If you have been hurt at work and have received a settlement from workers’ compensation, you may wonder if you are also entitled to Social Security disability insurance (SSDI) coverage at the same time. If you can collect both, you may wonder how the two amounts will offset each other.
If you have been in a workplace accident and are wondering about the coverage you can receive, the experienced attorneys at Jerome, Salmi & Kopis, LLC can help. Contact us today to request a consultation.
How Social Security Offsets Workers’ Compensation
When you collect benefits from workers’ compensation and SSDI at the same time, you may not be able to receive the full amount of coverage from both. This is called the “workers’ compensation offset” and is subject to many complex rules, regulations, and practices. If you are collecting workers’ comp, the Social Security Administration (SSA) will reduce your SSDI coverage so that you receive a monthly payment that is no greater than:
- 80 percent of the worker’s wages when they were fully employed, which is referred to as the “average current earnings.” The amount is determined by using the average earning potential of the employee in a high-earning year over five years, or the average monthly wage used to determine your monthly SSDI benefit. The highest of these amounts is used for the offset.
- 100 percent of all SSDI benefits received by every member of the worker’s family in the first month the worker also received workers’ compensation benefits. This amount is known as the “total family benefit.”
The greater amount of every offset will determine the amount that the offset impacts, which will deduct the remaining amount of total disability benefits received.
For example, if a worker injured at work has average current earnings of $4,000 and if he is receiving $2,000 a month from workers’ compensation and $2,000 a month in SSDI benefits, Social Security may reduce his benefits. Applying the 80 percent rule, 80 percent of $4,000 (average current earnings), is $3,200. Social Security will reduce the worker’s SSDI benefits by $800 ($4,000 – $3,200). The SSDI benefits the worker receives will be reduced until the employee reaches the age of 65, or until the workers’ compensation benefits cease, whichever comes first.
Workers’ compensation law varies widely from state to state, and the offset rules when these benefits combine with SSDI are complicated. It is always important to speak to a disability lawyer that can help you make sense of your benefits and that can advise on the full amount you are entitled to.
How Workers’ Compensation Lump Sum Payments Affect Social Security
Some people receive a workers’ comp lump sum payment rather than weekly payments. When this is the case, SSDI benefits are still offset in the same way they are when weekly payments are received. The SSA has many ways to convert a lump sum payment into a monthly benefit. One of the main ways to determine the calculation for the offset is to examine the language contained within the workers’ comp settlement.
In the majority of cases, the SSA will convert the lump sum workers’ comp payment to a monthly amount. They will divide the lump sum by the periodic workers’ comp payment the worker had been receiving, then apply the offset for SSDI to the resulting number of months.
For example, if you were injured on the job, you may receive $1,000 a month in workers’ comp benefits and then enter into a lump sum settlement agreement for $20,000. The SSA will consider the fact that you received $1,000 every month for 20 months ($20,000 divided by $1,000) in order to calculate the SSDI offset.
How to Minimize the Offset
Offsets can significantly impact the amount you receive from workers’ compensation and SSDI payments. If you have been hurt, it is important to speak to a disability lawyer who can draft a workers’ comp settlement agreement to help reduce the offset of SSDI benefits. For example, an attorney may draft an agreement that does not include items such as medical and legal expenses. In turn, SSA must also exclude these expenses from the calculation of the offset.
Due to the fact that the SSA carefully examines the language of workers’ comp settlements before determining how much of a settlement is subject to offset, it is important to create favorable terms that will significantly reduce the offset amount. Failing to clearly state medical billing settlements and other factors can sometimes result in the SSA asking for proof of those expenses before they exclude those amounts from the offset amount. It is important to speak with a lawyer who can help ensure you receive the full benefits you deserve.
How to Maximize Workers’ Comp Benefits
There are a few steps you can take to help maximize your workers’ comp benefits without reducing your SSDI benefits. First, understand the exclusions you can subtract from your workers’ comp settlement, such as your legal fees and rehab costs. Second, structure your payments so that it appears as though you are receiving benefits over a long period of time, rather than all at once in a lump sum payment. A lawyer is a great help when structuring payments this way. Lastly, switch to retirement benefits, if possible. Offset amounts do not apply to retirement benefits, so making the switch can offer the protection you are looking for.
Get Legal Help Today
When you are injured and unable to work, you need benefits that can help you pay for your medical treatment and your daily living expenses. At Jerome Salmi Kopis, LLC, our experienced workers’ compensation and disability lawyers can provide the legal advice you need to help ensure that SSDI does not affect your workers’ comp benefits any more than they have to. Contact us today to schedule a free consultation.