Workers’ compensation and other public disability benefits may reduce or offset Social Security benefits. Calculating worker’s compensation offsets are complicated; a disability attorney may provide assistance in determining if an offset applies. Generally, Social Security Disability Insurance, or SSDI, benefits must be reduced to where the total monthly amount of benefits is no more than 80% of the amount of a worker’s earnings when engaged in full-time employment.
To calculate the amount of benefits offset, the “applicable limit,” the maximum total monthly amount of combined benefits that a claimant is allowed to receive pursuant to federal law must be determined.
If the recipient of benefits receives more than the applicable limit in any month, then this amount is offset to reduce the total of the applicable limit. Low-income workers are more susceptible to worker’s compensation offsets because their applicable limits are lower and more easily exceeded by the receipt of both worker’s compensation and SSDI.
To arrive at the applicable limit, take the higher of either:
- 80% of the worker’s “average current earnings,” or
- the “total family benefit” measured by the total amount of SSDI received by all of the members of the recipient’s family in the first-month worker’s compensation is received.
Usually, for most recipients of SSDI, the number representing 80% of average current earnings will be higher, and thus the amount typically used in the offset calculation.
In calculating average current earnings, Social Security takes the highest of the following three amounts.
- The “unindexed primary insurance amount” which is the average monthly wage that your SSDI benefit amount is based;
- the “high five,” or the average monthly earnings from the highest five years in a row, or
- the “high one,” or the average monthly earnings from a single calendar year, either the year the person’s disability began or any one of the five calendar years before that year.
For the great majority of recipients of SSDI, Social Security arrives at the average current earnings amount by using the “high one” test.
Take the following as an example: Prior to disability, average earnings were $5,000 a month. A claimant’s family of four is eligible to receive a total of $2,200 a month in Social Security disability benefits while the claimant receives $2,300 a month in workers’ compensation benefits. Because the total amount of benefits ($4,500) is more than 80 percent ($4,000) of average current earnings ($5,000), total Social Security benefits will be reduced by $500 ($5,000 – $4,500).
Whether you are 40, 50, or 60, the assistance of an experienced disability attorney can help you navigate the often lengthy and complicated process of applying for disability benefits. Contact the Sullivan Law Office to get the help you need in the Louisville metro area. Call 888-587-0228 or visit us online.