How to Insure Your Income: Determining the Amount

The actual disability benefit is equal to your primary insurance amount (PIA). The PIA is based on the average earnings history upon which Social Security taxes have been paid. In addition, the actual disability benefit is affected by your age at the onset of the disability and your dependent status.

Disability benefits may be reduced to offset benefits received from workers' compensation and any statutory disability plan, such as a federal or state disability plan. This reduction in benefits will be made if the Social Security benefits plus the statutory plan benefits exceed 80 percent of your pre-disability average earnings.

Example: Luis' monthly earnings prior to the onset of a disability were $2,000. Due to a serious work-related injury, Luis has been approved for Social Security benefits and also is eligible for workers' compensation. His Social Security benefit is $1,250 monthly. His workers' compensation benefit is $750 monthly, for a total benefit of $2,000 -- 100 percent of his pre-disability income.

Luis' Social Security benefits must be reduced so that total benefits don't exceed 80 percent of $2,000 (that is, $1,600) monthly. So, his Social Security benefit will be offset by $400 -- which reduces it to $850.

Certain benefits are not subject to this offset rule. Veterans Administration (VA) benefits are excluded, as are private pension or insurance benefits.