This Sample Workers Comp Settlement Language Could Put Tens of Thousands of Dollars in Social Security Disability Insurance (SSDI) Benefits in Your Pocket
A Carefully Worded Petition and Order in Your Workers Compensation Case Can Protect Your Entitlement to SSDI Benefits
And you can even get monthly SSDI benefits after settling your workers compensation case.
But the Social Security Administration may offset (reduce) your monthly SSDI benefit by the amount of your workers comp benefits or lump sum settlement.
For example, the SSA may cut your SSDI benefit if your combined SSDI and periodic workers comp payments exceed 80 percent of your average current earnings.
Fortunately, there is an easy way to minimize and possibly eliminate the reduction in SSDI payments due to workers comp: including the appropriate language in the workers compensation settlement contract.
This article provides sample language to include in your workers compensation Petition and Order to reduce the offset of SSDI benefits.
Do not sign the settlement papers unless they include similar language.
You may not plan on applying for Social Security disability now. But you might change your mind if your permanent partial disability from the occupational injury makes it difficult to return to full-duty work without medical restrictions.
Keep reading to learn more.
And call us (804-251-1620 or 757-810-5614) or complete the online form if you have questions about workers compensation law in Virginia.
We are ready to resolve your claims and help you recover every dollar.
Sample Language to Add to the Workers Compensation Petition and Order to Reduce the Social Security Offset
In many states (including Virginia), the parties must sign and submit multiple settlement documents to the executive agency overseeing occupational injury claims.
For example, a settlement in Virginia is not final until the Workers Compensation Commission reviews a Petition, Order, and Affidavit and approves the settlement terms.
Both the Petition and Order should include language addressing the Social Security disability offset.
Below is some sample language you should ask the insurer (Travelers, Liberty Mutual, etc.) or claim administrator (Sedgwick, Gallagher Basset, Memic, etc.) to include in both documents.
In this example, the parties settled the claim for $100,000.00.
Sample Petition Language
The employer, insurer, and claimant recognize that the Social Security Act allows the claimant to apportion the lump sum settlement payment to reduce or eliminate the reduction of Social Security disability insurance benefits due to the workers comp payment.
The parties stipulate the Social Security Administration should apportion the lump sum payment as outlined in the Order approving this Petition.
Further, the claimant reserves the right to propose an alternate formula and weekly compensation rate if the Social Security Administration rejects the proposed apportionment.
Sample Order Language
The parties recognize that the Social Security Act permits the apportionment of workers compensation benefits received in a lump sum settlement to determine the extent of any offset of workers comp payments against the receipt of Social Security disability benefits.
The claimant was born on January 1, 1972. Therefore, under Virginia Code Section 8.01-419, he has a life expectancy of 28.5 years.
To address the Social Security offset, the parties state the Social Security Administration should apportion the lump sum settlement as follows:
1. Attorney Fees and Legal Expenses: $20,500.00 (as set by the Virginia Workers Compensation Commission elsewhere in this Order).
2. Future Medical Expenses: The parties affirm that $11,250.00 of the gross lump sum settlement is allocated to future Medicare-covered medical expenses related to the occupational injury of July 8, 2020.
3. Remainder of Lump Sum (Prorated Compensation Rate): The remainder of the lump sum represents the settlement and compromise of all future claims for disability benefits, including permanent total disability benefits. Potentially the claimant could have received these benefits over the remainder of his life expectancy, which is 28.5 years. Prorating the balance of the settlement proceeds after excludable expenses ($68,250.00 net proceeds) by 1,482 weeks (28.5 years x 52 weeks) yields a weekly compensation rate of $46.05. This weekly compensation rate is the rate the Social Security Administration must use to determine any offset based on the claimant’s receipt of this additional workers compensation payment.
Should the Social Security Administration reject this proposed formula, the claimant reserves the right to offer any other computation in his best interest.
Further, this proration formula applies to any long-term disability insurance policy paying benefits to the claimant now or in the future.
We Help Injured Workers Negotiate Settlements that Maximize their Social Security Disability Insurance Benefits
A workers comp settlement can provide financial security after an industrial accident or the diagnosis of an occupational disease.
But unless you include the correct contract language, a settlement can cost you tens of thousands of dollars in other disability benefits.
Avoid this mistake by calling us today at (804) 251-1620 or (757) 810-5614.
We have helped thousands of disabled workers.
And we want to start on your claim.
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