How Does A Workers’ Comp Settlement Affect Social Security Disability?

It is not uncommon for a person with a work-related injury or illness to qualify for benefits through Social Security disability and workers’ compensation at the same time. If you find yourself in that situation, be mindful of the fact that payments received through workers’ compensation may affect your ability to qualify for or reduce the benefits that you receive each month from Social Security disability. If given the option of accepting a one-time disability settlement from workers’ compensation instead of monthly payments, Social Security converts the lump sum into monthly payments.

How payments or a worker compensation settlement affect SSD depends, in part, on whether you receive disability payments through the Social Security Disability Insurance or the Supplemental Security Income program. The following information about workers’ compensation and SSD may be helpful to understanding how they generally work together, but you should speak with a disability advocate at London Eligibility to learn more about what to expect in your specific situation.

Reporting benefits from other sources

You must report payments that you receive from public disability benefit programs, including:

1). State-funded disability

2). State or federal workers’ compensation

3). Civil service disability

4). State or local government retirement plans

If you qualify for benefits through the SSI program, you must report all sources of income, including workers’ compensation. SSI is a needs-based program that pays disabled or blind adults or children who are in financial need and unable to afford the cost of food and shelter. Your income and financial resources must be limited to qualify for SSI benefits.

Workers’ compensation payments that you receive reduces the SSI benefit that you get each month. If what you receive from workers’ comp exceeds the monthly SSI benefit, then you are not eligible for SSI.

To qualify for benefits through the SSDI program, you must have a history of working and paying Social Security taxes on your income for a sufficiently long enough duration based on your age at the onset of disability. Federal regulations take into account payments you receive through workers’ compensation in determining how much you may receive each month through SSDI.

How does workers’ comp affect SSDI benefits?

When you qualify for SSD benefits, the payments received through workers’ compensation or other public disability programs when combined with your SSDI benefits cannot exceed 80% of the average current earnings you had while working before the onset of your disability. Payments combined with your SSDI benefits also include payments from the Veterans Administration and any benefits you qualify for through SSI.

When combined benefits exceed 80% of the average current earnings you had, the excess is offset against what you should otherwise have received in SSD benefits. Bear in mind that this offset occurs only against SSD benefits. It stops once your SSDI payments convert at full retirement age to Social Security retirement.

It is a good idea to talk to an SSDI advocate from London Eligibility to ensure that the offset is calculated correctly. They also will check to make certain that it does not include payments that should be excluded. For example, if you get retirement benefits through a state or local government plan and paid Social Security taxes on what you earned while working, the payments should not be included when calculating the offset.

How does a worker compensation settlement affect SSD?

When you have a work-related injury or illness and qualify for workers’ compensation benefits, you generally receive periodic payments. Sometimes, a workers’ compensation system allows the insurance company handling a claim to offer someone with a disability a settlement with a one-time payment. The settlement payment is in place of a continuation of periodic payments, which stop once the settlement is accepted.

A worker compensation settlement does not necessarily mean that your monthly SSDI benefits increase. Social Security may continue the offset for workers’ compensation. It accomplishes this by taking the amount of the worker compensation settlement and dividing it by the monthly amount you received from compensation before the settlement. The result of the calculation represents the number of months that your SSD payments will continue to be subject to the workers’ compensation offset.

Let London Eligibility review your SSD payments

If you receive a worker compensation settlement, let a disability advocate at London Eligibility review it to ensure that Social Security excludes from the offset calculation any amounts that went toward legal fees, medical and rehabilitation expenses, and money allocated for medical treatment you need in the future.

A workers’ compensation settlement sometimes lacks clarity about what it covers, which could result in an incorrect calculation of the offset by Social Security. Our disability advocates work with your workers’ compensation attorney to gather and present the documents needed to clarify the purpose and intent of the settlement and the purpose of the funds.