How Does Workers’ Comp Affect Social Security Disability Benefits?


Social Security Disability Insurance (SSDI) benefits are primarily offered by the Social Security Administration (SSA) if you meet certain requirements. These requirements typically apply to your medical condition, financial standing, monthly wages, past work history, and other factors. Of these, the monthly wage is a key factor that SSA uses in determining whether or not you qualify for benefits.

Even once you have qualified and started receiving SSDI benefits, changes in your monthly wage can affect your status or the amount of benefits you receive. This is why if you also qualify for workers’ compensation benefits while being an SSDI recipient, this can impact your SSDI payout. However, your SSDI payout will be reduced only when your total monthly income meets a certain threshold.

When Does Workers’ Comp Impact SSDI?

When the combined amount of your Social Security Disability Insurance benefits and workers’ compensation benefits exceeds a certain threshold, SSA trims down your SSDI benefits. To calculate when this applies, SSA adds up the monthly amounts of workers’ compensation and Social Security Disability Insurance. This amount is compared with your average current earnings before you became disabled.

If the combined amount of SSDI and workers’ comp is more than 80% of your pre-disability earnings, one of the two things can happen. Your Social Security Disability Insurance can be reduced so that the total sum from both sources remains below the 80% threshold. Alternatively, your workers’ comp benefits may be reduced to the same effect.

How Does SSA Calculate Average Current Earnings?

It is important to understand how SSA calculates average current earnings as this formula has a direct bearing on your SSDI and workers’ compensation benefits.

SSA uses one of three methods to calculate these earnings. The calculation is basically meant to reflect your level of earnings before you became disabled. The three methods are as follows.

High-One Formula Method

When using this method, SSA looks at your annual earnings during the last five years. Out of these, the years when you earned the most amount of money is picked out. The average monthly wage for that year is calculated. This then becomes SSA’s estimate of your pre-disability average current earnings.

High-Five Formula Method

In this method, SSA considers your work history to pick out the five consecutive calendar years when your total earnings were the highest. The total earnings of these years are then used to calculate average monthly wages.

Average Monthly Wage

When calculating with this method, SSA simply considers your average monthly wage and uses it as the yardstick to measure the amount of disability benefits and workers’ comp benefits.

How Does the Offset Work?

When your cumulative amount of disability benefits and workers’ compensation benefits exceeds 80% of the average current earnings, offset applies. The offset works by reducing the SSDI amount so that the sum of the benefits is once again less than 80%.

However, it is possible to minimize the offset in such a case. This is because SSA allows for a number of exclusions that apply to the offset. For instance, if you have any related legal fees, past or future medical costs, dependent payments, or disability-related rehabilitation costs, these amounts are deducted from the sum of the SSDI and workers’ compensation benefits. This often has the effect of bringing down the total sum well below the 80% threshold.

Similarly, if you receive a lump-sum payment for your workers’ compensation benefits, the amount may suddenly bring your total sum of benefits above the threshold. However, you can easily avoid this by making some changes to the settlement agreement when you receive the lump-sum amount. You can state in this agreement that the lump sum is meant for the rest of the recipient’s life. When this is formally stated, the lump sum is then divided into monthly amounts for the average lifespan of the recipient.

This helps you avoid a major increase in your monthly amount of benefits and avoid the offset altogether or have the offset amount significantly reduced.

Consult Reliable Disability Lawyers in Greenville, SC

If you are applying for SSDI benefits or already receive these benefits and also want to apply for workers’ comp benefits without suffering the offset, we can help you. Here at Robert Surface Law Firm, we have many years of experience in handling SSDI claims. Our aim is to help you receive the maximum amount of benefits for your disabilities. If you think that an offset may apply, we can work with you to see if you qualify for one of the exclusions. Reach out to us today to discuss your case.