PURPOSE: To state the policy regarding the treatment of increases in workers' compensation (WC) and certain other disability benefits provided under Federal, State, or local laws or plans (hereafter collectively referred to as "public disability benefits").
CITATIONS (AUTHORITY): Section 224 of the Social Security Act (the Act), Regulations No. 4, section 404.408.
PERTINENT HISTORY: Section 224(a) of the Act provides that when a disability insurance (DI) beneficiary under age 65 also receives public disability benefits, the disability insurance benefit (DIB) may be reduced. The total of benefits the beneficiary and his or her family receive under all programs is not to exceed the higher of 80 percent of his or her average predisability current earnings or the maximum family benefits payable on the basis of his or her earnings.
Clauses (7) and (8) of section 224(a) of the Act provide a specific exception to that provision. They allow Social Security benefit increases to be passed on to the beneficiary by precluding any subsequent monthly offset from reducing the Social Security benefit below the sum of the reduced benefit for the first month of offset and any subsequent increases in Social Security benefits. However, there is no corresponding provision which would allow increases in the public disability benefit to be passed on to the beneficiary. Moreover, the legislative history of the offset provision indicates that Congress was not considering potential increases in the public disability (then workers' compensation) benefit when it drafted sections 224(a)(7) and (8).
The history reveals that Congress envisioned two methods by which reduced benefits would be protected against inflation. First, increases in the Federal benefit would be protected pursuant to sections 224(a)(7) and (8). Second, the worker's average predisability earnings would be recalculated, on a triennial basis, to reflect changes in its value. There is no indication in the legislative history that Congress believed the additional protection of increases in public disability benefits would be required to prevent the erosion of the worker's benefits. Although section 224(a)(7) and (8) of the Act and section 404.408(a) of the regulations provide that increases in DI benefits after offset is imposed are not subject to offset, the Act and regulations do not specifically cover the treatment of increases in the amount of public disability benefits.
Section 224 of the Act or section 404.408()a) of the regulations, thus, does not authorize limiting offset to the first monthly amount of public disability benefits. In fact, the legislative purpose, as indicated by the statute and legislative history, is clearly contrary to that result. To apply offset on the basis of the first such award, reducing the excess over the 80 percent limitation, and then not readjusting on the basis of a later, increased award, would result in combined benefits that could substantially exceed the 80 percent limitation set forth in section 224(a)(1-6). The resulting payment of combined benefits in excess of predisability earnings was specifically disapproved in the original legislative history of the offset provision and has been subsequently reaffirmed by Congress.
Additionally, the language of section 224(a) of the Act provides for the reduction of DI benefits for those months in which the individual is entitled to both DI benefits and other public disability benefits (including WC). In other words, benefits are computed monthly and increases or decreases in the amount of benefits received for any month require a corresponding adjustment in offset for that month. Both the language of 224(a) and the Act and section 404.408 of the regulations call, therefore, for the monthly computation of benefits and possible ensuing reductions based on the amount of public disability benefit payable for each month.
POLICY STATEMENT: All increases in public disability benefits after offset is first considered or imposed should be considered in the computation of the DIB reduction and will result in the imposition of an additional offset where appropriate. Although this issue was not specifically addressed in section 224 of the Act, it is consistent with the intent of Congress to limit combined public disability benefits and DIB.
Each subsequent increase in the public disability benefit after offset is imposed may result in a further reduction of Federal disability benefits. Where offset was previously considered but not imposed because the combination of public disability benefits and DIB did not exceed the 80 percent limit (or total family Social Security benefit, where applicable) such increases in the public disability benefit could, of course, a result in the initial imposition of offset. This policy is comparable to the Social Security Administration's treatment of decreases in the public disability benefit. Where the DIB is reduced because of the receipt of the public disability benefit and the public disability benefit decreases, the DIB is increased, subject to the maximum payable, to the limit specified in section 224.
EFFECTIVE DATE: This policy has been in effect for many years.
CROSS-REFERENCES: Program Operations Manual System section DI 00203.345.
 Prior to September 1981 section 224 only provided for the offset of WC benefits before age 62. Section 2208 of Public Law 97-35 (the Omnibus Budget Reconciliation Act) enacted in 1981 modified section 224 to provide that certain other public disability benefits are to be offset the same as WC and that the reduction could be imposed up to age 65.
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