Sometimes a worker who is injured on the job and receives worker’s compensation benefits also applies for social security disability. This may happen in cases where the injury is so severe that it prevents the person from working for at least twelve consecutive months.
In such a situation, the injured person needs to keep in mind that his or her social security disability benefits can be offset by the worker’s compensation benefits.
Generally speaking, the person cannot receive more than 80% of their Average Current Earnings (or A.C.E.) in combined benefits.
I will not go into great detail on how to calculate the A.C.E. The two main ways to calculate it are:
1)Take the highest yearly earnings amount from the year of disability onset and the previous 5 years. Divide the highest yearly total by 12 months. Round this number down to the next lowest dollar amount.
2) Take the sum of the five consecutive years following 1950 with the highest unindexed earnings. Divide the total by sixty months. Round this number down to the next lowest dollar amount.
So, for example, assume an injured worker whose A.C.E. is $3,000 per month. 80% of this amount is the total amount the person can receive in combined worker’s comp and social security disability benefits; i.e., $2,400 in this case. The person receives worker’s compensation benefits of $1,200 per month. If the person’s social security disability benefits would normally be $1,200 per month, there will be no offset, because the combined amount of benefits does not exceed 80% of the A.C.E.
On the other hand, assume an injured worker whose A.C.E. is $4,500 per month. 80% of this amount is the total amount the person can receive in combined worker’s comp and social security disability benefits; i.e., $3,600 in this case. The person receives worker’s compensation benefits of $2,400 per month. If the person’s social security benefits would normally be $2,000 per month, there will be an offset of $800 per month in the person’s social security disability benefits. This is because the person cannot receive more than his or her $2,400 per month work comp benefit plus $1,200, which combined equal $3,600, or 80% of the person’s A.C.E.
It is important when a person is entitled to both work comp and SSDI benefits, to look carefully at the A.C.E. and to report to the Social Security Administration any and all benefits the person is receiving. Otherwise, if there is inadequate or incomplete reporting, the person could end up in a situation in which Social Security overpays disability benefits and then seeks reimbursement of the overpayment.
If the person has the same attorney handling both the work comp and the SSDI case, that attorney should advise the client about the effects of the worker’s compensation offset. If the person has separate attorneys for each case, the attorneys should at a minimum, communicate with each other to make sure the client is well informed of the offset and avoids an overpayment situation.
This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.