When you’ve waited months or even years and fought through denied claims, being approved for Social Security disability insurance (SSDI) is a wonderful feeling. But if your disability was caused at work, and you have also been earning money from a workers’ compensation claim, you may be alarmed at the seemingly small amount owed to you by the Social Security Administration (SSA).
What’s likely to blame for the decrease in benefits is your workers’ compensation payout, which the SSA takes into account when determining your monthly household income. So, while being approved for disability benefits is usually a good thing, the monthly increase compared to your workers’ compensation can be minimal in certain cases.
Let’s take a look at the income considerations that play a role in determining the amount on your monthly check from Social Security disability insurance benefits.
Calculating SSDI Offsets
The SSA uses a general formula to calculate the maximum amount of income a disabled worker can receive from both workers’ compensation and SSDI: 80 percent of the amount the person earned while they were employed. If the injured worker made $2,000 per month, the maximum amount of SSDI and workers’ compensation benefits he or she could receive would be $1,600.
Continuing the example, if that injured worker was set to receive $900 each month from their settled workers’ compensation claim, they could only get a maximum of $700 a month from Social Security disability insurance benefits (DIB). Even if they were approved for, say, $1,000, their monthly check would be $700 until the workers’ compensation claim expired or otherwise changed.
The difference between the approved monthly amount and actual earned income is the offset. Though the 80 percent limit cannot be altered, people receiving workers’ compensation who plan on applying for DIB can take steps to help minimize their offset costs.
Minimizing DIB Reductions
When evaluating how much monthly assistance approved DIB recipients will receive, the SSA will look through all other monthly income they may have. This includes SSI, workers’ compensation, and substantial gainful activity (SGA). Any monthly income beyond the limits set by the SSA for DIB will result in reduction or denial of your claim.
When you settle a workers’ compensation claim, the distribution and purpose of the lump sum affects any additional benefits you may receive from SSDI. For example, if you’re set to receive $15,000 for 24 months, your monthly income from workers’ compensation would be $625, which is more likely to affect your disability income than if the same amount were spread out over 48 months. Since the SSA calculates offset according to monthly income, increasing the total time of payout of a workers’ compensation claim can reduce the offset or even eliminate it.
In addition, the SSA excludes amounts of workers’ compensation claims designated to be used for medical or legal expenses. In the above example claim, let’s say the disability attorney takes $3,750 for his or her contingency fee (25 percent). The SSA won’t count that amount toward the offset cost, which means you won’t be penalized for benefits that help pay for necessary costs.
This language needs to be written into the workers’ compensation claim before it’s settled, however. Otherwise, in some cases, the SSA may not be able to determine what amount of the claim is earmarked for medical and legal fees. That’s why it’s important to consult with an attorney who can communicate your needs for both your workers’ compensation and SSD claims.
Guidance from an Indiana Disability Attorney
The good news for people seeking both workers’ compensation and SSDI is that there are Indiana Social Security disability attorneys ready to help you navigate this tricky time. When you call Hensley Legal Group, you take the first step toward getting peace of mind. Our disability attorneys will take care of all the paperwork and keep you on track to receive the most from your claims.
Your conversation with us is free. Feel free to call or contact us online today.