How Do Social Security Payments Affect Workers Comp Payments?

Your workers’ compensation benefits will not be reduced or affected by your Social Security Disability Insurance (SSDI) benefits—only the SSDI may be reduced.

Can You Receive Social Security Disability AND Workers’ Comp Benefits?

The short answer is yes, you can receive both. The longer answer is yes, but there is a limit to how much total money you can receive each month. The combined amount of your monthly benefits from Social Security Disability Insurance and your monthly workers’ compensation can not exceed 80% of what you were earning each month (on average) before you had a disability. Worth noting: don’t confuse Social Security Disability Insurance with the “regular” Social Security (Retirement Insurance), which workers’ compensation does not affect.

The Difference Between Social Security and Workers’ Comp

• Social Security — The United States’ social welfare and social insurance programs include benefits for retired individuals, the disabled, and survivors (aged and/or disabled widows, widowers, and orphans). If you’ve worked and paid Social Security taxes for at least ten years, you can start receiving monthly retirement benefits starting at age 62.
• SSDI — Social Security Disability Insurance. Sometimes referred to simply as “Disability.” Provides monthly payments to those who have a disability that prevents them from working, or limits their ability to work.
• Workers’ Compensation — If injured at work, employees are entitled to financial assistance from the employer’s insurance company. This may include payment for time off work, coverage of medical fees (surgeries, physical therapy, MRI scans, prescriptions, etc), and additional compensation based on disability impairment ratings.

More Useful Terms to Know

• SSA — Social Security Administration. The independent agency of the U.S. federal government that administers Social Security.
• SSI — Supplemental Security Income. Provides monthly payments to the aged and/or disabled who have little to no income or resources.
• SSRI — Social Security Retirement Insurance. What people typically refer to when saying “Social Security.” It is a separate program from SSDI and SSI.
• ACE — average current earnings. Used to determine whether disability insurance benefits will be paid, and how much will be reduced. Typically based on the one calendar year in which earnings were highest, but may be based on the average of five consecutive years. The individual’s AMW (average monthly wage) based on total earnings and years could also be used for the calculations.
• PIA — primary insurance amount. The benefit you would receive if you choose to begin receiving retirement benefits at a normal retirement age. (For people born in 1960 or later: age 67.)
• Pareto Principle — AKA the 80/20 Rule. Refers to the amount deducted from your SSDI payments if the combination of those plus your workers’ compensation benefits exceeds 80% of the ACE (average current earnings) you received prior to becoming disabled.

An Example of the Workers’ Compensation Offset

If the total amount of your Social Security Disability and workers’ comp benefits exceeds 80% of your ACE prior to disability, the SSA will deduct the excess amount from your SSDI. For example, let’s say your average earnings were $5,000 a month, and you’re eligible to receive $3,000 a month in SSDI benefits. You also receive $1,500 each month from workers’ compensation. That makes a total of $4,500 in monthly earnings for your disability. But 80% of $5,000 is $4,000—which means the SSA will have to offset (or deduct) $500 from your SSDI. If there is ever a change to the amount of your disability payments, you should report to the SSA right away to avoid any future issues with your SSDI. Worth noting, the combined payments of SSDI and workers’ comp will never be less than the SSDI amount on its own.

If you receive your workers’ compensation as a lump-sum payment, you may want to include an amortization provision in your settlement agreement. This can maximize the amount of your benefits, since the insurance company would dole out a portion of the lump-sum payment on a monthly basis, keeping the total with your SSDI at or below 80% of your ACE. Be sure to discuss this with your attorney when settling a workers’ comp case, in order to minimize the potential offset to your SSDI. At Rose Legal, we will take the measures necessary to help ensure you receive all possible benefits for your financial security following a work-related injury or illness.