Did you know that your workers’ compensation benefits could potentially affect your Social Security disability benefits (SSDI)? This is a very important issue for any injured worker who is currently, or potentially will be, receiving both types of benefits. Understanding the workers’ compensation offset, and how to deal with it in your specific case, is complicated. If you are, or will be, receiving both types of payments, you should speak to an experienced workers’ compensation attorney. Your experienced attorney can ensure that you are getting the full benefits you deserve.
The Workers’ Compensation Offset
Under United States law, there is an offset of Social Security disability benefits required when a worker’s combined monthly benefits (the workers’ compensation plus the Social Security disability benefits) reaches 80 percent of that worker’s pre-injury monthly income. When that 80 percent threshold is reached, the monthly SSDI payments will be reduced accordingly. Typically, Social Security uses a calculation known as the ‘high one formula’ to determine a worker’s pre-injury income. The ‘high one formula’ looks at a worker’s last five years of earnings before an injury. The highest year of earnings is selected, and that figure is divided by 12, into monthly segments. Eighty percent of that number represents the worker’s maximum level of combined monthly benefits.
You Need to Structure your Workers’ Compensation Benefits Correctly
The Social Security offset may come into play in your case; and if it does, you should work with an experienced workers’ compensation attorney to structure your workers’ compensation benefits in a way that is best suited for your situation. The system presents opportunities for you to make sure that you collect the full benefits available. Two key considerations include:
- Proper accounting of expenses: When Social Security calculates your workers’ compensation award, in determining whether or not an SSDI offset applies, they must exclude your expenses. For example, your attorneys’ fees and all medical expenses should be excluded from any offset calculation. This means that a proper accounting of your expenses is absolutely critical. You may be able to avoid the offset entirely if your expenses are correctly classified.
- Spreading a lump sum payment over time: Spreading out a lump sum award can be an effective legal strategy to reduce your SSDI offset. Oftentimes, spreading out a lump sum workers’ compensation award can eliminate your Social Security offset entirely. In this situation, you should work with an experienced workers’ compensation lawyer. Your lawyer can help you craft an effective payment structure to make sure that you are not unfairly penalized by a Social Security offset.
Contact An Experienced Workers’ Compensation Attorney
The regulations surrounding Social Security disability benefits and workers’ compensation benefits are very complicated. The bottom line is that the legally mandated offset may impact your payments. Your workers’ compensation benefits should be structured in the appropriate manner to minimize the effect of the offset. You deserve full and fair compensation, and an attorney can help. If you have any questions about how your workers’ compensation benefits will impact your social security benefits, please do not hesitate to contact an experienced Chicago workers’ compensation attorney who can help explain your legal options to you.