SSR 86-6a: SECTION 224 (42 U.S.C. 424(a)) DISABILITY INSURANCE BENEFITS -- REDUCTION FOR RECEIPT OF A PUBLIC DISABILITY BENEFIT UNDER FLORIDA'S RETIREMENT SYSTEM

20 CFR 404.408

SSR 86-6a

Despite her receipt of a public disability benefit under the State of Florida Retirement System, the claimant, who became disabled on May 17, 1981, contended that the disability insurance benefits awarded her effective November 1981 were not subject to offset under 20 CFR 404.408(a)(2). Florida does not have a law of plan for offsetting a public disability benefits payable to a person under its retirement system when that person is also entitled to a disability insurance benefit under title II of the Social Security Act (the Act). Therefore, the claimant did not meet the exception to offset in 20 CFR 404.409(b)(2)(i). Under Social Security Ruling 83-9 (Cumulative Edition 1983), a public disability benefit (except workers' compensation) payable to a public employee will be considered "based on employment covered under Social Security," for purposes of 20 CFR 404.408(b)(2)(ii), if at least 85 percent of the employment in question was covered by an agreement entered into under section 218 of the Act. Since less than 12 percent of the employment upon which the claimant's public disability benefit was based was covered by such an agreement, the claimant did not meet the exception to offset in 20 CFR 404.408(b)(2)(ii). Held, because neither of the exceptions in 20 CFR 404.408(b)(2) was applicable, the claimant's disability insurance benefits were subject to offset under 20 CFR 404.408(a)(2).

The issue before the Appeals Council (AC) was whether the claimant's disability insurance benefits were properly reduced in view of her receipt of a public disability benefit from the State of Florida.

The Social Security Administration determined that, because the claimant was receiving a public disability benefit under the State of Florida Retirement System, the disability insurance benefits awarded her effective November 1981 were subject to offset under § 404.408(a)(2) of Regulations No. 4. When the claimant appealed, an administrative law judge (ALJ) decided that the claimant's disability insurance benefits were not subject to offset.

Section 404.408 of Regulations No. 4 provides, in pertinent part, that --

"(a) When reduction required. Under section 224 of the Act, a disability insurance benefit to which an individual is entitled under section 223 of the Act for a month . . . is reduced (except as provided in paragraph (b) of this section) . . . if:

(2) The individual first became entitled to disability insurance benefits after August 1981 based on a disability that began after February 1981, and
(i) The individual entitled to the disability insurance benefit is also, for that month, concurrently entitled to a periodic benefit (including workers' compensation or any other payments based on a work relationship) on account of a total or partial disability (whether or not permanent) under a law or plan of the United States, a State, a political subdivision, or an instrumentality of two or more of these entities, and
(ii) The individual has not attained age 65.
(b) When reduction not made.

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(2) The reduction of a benefit otherwise required by paragraph (a)(2) of this section is not to be made if:
(i) The law or plan under which the periodic public disability benefit is payable provides for the reduction of that benefit when anyone is entitled to a benefit under title II of the Act on the basis of the earnings record of an individual entitled to a disability insurance benefit under section 223 of the Act and that law or plan so provided on February 18, 1981 . . . or
(iii) The benefit is a . . . public disability benefit (except workers' compensation) payable to a public employee based on employment covered under Social Security. . . ."

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The AC did not agree with the ALJ's decision. The ALJ apparently decided that the public disability benefit which the claimant was receiving from Florida was workers' compensation, even though the evidence of record clearly showed that it was a disability benefit payable under the State's retirement system. Although Florida has a plan for offsetting the workers' compensation benefit[1] payable to a person who is also entitled to a disability insurance benefit, it does not have a law or plan for reducing the public disability benefit payable to such a person under the State's retirement system. Therefore, the AC found that the claimant did not meet the exception to offset in § 404.4089(b)(2)(i) of Regulations No. 4. Under Social Security Ruling 83-9 (Cumulative Edition 1983), a public disability benefit (except workers' compensation) payable to a public employee will be considered "based on employment covered under Social Security," for purposes of § 404.409(b)(2)(iii) of Regulations No. 4, if at least 85 percent of the employment in question was covered by an agreement entered into under section 218 of the Social Security Act. The evidence of record showed, however, that less than 12 percent of the employment upon which the claimant's public disability was based was covered by such an agreement. Accordingly, the AC found that the claimant did not meet the exception to offset in § 404.408(b)(2)(ii) of Regulations No. 4. On the basis of these findings, the AC concluded that the claimant's disability insurance benefits were subject to offset under § 404.408(a)(2) of Regulations No. 4.

[1] Under Florida law, however, workers' compensation is not reduced "until the Social Security Administration determines the amount otherwise payable to the employee . . . and the employee has begun receiving such social security payments." Thus, since the State offset is not effective until the receipt of the first disability insurance benefit, the disability insurance benefits due a claimant for months prior to the month of adjudication are subject to offset under section 224(a) of the Social Security Act (see Social Security Ruling 83-29c (Cumulative Edition 1983)).

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