A disability can have a tremendous impact on a person's life both physically and financially. If you are disabled and are entitled to worker’s compensation benefits, it is crucial that you understand how these two entitlement programs affect one another. It is possible to receive both workers' compensation and Social Security benefits at the same time. However, there is a catch. Social Security disability does not want the combined benefits from workers' compensation and Social Security to be equivalent to what an individual was earning before becoming disabled. This would create an incentive that the government wants to avoid. If this happens, Social Security has a rule that will reduce its benefits so that the combined Worker's Compensation and Social Security benefits would be no more than 80% of an individual's previous "average monthly earnings".
For example, let's say that John Doe's "average monthly earnings" were $2,500 before he became disabled. 80% of his "average monthly earnings" would told to $2,000. Let's also say that John Doe's Worker’s Compensation benefits averages $1,200 per month. His Social Security benefits averages $1,000 per month. The combined benefits total $2,200. The combined benefits from both entitlement programs would be greater than 80% of his "average monthly earnings". As such, Social Security would reduce John Doe's benefits by $200. John Doe's Worker's Compensation and Social Security benefits would then total $2,000 which is within 80% of his "average monthly earnings" before becoming disabled.
The good news is that the government takes a generous approach when coming up with a person’s “average monthly earnings”. For most people, Social Security will look at the average monthly earnings for the year that the individual became disabled and the previous five years before that. Social Security will then use the best "average monthly earnings" within those time periods.
For example, let's say that John Doe's average earnings for three years prior to becoming disabled was only $1,000 a month. Two years before that, however, he averaged $5,000 a month. Social Security would find that his "average monthly earnings" is $5,000. 80% of his "average monthly earnings" would told to $4,000. As described in the previous example, the combined total of John Doe's Workers Compensation and Social Security is $2,200. In this instance, Social Security would NOT reduce John Doe's benefits. The combined benefits from both entitlement programs ($2,200) would be less than 80% of his "average monthly earnings" ($4,000).
Many times, Workers Compensation claimants are given the opportunity to settle their claim. How an attorney structures settlement can have a significant impact on that person's Social Security benefits. If you have any questions or concerns about your legal rights to obtain Social Security benefits, you may want to speak with an expert. To set up an appointment for a free consultation, call the Packard law firm at (210) 340-8877.