Social security disability (SSD) benefits are only one form of financial assistance available to individuals who are unable to work due to a disability or medical condition.
Workers’ compensation benefits are payable to individuals injured in a workplace accident. Disability benefits from public and private sources, including private disability insurance, are available to eligible individuals who suffer from both short- and long-term disabilities. Social security benefits, which include SSD and Supplemental Security Income (SSI), are paid to individuals whose disability lasts, or is expected to last, 12 months or longer or to result in their death.
While individuals can receive multiple benefits based on their disability status, certain payments can affect the amount of their monthly social security disability benefit. These other benefits may cause your monthly benefit amount to be reduced or eliminated. Here’s how receipt of certain disability payments and workers’ compensation payments can affect your SSD or SSI benefits.
Workers’ compensation benefits are payable to an employee following a workplace injury. The employee is entitled to workers’ compensation when the injury prevents him from returning to work, either temporarily (short-term) or permanently (long-term). The benefit amount varies based on the severity of the injury and the length of time the employee is unable to work.
It is possible to receive both workers’ compensation and social security disability benefits. However, receipt of both can result in a temporary loss of disability benefits. Social Security Administration (SSA) regulations state that the combined amount of an individual’s workers’ compensation and disability benefits cannot exceed 80% of their average earnings before becoming disabled. If the combined amount exceeds 80%, the SSA will offset the workers’ compensation payments by dividing it by the monthly disability benefit amount.
For example, assume you received a $50,000 workers’ compensation award after shattering your leg in a workplace accident; at the time of the accident, your average monthly earnings were $1,500. Later, complications from the injury prevent you from returning to your job as a construction worker. As a result, you apply for social security disability benefits and are awarded $1,300 a month.
The combined amount of the SSD benefits and the workers’ compensation award, however, exceeds 80% of your average earnings before the onset of disability. Therefore, the SSA will offset the workers’ compensation award against the monthly disability benefits. In this case, the offset would result in your being “ineligible” to receive disability benefits for 39 months.
It is possible to avoid this offset, however, if the workers’ compensation attorney includes spread language in the settlement. Spread language “spreads” the workers’ compensation payment over the employee’s lifetime, rather than paying it in one lump sum settlement.
Private disability benefits
Private disability benefits, such as benefits paid under a private disability insurance policy or a pension plan through a private-sector employer, do not affect social security benefits. Receipt of SSD benefits may, however, affect the disability benefit amount payable under the private plan.
Similar to workers’ compensation benefits, private disability insurance plans typically contain an offset provision. Under this provision, the private insurance carrier can reduce, dollar for dollar, the monthly benefit amount paid under the plan by the amount of your monthly SSD benefit. Essentially, this means the private insurer will use your SSD benefits to pay your private disability benefits. However, you can never receive LESS THAN the highest award amount.
For example, if you receive $1,200 in monthly SSD benefits and $1,150 in monthly private disability benefits, the dollar-for-dollar reduction means that you would receive $1,200 in SSD benefits and $0 in private disability benefits, because the SSD benefit amount exceeds the private insurance disability payment. If, however, your private disability benefit is $1,400 per month, the dollar for dollar reduction would leave a $200 per month difference between your private disability and SSD disability benefits. The private disability plan would pay this $200 difference so that the combined social security disability and private disability benefit you receive equals $1,400.
In addition to the offset, some private disability insurance plans require that you reimburse them for any disability benefits paid during the SSD application process. This payback requirement would kick in if the SSA awards you retroactive disability benefits, which typically happens if the SSA denies your application and you appeal its decision.
The requirement that private disability recipients apply for other disability benefits or payback benefits paid while awaiting the SSA’s decision on your disability application varies among policies. If you have private disability benefits, it is therefore important to read the plan documents to ensure you understand your obligations.
Public disability benefits
Public disability benefits include those paid from federal, state, and local government employers for non-job-related disabilities. These include benefits paid under civil service disability programs, state temporary disability programs, state and local retirement benefits paid based on disability, and VA benefit programs. Whether or not these public disability benefits affect social security disability benefits depends on the type of public benefits received.
Disability benefits paid through either the VA or state and local government jobs that deducted social security taxes do not affect public disability benefits. You may receive the full amount of benefits awarded from both programs, with no offset. That means if you are eligible to receive $950 from social security disability benefits and $750 from VA benefits, you will receive a combined $1,700 per month in disability payments.
Public disability benefits paid through federal, state, or local government jobs for non-job-related injuries will, however, result in a reduction of your social security benefits. Examples of public disability benefits that can negatively affect your monthly SSD benefit amounts include civil service disability benefits, state temporary disability benefits, and/or retirement benefits paid from state or local government jobs due to disability.
Obtaining disability benefits can be complicated, but an experienced SSD attorney can help you determine the best way to go about applying. Consider the Good Law Group for your representation – call (847) 577-4476.