What’s the Social Security Fairness Act?
On January 5th, 2025, President Biden signed The Social Security Fairness Act (SSFA) into law, but what does that mean, and does it affect you?
The SSFA gets rid of two rules – The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) – that were put in place to prevent double-dipping but ended up unfairly reducing Social Security benefits for a lot of federal employees. Now, retirees who get a government pension and also paid into Social Security through other work will get their full Social Security benefits.
It’s important to know that this new law does not apply to people receiving Social Security Disability Insurance (SSDI) or people who are retired through Federal Disability Retirement.
Will the SSFA affect FDR and SSDI?
So, will the new law change any part of the process for federal employees on SSDI or Disability Retirement?
The short answer is no – everything will stay the same.
That’s because SSDI and Disability Retirement are separate programs with their own rules. So, if you’re receiving monthly payments through Disability Retirement and SSDI, the new law will not affect the amount of money you receive monthly through your combined retirement benefits.
If you’re not already retired but struggling with a medical condition that’s keeping you from doing your job, now is an ideal time to explore Disability Retirement. It’s a powerful program specifically for federal employees, and no recent federal changes have touched it – it’s still here to help you get the support you need.
Review: How SSDI interacts with Disability Retirement
If you’re getting both SSDI and Disability Retirement payments, it’s important to know how these two benefits interact.
FDR Payments
First, let’s review your FDR payments.
For the first year, you’ll get 60% of your high-3 average salary – an average of your three highest-paid consecutive years. From the second year until regular retirement age, you’ll get 40% of your high-3 average salary.
SSDI Payments
So, how do your SSDI benefits affect this?
In your first year on Federal Disability Retirement, your payment will be reduced by the same amount you’re getting from SSDI.
That means that if your FDR monthly payment is $3,000 and your SSDI payment is $1,000, your total income from both benefits will be $3,000 – you’ll just get $2,000 from Disability Retirement and $1,000 from SSDI.
This is because Disability Retirement is designed to help make up the difference when your SSDI payments alone aren’t enough, but it won’t let your total payments exceed your pre-retirement salary.
Year 2 and Beyond
In the second year, though, you’ll start seeing the benefit of having both SSDI and Disability Retirement.
In your second year on Disability Retirement, you’ll get 40% of your high-3 average salary each year. But, your SSDI payment will also be adjusted: Only 60% of your SSDI payment will be subtracted from your Disability Retirement payment instead of 100% like in year one.
Let’s use the same numbers as before to make the difference clear.
If your monthly payment from Disability Retirement in year two is $3,000 and your SSDI payment is $1,000, only 60% of that $1,000 ($600) will be subtracted from your Disability Retirement payment. So, your total income from both benefits would be $3,400 in year two and beyond.
The takeaway is that there’s a benefit to having both Disability Retirement and SSDI benefits since you’ll start getting more money each month after the first year. If you haven’t applied for Disability Retirement yet but think you might qualify, reach out and we’ll help you see if it’s right for your situation.
Current Events and Federal Disability Retirement
New laws and administration changes can be confusing and stressful for federal employees. But to recap – you don’t need worry about the potential impacts of the SSFA if you’re getting Federal Disability Retirement benefits or Social Security Disability Insurance. You can continue to expect the same amount of money each month as usual.
Still have questions or wondering if your situation qualifies for Disability Retirement? Schedule a free consultation with us today and we’ll walk you through the process step-by-step. Your future income and peace of mind are worth it.
