It’s not uncommon for a work-related injury or illness to be severe enough to prevent a person from returning to work. If you receive workers’ compensation benefits for a severe medical condition causing total and permanent disability, you could also be eligible for disability benefits through the Social Security Disability Insurance program.
Qualifying for workers’ compensation and Social Security Disability (SSDI) is not unusual, but the payments from workers’ comp may reduce how much you receive through SSDI. Here is an explanation of the relationship between workers’ comp and disability benefits, focusing on the impact of the settlement of a workers’ comp claim on the SSDI benefits you receive.
If you have questions or concerns as you read through this information, the disability professionals at Sackett and Associates can help with answers and skilled representation. Sackett Law has been assisting people with disabilities and their families in Northern California and throughout the country for the past 45 years, so don’t hesitate to contact them for a free consultation.
Workers’ Compensation And Other Public Disability Benefits
Most states and the federal government have workers’ compensation or other programs that pay disability benefits when you cannot work because of an injury or illness. The Social Security Administration refers to the benefits paid by such programs as public disability benefits that do not prevent you from qualifying for SSDI, but they may reduce how much you receive each month.
Workers’ compensation and other public disability benefits cannot exceed 80% of the average earnings you received before you could not work because of a disability. Not all types of public benefits affect the amount of your SSDI benefits. For example, your SSDI benefits will not be reduced for the following:
- Benefits you receive from the Veterans Administration.
- Benefits received through the Supplemental Security Income (SSI) program.
- State and local government benefits provided that Social Security taxes were deducted from your salary or wages.
The best way to understand how workers’ compensation affects your monthly SSDI benefits is through an example. Assume you earned $5,000 monthly from working before your disability caused by a work-related injury. You now receive $2,000 monthly from workers’ comp and $2,200 from SSDI for a total of $4,200.
The total benefits you receive monthly exceeds 80% of your monthly earnings from working ($4,000) by $200. The $200 will be offset by reducing your SSDI monthly benefit payment from $2,200 to $2,000. The offset continues until either your workers’ comp payments end or you reach full retirement age when your SSDI automatically converts to Social Security retirement that is not affected by workers’ compensation or other public benefit payments you receive.
The Effect Of A Lump-Sum Workers’ Compensation Settlement On SSDI Benefits
It’s not unusual for an injured worker to be offered a lump-sum settlement instead of periodic payments for a workers’ compensation claim. Unless your employer was self-insured, the insurance company that issued the workers’ comp policy may offer to settle your claim with an offer of a one-time payment in settlement of your claim. A reduction in SSDI after settlement of a workers’ comp claim may not be avoidable.
Filing for SSDI post-settlement does not help you avoid getting past the 80% rule. The Social Security Administration could rely on a calculation using your life expectancy or another method included in the settlement agreement to calculate the lump-sum payment amount. It could also use its own method for calculating the periodic payments.
Regardless of the method used, the Social Security Administration determines a monthly periodic payment amount to use in applying the 80% rule and calculating the amount of any offset to be applied to your monthly SSDI. As with the monthly benefits received from workers’ compensation, any reduction in your SSDI benefit payments due to the offset ends when you reach full retirement age.
Full Retirement Age Depends On The Year Of Your Birth
SSDI benefits automatically convert to Social Security retirement benefits when you reach full retirement age, so what is full retirement age? The Social Security Administration uses your birth year to determine when you become eligible for full retirement benefits, distinguished from early retirement benefits at age 62. Early retirement comes with a reduction in benefits of as much as 30% less than you could receive at full retirement age.
If you were born in 1960 or later, your full retirement age is 67. Check your full retirement age using a convenient chart from the Social Security Administration.
Get Help With Social Security Disability Benefits
The disability lawyers at Sackett Law are available when you have questions or need assistance with SSDI benefits. Whether applying for disability benefits for the first time or appealing a reduction or denial of benefits, get the help you need by contacting Sackett Law for a free consultation.
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