DI 52125.001 Public Disability Benefits (PDB) - Definitions and Rules for Applying Offset
SSR 83-9 - Title II: What Constitutes “Substantially All” State or Local Covered Employment for Purposes of Excluding Offset (Against Disability Benefits)
SSR 86-6a - Section 224 - Disability Insurance Benefits - Reduction for Receipt of Public Disability Benefit under Florida's Retirement System
A. PDB-related definitions
1. Public disability benefit (PDB)
A PDB is a benefit paid under a Federal, State, or local law or plan to workers for temporary or permanent disabilities. PDBs are usually not based on a work-related injury or illness and may be in the form of periodic payments or a lump sum. An employment relationship is not required to receive a PDB; however, it is needed for a PDB that can result in offset. The persons receiving the benefit do not, necessarily, have to have been employees of the public entity paying or requiring the benefit.
2. Covered service
Covered service (or covered employment or covered wages) is employment on which Federal Insurance Contribution Act (FICA) taxes are paid either through payroll deduction or other arrangements. See DI 52125.010 for instructions on identifying covered service.
3. “Based on”
PDB is “based on” covered service if the period of covered service in question is used to determine eligibility to or compute the amount of the PDB.
PDB is “not based” on covered service if a worker had a period of covered service but that period is not used to determine eligibility to or to compute the amount of the PDB. Offset is applicable.
EXAMPLE: Puerto Rico pays a benefit to certain disabled workers under their Automobile Protection Act. This PDB is not based on any employment. Therefore, it is offsettable.
If the PDB plan used one period of service to establish eligibility and a different period of service to compute the amount of the PDB, do not consider the entire period of service or employment. Consider only that portion of service or employment used to determine eligibility to a PDB, or the period of service or employment used to compute the amount of the PDB. (See Examples in DI 52125.010G.)
4. “Substantially all”
Substantially all means 85 percent or more of covered service.
EXAMPLE: A NH receives a State teachers' pension based on her 20 years of employment and alleges that there are a few years when she did not pay into Social Security. Upon review of the NH's earnings, 2 years out of 20 years are in non-covered employment. Since 18 years of covered service out of 20 equals 90 percent, the pension is excluded from offset.
5. “All or in Part” test
One day of covered service at any point in the Federal career meets the “all or in part” test. This only applies to Federal employees who meet the requirements. See DI 52130.005 - Civil Service Retirement System (CSRS) Disability Benefits.
NOTE: The one-day exclusion used to preclude PDB offset differs from GPO. The GPO exclusion must be met on the last day of work, however PDB offset looks at any one day of covered service in the total length of service used for the PDB.
B. Rules for applying offset
A PDB requires offset of Social Security disability insurance benefits (DIB) for disabled workers unless the PDB meets one of the exclusions listed in DI 52125.001B.3. below. A PDB may cause offset even if a workers' compensation (WC) benefit also causes offset.
1. Onset/Month of Entitlement (MOET)
PDB offset only applies if the DIB onset is 03/01/1981 or later and the MOET is 09/1981 or later.
2. Other SSA offsets that may also apply
Determine if the windfall elimination provision (WEP) applies based on the receipt of a pension that is based, at least in part, on non-covered earnings.
NOTE: WEP may apply even if PDB offset does not apply and vice versa. See RS 00605.360 - WEP Applicability. If the number holder (NH) receiving PDB is also entitled to spouse's or widow's benefits, determine if government pension offset (GPO) applies. See GN 02608.100 - Government Pension Offset (GPO) Provision. It is possible for PDB offset to apply to the NH's DIB benefit at the same time GPO applies to the spouse's or widow's benefit the NH also receives.
3. PDBs excluded from offset based on covered and non-covered employment
Certain PDBs are excluded from offset if based all or in part on earnings covered under sections 210 (Definition of Employment) or 218 (Voluntary Agreements for Coverage of State and Local Employees) of the Social Security Act. These exclusions do not apply to WC payments.
NOTE: Section 218 of the Act provides for coverage of State and local government entities if the entity elects coverage. Section 210 of the Act generally covers exceptions to Social Security coverage in the private sector, however it also covers FERS employees.
Excluded benefits include:
Federal disability benefit based all or substantially all (at least 85 percent) on covered federal employment where the DIB onset is 05/01/1986 or later.
Federal disability benefit based (all or in part) on covered federal employment where the DIB onset is in the period 03/01/1981 through 04/30/1986 and the MOET is 09/1981 or later. (The 1985 Social Security Amendments changed the exclusion test for a Federal PDB if the onset is 05/01/1986 or later). See DI 52130.001 - Types of Federal Public Disability Benefit (PDB) Payments.
State or local disability benefits based on State or local employment (all or substantially all) covered for Social Security purposes. See DI 52125.015 - Determining Public Disability Benefit (PDB) for State and Local Employment.