provisions
Social Security DIB may be reduced, or totally offset, if the disabled worker is also entitled to:
Federal or State WC payments;
Federal, State, or local government PDB payments; or
Both Federal or State WC payments, and Federal, State, or local government PDB payments.
Offset only applies if the number holder (NH) is receiving WC/PDB. Do not consider offset if the only recipient of WC/PDB is an auxiliary beneficiary.
NOTE: For WC/PDB offset purposes, “State” includes the District of Columbia, American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.
1. When offset is applied
Apply offset when total benefits payable to the worker and any entitled auxiliaries, plus WC/PDB, exceed the higher of either:
The combined WC/PDB and DIB payments (after the reduction) can never be less than the amount of the total DIB payments before the reduction.
2. When offset stops
Reduction of DIB for receipt of WC/PDB stops when one or more of these occur:
the NH is no longer disabled;
the NH’s benefits are suspended for SGA;
lump sum proration ends;
periodic WC/PDB ends;
SSA recognizes a reverse offset plan per DI 52105.001;
a high ACE precludes offset (due to a triennial redetermination or a reduction in the WC/PDB payment);
the NH elects reduced retirement insurance benefits (RIB). For information, see DI 52150.030; or
the NH dies.
Reduction of DIB for receipt of WC/PDB also stops when the NH attains:
full retirement age (FRA) for individuals who attain age 65 on 12/19/15 or later (based on the new law in the 2015 Amendment);
age 65 for individuals covered by the 1981 Amendments and who attain age 65 prior to 12/19/15 ; or
age 62 (in pre-1981 Amendment cases).
NOTE: For information regarding all amendments, see DI 52101.005.
3. Order of payment after offset
Follow this order:
If any benefits are payable after offset is applied, they are first paid to the NH; and
If the amount payable after offset exceeds the NH’s benefit, we distribute the excess proportionately to any auxiliaries.
Offset is the reduction in DIB to a NH or entitled auxiliaries, or both, when the sum of the total benefits payable and WC/PDB exceeds the limit provided in the Social Security Act. WC, PDB, or both can cause offset.
NOTE: The DIB and WC/PDB do not have to be based on the same injury or illness for offset to apply.
2. Workers’ Compensation (WC)
WC is a temporary or permanent payment made under a Federal or State law to a worker because of a work related injury, illness, or disease.
a. Sources of WC payments
The sources are:
b. Types of WC payments
WC is usually paid weekly, every two weeks (per pay period), twice a month, monthly, every 4 weeks (every 28 days), or in a lump sum.
The types of payments are:
Temporary payments are made while a decision is pending on the amount of the permanent award. Temporary payments are usually short term and paid to cover lost wages for work injuries. It does not mean a permanent award is, or will be, paid.
Temporary Total (TT) payments are made when the worker is totally disabled now but may medically recover to return to work.
Temporary Partial (TP) payments are made when the worker returns to work on a “light duty” basis before reaching maximum medical improvement.
Permanent payments are made where no further medical improvements are expected.
Permanent Partial (PP) payments are made when the worker has a permanent loss of, or loss of use of, one or more body parts, each of which has a legally determined number of weeks of WC payments that the disabled worker is entitled to receive. PP payments are payable based on a scheduled maximum number of weeks for the specific body loss or based on a percentage loss of the whole body or loss of earning capacity.
Permanent Total (PT) payments are made when the worker’s injury or illness permanently removes the person from the work force.
Disfigurement payments are made due to a permanent injury, usually to the head, face, or neck, which impedes the progress of finding future employment.
Second Injury Fund or subsequent injury payments are WC payments made by specific funds created by State law, which are in addition to the WC payments made by the employer.
NOTE: For detailed information about the types of WC payments, see DI 52120.001C.
3. Public Disability Benefit (PDB)
PDB is a periodic benefit paid under a Federal, State, or local law or plan to a worker with a temporary or permanent disability. PDB is not always based on a work-related injury or illness. Workers receiving a PDB do not necessarily have to have been employees of the public entity paying or requiring the benefit.
4. State WC definitions
See the WC glossary in “Introduction to State Specific Workers’ Compensation (WC) Procedures” in subsection DI 52120.001I.
C. Listing codes
Listing codes are used to identify and collect WC/PDB offset cases. POMS instructions and other national instructions explain when to use a listing code. Field offices (FOs) input the listing code through the Modernized Claims System (MCS) and the processing centers (PCs) input the listing code through Processing Center Action Control System (PCACS).
WC/PDB Offset Listing Code
WC/PDB Lump Sum Prorated Based on Life Expectancy
DI 52101.005 Social Security Amendments with WC/PDB Offset Provisions