5 U.S.C. § 8349 — Offset relating to certain benefits under the Social Security Act

(a) Old-age benefits. (1) Despite the other rules in this subchapter, if an individual covered by section 8402(b)(2) is entitled, or would be entitled after properly applying, to old-age insurance benefits under title II of the Social Security Act, the annuity otherwise payable to that individual must be reduced under this subsection. (2) The reduction starts with the first month in which both conditions are met: (A) the individual is entitled to an annuity under this subchapter; and (B) the individual is entitled, or would be entitled after properly applying, to old-age insurance benefits under title II of the Social Security Act. (3)(A)(i) Subject to clause (ii) and subparagraphs (B) and (C), the reduction equals the difference between: (I) the old-age insurance benefit that would be payable to the individual for that month; and (II) the old-age insurance benefit that would be payable if all wages from the individual’s Federal service were left out and the individual were assumed to be fully insured, as defined in section 214(a) of the Social Security Act. (ii) For this subsection, each benefit amount in clause (i) is determined without applying subsections (b) through (l) of section 203 of the Social Security Act and without requiring an application for the benefit. (B) The reduction: (i) may not be more than the product of: (I) the old-age insurance benefit to which the individual is entitled, or would be entitled after properly applying, for the month in paragraph (2), calculated without applying subsections (b) through (l) of section 203 of the Social Security Act; and (II) a fraction determined for the individual under section 8421(b)(3), except that “service” in that section’s subparagraph (A) means Federal service; and (ii) may not reduce the individual’s annuity payment below zero. (C) Each amount calculated under subclause (I) or (II) of subparagraph (A)(i), or under subparagraph (B)(i)(I), for this reduction must be adjusted under section 8340 of this title. (4) The reduction applies to the annuity otherwise payable under this subchapter, except an annuity under section 8337, for the month involved. It is based on the individual’s service and applies without regard to section 8345(j), if that section would otherwise apply. (5) When calculating an amount under paragraph (3)(A)(i)(I) or (II), or paragraph (3)(B)(i)(I), the preceding paragraphs of this subsection are not taken into account when applying the second sentence of section 215(a)(7)(B)(i) or section 215(d)(5)(ii) of the Social Security Act. (b) Disability and survivor benefits. (1) Despite the other rules in this subchapter, the following are subject to reduction under this subsection if the person is also entitled, or would be entitled after properly applying, to similar benefits under title II of the Social Security Act based on the wages and self-employment income of the covered individual: (A) a disability annuity payable under this subchapter to an individual described in section 8402(b)(2); and (B) a survivor annuity payable under this subchapter to a person based on the service of such an individual. (2)(A) Subject to subparagraph (B), these reductions are calculated and made consistently with the reductions under subsection (a). (B) The reductions stop if, or for as long as, entitlement to the similar title II benefits ends. For an individual who has not properly applied for those benefits, the reductions stop if that entitlement would end. (3) When section 224 of the Social Security Act is applied to the disability insurance benefit used to calculate this reduction, the CSRS annuity counted is the amount before this section is applied. (4) The Office must issue regulations to carry out this subsection. (c) Meaning of “Federal service.” For this section, “Federal service” means service that counts as employment for title II of the Social Security Act and chapter 21 of the Internal Revenue Code of 1986 because of the amendments made by section 101 of the Social Security Amendments of 1983. This section does not define any other quoted term. (d) Expanded terms. (1) In administering subsections (a) through (c), each of the terms “an individual under section 8402(b)(2)” and “an individual described in section 8402(b)(2)” also includes an individual who: (A) is subject to this subchapter under a law provision described in section 8347(o); and (B) has employment described in section 8347(o) that also counts as employment for title II of the Social Security Act and chapter 21 of the Internal Revenue Code of 1986. (2) For an individual covered because of paragraph (1), “Federal service” means the employment described in paragraph (1)(B) performed after December 31, 1983.