How Can I Determine Much My Husband's SSDI Rate Would Be Reduced By His NYC Pension?

Oct 30 2018 - 12:28pm

My husband is applying for SSDI, and recently took disability retirement as a NYC public schook teacher. For his pension, he was encouraged to count all former service time so recently applied for some of ancient hours in the city system. The hours total maybe 4 months of a career of over 20 years. But we learned from SS that because no security tax was taken on those hours, his SSDI payment could be reduced. How can I find out how much the offset would be, so we can evaluate if he should pursue getting those hours applied to the pension (not yet processed) or forgo them? The hours may increase the pension more than they decrease the SSDI - unless even a few months work will dramatically reduce the SSDI payments. Thanks for your guidance.

Hi,

My assumption from what you've written is that your husband paid Social Security (SS) taxes on all of his earnings at the NYC schools except for the roughly 4 months that his earnings were exempt from SS taxes. There are 2 different Social Security provisions that could potentially be involved in a situation like that of your husband. One is the Public Disability Benefit (PDB) offset provision that applies only to Social Security disability benefits (SSDI), and the other is the Windfall Elimination Provision (WEP) that applies to both Social Security retirement benefits and SSDI.

Based on your description, I don't believe that the PDB offset provision would apply in your husband's case. In order for a public disability benefit to cause an offset to SSDI benefits, at least 15% of the earnings on which the pension is based would have to be exempt from SS taxes. So, assuming that your husband paid SS taxes on at least 85% of the earnings on which his NYC pension is based, his SSDI benefits would not be affected by the PDB offset provision.

However, the WEP provision would likely cause at least some reduction to your husband's SSDI rate unless he meets one of the exceptions to WEP. The WEP exceptions are outlined in the following Social Security publication: https://www.ssa.gov/pubs/EN-05-10045.pdf. The WEP provision can cause a person's SS retirement benefit rate or SSDI rate to be calculated using a less generous formula, but there is a WEP guarantee provision that limits any SS rate reduction to no more than 50% of the portion of the public pension attributable to the person's non-covered (i.e. exempt from SS taxes) earnings. So, for example, if your husband's NYC pension amount increased by $100 with the addition of his non-covered earnings, that should only result in a WEP reduction to his SSDI rate of roughly $50.

Therefore, based on your description my best guess would be that your husband would receive more in total benefits if he chooses to accept the higher NYC pension that would result from inclusion of his non-covered earnings. However, I would need all of the pertinent facts of his case in order to know for sure.

Best, Jerry