Why have my Social Security Disability benefits been reduced and now I have an overpayment?

by Ben Wiborg | October 3rd, 2013

For those who qualify for Social Security Disability benefits, the benefit amount is based upon the disabled worker’s Average Current Earnings (ACE).  The Social Security Administration determines the ACE by reviewing the disabled worker’s earning history from the years he or she was able to work.  Essentially the ACE is the highest earning calendar year during the five year period prior to the injured worker’s disability, or the average earnings during the five highest consecutive earning years after 1950.  The highest average amount per month between these two is the disabled worker’s ACE.

The combination of Social Security Disability and workers’ compensation benefits that a disabled worker receives cannot exceed 80% of the ACE.  In those instances where the combined benefits do exceed 80% of the ACE, the SSD benefits will be reduced to a level where the combination of both total 80% of the ACE.  If a disabled worker is already receiving SSD benefits for a period of time when a retroactive period of workers compensation benefits are awarded, this will likely result in an overpayment of SSD benefits that will have to be repaid, thus causing a reduction or elimination of the SSD benefits until the overpayment is recovered.

There are currently 15 states, including Ohio, that reduce workers compensation benefits when SSD is being received concurrently.  These are called “reverse offset” states.  In these cases, the workers’ compensation carrier or the state will benefits from the reduction in benefit payments, as opposed to the Social Security Administration.

Next Blog:  Maximizing the combined benefits when settling your workers’ compensation claim