Long-term disability and Social Security are separate programs, but they interact in ways that reduce your total income

If you receive long-term disability (LTD) insurance through your employer or a private policy, Social Security will reduce your SSDI payment by a portion of what you get from LTD. This reduction is called an offset. The offset exists because Social Security assumes you should not receive your full SSDI amount plus your full LTD amount at the same time — the two programs together are meant to replace a percentage of your lost wages, not to pay you more than you would have earned while working.

The offset amount depends on your specific LTD policy and how much you receive each month. Social Security does not take all of your LTD payment — it takes only the portion that, when combined with your SSDI, would exceed a certain threshold. Understanding how this works helps you plan your finances and avoid surprises when your SSDI payment arrives.

Key Takeaways

  • Social Security reduces your SSDI payment when you also receive long-term disability insurance, a process called an offset.
  • The offset is calculated so that your SSDI plus your LTD does not exceed roughly 80 percent of your average earnings before you became disabled.
  • You must report your LTD income to Social Security within 10 days of receiving your first payment, or you may have to repay benefits later.
  • When you reach full retirement age, your SSDI converts to retirement benefits and the offset rules change, sometimes increasing your total monthly income.

How the offset is calculated

Social Security uses a formula based on your Primary Insurance Amount (PIA) — the benefit you would receive at full retirement age — and your Family Maximum, which is the total amount Social Security will pay to you and your family members combined. When you receive LTD, Social Security compares your SSDI payment plus your LTD payment to a target amount, usually around 80 percent of your average earnings before disability.

If your SSDI plus LTD exceeds that target, Social Security reduces your SSDI to bring the total down. For example, if your SSDI is $1,200 per month and your LTD is $800 per month, and the combined amount exceeds the threshold, Social Security might reduce your SSDI to $600, leaving you with $1,400 total. The exact calculation depends on your earnings history and the terms of your LTD policy.

The offset does not explore to all types of disability income. Workers' compensation and certain other government disability programs trigger offsets, but some private disability policies do not. Check your LTD policy documents or contact your plan administrator to learn whether your specific policy will cause an offset.

Reporting your long-term disability income to Social Security

You are responsible for telling Social Security about your LTD income within 10 days of receiving your first payment. You can report it by calling Social Security at 1-800-772-1213, visiting your local Social Security office, or using your my Social Security account online. Have your LTD policy number and your first payment stub ready when you report.

If you do not report your LTD income, Social Security will eventually discover it through other means — your employer, your insurance company, or tax records — and you will be asked to repay the benefits you received while you should have been receiving a reduced amount. This can result in a large debt to Social Security. Reporting promptly protects you from overpayment and keeps your record accurate.

Social Security will ask you to provide copies of your LTD award letter and your monthly payment statements. Keep these documents in a safe place and send them to Social Security as soon as you receive them, especially if your LTD amount changes.

What happens when you reach full retirement age

When you turn your full retirement age (which varies based on your birth year, typically between 66 and 67), your SSDI converts to retirement benefits at the same rate. At that point, the offset rules change. If you are still receiving LTD, Social Security will no longer reduce your retirement benefit because of the LTD — the offset applies only to SSDI, not to retirement benefits.

This conversion can actually increase your total monthly income. If you were receiving a reduced SSDI because of an LTD offset, your retirement benefit will be higher, and you will keep your full LTD payment without reduction. Social Security handles this conversion automatically; you do not need to do anything, but you should expect your payment to change in the month you reach full retirement age.

If your LTD ends before you reach full retirement age, your SSDI will increase to its full amount (assuming you are still disabled). Report the end of your LTD to Social Security within 10 days, just as you reported the start of it.

How long-term disability affects your work incentives

If you receive both SSDI and LTD, you may be hesitant to work because you fear losing both payments. In reality, SSDI has built-in work incentives that allow you to test your ability to work without when ready losing your benefits. These incentives include a trial work period of nine months during which you can earn any amount and keep your full SSDI payment, and an extended may be able to access period of 36 months after the trial work period ends during which you can work and still receive SSDI in months when your earnings fall below a certain threshold.

Your LTD policy may have different rules about work. Some LTD policies allow you to work part-time and still receive a partial benefit, while others require you to stop working to keep your LTD. Check your policy documents or contact your plan administrator before you start working, because working without permission could cause your LTD to be terminated.

Coordinating with other disability programs

If you receive disability benefits from more than one source — for example, SSDI, LTD, and workers' compensation — the offsets can stack in ways that significantly reduce your total income. Social Security coordinates offsets with workers' compensation and some other government programs, but the rules are complex and vary by state.

If you are receiving multiple disability payments, ask Social Security to explain in writing how each offset is being calculated and how much you should expect to receive from each source. You can request this explanation by calling 1-800-772-1213 or visiting your local office. Having this in writing helps you budget and catch errors.

What to do if your offset seems wrong

If you believe Social Security has calculated your offset incorrectly, you can request a detailed explanation of how your benefit was calculated. Call 1-800-772-1213 and ask for a benefit calculation statement, or visit your local Social Security office with your LTD award letter and payment statements.

If you disagree with the calculation after reviewing the explanation, you can file a written request for reconsideration. This is not the same as a formal appeal — it is a request that Social Security review the calculation again. You have 60 days from the date you receive the notice of your benefit amount to file a request for reconsideration. If you still disagree after reconsideration, you can file a formal appeal, which may involve a hearing before an administrative law judge.

Frequently Asked Questions

Will I lose my SSDI if I receive long-term disability?

No, you will not lose your SSDI, but Social Security will reduce it. Your SSDI payment will be lowered so that your SSDI plus your LTD does not exceed roughly 80 percent of your average earnings before disability. You will still receive both payments, but the total will be less than if you received each one separately.

What if my long-term disability ends?

If your LTD ends, report it to Social Security within 10 days. Your SSDI will increase to its full amount (assuming you remain disabled and meet all other requirements). You should see the increase in your next payment after Social Security processes the report.

Can I work while receiving both SSDI and long-term disability?

SSDI has work incentives that allow you to earn money during a trial work period and an extended may be able to access period. However, your LTD policy may have its own rules about work. Check your LTD policy before working, because some policies require you to stop working to keep your benefit.

Does the offset explore to my family members' benefits?

No, the offset applies only to your own SSDI benefit. If your family members receive benefits based on your work record, their payments are not reduced because of your LTD. However, your LTD may affect the total amount your family can receive if your family maximum is reached.

What happens to the offset when I reach full retirement age?

When you reach full retirement age, your SSDI converts to retirement benefits and the offset no longer applies. Your retirement benefit will be higher than your reduced SSDI was, and you will keep your full LTD payment without reduction.