BASIC (09-08)

Certain public disability benefits (PDBs) are excluded from offset if the benefits are based on "covered" employment, (or covered service, or covered wages), i.e., employment on which FICA taxes are paid - see DI 52125.001A. Types of PDBs excluded from offset are listed in DI 52125.001B.3. Use the following instructions to determine if a PDB meets one of the covered service exclusions. These exclusions do not apply to State or local PDBs based on private employment.

See DI 52125.005 for a list of benefits not considered a PDB for offset purposes.

A. Identifying covered service

Identify the possibility that a PDB is based on covered service using information in the claims file, including:

• A “yes” response to the question 4 “Do the PDBs meet the covered service exclusion?” on the WPCL screen in Modernized Claims Screen (MCS), or

• Look for non-covered wages on the Detail Earnings Query (DEQY) or for details of the number holder’s (NH's) work history on the SSA-3368-BK (Disability Report-Adult) and/or SSA-3369-BK (Work History Report). See OS 15020.375 for SSA-3368 and OS 15020.380 for SSA-3369, or

• A “yes” response to question 4 on the SSA-546 (Workers’ Compensation/Public Disability Questionnaire).

Develop each case individually because work histories and dates of covered service will vary.

NOTE: If the PDB plan is based on one period of service to establish eligibility and a different period of service to compute the amount of the PDB, either period can exclude the PDB from offset if at least 85 percent of the period used is covered. (See DI 52125.010H Example 3 below.) In these situations:

• Evaluate the first period of service. If the 85 percent test is met, the PDB is excluded from offset.

• If the first period of service does not satisfy the 85 percent test, look at the second period of service.

• If the second period of service (evaluated on its own and without regard to the first period) satisfies the 85 percent test, the PDB is excluded from offset.

• If the second period also does not satisfy the 85 percent test (i.e., neither period satisfies the 85 percent test), the PDB is offset.

B. Alleged amount of covered service precludes offset

If the alleged amount of covered service precludes offset:

1. Verify covered service.

   NOTE: Do not accept the NH’s allegation.

2. Do not offset if verification shows the covered exclusion is met.

3. Verify the amount of the PDB and impose offset if the exclusion is not met.

C. Alleged amount of covered service does not preclude offset

If the alleged amount of covered service does not preclude offset:

1. Accept the NH’s allegation.

2. Verify the amount of the PDB and impose offset.

3. Verify post-adjudicatively; and

4. Remove offset if verification shows exclusion met.

D. Amount of covered service unknown

If the NH does not know the amount of covered service and verification is not readily available:

1. Impose offset.

2. Verify post-adjudicatively; and

3. Remove offset, if verification shows exclusion met.

E. Verification of covered service

The following may contain acceptable verification of covered service:

1. Summaries of State Agreements which establish periods of State and local coverage. See DI 52125.015 - Determining Public Disability Benefit (PDB) for State and Local Employment.

   Document the file with a photocopy of the page from the Summaries or use an SSA-795 (Statement of Claimant or Other Person) to explain where the verification came from.

2. Responses to questions 10 and 11 on the SSA-1709 (Request for Workers' Compensation/Public Disability Benefit Information).

3. Statements from employers, or the Office of Personnel Management (OPM) regarding periods of employment on which the PDB is based.

4. A copy of the PDB plan that shows how entitlement to PDB and the amount of PDB are determined. Obtain a Detail Earnings Query (DEQY) for employment after 1977.

For instructions on obtaining Worker’s Compensation (WC)/PDB proof, see DI 52145.001.

F. Folder documentation

WC/PDB verification often involves complex, State-specific forms and documents that routinely involve a certain degree of interpretation. Therefore, all WC/PDB proofs must be permanently retained in file to provide the most comprehensive documentation (see DI 52145.015 Retention of Workers' Compensation/Public Disability Benefit (WC/PDB) Proofs).

G. Examples

1. EXAMPLE 1:

   85 percent met

   NH was a State employee for 10 years from 1991 to 2000. In January 2001, NH retired on disability and began to receive a State disability pension. The pension was based on 10 years of employment. Of those 10 years, 9 were covered for Social Security purposes or 90 percent of the total employment. The State disability pension does not cause offset of DIB since at least 85 percent of the State service (for which the PDB is based) was covered service.

2. EXAMPLE 2:

   85 percent not met

   Same facts in Example 1 (in this section) except only 7 years were covered service under Social Security.

   Since only 70 percent of the State service for which the PDB is based is covered service, the State disability pension is offsettable.

3. EXAMPLE 3:

   85 percent not met

   Eligibility to the PDB is based on 15 years of employment (and only 50 percent of those 15 years are covered). The amount of the PDB is based on only the last 3 years (and 35 percent is covered):

   • The “all or substantially all” (85 percent) test is not met by the period of service used to establish eligibility to the PDB.

   • The "all or substantially all" (85 percent) test is not met for the period of service used to determine the amount of the PDB.

   • Although the separate percentages from the two periods equals 85 percent (50 percent + 35 percent), we do not add them together. The 85 percent must be satisfied by one of the periods considered alone. Since neither period meets the 85 percent test, the PDB is offset.