Many Social Security Disability (SSD or SSDI) recipients were injured or became ill because of another party’s negligence or from an accident at work that was covered by worker’s compensation. In these cases, it is very common for the responsible party’s insurer to dispute the cause of the incident or the value of the claim for many months, or even several years.
SSD benefits often become the primary source of financial support for people while they wait for their other claims to be settled or to receive a lump sum settlement. Let’s look at how your SSD benefit payments will be affected by a lump sum settlement.
SSD Benefits While You Wait for a Lump Sum Settlement
Social Security Disability benefits are paid to disabled workers who accumulated enough work credits and have a medically determinable physical or mental impairment that prevents them from performing substantial gainful activity, and which has lasted or is expected to last for 12 months or is expected to result in death.
SSD recipients are eligible to collect worker’s compensation payments and SSD payments simultaneously. But the Social Security Administration rules and SSD regulations prohibit you from collecting a total of more than 80% of your average salary or wages. If the combined total of your SSD benefit payment and your worker’s compensation payment exceeds 80% of your average pay, then one or the other program will reduce your payment. This procedure is called a benefit “offset.” The intent is to ensure that no SSD recipient collects the same lost wages from two separate programs.
Lump-Sum Settlements and SSD Payment Offsets
When pending personal injury claims or worker’s compensation claims are finally settled, or when the disabled plaintiff wins a court judgment, some portion of the settlement proceeds usually represents money compensating them for your lost wages going back to the date they stopped working. Theoretically, some of those funds are covering the lost wages from the same period for which they already received SSD benefit payments.
The lawyer handling the worker’s compensation or personal injury claim can draft specific terms into the settlement agreement to deal with the SSA’s concerns about double payments for the same wages.
How Your Lawyer Can Protect Your Settlement from Excessive SSD Offsets
The Social Security Administration focuses its attention only on the duplicate payment of wages when an SSD recipient gets a lump sum settlement from worker’s compensation or a personal injury claim. Settlement documents often contain only general language stating the total amount of the settlement and that the injured party release all claims.
The SSD recipient’s lawyer should consult with a skilled disability lawyer to learn how to include specific language in the settlement documents identifying what amount of settlement funds are intended to pay medical bills and future medical costs, attorney’s fees, and costs of litigation, or other expenses. If any portion of the settlement is intended to cover lost wages, as certainly is the case with worker’s compensation settlements, then the settlement agreement can clearly state that the proceeds are intended to cover wages lost over the claimant’s working lifetime.
Lump-Sum Settlements Covering Lifetime Wages
Spreading lost wage settlement funds over the course of a worker’s life means that the amount of the settlement can be divided by the number of months remaining between the worker’s current age and their full retirement age. For example, if an SSD recipient gets a lump sum worker’s comp settlement when they are 42 years old (born January 1), there will be 28 more years in their working life. There are 336 months in 28 years. If the lost wage lump sum settlement was $100,000, then we divide that amount by 336 months.
$100,000 divided by 336 = $297.62
In this example, the SSD recipient would be credited $297.62 from their lump sum settlement each month. Therefore, if they continued to receive SSD benefits, each monthly SSD payment would be reduced for the SSD offset by $297.62.
The amount of the SSD offset in each case depends on how much, or how little, of the lump sum settlement represents lost wages.
Contact NY Disability Lawyer Daniel Berger for Answers SSD Offset Questions
The subject of Social Security Disability offsets of lump-sum worker’s comp or personal injury settlements is complicated, and answers depend on your individual circumstances. Attorney Daniel Berger has more than 24 years of experience fighting for SSD and SSI disabled claimants.
Attorney Berger’s entire team of professional disability lawyers can easily be contacted at nydisability.com or by calling 1-855-444-7024. New York’s best disability lawyers want to help you structure your lump-sum settlement in a way that maximizes the SSD benefits you continue to receive.
Don’t lose more SSD benefits than you need to because of a poorly drafted and badly planned lump sum worker’s comp or personal injury settlement agreement.