SSDI, STD and the Offset
First and foremost, you cannot collect BOTH the full amount of SSDI benefits AND the full amount of STD benefits you would otherwise be entitled to receive. The Social Security Administration (SSA) will compute what is called an “offset” and reduce your monthly SSDI benefit check amount if the combined amount of your SSDI and STD would exceed 80 percent of what you were earning before you became disabled. The SSA calculates your pre-disability earnings by figuring out the average amount you made each month of the year when your pay was the highest out of the five preceding years.
Also, the offset for STD benefits can affect your back pay. This term refers to the amount of SSDI benefits you are entitled to receive computed from the time you became disabled until the time the SSA finally gets around to paying you.
For example, you might become disabled on Jan. 1, 2012, but not apply for SSDI benefits until Jan. 1, 2013, and not get an award of benefits until Jan. 1, 2015. That’s three full years later. After deducting the mandatory five-month waiting period for SSDI benefits to kick in, you are short by 31 months of back pay. However, if you were receiving STD benefits through your employer during the same period over which the back pay is computed, the same offset described above applies and your back pay will be reduced accordingly.
Finally, be aware that in a situation where if you are receiving STD through your employer and then later win your SSDI case, the insurance company from whom you received the STD benefits will often be reimbursed for the STD benefits they paid you. In almost all such situations, the terms of the STD policy allow the STD plan to recover its money back if you are awarded SSDI benefits. You can think of STD benefits through your employer almost like a loan that has to be paid back if and when you become entitled to the longer-term benefits from the U.S. government.