Social security benefits paid to Americans can be retirement benefits or disability benefits, the latter requiring medical chart review among other processes to determine eligibility. Workers may be eligible to receive workers’ compensation benefits in addition to social security disability benefits if they have work-related injuries or illnesses. But workers may not be able to receive the entire amount of social security and workers’ comp benefits at the same time.
Other Benefits and Their Impact on Social Security Benefits
If a worker receives disability payment from private sources such as private pensions or insurance benefits, it will not affect his/her social security disability benefits. However, public disability payments such as workers’ compensation, other disability payments such as those paid by a federal, state, or local government and are for disabling medical conditions that are not job related (civil service disability benefits, state temporary disability benefits, state/local government retirement benefits that are based on disability) may affect your social security payments.
Generally, Social Security requires that SSDI or social security disability insurance benefits be reduced so that the total monthly amount a disabled worker receives is not more than 80% of the amount he/she earned when they were fully employed. Disability programs such as workers’ compensation, also granted only after a thorough medical chart review, vary from one state to another and therefore rules about how Social Security calculates the reduction or offset can be complicated.
There are some public disability payments that don’t have an impact on social security payments. They are:
- Veterans administration benefits
- State and local government benefits, if taxes have been deducted from your earnings
- SSI or supplemental security income
Applicable Limit and Average Current Earnings
Social Security first determines the “applicable limit” – this is the maximum total monthly amount of combined benefits that a recipient can receive under federal law (average current earnings). To calculate average current earnings, Social Security takes the highest one of the following 3 amounts.
- Average monthly wage that your SSDI benefit amount is based on or un-indexed primary insurance amount.
- The average monthly earnings from the highest 5 years in a row.
- The average monthly earnings from a single calendar year, either the year the disability began or any one of the 5 calendar years before that year.
For most SSDI recipients, the SSA finds average current earnings by using the last test in the above list.
When a claimant gets money exceeding the applicable limit in any given month, Social Security offsets SSDI in the amount required to restore the total to the applicable limit. The SSA (Social Security Administration) gives the following example.
- Take the case of a worker whose average earnings were $4,000 a month.
- The worker, his/her spouse, and their two children are eligible to receive a total of $2,200 a month in Social Security disability benefits.
- They also receive a $2,000 a month from workers’ compensation.
- Since the total amount of benefits the worker would receive is $4,200, which is more than 80% ($3,200) of his/her average current earnings ($4,000), the family’s Social Security benefits will be reduced by $1,000 ($4,200 – $3,200).
- The worker’s social security benefit will be reduced until he or she reaches age 65, or the month his/her other benefits stop, whichever comes first.
- The benefits will continue to be reduced until the worker reaches full retirement age.
Notify Any Change in Disability Payments Promptly
The SSA requests all disability benefit recipients to notify them if there is any change in the amount of their other disability payments or if the benefits stop. This is important because any such change is likely to affect the amount of their social security benefits. Being active in the field providing medical records review services to social security attorneys, we understand that social security beneficiaries can avoid any unintended consequences that an unanticipated change in benefits can bring by being financially prepared. The SSA has a benefits planner webpage (https://www.ssa.gov/planners/) where they provide information about your options for securing your future.