Many disabled workers are injured on the job and apply for worker’s compensation benefits. During this same time, or shortly after, if it is determined a disabled worker will be unable to work for at least 12 consecutive months, the disabled worker may decided to apply for Social Security disability benefits – Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) or both.
If an applicant is receiving or has received worker’s compensation benefits and is awarded Social Security disability benefits, the Social Security program, as of 1965, requires Social Security disability benefits to be reduced so that the combined amount of worker’s compensation and Social Security disability payments does not exceed 80 percent of the disabled worker’s most recent earnings. If an injured worker is paid in a lump sum settlement for a worker’s compensation case, that amount is prorated to reflect what the monthly rate would average out to be.
According to Social Security, “the intent of the offset provision is to ensure that the combined benefits from worker’s compensation and Social Security are not excessive.”
This offset rule impacts a large portion of Social Security disability applicants. According to Social Security, in 2003, 1.7 million (17 percent) of the 7.6 million SSDI beneficiaries had some connection to worker’s compensation or public disability benefits.
It is important to note that the percentage of SSDI recipients with concurrent worker’s compensation claims varies from state to state guidelines. Worker’s compensation law is left up to the state while Social Security is a federal program.
Although worker’s compensation benefits impact SSDI benefits, many other types of benefits, such as Veteran’s Administration benefits, SSI payments and some other state and local benefits are not affected by worker’s compensation benefits.
For more information about how worker’s compensation payments impact SSDI visit: http://www.socialsecurity.gov/policy/docs/ssb/v65n4/v65n4p3.html.
