When a person becomes disabled, he or she may have a variety of disability benefit programs to choose from, including federal Social Security Disability Insurance (SSDI), disability coverage through private insurance, workers’ compensation disability benefits and other public disability benefits programs. However, workers’ compensation and other benefits may reduce the amount of benefits a disabled worker qualifies for through SSDI.
Workers’ compensation and public disability benefits
Workers’ compensation disability benefits are paid when a worker is injured or permanently disabled in a work-related injury. They may be paid through an employer’s insurance company, employers themselves or through a state or federal workers’ compensation agency.
Public disability benefits are available to disabled workers who may or may not be injured in a work-related incident. Public benefits are available in the form of state temporary disability benefits, civil service disability benefits or retirement benefits through state and local governments.
How workers’ compensation and public disability benefits affect SSDI
When a disabled worker receives SSDI, workers’ compensation and public disability benefits, the Social Security Administration has a rule that the total amount of this combination of benefits cannot exceed 80 percent of the disabled worker’s average current earnings. If they do, the excess is subtracted from their SSDI benefit.
If the administration determines that a beneficiary’s combined monthly benefit is more than 80 percent of their average current earnings, the benefit is reduced to be within that threshold until the disabled worker turns 65 when retirement benefits kick in, or when their other benefits stop, whichever is first.
The administration determines a worker’s average current earnings through a variety of formulas. It may be determined by a worker’s average monthly earnings from employment or self-employment from the five consecutive years with the highest earnings, by finding monthly average earnings from the single calendar year with the highest earnings within five years of the worker becoming disabled or the calendar year in which the worker became disabled.
Sometimes, workers’ compensation or public disability benefits are distributed in a lump sum. In this case, the Social Security Administration pro-rates the sum to determine the monthly rate at which the it would have been paid and uses this rate to calculate whether or not benefits exceed 80 percent of the worker’s average current earnings.
Some exceptions
There are a few notable public benefits not factored into the 80 percent rule. These include VA disability benefits, Supplemental Security Income through the Social Security Administration, unemployment benefits, sick pay from employers or state and local disability benefits if Social Security taxes are deducted from these earnings.
While benefits from SSDI can provide vital funds to disabled individuals, they may be reduced if a person’s total disability benefits are over a certain threshold. Your attorney will work to make sure your benefits are maximized and will try to minimize any potential offset from other disability benefits.
