Published on: December 17, 2015
Social Security benefits, including SSDI and SSI, help many across the United States maintain a livable income and standard of life. However, there are a number of things that can reduce overall benefit rates that may come as a surprise to some.
While some additional forms of government benefits do not affect Social Security payments, this is not always the case. Things like government pensions, an increase in income and even living situations can all affect your monthly Social Security benefits and/or SSI benefits. It can be difficult to pinpoint what does and does not affect Social Security benefits - in this blog, we hope you’ll gain a better understanding of things that can lower your benefit amounts right under your nose.
1.) Returning to Work or an Increase in Income
The most common factors that can decrease Social Security benefits are returning to work (if retired or out of the workforce entirely) or receiving a sizable increase in income - to the extent that Social Security benefits are no longer necessary to help you maintain quality of life. Returning to work can cause Social Security Disability benefits to be terminated and can cause SSI benefits to be reduced or terminated.
If the SSA determines you are engaging in “Substantial Gainful Activity” (earning over $1,090 monthly), your benefits can be affected or cease altogether. If you are determined to be engaging in Substanital Gainful Activity, your SSDI benefits can be terminated after the expiration of a 9-month Trial Work Period.
2.) You’re No Longer Medically Eligible for SSDI
Social Security disability benefits exist to help those that cannot work or earn an income due to a disabling condition; as such, if your condition improves and you are able to return to work (and this is verified by a trained physician), you will no longer be eligible for SSDI payments. In fact, significant medical improvement can outright cease both SSDI and SSI benefits.
During periodic - and required - medical reviews by the SSA, it may be determined that your condition no longer prevents you from working. If this is the case, you may not be considered as “disabled,” and thus lose your benefits.
3.) Government Pensions Payments
According to the SSA, pensions for federal, state or local government work (for which you did pay Social Security taxes) can result in sizable deductions in Social Security benefits for dependents. Any benefits a spouse or widow receives on behalf of another will be reduced by two-thirds of the original recipient’s government pension.
Example: If you receive a government pension of $450/month, two-thirds of that figure ($300) will then be deducted from your spouse or widow(er)s' benefit rate.
This also applies for annual pension lump sums; in these cases, the SSA divides the sum as if you were receiving it monthly as deducts from dependent Social Security benefits as it would for monthly pensions. There are exceptions to the Government Pension Offset, however. Your Social Security benefits will not be reduced by government pensions if:
- You are a federal employee currently enrolled in the Federal Employees’ Retirement System
- Any government pension you or a spouse is receiving is not based on earnings
- You are currently a federal employee, you are receiving a pension for a job in which you paid Social Security taxes, and you were entitled to/filed for spouse benefits before April 1, 2004
- You are a government employee and have paid Social Security taxes on work during the last 60 months of service
4.) Living Arrangements
For current recipients of Supplemental Security Income (SSI), living arrangement can be a factor in overall payment rates. Generally speaking, the more housing and/or living assistance you receive from friends, family or organizations, the more you will have your monthly SSI rate reduced. In the SSA’s point of view, if you are no longer paying for food and/or shelter, you no longer need the extra funds to purchase such things.
Living in an institution, care facility or another person’s household is considered by the SSA to be in-kind support and maintenance (ISM) in most cases. ISM is a form of unearned income, and can reduce one’s benefit rates on account of food and shelter that is no longer paid for by the recipient. Other items one may be provided, such as appliances, furniture or general goods, do not have any affect on SSI benefit rates. IMS generally refers to assistance with food and shelter only.
