Social Security and Workers’ Compensation Offsets

There is a maximum monetary amount that members can receive from the combination of MainePERS disability retirement, Workers Compensation and Social Security disability benefits.

If one or more of the medical conditions applied on is the result of or exacerbated by MainePERS-covered employment, a member must provide proof of filing for Workers’ Compensation prior to MainePERS reaching a decision on eligibility for disability retirement.

When a member makes contributions to both Social Security and MainePERS for the same MainePERS-covered position, Maine law requires that they apply for Social Security disability before an application for MainePERS disability retirement can be accepted. A member does not have to receive a decision from Social Security before the MainePERS application can be accepted but they must provide proof that an application has been filed with Social Security.

If a member receives a Social Security disabilty benefit for employment unrelated to their MainePERS-covered position or receives a Workers’ Compensation or Social Security disability benefit for a condition other than the condition(s) the MainePERS disability benefit has been granted on, there is no offset to the MainePERS disability benefit.

The combination of MainePERS disability retirement, Workers’ Compensation benefits (awarded based on the same medical condition(s) that a MainePERS disability retirement benefit is granted on) and/or Social Security disability (awarded based on the same medical condition(s) and the same employment position as the MainePERS benefit) cannot exceed 80% of the Average Final Compensation for State/Teacher members or Average Annual Earnings for PLD members. Average Annual Earnings means the total of the recipient’s average final compensation plus other wages and earnings from employment for the calendar year in which the recipient has the highest total of other wages and earnings from employment during the five years immediately preceding the year in which the recipient became disabled. When the combined benefits exceed the amount allowed, MainePERS will reduce the disability retirement benefit to reach the 80% threshold. However, a disability benefit cannot be reduced below the actuarial equivalent of a member’s contributions and interest.

It is important that disability recipients notify MainePERS when there is a change in the amount of Workers’ Compensation or Social Security benefits payments to avoid over or underpayment of MainePERS disability retirement benefits.

For example:

Average Final Compensation (AFC) is $40,000

Workers’ Compensation monthly benefit is $1,000

80% is the maximum allowed from the combination of all benefits (disability retirement, WC and/or SSDI)

  • $40,000 x 80%= $32,000/12= $2,666,67 (monthly)

Disability benefit is 59% of the AFC

  • $40,000 x 59%= $23,600/12= $1,966.67 (monthly disability benefit)

$1,966.67 + $1,000 = $2,966.67 (total of all benefits)

$2,966.67 – $2,666.67(max amount allowed) = $300 (offset)

$1,966.67 (unreduced monthly benefit) – $300 (reduction) = $1,666.67 (offset disability benefit)