Worker's Compensation Benefit

SOCIAL SECURITY DISABILITY BENEFITS FOR INDIVIDUALS WHO RECEIVE WORKER’S COMPENSATION BENEFITS

Worker's Compensation BenefitIf an individual receives Worker’s Compensation benefits, their entitlement to Social Security Disability benefits may be reduced or eliminated.  An individual can only receive 80% of their prior earnings in the combination of Worker’s Compensation cash benefits and Social Security Disability benefits.

 

How the Social Security Administration (SSA) Determines Prior Earnings

The SSA utilizes a variety of formulas to determine prior earnings. Generally, they use the highest of following numbers:

  1. The highest yearly income of the five calendar years immediately prior to the onset of disability and entitlement to disability benefits.

  2. An average of the five highest consecutive years of an individual’s entire work history.  

This amount is called an Average Current Earnings (ACE) and is computed on a monthly basis. An individual is allowed to collect 80% of that monthly ACE amount in the combination of Worker’s Compensation (or public disability) benefits.  

 

How the Worker’s Compensation Offset Affects Social Security Disability Benefits

Here’s an example:

Calculate Worker’s Compensation benefits (2)First, calculate the 80% maximum amount of benefit. If an individual’s Average Current Earnings is $3,000 per month ($36,000 per year), 80% of Average Current Earnings would be $2,400 per month.

Next, add the their monthly Social Security Disability benefits and their Worker’s Compensation benefits. If the individual is receiving $1,500 per month in Workers Compensation benefits and $1,500 in Social Security Disability benefits, their total monthly benefit is $3,000.

Then, subtract the 80% maximum amount of benefit from the total monthly benefit to get the offset amount. In this example, $3,000 minus $2,400 equals a $600 offset.

Finally, subtract the offset amount from the monthly Social Security Disability benefit. The $1,500 Social Security Disability benefit would be reduced by $600, and the monthly benefit equals $900.  

 

If you have questions about your Social Security benefits or if you qualify for benefits, contact us at Match & Farnsworth a free evaluation.

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