Does Workers Compensation Benefits Reduce Your Social Security Disability Insurance?

Posted on: 24 April 2017

It's possible to receive SSDI and workers compensation benefits at the same time. However, your SSDI payment amounts may see a reduction. The SSA will do this based on calculations and a process known as an "offset." Here's more information on how an offset works.

Hitting Your Limits

The first thing the SSA will do is calculate your "applicable limit." This represents the amount of money you're allowed to receive each month under federal law. They will then adjust your SSDI payments to keep your total monthly earnings at or below that limit.

Note that other payments, such as those from pensions and retirement plans, do not have to go through this process. Things like VA benefits and local government benefits also won't affect your SSDI payments. If you collect some other form of disability payment, then that will likely fall under the SSA offset rules.

How to Figure Out the Reduction

A little proactivity can help you prepare for what will happen when the SSA reduces your SSDI. Here's how to figure out the reduction.

Calculate your monthly amount - Add your total monthly SSDI payment amount to your total monthly WC or other disability payments.

Find your average current earning amount – This is your average earning amount prior to you becoming disabled. Typically, it's your highest monthly earning amount from the past five years.

If the total amount of your benefits is greater than 80% of your average current earning amount, the SSA will reduce your payments by the excess amount. For example, you averaged approximately $5,000 a month before your disability. 80% of $5,000 is $4,000.

You and your family receive or will receive $2,500 a month in SSDI. You receive or will receive $2,000 a month in WC benefits. That's $4,500, which is $500 more than 80% of your average current earning amount.

Your SSDI benefits will see a reduction to $2,000. That reduction will last until you no longer receive disability benefits, or until you reach retirement age and transition to retirement benefits.

There's More To WC Offsets

Not everyone has a cut and dry situation when it comes to a WC offset. You may find the SSA miscalculated, or the state wants to reduce your WC benefits. Many different things can happen.

If you feel your benefit reduction occurred unfairly or incorrectly, contact a social security attorney to figure out what went wrong, and how to correct it. You can also speak to an attorney for guidance on a pending change that can affect your benefits.