Workers' Compensation and Social Security Disability
People who have had Maryland work injuries must be extra cautious if they are receiving disability benefits from the Social Security Administration. Workers’ compensation benefits and social security disability benefits have a complicated interaction, and lawyers must be careful to ensure that the maximum amount of benefits continue.Reduction of Social Security Disability Benefits
42 U.S.C. §424a(a), Reduction of Benefits Based on Disability, provides the criteria:
If for any month prior to the month in which an individual attains the age of 65
(1) such individual is is entitled to benefits under section 223, and
(2) such individual is entitled for such month to
(A) periodic benefits on account of his or her total or partial disability (whether or not permanent) under a workmen’s compensation law or plan of the United States or a State
When that criteria is fulfilled, social security benefits can be reduced. If the claimant’s total Social Security benefits, workers’ compensation benefits, and public disability benefits are more than the higher of (a) 80% of the “average current earnings” before the disability began; or (b) the claimant family’s total Social Security benefit (before the reduction), then the offset of benefits continues to age 65.Calculating the Offset
There are three important numbers:
- Monthly workers’ compensation benefit (WC)
- Monthly Social Security disability benefit (SSD)
- Average current earnings (ACE)
The total of the first two numbers cannot exceed the 80% of the third number.
Here’s the calculation:
- Step 1: Calculate 80% of the ACE. This is the maximum allowable combined WC and SSD benefits.
- Step 2: Take the number from Step 1 and subtract WC. This is the maximum allowable SSD benefit.
- Step 3: If the SSD is greater than the number from Step 2: Take the number from Step 2 and subtract SSD. This is the amount that the SSD needs to be reduced by.
Some things to note in making these calculations:
- Amounts should be rounded down to the next dollar
- Lump-sum workers’ compensation settlements can still cause reductions in Social Security disability benefits. Here, the lump sum would be prorated to determine the monthly rate. Medical and legal expenses are excluded from this offset, however
- 42 U.S.C. 424a(a): Reduction of Disability Benefits
- 20 C.F.R. 404.408: Reduction of Benefits Based on Disability on Account of Receipt of Certain Other Disability Benefits Provided Under Federal, State, or Local Laws or Plans