Finalizing the total benefits receivable for injured workers can be a complicated matter. Both workers’ compensation insurance agencies and the Social Security Administration (SSA) are concerned with how much financial benefit an injured claimant will receive, and in many states both will be offset in some manner.
Amounts that are paid monthly can also be calculated differently than with a lump-sum settlement application because the single payout ends the responsibility of workers’ compensation to pay the claimant on a monthly basis. The process can differ depending on the state, but workers’ compensation benefits are always calculated first before Social Security Disability Insurance (SSDI) process will take effect.
Determining Workers’ Comp Benefits
The first payment issued when an injured worker has been declared unable to earn a living due to a workplace injury will be determining how much the workers’ compensation benefit will be, which is capped at 80% of what the injured worker was earning at the time of the injury occurrence. This is done by either evaluating the prior five-year employment period earnings and averaging them, or by taking the highest one year of earnings and using it as the guideline for the 80% determination.
Whether or not a claimant is eligible for SSDI depends on the amount of money being received from workers’ compensation benefits.
Understanding the Applicable Limit
If the calculated monthly workers’ compensation amount is more than the “applicable limit,” then the SSA will deny an additional disability claim. This is because the benefit level of the workers’ comp payments is in excess of what SSA considers when approving a Social Security disability claim.
Additionally, there can still be some asset restrictions for those who are injured and under standard retirement age. When workers’ comp benefits are less than the applicable limit, then SSDI will provide the additional income benefits to bring the injured claimant to the threshold of the applicable income limit.
Lump Sum Settlement Inclusion
Many workers’ compensation claims are settled with lump sum payments when the insurance company wants to avoid monthly annuities. This is very common for injured workers who have high earnings levels, and it can impact a SSDI determination significantly. The SSA will take the lump sum payment and apply it across the time frame used to make the settlement offer, then dividing the total by the number of months payable according to claim records.
After the end of the workers’ compensation period, the claimant will then be allowed full SSDI benefits with no asset penalties. There are times when a lump sum will not reach the limit of 80% of the highest earning year as a workers’ compensation benefit award, which then would mean SSDI would provide the remainder based on the SSA monthly calculation across the workers’ comp benefit period.
Why Injured Workers Need Attorneys
The final benefit determination can be a complicated issue when injuries are borderline regarding permanent disability. Claimants who are approved for workers’ compensation benefits still face a challenge of proving to the government that the disability is total and permanent, which is always a deliberate process by the SSA. They take their time settling a disability claim because they know it’s always permanent in the case of SSDI.
In addition, every claimant may not be entitled to SSDI if they have not earned at least 20 Social Security credits during the past ten years. There are many rules the SSA uses when approving claims, and having an experienced attorney is vital.