How Teacher Retirement Plans Affect Social Security Disability

Disability Benefits

In all 50 states, public sector employees — including schoolteachers — have access to at least one retirement system or pension plan. While these plans vary, it means about 40% of public school teachers don’t have FICA taxes withheld from their paychecks. Below, we’ll explain how certain states’ teacher retirement plans and pensions impact your ability to collect Social Security disability benefits.

Which States Offer Teacher Retirement Plans, But Not Social Security Coverage?

Back in 1935, the Social Security Act’s initial draft exempted all state, federal and local employees from paying FICA taxes. Since then, many U.S. states chose to opt into coverage agreements with the Social Security Administration (SSA), but not all. The 15 states still offering public employees state-run pensions or teacher retirement plans instead of opting into Social Security are:

  • Alaska
  • California
  • Colorado
  • Connecticut
  • Georgia (certain local governments)
  • Illinois
  • Kentucky (certain local governments)
  • Louisiana
  • Maine
  • Massachusetts
  • Missouri
  • Nevada
  • Ohio
  • Rhode Island (certain local governments)
  • Texas

These states typically offer teacher retirement plans and pensions for firefighters, police officers and other state, local or county employees. Keeping Social Security and state-run pensions and teacher retirement plans separated prevents people from “double-dipping” at their full retirement age.

What About Teachers Who Paid Into Social Security Through Other Means?

Of course, many teachers living in the above 15 states take additional jobs that withhold FICA taxes from their paychecks. But can individuals with teacher retirement plans who previously paid into the SSA’s fund qualify for Social Security disability benefits? The short answer is: It depends. There are two rules that could prevents teachers living in those 15 states from qualifying for Social Security disability benefits. These two rules are known as the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).

How The Windfall Elimination Provision (WEP) Rule Affects Benefits Not Paid Through Teacher Retirement Plans

If you’ve never paid Social Security taxes, then the WEP won’t affect you. The WEP rule only applies if you’ve worked another non-exempt job where you paid into the Social Security system. This program affects how the SSA calculates both retirement and disability benefits for people working in the public sector. If you live in one of the above 15 states, then the WEP rule only applies to people who:

  • Are entitled to a Social Security benefit based on their own work history, and
  • Have a work pension or participate in teacher retirement plans that exempted them from paying Social Security taxes.

Because the SSA never intended Social Security benefits to replace full pre-retirement earnings, the WEP reduces your eligible payment amount. Luckily, the most you’ll lose in Social Security disability or retirement benefits is half your state-run plan’s monthly benefit payments. If you paid Social Security taxes for 20 years, then your maximum disability or retirement benefit reduction under WEP is 40%. After 30 years, the WEP rule no longer reduces any monthly Social Security disability or retirement benefits.

How The Government Pension Offset (GPO) Works

This provision only applies to spouses, widows, and widowers applying for Social Security survivor benefits. The GPO rule reduces Social Security survivor benefits to two-thirds the amount you’ll receive in monthly state-run pension benefits. So if you have a $600 monthly pension, the SSA reduces your approved disability or retirement survivor benefits by $400. This rule can be pretty confusing, so more information, read the SSA Government Pension Offset brochure linked here.

Even people who don’t have state-run pensions and teacher retirement plans find the Social Security disability benefits application process confusing. We recommend asking a Social Security lawyer or disability advocate for advice about your specific situation before filing your claim. An experienced attorney can help you navigate your state’s laws and identify other programs that may offer you financial assistance. Plus, having an attorney file your paperwork nearly triples your chances of getting benefits.

Ready to see if you may qualify? Click the button below to start your free online benefits evaluation now:

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Mandy Voisin is a freelance writer, blogger, and author of Girls of the Ocean and Star of Deliverance. As an accomplished content marketing consultant, mom of four and doctor's wife, Mandy has written hundreds of articles about dangerous drugs and medical devices, medical issues that impact disabled Americans, veterans' healthcare and workers' compensation issues since 2016.