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How Windfall Elimination Provision affects SSD benefits-Part II

Last week's post discussed the Social Security Administration's Windfall Elimination Program and highlighted how Social Security disability benefits are affected when the Windfall Elimination Provision is applied. This blog post delves deeper into the subject and discusses exactly how this provision works and how the SSA determines the deduction.

The purpose of SSD benefits is to replace some of a disabled Missouri worker's income earned prior to the disability. SSD benefits are based on that worker's average monthly income before the disability and are adjusted for inflation at regular intervals. However, if the Windfall Elimination Provision is applicable, the worker's earnings are categorized into three parts and the SSA multiplies those parts with three separate factors to arrive at the final payment.

For example, if a worker is disabled in 2015 at 62 years old, $826 of monthly income is multiplied by 90 percent and the next $4,980 of monthly income is multiplied by 32 percent and any remaining wage is multiplied by 15 percent. With the help of this provision, the SSA provides an average wage replacement rate of 25 percent for high-wage earners and 55 percent for low-wage earners.

The main purpose of the Windfall Elimination Program is to remove disparity in SSD benefits received by workers who retired or became disabled before and after the year 1983. During those years, many workers did not pay Social Security taxes but started receiving SSD benefits based on the calculation method in place for long-term low-wage workers in addition to employer-paid pensions. This calculation often resulted in remarkably high SSD benefits.

Knowledge of the Windfall Elimination Program can help many workers clarify any questions about SSD benefits. However, there may be other issues as well. Therefore, it may be a wise decision if SSD benefits applicants retain an experienced SSD lawyer who not only has adequate knowledge of all rules and regulations but is also equipped to help claimants resolve SSD issues.

Source: SocialSecurity.gov, "Windfall Elimination Provision," Accessed on June 15, 2015

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