How Worker's Compensation & Other Disability Payments May Affect Your Social Security Benefits
Social Security Disability benefits are often offset or reduced by workers' compensation lost time payments and other public benefits for disabilities. Private disability benefits, such as from a pension or private health insurance, generally do not affect Social Security Disability (SSD) payments. Before applying for any type of disability benefit, a SSD recipient should check with the Social Security Administration or legal counsel.
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Workers' Compensation Benefits
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When a disabled worker receives both SSD benefits and workers' compensation lost time wages from a work related injury, it is possible that SSD payments could be reduced. The Social Security Administration will calculate a recipient's average current earnings from before the disability occurred. If SSD benefits and workers' compensation benefits exceed 80 percent of the average current earnings, then SSD benefits will be reduced so that the total earnings from combined benefits is 80 percent of average current earnings.
Other Public Disability Benefits
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Other benefits paid by local, state or federal governmental agencies can reduce SSD payments in the same fashion that workers' compensation benefits do. If the benefit is paid because of a medical condition causing a disability, the Social Security Administration can reduce SSD payments until the 80 percent threshold mentioned above is met. However, there are several important exceptions.
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Public Benefit Exceptions
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There are three important types of public benefits that will not affect SSD benefits. Money paid by the Veterans Administration to the recipient will not reduce the amount of SSD payments, even if the total amount exceeds 80 percent of the average current earnings. Additionally, if Social Security taxes are deducted from state or local disability benefits, then the benefit will not reduce SSD benefits. Finally, Social Security Income payments will not diminish the SSD amount paid.
Private Benefits
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When someone with a disabling medical condition collects benefits from a private source, such as a company pension, company paid short term or long term disability insurance, or even insurance purchased by the recipient, SSD benefits will not likely be reduced by the Social Security Administration. Private disability benefits are those for which you or your employer have paid out of your own funds and the Social Security Administration will not generally penalize you for stacking these benefits along with SSD benefits.
Reporting Changes in Benefits
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It is important to keep the Social Security Administration updated regarding other public benefits. If your other benefits, such as workers' compensation, end, notify the Social Security Administration so that your SSD benefits can be adjusted upward. The rules pertaining to the stacking of benefits can be complicated at best. If you have questions about disability benefits, contact your legal counsel or the Social Security Administration.
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References
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