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Social services > 27. Social Security Benefit Coordination

Benefit offsets for related programs help reduce the potential for overlapping payments but pose administrative challenges.

Why This Area Is Important


Social Security provides old age benefits to millions of Americans, forming the foundation of retirement income. However, Social Security is more than a retirement program: it also provides benefits to survivors and other dependents, as well as to disabled workers. In 2011, over 60 million Americans received $770 billion in Social Security benefits. While Social Security provides benefits to many different groups, and beneficiaries may receive benefits from more than one social safety net program, Social Security’s design helps reduce overlap with other programs. The Social Security programs are subject to several provisions that offset benefits for individuals who receive both Social Security benefits and similar benefits under another program.[1] However, ensuring that these provisions offset benefits appropriately and accurately can pose administrative challenges.

As GAO reported in March 2011, the Social Security Administration (SSA) needed accurate information from state and local governments on retirees who receive pensions from employment not covered under Social Security to fairly and accurately apply two public pension offsets—the Government Pension Offset, which generally applies to spouse and survivor benefits, and the Windfall Elimination Provision, which applies to retired and disabled worker benefits. GAO continues to believe that it is important to apply the Government Pension Offset and Windfall Elimination Provision consistently and equitably and reiterates its earlier recommendation that Congress consider giving the Internal Revenue Service the authority to collect the information that SSA needs on government pension income to administer the Government Pension Offset and Windfall Elimination Provision accurately and fairly. In this report, we focus on other offsets—workers’ compensation offsets.

[1]For some of these programs, the calculation of the offset is not a significant issue. Supplemental Security Income (SSI) provides financial assistance to eligible individuals who are age 65 or older, blind or disabled, and who have limited income and resources. While SSI provides benefits to individuals with disabilities, the Disability Insurance (DI) program, also administered by SSA, uses the same definition of disability as SSI. SSI is a means-tested program, and the amount of the DI benefit is considered as income when determining whether an individual with a disability also qualifies for SSI. While individuals who receive SSI and DI have their SSI benefit offset based on the amount of their DI benefit, the appropriate offset calculation is not an issue since SSA administers both programs. Social Security also allows a person to receive both SSI and Temporary Assistance for Needy Families payments, but Temporary Assistance for Needy Families benefits are also considered income for SSI purposes, and will reduce the SSI payment. Other assistance received, such as from the Supplemental Nutrition Assistance Program and home energy assistance, is not considered income for SSI and thus does not offset the amount of the benefit received.

What GAO Found


The Social Security program’s workers’ compensation offsets reduce the potential for overlapping payments to beneficiaries who also receive workers’ compensation benefits. However, the lack of reliable information on receipt of workers’ compensation can result in these offset provisions not being administered fairly or equitably. Adequately addressing this issue offers the potential for cost savings by reducing overpayments.

Workers’ compensation consists of a complex array of programs that provide benefits to persons injured while working or who suffer occupational diseases. Employers provide workers’ compensation insurance for their employees and report work-related injuries to the state workers’ compensation agency. Although workers’ compensation programs exist in all states, the programs are not federally mandated, administered, or regulated.[1] Workers’ compensation beneficiaries may also be eligible for federal program benefits, such as Social Security Disability Insurance (DI) and Supplemental Security Income (SSI). For these other programs, the law often limits access or reduces benefits for those receiving workers’ compensation. For example, if a person receives both DI and workers’ compensation benefits, and together these benefits exceed 80 percent of the injured worker’s average current earnings, SSA generally reduces the DI benefit.[2]

In a prior report, GAO found that SSA’s administration of the workers’ compensation offset provision continued to be undermined by the lack of reliable information identifying the receipt of workers’ compensation benefits by DI beneficiaries, causing payment errors.[3] No national reporting system identifies workers’ compensation beneficiaries. Instead, SSA largely relies on applicants and beneficiaries to report their receipt of workers’ compensation benefits and any changes that occur in the benefit amounts—an approach that makes it very difficult for SSA to make accurate benefit payments. GAO recommended that the Commissioner of Social Security and the Administrator of the Centers for Medicare & Medicaid Services test the extent to which sharing information that identifies persons who are or may be receiving workers’ compensation benefits improves the accuracy of their benefit payment.[4] GAO also recommended that SSA officials meet with representatives from the workers’ compensation insurance industry to determine whether a viable voluntary reporting process could be established that would provide the government with information that periodically identifies workers’ compensation beneficiaries. In response, SSA met with the Centers for Medicare & Medicaid Services and representatives of the workers’ compensation insurance industry. Since these meetings, SSA has been able to do some data sharing with states, but on a very limited basis due to systems limitations. Additionally, the workers’ compensation insurance data held by privately-owned organizations is not available. Therefore, GAO continues to believe that this problem should be addressed.

For federal workers, the Federal Employees’ Compensation Act (FECA) program provides wage loss compensation and payments for medical treatment to those federal employees who are injured in the performance of their federal duties.[5] A claimant can receive both FECA and SSA retirement benefits, although the claimant’s FECA wage-loss-compensation payment is to be reduced by the amount of SSA retirement benefits attributable to federal service. Similarly, a claimant can receive both FECA and SSA disability benefits, although in such cases SSA is required to reduce the level of disability benefits it pays if the combined benefits exceed a certain amount.

As GAO reported in February 2008, the FECA program is vulnerable to improper payments. Some overpayments occur because Labor’s Office of Workers’ Compensation Programs (OWCP), which administers the program, does not regularly verify whether claimants are receiving SSA retirement benefits, for which FECA benefits are to be reduced. GAO recommended that OWCP take steps to ensure that wage-loss-compensation payments for claimants covered by the federal retirement system are appropriately reduced by the amount of their SSA benefits that are attributable to their federal service. In response to our recommendation, OWCP reported that it has implemented an automated request to be sent to SSA when a claimant reaches retirement eligibility age to identify cases in which FECA payments should be reduced due to the receipt of Social Security retirement benefits. If this system functions as planned, it has the potential to reduce overpayments. Further, in October 2010, the SSA Office of Inspector General found that improper payments resulted when recipients’ FECA compensation was not recorded or accounted for in the calculation of their DI and SSI benefits.[6] The Office of Inspector General projected that there were approximately $43 million in estimated DI overpayments and approximately $603,140 in SSI overpayments, based on a sample of beneficiaries who received FECA compensation any time from June 2002 to April 2010.

[1]See GAO-01-367 for more information. Also, workers’ compensation benefits are generally exempt from federal income taxes, so the IRS does not have any data on receipt of workers’ compensation benefits.

[2]This offset was enacted in response to concern about individuals receiving excessive benefits as a result of receiving DI and workers’ compensation benefits concurrently. An exception to the offset was made, however, for such individuals if they resided in states whose laws already reduce their workers’ compensation benefits (making a reduction in DI benefits unnecessary). Such state provisions are referred to as reverse offsets, and in these cases, SSA does not offset the DI benefit if it recognizes the state provision. The reverse offset exception only applies to state provisions that were in effect on February 18, 1981.

[3]In February 2011, the SSA Office of Inspector General found payment errors and estimated there were about $4 million in payments with errors resulting in underpayments and about $3.8 million in payments with errors resulting in overpayments related to the workers’ compensation offset.

[4]Prior to July 2001, the Centers for Medicare & Medicaid Services was known as the Health Care Financing Administration. Throughout this report, we refer to the agency as Centers for Medicare & Medicaid Services, even when describing initiatives taken prior to its name change.

[5]5 U.S.C. § 8101 et seq.

[6]Social Security Administration, Office of Inspector General, Federal Employees Receiving Both Federal Employees’ Compensation Act and Disability Insurance Payments, A-15-09-19008 (Baltimore, Md.: Oct. 14, 2010).

Actions Needed


In response to prior recommendations, SSA has taken steps to explore the possibilities of sharing information with states and the workers’ compensation insurance industry to identify persons who might be receiving workers’ compensation benefits. While some information sharing has taken place, GAO continues to believe that additional opportunities exist to share information. While obtaining information from states is difficult, these efforts may help identify workers’ compensation beneficiaries so that benefits can be appropriately and accurately offset.

How GAO Conducted Its Work


The information contained in this analysis is based on findings from the products listed in the related GAO products section as well as additional audit work GAO conducted.

Agency Comments & GAO Contact


GAO provided a draft of this report section to the Department of Labor and the Social Security Administration for review and comment. Labor did not provide comments. SSA provided technical comments, which were incorporated as appropriate. As part of their comments, SSA indicated that as recently as 2011, they submitted draft legislation to Congress to require state and local governments, and any other entities that administer workers compensation and private disability plans, to provide SSA with information on payments to individuals under such plans.

For additional information about this area, contact Charles Jeszeck at (202) 512-7215 or



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