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What are the effects of workers' compensation on SSD benefits?


When a worker is injured on the job, the first agency that the person turns to for benefits is workers' compensation insurance. Workers' compensation pays for medical expenses, lost wages and pain and suffering. It also compensates an injured worker for temporary and permanent disabilities that may have resulted from the work-related injury. However, it is important to remember that claiming worker's compensation can have its effects on the Social Security Disability benefits of that worker.

According to the guidelines set by the Social Security Administration, the sum of Social Security benefits and workers' compensation benefits must not be more than 80 percent of the individual's average current earnings before becoming disabled. Any amount in excess of this threshold is deducted for the individual's Social Security Disability benefits for the injury. However, the sum in this case includes earnings of all family members through employment or other public disability payment programs.

For example, if a worker earns $5,000 per month before becoming disabled, the person's total benefits from workers' compensation and Social Security Disability would be capped at $4,000. In a scenario like this, the worker and the worker's family would be entitled to $2,750 as Social Security Disability benefit per month. However, if that worker receives a monthly payment of $2,500 from workers' compensation, the person's Social Security benefits would be reduced by $1,050 to meet the aforementioned 80 percent limit.

Considering this, it is important for any worker who claims workers' compensation benefits to report changes in disability payments the person receives because the change has an effect on the individual's Social Security Disability benefits for injury. The same applies for both monthly and lump-sum payments. The reduced payments continue until the age of 65 years or the date the other benefits stop.

Source: Social Security Administration, "How Workers' Compensation And Other Disability Payments May Affect Your Benefits," Accessed on Oct. 24, 2014

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