The Social Security Administration failed to tell an estimated 8,726 disabled beneficiaries that they could file for a higher retirement benefit, and the money they could have collected is now beyond the agency’s reach, according to an audit released October 6 by the agency’s inspector general.
The people involved share a specific situation: their disability checks were being cut because they also received workers’ compensation or another public disability benefit. The watchdog first flagged the same problem in 2015, and this follow-up found it had not gone away.
The offset that shrinks disability checks
Social Security caps how much disability income a person can collect from public sources combined. Under the rule described in the agency’s publication on workers’ compensation and other disability payments, the total of Social Security disability benefits plus workers’ compensation or a public disability benefit cannot exceed 80 percent of a worker’s average current earnings before the disability. When the total goes over that line, the Social Security check is reduced.
That reduction lasts until the month the beneficiary reaches full retirement age, or until the other benefit stops, whichever comes first. For the group in this audit, that left a stretch of years in which their Social Security disability check stayed smaller than it would otherwise be.
Inside the kit: A six-tab calculator for claiming age and break-even, plus the 2026 earnings-test rules, built for laying a claim at 62 beside a claim at full retirement age the way this audit’s beneficiaries had to. Open The Social Security Claiming & Family Benefits Kit.
Why turning 62 opened a better option
The workers’ compensation offset applies to disability benefits, not to retirement benefits. The full audit report explains that once a disabled beneficiary in this situation turns 62, a retirement benefit can be higher than the offset disability benefit.
Retirement benefits claimed before full retirement age are normally reduced. The agency’s age-reduction chart shows a 30 percent cut for someone with a full retirement age of 67 who claims at 62. But the inspector general’s report notes that months spent entitled to disability benefits are left out of that reduction calculation, and the retirement amount rises automatically at full retirement age.
There is a catch that makes timing decisive. The report says Social Security’s rules limit entitlement to early retirement benefits to the month of filing, so the agency cannot pay early retirement benefits for months before an application is filed. Every month a beneficiary did not know about the option was a month of the higher amount that could not be recovered later.
What the inspector general found
Auditors drew a sample of 125 cases from 35,185 insured disabled beneficiaries with workers’ compensation or public disability offsets who turned 62 between January 1, 2018 and December 31, 2022. Projected across that population, the inspector general’s announcement says the agency did not notify about 8,726 beneficiaries of their option to file. It notified another 3,659 but did not properly document their decisions not to file or the reasons why.
Together, those beneficiaries could have been entitled to about $84 million in additional benefits. The report says statutory restrictions prevent Social Security employees from taking action to issue those payments, because the decision to file belongs solely to the beneficiary.
A separate group may still see money. The inspector general estimates the agency may be able to pay about $41 million to roughly 4,785 beneficiaries who did file but were not paid the correct, higher amount. The detailed breakdown in the body of the report adds up to about $40 million, a small gap between the summary and the itemized figures.
A problem first flagged in 2015
The audit is a follow-up to a January 2015 review that found similar failures. The agency agreed to corrective action then and automated parts of its notification process. The new report found that notification and documentation gaps persisted anyway.
The inspector general made four recommendations: correct the records of 17 beneficiaries in the sample who elected early retirement but were not paid correctly, build a process to find others in the same position, strengthen controls over employee actions, and clarify policy on following up with beneficiaries who do not respond to alerts. Social Security agreed to all four.
Who should look at this more closely
The findings matter most to people who receive Social Security disability benefits and also collect workers’ compensation or a public disability benefit, such as certain state or local government disability payments. The agency’s publication lists the kinds of payments that count and those that do not; veterans’ benefits and Supplemental Security Income, for example, do not trigger the offset.
For someone in that position who is 62 or older and below full retirement age, the question the audit raises is whether a retirement application was ever discussed. Because early retirement benefits start no earlier than the month of filing, the agency’s own report treats the timing of that application as the point where money is either kept or lost. Rules differ case by case, and only Social Security can calculate the comparison for a specific record.
Choosing between two benefit amounts
The inspector general’s report describes beneficiaries who could have compared an offset disability check with a retirement benefit at 62 and never had the comparison put in front of them. Because early retirement starts no earlier than the month of filing, the gap is a question of when to claim, and it has to be worked out on each person’s own figures.
The Social Security Claiming & Family Benefits Kit includes a six-tab calculator for claiming age, break-even and survivor benefits and a large-print quick start, set up for comparing a claim at 62 with a claim at full retirement age.
Compare the claiming ages in The Social Security Claiming & Family Benefits Kit.
This article was created with AI assistance and reviewed for accuracy against the Social Security inspector general’s October 6 announcement, its full audit report, and Social Security Administration publications.
Nathaniel Cross focuses on retirement planning, employer benefits, and long-term income security. His writing covers pensions, social programs, investment vehicles, and strategies designed to protect financial independence later in life. At The Daily Overview, Nathaniel provides practical insight to help readers plan with confidence and foresight.
