The Social Security Disability windfall offset, also known as windfall elimination, is used to prevent Social Security Disability recipients from receiving more money than they are actually due. The windfall offset usually only affects recipients who are receiving both Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) payments.
Most Social Security Disability applicants must pursue a lengthy and complicated disability appeal process before they are awarded the benefits they are entitled to. As a result, the Social Security Administration (SSA) usually ends up owing these applicants a back-payment of benefits. The windfall offset is a calculation that is used to ensure that your back-payment amount is not more than what you would have received had you been receiving monthly benefits all along.
When the SSA calculates your windfall offset amount, the factor in the SSI back payments that you are due including the annual Cost of Living Allowance and any other disability or workers compensation payments you may have been receiving. If the SSA finds that your back-payment amount is more than you would have received had your payments been being sent monthly, your benefit back payment will be adjusting accordingly.
If an offset is necessary and your benefits need to be reduced, the SSA will reduce your SSDI benefits before reducing your SSI payments. This is due to the fact that an elimination of SSI benefits would make you ineligible for Medicaid. If your SSI payment amount would be reduced to $0, the SSA will still pay you $1 per month in SSI payments so that you would be able to retain access to Medicaid benefits.
It is important to understand that your windfall offset will not usually affect the future disability payments that you will be receiving on a monthly basis. The windfall offset is usually only taken from the back payment that is due to you once your disability benefits have been awarded.