Workers’ compensation benefits and Social Security Disability (SSD) have a complex relationship with each other. The two programs have some similarities that cause confusion amongst potential recipients, because the requirements and benefits of both are actually very different. In addition, for a seriously injured employee already receiving Social Security at the time of his or her injury, their total combined benefit amount of Social Security and workers’ compensation will be subject to certain offsets.
Differences Between Social Security and Workers’ CompAlthough workers’ compensation and Social Security disability benefits are the nation’s two largest programs that provide cash and medical benefits to disabled workers, the two programs are quite different.
Workers’ compensation provides medical benefits and wage replacement benefits to workers who are injured on the job or contract an occupational illness. An employee is eligible for workers’ compensation benefits from their first day of work. Social Security Disability, on the other hand, applies to disabled workers under the age of 65 and their families, and is only available to individuals who have a substantial work history.
Workers’ comp can provide benefits for both short and long-term disabilities, and provides compensation for partial as well as total disabilities. By contrast, Social Security Disability is available only to workers with long-term impairments that preclude them from any gainful work, and regardless of whether or not the disability arose on the job. Worker’s comp benefits are adjusted accordingly if the employee is able to return to some type of suitable employment but earning less than they did before their accident. Meanwhile, Social Security disability requires that the person be unable to engage in any gainful activity because of a medically determinable mental or physical impairment that is expected to last at least one (1) year or result in death. Workers’ comp benefits are available after the employee has had to miss a week of work; Social Security disability benefits do not begin until after a five (5)-month waiting period.
Finally, workers’ compensation programs are both designed and administered by the states. In North Carolina, for example, our state’s Workers’ Compensation Act governs the program and the North Carolina Industrial Commission is in charge of processing employee claims. Workers’ comp programs vary across the states in terms of who is permitted to provide insurance, which illnesses or injuries are compensable, and the level of benefits. Meanwhile, Social Security Disability is a federally administered program with standardized rules and requirements.
In addition to these sometimes confusing differences, the calculation of a person’s total maximum benefits (SSD plus most other income, including workers’ comp) is complex and there are certain limits to it.
Offsetting Total BenefitIn 1965, the Social Security Administration began requiring that a person’s disability insurance benefits be reduced in certain circumstances so that overcompensation does not occur. Total benefits are reduced only if benefits payable to you and your family through SSD and workers’ comp exceed the higher of either:
This reduction can be made any month before the month the disabled worker turns 62 or 65, depending on when they became disabled and the date they became entitled to benefits.
In addition, sometimes a state’s workers’ comp program, or local, state or federal public disability plan or law will allow for lump sum settlements between the injured worker and their employer or insurance company. Lump sum settlements are a substitute for the periodic payments and are subject to the Social Security-Workers’ comp offset. In this situation, the settlement amount would be prorated to reflect the monthly rate that would have been paid if the lump sum award had not been made. However, the worker is allowed to exclude medical and legal expenses from the settlement amount subject to the offset.
Social Security Retirement Benefits and Workers’ CompIn addition, if a person filing for workers’ comp benefits is already receiving full retirement benefits under Social Security (unrelated to disability) after reaching full retirement age, their workers’ comp benefits can be reduced by 100 percent of their SS retirement benefit.
Despite all the good they do, Social Security and workers’ compensation benefits are complicated enough to understand on their own, and even more so when collected simultaneously. If you have a workers’ comp claim, it is vital to speak with an experienced workers’ compensation attorney who can deal with the NC Industrial Commission, your employer and the insurance companies so that you can focus on your recovery. This is even more important if you are already collecting Social Security benefits. Please contact Arnold & Smith, PLLC today for a consultation with one of our workers’ comp attorneys. We are a civil and criminal defense litigation firm in Charlotte, North Carolina and our dedicated attorneys are standing at the ready to fight for the compensation you deserve.