Anyone who has ever filed a claim for worker’s compensation benefits and Social Security disability benefits is aware of the term “offset,” which limits the combined total amount of benefits a worker can receive.
This provision was passed in 1965 because worker’s compensation and Social Security are both public disability benefits. Worker’s compensation benefits are paid to a worker because of a job-related injury or illness and benefits are paid by federal or state worker’s compensation agencies, employers, or by insurance companies on behalf of employers. Below is a description of how the worker’s compensation offset was implemented back in 1965.
Workmen’s Compensation Offset
The 1965 amendments re-introduced into the disability program a provision for social security disability benefits to be reduced in some cases were a worker is also receiving workmen’s compensation. In 1957 and 1958, Congress repealed earlier provisions of the Social Security Act, which required the reduction of social security disability benefits were the individual was receiving another Federal disability benefit or a State workmen’s compensation payment. Under this provision, the total benefits payable to the disabled worker and his dependents under both programs cannot exceed 80 percent of his average monthly earnings before the onset of disability. In instances where they would, the social security benefit is reduced accordingly (although in no instance would it be reduced to the point where the family is receiving less from both programs than it would from social security alone). The amount of the reduction will be adjusted periodically to take account of increases in national earnings levels.
It is important to note that the public aspect of these programs is why the offset is in place. Disability paymenst from private sources, such as pensions, or other types of insurance benefits don’t impact Social Security benefits.
