Does a workers comp settlement affect Social Security? Learn how workers compensation can affect your Social Security disability benefits.
Both Workers’ Compensation and Social Security Benefits are the nation’s largest disability benefits programs. The two programs payout benefits monthly, but the source of the funds and purpose of these benefits differ greatly.
- Workers’ Compensation insurance is for job-related injuries. The source of Workers’ Comp benefits comes from insurance employers pay into.
- Social Security Disability Income (SSDI) is for those who can not work due to a physical or mental impairment. The source of Social Security benefits comes from the insurance you into while employed.
Read on to learn how these two programs interact with each other.
What Is Workers Compensation?
Workers’ Compensation is a benefit or medical care payment for a job-related injury. An injured worker is entitled to receive Workers’ Compensation benefits when their employer or insurance carrier determines the illness or injury directly results from their job.
Workers’ Compensation benefits are available from the first day of your employment. In contrast, Social Security benefits are paid only to people with a substantial work history.
Employers have Workers’ Compensation insurance policies to protect their workers and themselves against workplace accidents or illness.
Note: In particular circumstances, such as death due to an injury on the job, a dependent will also receive Workers’ Compensation benefits.
Does a Workers Comp Settlement Affect Social Security?
Yes! Workers’ Compensation settlements may cause a reduction in Social Security Disability Insurance benefits. This can happen whether you get Workers’ Compensation in installments or as a lump-sum payment.
However, this reduction will only occur if the combined Workers’ Compensation settlement and SSDI payments exceed 80% of your average current earnings (ACE) before collecting disability benefits.
How Does Workers Comp Affect Social Security Disability?
If you receive Workers’ Compensation and file for Social Security disability, you may not be able to collect the maximum amount of Social Security benefits.
Before filing for Social Security disability, understand how Workers’ Comp can affect your claim:
- States will reduce your Workers’ Compensation amount or the number of benefits you receive from your Social Security Disability benefit.
- If your Workers’ Compensation benefits exceed 80% of your pre-disability earnings, then your Social Security Disability compensation will be “offset” or lowered.
Every office determines the effect of your Workers’ Compensation differently. It is essential to ensure you keep all of your options open.
Hiring a trusted and knowledgeable Social Security Disability attorney, like the team at Evans Disability, will ensure you keep your maximum benefits.
How Does a Lump Sum Settlement Affect Social Security Disability?
A lump sum of Workers’ Compensation or other benefits will most likely reduce your amount of Social Security Benefits.
Note: A lump sum under the Veterans Administration, private pensions, or Supplemental Security Income payments will not reduce your Social Security amount.
How Do I Report Income Changes to Social Security?
After receiving a settlement or a monthly payment from Workers’ Compensation, you must report the income change to the SSA.
If you have a representative payee, your representative payee must report your earned or unearned income.
Ways to report income changes to Social Security:
- Submit a pay stub or an award letter to Social Security.
- Call Social Security at 1-800-772-1213 or report income changes on the Social Security Website.
Note: You will have ten days after the end of the month when the change took place to notify the SSA.
What Happens if You Don’t Report Income to Social Security?
When you first apply for Social Security Disability Income benefits, you agree to keep the Social Security Administration updated on any forms of earned and unearned income.
If you do not report earned or unearned income to Social Security, you will owe it back to Social Security as an “overpayment.” This means the amount you owe back to the SSA either becomes due upon notice, or you will have to pay back this amount with each monthly payment.
You can also be underpaid if you do not report any income changes timely or accurately. It is always good practice to report income changes as soon as possible to the Social Security Administration.
How Does Social Security Calculate Benefits?
There are several different ways the Social Security Administration can calculate your benefits. However, the most common method is looking at your work history and the number of months you “paid into” your Social Security tax.
If you have medical expenses (or even legal associated expenses) while seeking Workers’ Compensation benefits, these amounts can be excused from calculating your benefits.
How to Maximize Social Security Benefits
Here are two simple ways to maximize your Social Security Benefits:
- Report your earned and unearned income as soon as possible to ensure you receive the correct benefit amount. This step helps avoid deductions in benefits from overpayments.
- Keep Social Security updated on the members of your household, address, and other essential information. This step will help you receive the maximum amount for your specific situation.
Need Help with Social Security Disability Benefits? Call Us!
Evans Disability has a team of experienced attorneys with vast knowledge of Social Security Disability benefits. They have helped hundreds of clients like you sort out Workers’ Compensation and Social Security Disability Income benefits issues.
Don’t wait until it is too late! Call Evans Disability today at (855) 503-0101 or schedule a Free Consult.
Workers Compensation and Disability FAQ
Frequently asked questions about Workers Compensation and Social Security Disability benefits.
Can You Get Workers Comp and Disability at the Same Time?
Yes! You can receive both benefits at the same time. However, your Workers’ Compensation and Disability Benefits may get offset.
What Does the Social Security Offset Mean?
If you receive Workers’ Compensation payments, Social Security will consider this income an “offset” of your benefit amount. The SSA determines this offset when calculating your Social Security Benefit amount.
For example, Social Security will “offset” your disability payments from Workers’ Compensation benefits by adding them to your Social Security Disability amount.
However, your payments will be reduced in many states if your Social Security benefits and Workers’ Compensation earnings exceed 80% of your average earnings.
If you have received an offset of your benefit amount, it will continue until you pay the total amount of Workers’ Compensation benefits. This is sometimes called your settlement amount.
The other way to end your offset of Social Security benefits is when your disability benefits switch to retirement benefits. Then it would no longer be applicable.
Can I Get Disability After a Workers Comp Settlement?
Yes, you are still eligible to receive disability benefits after a Workers’ Compensation settlement.
However, you may get reduced Social Security Disability benefits or Workers’ Compensation if the settlement exceeds 80% of your earned income before becoming mentally or physically disabled.
Does Workers Comp Affect Social Security Retirement Benefits?
Yes, Workers’ Compensation benefits can affect your Social Security Retirement benefits.
However, it depends on your work credit history. Retirement benefits are based on the “work credits” you earn for each period you pay into Social Security.
If you receive Workers’ Compensation benefits, this may affect the amount of income you receive or work amount of time. Both scenarios are likely to affect your Social Security Retirement benefits.