How will your workers’ compensation claim affect your Social Security Disability benefits?
There are instances when injured employees are eligible for both Social Security and workers’ compensation benefits. However, they cannot collect all of the benefits provided by Social Security and workers’ compensation simultaneously. In many instances, Social Security lowers Social Security Disability Insurance or SSDI benefits to ensure that the total benefit amount for the month does not go over 80 percent of the monthly pre-injury earnings of the employee. This process is also known as a workers’ compensation offset.
Determining the Offset
Social security initially calculates the applicable limit, or the upper monthly limit of benefits an employee can receive, to determine the offset amount. Social security offsets the Social Security Disability Insurance benefits based on the amount needed to ensure the total does not go beyond the maximum limit. Workers’ compensation offsets normally occur among lower income employees since the applicable limit is lower. The applicable limit is normally exceeded after workers’ compensation and SSDI are given to the employee.
Applicable Limit or Upper Monthly Limit for Benefits
The applicable limit is normally bigger than:
- 80 percent of monthly income or the “average current earnings” of the employee.
- The total SSDI amount provided to the family of the employee or the “total family benefit” during the first month when workers’ compensation is released.
Many times, 80 percent of the earnings are higher, which is used by Social Security to determine the offset amount.
Decreasing the SSDI
Social Security determines 80 percent of the average current earnings or 100 percent of the total family benefit to establish the applicable limit. After this, the monthly SSDI benefit is added into the monthly workers’ compensation benefit. Missouri workers’ compensation attorneys inform us that the SSDI is reduced if the total benefit goes beyond the applicable limit. Social Security reduces SSDI until the retirement age of the employee or when the employee starts to receive retirement benefits.
Total Workers’ Compensation Settlement Amount
The majority of injured employees will agree to a settlement before the case reaches the court. Many disabled employees opt to receive the total settlement amount instead of the monthly workers’ compensation payments. Social Security takes into account the total settlement amount when it offsets SSDI benefits.
Social Security converts the total workers’ compensation settlement into monthly payments through a number of methods. It will also evaluate the settlement terms when it offsets the total settlement amount. One method entails the division of the total settlement amount with the monthly workers’ compensation payment schedule before the appropriate SSDI offset is calculated.
Reducing the Social Security Offset
A St. Louis workers’ compensation lawyer may create a draft settlement agreements to circumvent SSDI offsets. Due to this, Social Security evaluates the terms indicated on the workers’ compensation settlement to determine the offset. Lawyers also create draft settlement agreements for lump sums without legal and medical expenses. Social Security will not include these expenses in calculating the offset whenever the settlement terms are unambiguous. Social Security may require a document indicating legal and medical expenses whenever the settlement terms are not clear before it removes these figures in calculating the offset.
You may need the expertise of a St. Louis workers’ compensation attorney to navigate these complexities. Please call The Law Office of James M. Hoffmann at (314) 361-4300.