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How Do Workers’ Compensation Benefits Affect Social Security Payments?

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Archive: Jun 2015

How Do Workers’ Compensation Benefits Affect Social Security Payments?

It is not uncommon for employees to be eligible for both Social Security and worker’s comp benefits at the same time. However, when this is the case, employees are usually not able to receive the full amount of both.

Usually, the person’s social security benefits are reduced to receive the amount of worker’s compensation awarded to them. This only happens when both the SSDI and the worker’s compensation add up to more than 80% of the employer’s average current earnings, a figure that is calculated to determine your benefits. If the total is more than 80%, your SSDI will be offset to allow for worker’s compensation. However, there are ways to reduce the amount of the offset applied to your SSDI.

Experienced workers’ compensation attorneys in California can help you figure out the best ways to reduce the offset. The state of California uses the “high-one” formula when determining your average monthly wage. This means they look at the highest paid year of employment within the last five years to determine the 80% average. If your SSDI and worker’s compensation benefits exceed this percentage, the offset will then be applied. To maximize benefits, lawyers will try to find exclusions to this clause, such as:

Expense Exclusions

Social Security, legal fees, payments to dependents, and rehabilitation costs are all deducted from the calculation. In addition, past and future medical bills will be left out (unless they are Medicare payments). In this way, keeping accurate records of all these expenses can help reduce the amount of money taken from your worker’s compensation benefits. Working with an experienced attorney will help you find all the necessary options for expense deductions and support your deductions with appropriate documentation.

Taking a Lump Sum Payment and Spreading It Out

If you elect to take a lump sum payment from worker’s compensation instead of incremental payments, you can state you intend to spread them out yourself in an effort to reduce the affect of the offset. Your intention to spread out the payment will need to be stated expressly during the settlement agreement. This method often significantly reduces the offset, and in some cases may even remove it.

However, this option is only available if it is presented in the original settlement, known as an amortization provision. If it is not presented in the original agreement, you may not be able to receive benefits in a lump sum. Keep in mind, once the lump sum agreement is initiated, you are releasing the employer from any further liability. Therefore, if your worker’s comp runs out and you are still undergoing medical treatment, you will not be able to seek additional compensation.

Changing Your SSI to Retirement Benefits

No worker’s comp offset will take place if you are receiving Social Security retirement benefits. Therefore, if you are on SSI and are going to file a worker’s comp claim, it may be in your best interest to consider retiring early. Though your Social Security benefits will naturally be lower, your worker’s compensation payments will not be affected. Of course, it is not beneficial to consider retiring early unless you are over 60, so this option doesn’t work for everyone.

Worker’s compensation can be a complex system to navigate, and with the added confusion of SSI and offsets, it can get overwhelming quickly. If you are currently on SSI and are filing a worker’s comp claim, it is best to contact a competent workers’ compensation attorney. Injury attorneys are well-versed in the nuances of SSI and worker’s comp laws and will be able to determine the best options for you to reduce or eliminate your offset.

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