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If WEP Or GPO Applies To DAC Benefits, What Is The Calculation For Offset?

70 yo beneficiary on DAC and a small amount of SSI. Parent whose work record he is drawing on died. Beneficiary now eligible for state pension on same work record. I cannot find clear rules regarding whether the GPO or windfall provision applies to DAC benefits. If so, what is the calculation for offset? SSI will drop off also, correct?

Hi. The Windfall Elimination Provision (WEP) only applies to Social Security retirement or disability (SSDI) benefits, not auxiliary or survivor benefits. Disabled adult child's (DAC) benefits are auxiliary or survivor benefits, so WEP does not apply to DAC benefits, at least in a direct manner.

The Government Pension Offset (GPO) provision only applies to auxiliary or survivor benefits, so GPO can affect DAC benefits. However, GPO would only apply to the DAC beneficiary in your question if the DAC is receiving a pension based on their own work for a governmental agency where their earnings were exempt from Social Security taxes. If they are, then their DAC benefit amount would be reduced by 2/3rds of the amount of their government pension.

Auxiliary DAC benefits payable on the record of a living parent are calculated based on 50% of the parent's primary insurance amount (PIA). So, if the primary insurance amount PIA of a worker is reduced due to WEP and if a DAC is getting benefits on that worker's record, then the DACs benefit rate could be lower as an indirect result of WEP. If the worker dies, though, any WEP reduction to their PIA is removed when calculating survivor benefits. So, surviving DAC beneficiaries can't be affected by WEP even indirectly.

Survivor DAC benefits are calculated based on 75% of the deceased parent's PIA. Supplemental Security Income (SSI) is a needs based benefit, and if the SSI beneficiary receives Social Security benefits then their Social Security benefits offset their SSI payments roughly dollar for dollar. So, if a DAC is receiving both Social Security DAC benefits and SSI, if their DAC benefit rate increases as a result of their parent's death then the increase in their DAC rate could cause their SSI payments to be terminated depending on the amount of the increase.

Best, Jerry

Feb 25 2022 - 3:53pm
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