Characteristics of Disabled-Worker Beneficiaries Receiving Workers' Compensation or Public Disability Benefits Compared With Disabled-Worker Beneficiaries Without These Additional Benefits

by Rhonda Newsome and Rene Parent
Research and Statistics Note No. 2008-01 (released January 2008)

This note was prepared by Rhonda Newsome, formerly with the Office of Disability and Income Assistance Policy, and Rene Parent, currently with the Office of Disability and Income Assistance Policy, Office of Policy, Social Security Administration.

The findings and conclusions presented in this paper are those of the authors and do not necessarily represent the views of the Social Security Administration.


Some Social Security Disability Insurance (DI) beneficiaries are subject to a reduction in their DI benefits, called an offset, if they also receive workers' compensation (WC) or public disability benefits (PDBs). Whether their benefits are offset by the Social Security Administration depends on their predisability earnings and the state in which the injury occurred.

An analysis of recently entitled disabled-worker beneficiaries shows some differences in the characteristics of DI beneficiaries who also received WC or PDBs and DI beneficiaries without these additional benefits. This analysis does not include auxiliary beneficiaries or payments to auxiliary beneficiaries. Disabled workers who received both WC or PDBs in addition to DI benefits were more likely to be male, higher earners, older at entitlement, and from the West.

The earnings replacement rate for DI beneficiaries covered under Social Security, as measured by the ratio of the monthly DI benefit to average indexed monthly earnings, shows that disabled workers without WC or PDBs had higher replacement rates. This is the result of both the WC or PDB offset and the DI benefit formula, which replaces a higher percentage of predisability earnings for lower earners. Disabled workers without WC or PDBs were also slightly more likely to receive means-tested Supplemental Security Income benefits in addition to their DI benefits.


This note analyzes recently entitled disabled-workers receiving benefits under the Social Security Disability Insurance (DI) program. The analysis, based on data available in the Social Security Administration's (SSA's) administrative records, compares the characteristics of disabled workers receiving only DI benefits with the characteristics of disabled workers receiving DI benefits and workers' compensation and/or public disability benefits (WC/PDBs). Common to all individuals in the study were their entitlement to DI benefits based on insured status and medically determined disability.

This analysis does not allow one to form conclusions about the differences between all WC/PDB recipients and DI beneficiaries because a large number of individuals who receive WC/PDB payments are not represented in SSA's administrative records. The nonrepresented WC/PDB recipients either did not apply for or did not qualify for DI benefits, or they failed to report their WC/PDB status to SSA as required by law.

However, the analysis is useful for comparing concurrent WC/PDB and Social Security DI-worker beneficiaries with those DI-worker beneficiaries who do not receive benefits from WC or PDB, referred to henceforth as "DI-only" beneficiaries.


The Social Security program originally paid retirement benefits only. Later, other benefits were added.

Social Security Disability Benefits

Beginning in 1956, the Social Security program has paid cash benefits to workers with long-term disabilities who were insured for disability coverage because of their work in covered employment. These disabilities do not have to be work related; spouses and dependent children (auxiliary beneficiaries) of disabled workers may also be eligible for benefits.

Workers' Compensation and Public Disability Benefits

Workers' compensation programs are composed of state and some specific, limited federal programs (such as compensation for federal employees) that provide benefits to workers who are injured on the job or have a work-related illness. Those benefits include payments for medical treatment and replacement of lost wages. Public disability benefits are paid under a federal, state, or local government law or plan that provides compensation for conditions that are not job related, for example, civil service disability benefits or state temporary disability benefits, which could be short term. Of the 8,305,702 disabled-worker beneficiaries in December 2005, 1,440,772 had some past or present connection to WC or PDB; 798,476 had a current connection to WC or PDB in December 2005.1


The Social Security Amendments of 1956 (Public Law 84-880) contained an offset against WC payments. This provision required that benefits to disabled workers and their dependents be reduced if the worker also received WC payments. The Social Security Amendments of 1958 (Public Law 85-840) eliminated the offset, which was reinstituted by the Social Security Amendments of 1965 (Public Law 89-97). Subsequent amendments made further changes to the WC offset program.

The Omnibus Budget Reconciliation Act of 1981 (Public Law 96-598) extended the offset provision to public disability benefits. The provision also continued to exclude imposition of the WC/PDB offset upon DI benefits for workers with WC/PDB benefits paid by states that offset the WC or PDB payment or both of those payments against the Social Security DI benefit (as long as that state law was in effect as of February 18, 1981). These are called reverse offset states, of which there are 16 in addition to Puerto Rico.

Under the terms of the offset rules that are now in effect, DI benefits are reduced so that the total DI benefit plus the WC/PDB does not exceed 80 percent of the worker's average current earnings (ACE) or the family's total Social Security DI benefit before the reduction.

Average current earnings are the highest of—

Total earnings in covered employment, including those above the maximum taxable earnings for Social Security, are used in the determination of ACE.

Offset provisions apply to the disabled-worker beneficiary and dependents entitled on his or her account. Spouse and dependent child benefits are offset before the worker's benefit is offset. DI cost-of-living adjustments received after the initial offset are not subject to offsets.

In addition to periodic WC/PDB payments, lump-sum settlements that are substitutes for periodic payments are also subject to the offset. These settlements are prorated to reflect the monthly rate that would have been paid in lieu of the lump sum.


This analysis is based on the universe of 511,522 new Social Security DI beneficiaries entitled during an 18-month period from January 2003 through June 2004. The universe includes only disabled-worker beneficiaries who were in current-payment status at the end of June 2004.2 Those beneficiaries identified as concurrent WC/PDB beneficiaries also received WC/PDB payments within the period under study.


The analysis compares demographic characteristics and Supplemental Security Income (SSI) status between the two classes of new DI beneficiaries—disabled-worker beneficiaries receiving workers' compensation or public disability benefits compared with disabled-worker beneficiaries not receiving these additional benefits.

In addition, the analysis examines differences between the two groups as measured by the three earnings brackets used in benefit formulas to compute the primary insurance amount from average indexed monthly earnings (AIME).


In the 18-month study period from January 2003 through June 2004, roughly 11 percent of all DI beneficiaries with initial entitlement dates in this period also received WC/PDBs. When compared with disabled-worker beneficiaries with no WC/PDB activity, the disabled-worker group that received both WC/PDBs and DI benefits were more likely to be male, higher earners, older at entitlement, and from the West.3

Demographic Comparison

The following highlights detail some of the demographic comparisons shown in Table 1.

Earnings and Benefit Comparisons

The Social Security benefit computation is designed to replace more of a lower earner's preretirement or predisability earnings (average indexed monthly earnings) than a higher earner's. This is done by "bend points" in the primary insurance amount formula, which create three earnings brackets. Earnings up to the first bend point are replaced at 90 percent; earnings between the first and second bend point, at 32 percent; and earnings above the second bend point, at 15 percent, up to the taxable maximum. The three brackets are a convenient way to group workers by income (represented here by AIME). This grouping also helps distinguish differences in replacement rates, which are largely determined by the earnings bracket in which the worker belongs.

The following observations are based on data presented in Table 1.

Table 1. Characteristics of Disability Insurance beneficiaries with and without workers' compensation and public disability benefits
Group Population Average
Average monthly amount (2004 dollars) Average
rate a
Security Income
Number Percentage
of total
Number of
of recipients
in group
WC 56,207 11 51 1,118 2,515 916 481 42 3,276 6
No WC 455,315 89 50 991 2,088 983 -- 57 37,439 8
Geographic area b
WC 9,730 17 52 1,168 2,679 1,005 724 43 216 2
No WC 87,811 19 50 1,032 2,234 1,024 -- 56 7,079 8
WC 6,458 11 53 1,162 2,660 1,024 652 45 173 3
No WC 106,742 23 50 1,002 2,131 994 -- 57 8,286 8
WC 10,187 18 52 1,119 2,494 912 811 42 265 3
No WC 192,836 42 50 974 2,020 967 -- 57 14,689 8
WC 28,155 50 51 1,108 2,492 870 259 40 2,622 9
No WC 63,174 14 50 978 2,055 970 -- 58 7,379 12
Puerto Rico and Virgin Islands
WC 1,677 3 52 829 1,532 801 136 59 0 0
No WC 4,743 1 51 837 1,583 832 -- 62 c 0
WC 6,001 11 50 1,047 2,253 869 462 44 486 8
No WC 77,856 17 48 887 1,740 882 -- 61 9,732 13
WC 36,594 65 52 1,182 2,735 973 524 40 1,514 4
No WC 303,909 67 51 1,045 2,264 1,036 -- 55 18,870 6
WC 13,612 24 50 977 2,042 784 372 45 1,276 9
No WC 73,550 16 49 877 1,728 874 -- 62 8,837 12
WC 21,530 38 51 918 1,826 739 328 47 1,866 9
No WC 201,932 44 49 820 1,527 816 -- 64 21,923 11
WC 34,677 62 52 1,243 2,943 1,026 576 39 1,410 4
No WC 253,383 56 50 1,127 2,535 1,117 -- 51 15,516 6
Bend point
Below first bend point
WC 3,603 6 49 396 436 327 200 76 1,403 39
No WC 51,142 11 44 376 414 376 -- 91 25,120 49
Between first and second bend points
WC 39,776 71 51 1,005 2,025 780 435 42 1,867 5
No WC 340,034 75 50 956 1,868 949 -- 56 12,175 4
Above second bend point
WC 12,828 23 54 1,672 4,619 1,504 702 33 6 0
No WC 64,139 14 55 1,669 4,584 1,652 -- 36 139 0
SOURCE: Social Security Administration, Disabled Beneficiaries and Dependents File, June 2004.
NOTES: Percentages may not add to 100 percent because of rounding.
Geographic areas are defined as follows:
Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.
Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin.
South: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia.
West: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Washington, Wyoming.
In this table, WC refers to workers' compensation and/or public disability benefits.
-- = not available.
a. Calculated as initial monthly benefit rate divided by average indexed monthly earnings.
b. Nine DI-only individuals had missing geographic information and could not be assigned to a geographic area.
c. Data not shown to avoid disclosure of information for particular individuals.


1. Figures are from National Academy of Social Insurance, Workers' Compensation: Benefits, Coverage, and Costs, 2004 (tables updated to December 2005). Although one can conceive of odd situations in which an individual can receive both WC and PDB payments, for purposes of this note such an individual would be counted only once, in the WC/PDB category.

2. Specifically, the data are drawn from SSA's Disabled Beneficiaries and Dependents (DBAD) file. The analysis includes all Social Security disabled-worker beneficiaries with a disability entitlement date within the January 2003 through June 2004 period who also meet the following two requirements: (1) an initial Old-Age, Survivor, and Disability Insurance (OASDI) entitlement date that falls within the study period, and (2) a primary insurance amount (PIA) and average indexed monthly earnings (AIME) amount present within the study period. Cases being offset by the state rather than SSA (reverse offset) are included in the WC case counts, but their WC benefits are not included in the workers' compensation benefit column in Table 1.

3. See the notes in Table 1 for an explanation of the geographic regions in this note.

4. The bend point is the point in the PIA formula at which the replacement rate for earnings changes; see the Earnings and Benefit Comparisons section.

5. The initial DI benefit is the worker's monthly benefit credited.


National Academy of Social Insurance. 2006. Workers' compensation: Benefits, coverage, and costs, 2004 (tables updated to December 2005), July.