Coordinating Social Security Disability and Workers’ Compensation Benefits

Many people with work-related injuries will qualify for Disability if they’re persistent in pursuing their claim through the Social Security appeals process. Most Social Security Disability applications are initially denied and the Social Security Administration reports that you’re much more likely to recover benefits if you’re represented by an experienced attorney.

In fact, it’s especially important to get legal advice if you plan to settle your Workers’ Compensation claim or if you believe you should qualify for both Workers’ Compensation and Social Security Disability. The terms of your Workers’ Compensation settlement can have a huge impact upon the amount of Social Security benefits you receive and the degree to which Medicare will cover your future medical expenses.

You can receive Workers’ Compensation and Social Security Disability at the same time, up to a combined benefit of 80% of the income you were earning before you became disabled. Unlike most Workers’ Compensation benefits, Social Security includes annual “cost of living” increases and may pay additional benefits for your spouse and children.
But the Workers’ Compensation and Social Security laws determine the amount of income you were earning before you became disabled in very different ways.

Your Social Security Disability benefits are usually based upon your “average current wages” before you became disabled, which is the larger of (1) your average annual lifetime earnings, (2) your average earnings during the five years before you became disabled, or (3) your earnings during the year before you became disabled.

Meanwhile, your Workers’ Compensation benefits are usually based upon your “average weekly wage,” which is the average weekly income you earned in the few weeks just before your injury. In Louisiana, your Workers’ Compensation benefits are generally based upon your wages in the four full weeks just before your accident or the beginning of your illness.

While you’re receiving Workers’ Compensation benefits, your Social Security benefits may be reduced so that the combined benefits don’t go over 80% of your “average current wage” as determined by the Social Security Administration. The exception to this rule in Louisiana is that the claimant’s employer may request that the offset be reversed if the Louisiana Workers’ Compensation Court determines that the claimant is permanently totally disabled.

The Social Security offset can become a very important issue when a Workers’ Compensation claim is settled because the Social Security Administration may treat the lump-sum settlement as a replacement for periodic benefits. They may pro rate the amount of the settlement at the same rate that the claimant was receiving Workers’ Compensation wage benefits before the settlement. The Social Security Administration applies either (1) the rate specified in the lump-sum award, (2) the periodic rate paid prior to the lump sum settlement, or (3) your state’s Workers’ Compensation maximum in effect for your year of injury. This figure can be used if no rate is specified in the award or there were no periodic benefits paid before the settlement.

The net effect is that a claimant’s Social Security benefits will continue at same rate they were being paid before the Workers’ Compensation settlement though the claimant is no longer receiving Workers’ Compensation indemnity benefits. This can be particularly painful where the claimant has used their Workers’ Compensation settlement to pay debts that they incurred while their claim was pending.

To address this problem, the Social Security Administration allows you and your employer to stipulate in your Settlement Agreement that the amount paid in the lump-sum settlement of your Workers’ Compensation claim is intended to compensate you for your lost wages (or loss of earning capacity) over your entire remaining work-life. The settlement documents should explicitly state the term and imputed periodic rate of the lump-sum settlement.

In the typical settlement of a disputed Louisiana Workers’ Compensation claim, the appropriate stipulation in the Joint Settlement Petition should substantially reduce or eliminate the Social Security offset.

David Buie is a Louisiana Workers Compensation Lawyer representing individuals throughout all of Louisiana. www.DavidBuie.com

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36 Responses

  1. This article was very helpful. Thank you very much for posting this its answered a ton of my question. I’ve been searching for this information and my questions or most of them have been answered. Thank you and great site!

  2. After a worker’s comp settlement has been made, how long after will Medicare cover medical expenses if already on Medicare and totaly disabled?

  3. I received a settlement with workmans compensation eight years after I became disabled. I had been receiving SS Disability for 8 years and then got a workmans compensation settlement. Workmans Comp. had been paying the medical bills for my work-related injury and not Social Security. Social Security went back to within the first two years of my Social Security Disability and created an overpayment based on my settlement with Workmans Compensation–I had not received any notice in eight years I had an overpayment. SS had never claimed there was an overpayment. When I got the settlement and reported it to SS, they claimed that the settlement created an overpayment within the first two years of me receiving SSD. How is this possible? Is this legal or is SS taking my money without cause? They have already taken over $14K and want another $3K+ for each child. This will be almost 3/4 of my settlement with Workmans Compensation. How can an overpayment be created 8 years later when none existed before I received the settlement?

    I need some advice quickly before they stop payments to me.

  4. I am going through the same situation. I fell at work 8/16/02 injuring my knee; I had PT and still had problems with my leg but was able to work. On 8/1/03 my knee gave out and injured my back which I have not worked since. I filed SSDI at first denied; then appealed and received an ONSET date of 3/1/06 of which was the date I went to their doctors. I filed an appeal and went before the Judge and he amended the ONSET date to 8/1/03. SSDI sent me the arrearages that they owed and sent payment directly to my attorney of which I used him for my appeal. My Workers Compensation attorney advised me that when they make settlement if will be for LUMPSUM LIFE PAYOUT and therefore they will NOT cut my SSDI. I suggest you seek counsel for a consultation. Perhaps if you can get a statement from Employer’s Insurance Carrier that it was for LIFETIME LUMP SUM PAYOUT it may help recover some of the money. I would check with a SSDI attorney and WC as well.

  5. I”am currently waiting to hear from ssd about my claim and past due benifits. I was hurt in 3/04 never was giving workmens comp payments. finnally recived surgery in 11/06 .that put me out of work. then 5/07 I filled for ssd. I settled my case in 7/09. then in 10/09 was awared ssd.however I still have not recived any past due benifits.my offset date became11/06 when I had surgery and havenot worked scince. the wc payed me in full instead of half then 225 weeks. what happens now?

  6. i have an attorney but i am VERY dissatisfied with thier service at this point i need a lawyer who will listen to my concerns and one that can help me with all factors in my case ie; wc, disability ins thru company and social security if you can handle all three call me please

  7. i have the same problem, i’m in ny,if u rec any info on an atty that has the answers pls em me, i can’t find a person that can help u w/ wc, ssd, etc.tnks

  8. I’ am looking for a real benefit from being awarded SSD while involved in a WC claim. exactly what is it

  9. I haven’t received any money at all sense i filed the claim july of2007 my injuries were severe enough for a SSD award they went back 2 and half years from 2010

    My WC lawyer was fired and this was a GOOD thing he hasn’t done anything in the last 2 years out of 4 hoping my new firm will represent my case properly

  10. My daughter has received SSD for the last two years, when she tried to work 16 hours a week at min waged. She was in an accident and WC has paid a weekly pay for the amount she received while working. I noticed ,on the pay stub, she is classified temporary total disable. When she heals as much as she going to, what happens. There has been no one who explains any thing to us.

  11. I hurt my self at work on April 19,2010. I started receiving wc a month later. My job let me go . So in Aug. I filed disable and I had to get a lawyer. I won. I question is with ss own my back money will they take the amount that wc has been paying in the past year.And do I need a lawyer to settle with wc. I see my Dr. today about my neck and if he says he cannot do anymore for me then what?

  12. I was wondering if I am eligible for ssdi benefits.I hurt my back at work back in 08 had surgery dr.wont let me go back to same job.Settled with work comp jan of 2011 I have been trying to find work that I can now do with no luck.I wanted to know If I could file for ssdi.I was not classified as 100% disabled.My Rating was 31%.Any help would be appreciated.

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  14. OH gosh, all the legal jargon makes it hard to understand. I do know that the 31% disability found from Worker’s Comp has nothing to do with SSDI. If you cannot work and your are older they make a decision according to your disability, your age (if you are too old to retrain and get another job you can do) and they always deny the first time (or usually) Back injuries are pretty much totally disabling under SSDI.
    OK the one about the daughter she can be paid for permanent partial disability for 104 weeks in california. I don’t know about other states. Once the doctor finds her condition stationary (meaning its as good as it gets ). Then they can come to a settlement of a lump sum, medical for the condition for life and a permanent payment depending on the degree of disability which if it is 31% is quite a bit because 100% is like paralized from the neck down.

  15. Good Day,

    I’m an women union carpenter since 2004.
    I got injured on job back in 2010. I have been on worker compensation since, I already had two knee operations. As an single mother of disable child I had no choice but to get w/c payments which has been an awful experience with them stopping payments causing me to lose my apartments, and destroying my credit report. When I went to get help from government I was denied cause of my job title and income I was earning when working.

    I applied for social security and to my surprise I was told that I will only get 38 dollars an month for myself, 18 dollars for my disable child and only 1,500 back pay.

    I look up my annual report of payments to social security and it said I have paid 11,000 dollars from all the years I have work.

    I am being penalized for getting worker compensation like if I had an option how was I suppose to live and support my family. Why is it that I can not get the monies that I deserve from working so hard all these years.

    I come from N.Y, grew up in the projects on welfare. I have tried my best to provide an better living for my family, being an role model to my daughter showing her that It is not right to depend on the working class. Living in safe neighborhoods.

    Now all this will be taken away from me I will have to move back to the projects and live on welfare all these years of hard work down the drain. How do I explain to my daughter what happens to the working class.

    I have an appeal coming up on Monday. I am trying my best to get the monies that I deserve for working so hard all these years, any advise would be greatly appreciated.

    Thank you,
    Proud union member
    L.I.

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