In certain circumstances, workers may be eligible to receive both Social Security disability benefits and workers’ compensation benefits as a result of a work-related illness or injury. However, workers’ compensation and other public disability benefits may reduce or offset Social Security benefits. The rules related to the calculation of worker’s compensation offsets are complex and confusing, thus, it may be wise to consult a disability attorney for assistance. By the way, disability payments from private sources, such as private pensions or insurance, do not affect Social Security disability benefits.

Workers’ compensation and other public disability benefits reduce your Social Security benefits. Workers’ compensation benefits are paid to a worker because of a job-related injury or illness. Typically, Social Security Disability Insurance (SSDI) benefits must be reduced so that the total monthly amount of benefits is no more than 80% of the amount a worker earned when fully employed (actually it is an 80% “ACE” figure).   Your Work Comp benefits, having been commuted to a monthly benefit, are combined with the SSA monthly benefit.   To the extent the total exceeds 80% of your ACE (Average Current Earning), an offset can apply.  It is applied first against auxiliary beneficiaries, and next against the primary wage earner.

Public disability payments for disabling medical conditions that are not job-related may also affect Social Security benefits, such as civil service disability benefits, and other state and local government retirement benefits based on disability.

If you receive Social Security disability benefits, and one of the following types of public benefits, your Social Security benefit will not be reduced:

  • State and local government benefits, if Social Security taxes were deducted from earnings;
  • Supplemental Security Income (SSI); or
  • Veterans Administration benefits.

If the total amount of monthly Social Security disability benefits, including benefits payable to family members, when added to any workers’ compensation or other public disability payments exceeds 80 percent of average current earnings, the excess amount is deducted from Social Security benefits.

It is not unusual for a worker’s compensation claimants to settle their cases. Typically, workers exchange any entitlement to monthly worker’s compensation benefits for an immediate lump sum payment. Keep in mind that Social Security offsets SSDI benefits in consideration of any lump sum settlement of workers’ compensation benefits. The SSA will calculate an effective monthly benefit from the lump sum award.  It is very important that the language used in the Comp settlement documents contain the necessary verbiage to minimize the SSA offset.  If the goal is to keep more money in your pocket, pay attention to the words used in the Comp settlement documents!   Consider this, if settling the Work Comp claim for more than a certain amount will just result in a loss of SSA dollars, you do not have to push so hard in the Comp case. The presence of SSA disability benefits may make it easier to settle the Comp Case!

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.How Workers' Compensation & Other Benefits Affect Your Social Security Benefits