If You Receive Workers Compensation
What Payments May Affect Your Disability Benefits?
In most cases, disability payments from other sources do not affect your Social Security disability benefits. However, according to the SSA, the types of payments that can affect your Social Security disability benefits are workers compensation payments and/or another type of public disability payments. Workers’ compensation is payment made to a worker due to a job-related injury or illness. It may be paid by federal or state workers’ compensation agencies, employers, or insurance companies on behalf of employers. Public disability payments that may affect your Social Security benefits are those paid under a federal, state, or local government law or plan that pays for conditions that are not job-related. These public disability payments differ from workers’ compensation because the disability that the worker has may not be job-related. Some examples of public disability payments are: civil service disability benefits, military disability benefits, state temporary disability benefits, and state or local government retirement benefits which are based on disability.
If you are receiving disability payments from workers’ compensation or another public disability payment program, your and your family’s Social Security benefits may be reduced. In these situations, your Social Security disability benefit will be reduced so that the combined amount of the Social Security benefit you and your family receive plus your workers’ compensation payment and/or public disability payment does not exceed 80 percent of your average current earnings. (Note: the unreduced benefit amount is used for income tax purposes.)
What Payments Do Not Affect Your Social Security Disability Benefits?
The following payments are not considered when deciding if your Social Security benefit will be reduced:
· Veterans Administration benefits;
· Federal benefits, if the work you did to earn them was covered by Social Security;
· State and local government benefits, if the work you did to earn them was covered by Social Security;
· Private pensions or insurance benefits; and
· Supplemental Security Income (SSI) payments.
How Does the SSA Make The Reduction?
(1) Figuring Average Current Earnings
The SSA figures your “average current earnings” by using the highest of the following possibilities:
· The average monthly earnings SSA used to figure your Social Security disability benefit.
· Your average monthly earnings from any work you did (including self-employment) covered by Social Security during the five highest years in a row after 1950.
· Your average monthly earnings from work or a business during the year you became disabled or in the highest year of earnings you had during the five-year period just before you became disabled. (Divide the total year’s earnings by 12 to get the average monthly current earnings.)
All earnings covered by Social Security, including amounts above the maximum taxable by Social Security, can be used when figuring average current earnings.
(2) Figuring The Reduction
Your monthly Social Security disability benefit, including benefits payable to your family members, are added together with your workers’ compensation, or other public disability payment. If this sum exceeds 80 percent of your average current earnings, the excess amount is deducted from your Social Security benefit. However, the total benefits you and your family will receive will never be less than your and your family’s total Social Security benefits before they were reduced.
The reduction will last until the month you reach 65 or the month your workers’ compensation and/or other public disability payment stops, whichever comes first.
What You Must Report
You should advise the SSA of the following events:
* If there is a change in the amount of your other disability payments –
It is critical that you inform the SSA if the amount of your workers’ compensation or other public disability payment goes up or down. The change will probably affect the amount of your Social Security benefits.
* You receive a Lump-Sum Disability Payment
* You receive a Lump-Sum Workers’ Compensation or other disability payment to settle your claim; the amount of the Social Security benefits you and your family receive may be reduced. The reduction is calculated by prorating the lump sum over the number of months the workers’ compensation or other public disability benefit would normally have been made if you had not received the lump sum. The prorated amount is then added to the Social Security benefits you, and your family, are receiving. This sum is compared to 80 percent of your average current earnings in deciding if Social Security benefits must be reduced.