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Social Security Benefits, Disability and Public Pensions – Important Considerations

Social Security BenefitsClaiming social security disability benefits is often a complicated process, and many people prefer to consult a disability attorney in this regard. This is mainly because right from the initial step of determining whether they qualify for disability insurance through submitting the application, they are taken in the right direction. Moreover, in case of a denial, the attorney helps them with the appeal process. To reduce the complexity involved in determining the feasibility of a claim and whether the applicant’s disability is listed among the SSA’s list of conditions, disability attorneys utilize medical record review services from a reliable third party provider.

Social Security claiming strategy can become more complex for people alleging disability and are either state employees or have a public pension. Let us take the case of couples.

Couples, one of whom is on disability can choose from more than one claiming strategy.

  • Take the case of a couple where the healthy spouse is already claiming SS retirement benefits. The disabled spouse can apply to receive a spousal benefit instead of a disability benefit even at the age of 62. This would however depend on the couples’ work records and ages and other details that may provide a more valuable benefit.
  • The disabled or healthy spouse can opt to “file and suspend” at full retirement age. As per existing rules a person who is 66 or older can file for SS benefits and immediately suspend them thus allowing their benefits to accrue delayed retirement credits worth 8% per year up to age 70. This strategy helps to increase benefits by up to 32%. However, this strategy is coming to an end. Couples who want to make use of this strategy will have to be at full retirement age or older to utilize this strategy and also submit their request to “file and suspend” before April 30, 2016.
  • When the disabled person reaches full retirement age, SS disability benefits convert to SS retirement benefits, with the amount remaining the same. The total amount received at full retirement age may however, increase in cases where SS disability benefits were reduced due to payments such workers’ compensation and other public disability insurance.

Considering pensions a person may be receiving, private pensions don’t affect the SS benefits. But pensions for jobs that don’t pay into social security such as local, state and federal government jobs and teaching jobs in some states, employment in foreign companies, railroad jobs and so on are to be watched out for. The details of an employee’s work record and the benefits he/she is claiming are factors that have an impact on the SS benefits. There are 2 provisions to consider in this regard.

  • The Windfall Elimination Provision, under which a person’s SS benefits can be reduced even by 50%. The actual reduction may vary in keeping with the number of years the person worked in other jobs that may have paid into Social Security and his/her average earning during that working period. Such pensions would have less of an impact if the employee has put in more years of work at a job that paid into Social Security. This particular Provision wouldn’t apply if the employee paid SS tax on what the federal government considers “substantial earnings” (this amount may vary each year) for more than 30 years.
  • A more rigid provision, the Government Pension Offset is applicable in cases where a public pensioner is claiming spousal or survivor benefits. The spousal/survivor benefits would be reduced by an amount equivalent to 2/3rd of the pension. There are some exceptions where this provision doesn’t apply – for e.g. in the case of workers receiving a government pension from a military reserve service that does not pay into Social Security.

Applicants need to carefully study the complexity of their situation and would surely benefit from an expert in Social Security claiming strategies that would help maximize their retirement income.

About Rajeev Rajagopal

Rajeev Rajagopal

Manages the day-to-day operations of MOS from NY. With an interest in information technology, I have guided MOS to extensive use of digital technology and the internet that benefits MOS as well as MOS clients.