There are many similarities between workers’ compensation benefits and social security disability insurance benefits (“SSDI”) at first glance, but they are very different. Your workers’ comp benefits can actually lower the amount that you receive in Social Security benefits. This is important to keep in mind so that you do not expect significantly more income than you might otherwise receive under either system.
Differences Between Social Security Payments and Workers’ Compensation
Both workers’ comp and social security benefits are designed to help those who cannot work. Workers’ comp is generally a short-term solution while social security disability benefits are often more long-term. The definition of “unable to work” differs under each system, so you might be able to receive workers’ compensation benefits, but not SSDI benefits, and vice versa.
SSDI is for employees who cannot work for one year or more, and it is a federally run program. Workers’ compensation is a state-run program that can cover both short-term and long-term injuries or disabilities. SSDI also has medical benefits, like workers’ comp, but they are not available until 24 months after you begin receiving SSDI benefits.
SSDI also requires that you have “work credits” to qualify. That generally means that you must have worked for roughly 10 years before becoming eligible for full benefits. There is no similar requirement in workers’ comp. Most workers are eligible for workers’ compensation on day one of their employment.
Workers’ Comp and SSDI Payments
SSDI benefits will be reduced if you also receive workers’ compensation. However, this reduction only applies where the new income goes over 80% of your “average current earnings” before your received disability benefits. In Massachusetts, you can receive up to 60% of your average weekly wage before your injury for your temporary total disability benefits. Permanent benefits can also be up to this amount as well. That means that SSDI benefits will cover an additional 20% of your average weekly wage, but they cannot be above this amount.
SSDI benefits and the average weekly wage under workers’ compensation are calculated differently, so that can affect your amount of benefits as well. For SSDI, the most common method uses the average monthly wage for your highest-paid calendar year for the past five years.
This formula often means that SSDI’s calculation results in a higher wage than you may be entitled to receive under workers’ compensation. That also means that you may end up with an amount higher than 80% of your wages from your current employment if you earned more money at a previous job in the past five years.
Minimizing the Offset Amount
You can avoid some of the offset amount between workers’ comp and SSDI benefits by doing one or more of the following things:
- Documenting exclusions like medical expenses, dependent payments, legal fees, and rehabilitation costs carefully
- Constructing a favorable lump sum settlement agreement
- Consider retiring early to avoid a workers’ comp offset
Your workers’ comp attorney can help you decide which, if any, of these methods can help in your unique situation. You want to maximize whatever benefits you can get after a work injury because this will help you support your family while you cannot work. Jim Glaser Law can help. Contact us for more information.