A disability claimant from Colorado was found to be disabled as of August 20^th, 1984. However, because he was also receiving state disability benefits from the Colorado Public Employee Retirement Association, his federal disability payments were reduced to zero. He appealed.

Social Security disability insurance benefits (DIB) are subject to offset if the person also receives state public disability benefits. The total amount of combined benefits cannot exceed 80% of the person’s pre-disability earnings, also known as average current earnings, or “ACE.” To the extent the combined benefits exceed the amount of the ACE, social security offsets federal disability benefits. The purpose of the offset is to prevent overcompensation by avoiding situations where a person can receive more after-tax income from disability payments then they were receiving in their highest incoming-earning years.

In his appeal, the claimant alleged three things: 1) that the agency had erred in not including his earnings as a state tax auditor in its calculation of his 80% ACE; 2) that Colorado had a “reverse offset” law, by which the state reduces public disability benefits  when a person is also receiving social security disability benefits; and 3) that his benefits from Colorado were private benefits, and thus not subject to offset.

The claimant appealed all the way up to the 10^th Circuit Court, which ruled against him.

The Court found that the claimant’s earnings that were not covered for Social Security purposes were properly excluded from his 80% ACE calculation.

Many states have entered into so-called section 218 agreement, whereby all, most, some, or none of their employees’ wages are covered by the Social Security Act. In this instance, the claimant’s earnings as a state tax auditor were not covered. These earnings were properly excluded from the ACE calculation.

(State employees who are not covered under a state retirement program must be covered by social security).

The Court held that, while Colorado had a reverse offset law for worker’s compensation benefits, it had no such law for other public disability benefits, such as those received by the claimant.

Finally, the Court held that the claimant’s social security disability benefits were properly reduced, in order to avoid overcompensation, or “double dipping.”

The claimant’s 80% ACE was calculated to be $852.00. By law, he could not receive more than this amount in combined state and federal public disability benefits. Because his state disability payments were $873.00 per month, his social security disability benefits were properly reduced to zero.

This case is described in social security ruling (SSR) 92-2a.

If you have any questions regarding the interaction of state public disability or worker’s compensation benefits and social security disability benefits, it often helps to consult with an experienced disability attorney.

This material should not be construed as legal advice for any particular fact situation but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.