How To Benefit From SSDI & Worker's Compensation

Some workers who have work-related injuries or illnesses qualify for Social Security disability benefits and workers’ compensation benefits; but do they receive both benefits as the same time? A worker can receive both benefits, but they won’t receive the full amount. The combined amount received can’t exceed 80% of the amount they made while working.

The process of reducing Social Security benefits to supplement workers’ compensation is coined a workers’ compensation “offset. Every state has different maximum amounts that can be paid out, categories of benefits, and unique ways in which a claimant can settle their workers’ compensation file.

Calculating Your Social Security Benefits

First your “applicable limit,” the maximum total monthly number of combined benefits for a recipient, is determined. If a worker receives more than the applicable limit, then SSDI is offset. Here’s the breakdown:

Applicable Limit (Max Benefits)

Whichever of the following is higher, it becomes the applicable limit:

  • 80% of the worker’s income before injuries or illness (average current earnings)
  • Total SSDI earnings received by all family members of the applicant’s family within the initial month that worker’s compensation is received (total family benefit)

Related Post: Is Obesity Covered By Disability?

Average Current Earnings

Social Security determines average current earnings by taking the highest of these three amounts:

  • The average monthly wages SSDI uses to determine your benefit amount (unindexed primary insurance amount)
  • Average monthly earnings from the highest five years consecutively (high five)
  • Average monthly earnings from one year, from when disability began or any of the 5 years before that (high one)

SSDI Reductions

Once the applicable limit is established the monthly SSDI is added to the monthly worker’s compensation benefit. If the applicable limit has been exceeded Social Security will decrease it until it is at the limit. This will continue until the applicant reaches the full retirement age and can begin collecting Social Security.

Reverse Offset

If there is a reverse offset law in a state, then workers compensation will be offset like SSDI. In states that had this law before February 18, 1981, the recipients will not have their SSDI offset.

Lump Sum Workers’ Compensation

Sometimes workers will opt for an immediate lump sum payment. In this case Social Security calculates what that would translate into monthly payments and they SSDI corresponds to that amount. There can be additional terms of the settlement document that effect the benefit but for the most part there is a simple way to calculate the monthly amount. Social Security divides the total sum by the periodic worker’s compensation payment that the person had been receiving.

How to Minimize the SSDI Offset

An attorney can aid in drafting a settlement agreement that will minimize SSDI benefits. They will add clauses to eradicate medical and legal expenses from the amount, which could drastically increase the benefit amount received.

Make sure you have a qualified OC social security lawyer look over your settlement or you could have decreased benefit payments.

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Kenneth G. Marks has been practicing personal injury law since he was admitted to the California Bar in 1981.