Navigating the multitude of programs offered by the Social Security Administration (SSA) can be a daunting task. The disability programs provided by the SSA are the largest of several Federal programs that offer assistance to people with qualifying disabilities. Social Security Disability Insurance (SSDI) makes monthly payments to you if your medical condition qualifies.
To receive SSDI benefits, you must have a record of working in jobs covered by Social Security. You also must meet Social Security’s definition of disability. Partial or short-term disabilities are not covered by SSDI.
Social Security considers you disabled under these rules:
- You’re unable to continue the type of work you did before.
- You can’t adjust to other types of work because of your disability.
- Your disability has or will persist for one year or more, or result in death.
What If I Receive a Pension?
When you apply for SSDI, the Social Security Administration calculates the amount of your possible monthly disability benefits based on your work history. The SSA may reduce the amount you receive in some cases if you have other sources of income. Specifically, Social Security may lower your disability payments if you receive certain types of pension payments.
The main point that Social Security considers is whether you paid Social Security taxes on the money you earned while working the job that provided your pension. Most government jobs and private businesses participate in Social Security withholding, so any pension you receive from employment in such a job will not impact your disability benefits.
When SSDI Lowers Your Pension
In most cases, a pension doesn’t impact the amount of an SSDI payment. What about the other way around? Can an SSDI payment reduce the amount you receive from your pension?
The short answer is, “yes.” It isn’t a common occurrence but it can happen. Whether or not your pension payment alters Social Security Disability benefits depends on the kind of pension you have and on the type of Social Security benefits you’re receiving.
The SSA has two forms of disability income, each program with its own qualifying rules and methods for calculating benefits. The two programs are Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI.)
SSI payments are needs-based, where SSDI benefits are not. For this reason, your pension is more likely to reduce your SSI payments than your SSDI. However, it can happen.
Your eligibility for SSDI depends on your documented medical condition. This means most government and private pensions will not have an impact on the monthly SSDI benefits you’ll receive once you qualify for disability. As most pension plans are not exempt from Social Security taxes, this allows you to receive full monthly SSDI benefits while also drawing monthly pension payments.
As with just about everything in life, there are occasional exceptions to the rule.
- Civil service retirement benefits may affect your SSDI payments
- Some types of disability pensions and long-term disability plans impact SSDI benefits
Other Types of Benefits
If you’re receiving other types of public benefits, there may or may not a reduction in your Social Security disability benefits. The following public benefits programs, in conjunction with SSDI payments, will not reduce your monthly award:
- benefits through the Veterans Administration
- State and local government benefits, provided your earnings were subject to Social Security taxes and withholding during your time of employment
- Supplemental Security Income (SSI)
There’s also the Windfall Elimination Provision (WEP) to consider. This program can impact how the Social Security Administration calculates your retirement or disability benefits.
If your employer doesn’t withhold Social Security taxes from your wages or salary and you’re qualified for Social Security retirement benefits or disability payments because you worked other jobs that did pay withholding taxes, WEP may apply. If so, when the time comes for you to receive retirement benefits, or should you qualify for a disability pension from that employment, the SSA may reduce the amount of your monthly Social Security benefits.
Examples of when the Windfall Elimination Provision may apply include:
- You reach the age of 62 after 1985
- Your disabling medical condition occurred after 1985
- Your monthly pension eligibility results from the work you performed after 1985 on which Social Security taxes were not paid. Even if you’re still working, this rule is applicable.
Pensions and Social Security, Oh My!
Just the thought of delving into Social Security disability and pensions is overwhelming. If you’ve reached retirement age or have become disabled, let the experts at the Good Law Group navigate the minefield for you. With over 1,000 satisfied clients, these guys know how to get it done.