When an employee suffers a significant injury or disability, there may be many benefits that they are entitled to. The two most common longer term benefits include Workers’ Compensation and Social Security Disability benefits. Workers’ Compensation is a State run program paid to employees through their employer’s insurance coverage. Social Security Disability is paid to employees from the Social Security Administration through coverage payments withdrawn from your paychecks. There is a saying in the law however that the law abhors a double recovery. In other words, while benefits may attempt to make you whole from your loss, you should not receive benefits that pay you twice for the same disability. Because of this, certain benefit programs will get credit for other benefits you receive.
Social Security Disability and Social Security Retirement Benefits
If you are receiving Workers Compensation payments, Social Security Disability has a right to reduce your payments if the combination of benefits is too high. The Social Security Administration will determine your highest average earnings before you were disabled. 80% of that number is calculated as your limit for benefits. So as long as the combination of your Workers’ Compensation, Social Security Disability and other benefits do not exceed that 80% number, there is no offset. However, if the total exceeds that 80% figure, your Social Security Disability payments will be reduced to meet that number. However, Social Security Retirement does not adhere to these rules. There is no limit on your income to receive your retirement benefits in full.
It is extremely important that if you are settling your workers’ compensation case, that the amount of the lump sum is explained in detail in the settlement documents. The settlement may cover many benefits such as permanent disability, attorney fees, medical treatment, etc. Only the part of the workers’ compensation settlement that accounts for your permanent disability should be considered towards any offset from Social Security. If it is not explicitly separated, Social Security may seek more of a credit than it is entitled to. Thus, it is important to distinguish the amounts of the settlement attributable to permanent disability from other benefits being resolved in the settlement.
Workers’ Compensation Benefits
Social Security Disability benefits do not affect your Workers’ Compensation payments. However, if you are on Medicare, a settlement of your Workers’ Compensation benefits may require you to set aside a portion of your settlement to pay for medical treatment for your work injury before asking Medicare to pay. This is known as a Medicare Set Aside or MSA.
Why apply for both?
Despite the fact that there may be credits or reductions that occur, it is still beneficial to apply for both of these benefits if you are eligible. Evidence in your Workers’ Compensation case can aid in proving disability in Social Security. A finding of disability in the Social Security Administration can help prove greater levels of disability in the Workers’ Compensation system. There is a synergy that can occur when applying for these concurrent benefits.