You Can Get Both Workers Compensation and Social Security Disability Benefits at the Same Time
Some of you who are receiving workers compensation benefits for your work-related injuries or occupational disease may also qualify for Social Security disability benefits. Depending on your earnings at the time of the job injury when compared to how much you’ve earned over your lifetime, workers comp benefits may affect the amount of Social Security Disability Insurance benefits that you receive.
Workers Comp Benefits
In Virginia workers compensation payments are made to employees who suffer an injury by accident arising out of and in the course of the employment. These payments are made by your employer’s workers compensation insurance carrier or, if your employer is self-insured, by the employer itself. If your employer is required to purchase workers compensation insurance coverage but failed to do so, then the Uninsured Employer’s Fund, which is administered by the state, may make payments.
Not all injuries that happen at work are covered by workers’ comp. And even if your on the job injury should be covered under the Workers’ Compensation Act, your employer’s insurance company may delay, deny, and dispute your legal right to benefits. For this reason we recommend contacting an attorney who is well versed in both Virginia workers compensation and Social Security Disability law if you may be entitled to both types of benefits.
How Workers Compensation Benefits Offset Social Security Disability Benefits
The combined amount of your Social Security disability benefit plus your workers compensation payments cannot exceed 80% of your average current earnings, which is the amount you earned when you were employed.
When evaluating whether your disability benefits will be offset and by how much, the Social Security Administration (SSA) first determines your applicable limit for benefits. This is the maximum total monthly amount you can receive when combining your different disability benefits.
The SSA does not consider the following types of payments toward your applicable limit for benefits:
- Benefits from the Veterans Administration (VA)
- State and local government benefits
- Private pensions
- Supplemental Security Income (SSI) payments
- Federal benefit payments
If you receive more money than your applicable limit then the SSA will offset your SSDI payment by the amount needed to bring your total disability benefit payments down to the applicable limit. Workers compensation offsets often affect individuals who earned lower incomes while working. The more money you made the less likely a workers compensation offset will impact you.
Determining the Maximum Amount of Benefits You Can Receive When Combining SSDI and Workers Comp
Your applicable limit is the greater of:
- 80% of your pre-injury income, which is called your average current earnings, or
- the total amount of SSDI benefits received by all members of your family in the first month that you receive workers’ comp, which is called the total family benefit
For most of you the 80% earnings figure will be the number used by the SSA to determine any offset because of workers compensation benefits.
Calculating Your Average Current Earnings for SSDI Purposes
The SSA calculates your average current earnings by using the highest of the following three amounts:
- Your average monthly earnings from your five highest earning years in a row, or
- Your average monthly earnings from either the year your disability began or any one of the five calendar years before the year your disability began, or
- Your unindexed primary insurance amount (PIA), which is the average monthly wage used to calculate your SSDI benefit.
For many of you the SSA will use the second option, which is your average monthly earnings from the year your disability began or one of the five years before your disability began.
Reducing Your SSDI Benefit – An Example
Let’s say that you earned $5,000 per month before you got hurt on the job and started receiving Social Security benefits because of the work injury. The total amount of your workers compensation benefits combined with your Social Security Disability benefits must be less than 80% of your average earnings, or $4,000. If your combined benefits exceed that amount then the SSA will offset your disability benefit amount to keep it at the $4,000 amount.
If your workers compensation benefits end then the SSA will increase your disability benefit back to the normal amount.
Though this seems complicated, the bottom line is that you can receive Social Security Disability and workers comp at the same time. There is no penalty for getting both types of benefits. And if and when your workers comp benefits end your SSDI benefits will increase if they have been getting offset.
Minimizing or Eliminating the Offset Using a Lump Sum Workers Compensation Settlement
Many workers comp cases settle. This means that the injured worker gives up his or her entitlement to lifetime medical benefits, wage loss benefits, and permanent disability benefits in exchange for a lump sum workers comp settlement. The SSA knows this and will offset SSDI benefits based on this lump sum settlement unless you structure the settlement carefully.
When I draft workers comp settlement agreements I include language to minimize any offset of your SSDI benefits. If the appropriate language is not included in the documents then you are out of luck. The SSA will not allow you to go back and amend the settlement documents for the sole purpose of minimizing the SSDI benefits.
The SSA will allow you to deduct workers comp attorney fees, future medical expenses, and vocational rehabilitation expenses before calculating your SSDI offset. Then it will allow you to prorate the net benefit amount over the remainder of your lifetime to determine the monthly amount used to calculate any offset.
Here is an example. Let’s say that you are 30 years old and have been receiving $2,000 per month in workers compensation payments. Then you settle your case for $50,000.00. After deducting attorney’s fees of $10,000 and projected future medical and vocational rehabilitation expenses of $10,000, you’re left with $30,000 of the settlement being allocated toward future wage loss and permanent partial disability. The SSA will allow you to prorate that $30,000 over the remainder of your lifetime to determine the SSDI offset. And in doing so you can minimize or even eliminate the offset.
We recommend contacting an attorney with experience in both workers comp and SSDI to maximize the amount of money you get in your pocket. Call, text, or email Corey Pollard today for a free consultation.