The monthly benefits paid through Social Security disability can help to ease the financial hardships resulting from not being able to work due to a disability caused by a medical condition. The regulations that apply to SSD can be complicated and extremely confusing for the average person trying to apply for benefits.
It does not get any easier when a disabling medical condition is the result of a work-related injury or illness. When that happens, you may be eligible for workers’ compensation and Social Security disability benefits from the federal government. This article about the relationship between SSD and other disability benefit programs, specifically a workers’ comp settlement, gives the ability to recognize when to seek the advice and guidance of a disability attorney.
Workers’ compensation benefits
Workers’ compensation programs exist at both the state and federal levels to provide payment for medical care and lost earnings to workers injured or rendered sick because of accidents or conditions related to their employment. The federal program covers non-military employees of the federal government while each state has a system to provide benefits to workers within the state.
Instead of suing an employer for medical treatment and lost wages, as was the practice before the workers’ comp system was created, employees now simply file a claim for workers’ compensation benefits. The system makes it possible for a worker to recover from job-related injuries and eventually return to work. Settlements may be offered to those workers with severe injuries that cause them to be disabled.
The fact that you qualify for a settlement because the workers’ compensation laws in your state consider you to be disabled does not necessarily mean you qualify for Social Security disability benefits. A disability according to workers’ comp guidelines may prevent you from returning to the type of work you were doing when injured, but you may be able to work in a different occupation.
Qualifying as disabled for Social Security requires that you have a medical condition that prevents you from engaging in any type of work. The expectation must be that the medical condition will last for more than a year or that it will ultimately cause you to die.
What happens when you qualify for both SSD and workers’ comp?
Generally, the combined monthly amount you receive from Social Security disability and workers’ compensation may not exceed 80% of the average current earnings you had before becoming disabled. If it does, Social Security reduces your SSD payments by the excess to bring it down to 80%. Social Security uses one of the following three methods to calculate average current earnings depending upon your specific situation:
- The monthly average wage used to calculate the un-indexed amount of disability was based.
- The average monthly earnings you received from employment and self-employment during the highest consecutive five years after 1950.
- “The average monthly earnings” based on a single year in which you had your highest earnings from employment. It can be either the year that you became disabled or one of the five years immediately before it.
The rules regarding offsets for workers’ compensation tend to be complicated. For example, benefits paid to veterans are not subject to offset against SSDI.
Instead of receiving periodic payments from workers’ compensation for a disability, some state laws allow for a worker to negotiate a lump-sum settlement with the workers’ compensation insurance carrier. Acceptance of a lump-sum workers comp settlement by a disabled worker discharges the insurance company and the employer from any further obligation to pay benefits. A settlement of a workers’ compensation claim is quite different than a lump-sum payment you may receive for past-due workers’ comp benefits.
Past due benefits that you did not receive and are paid to you in a lump-sum do not represent a settlement. There must be an agreement or acknowledgment on your part releasing the employer or insurance company responsible for handling your compensation claim from liability for the payment of future disability benefits.
Social Security offsets SSD benefits against a lump-sum workers compensation settlement by prorating the settlement amount as though it were paid as periodic payments. It is important to keep in mind that the entire amount of the settlement may not be included when determining the monthly rate. The portion of the settlement representing reimbursement of your medical and legal expenses related to your compensation claim should be excluded from the calculation.
Consult an experienced disability attorney
At the Law Office of Daniel Berger, we understand the frustration you may be feeling trying to protect your right to benefits when confronted by complex rules and regulations. If you have questions about Social Security disability and a workers’ comp settlement, we can help. We know the rules and regulations and work to ensure that your rights are protected. Learn more by visiting our website or calling us at (855) 444-7024 for a free consultation.