As I explained in a previous post, the Social Security Administration will reduce or offset your Social Security check if your Workers’ Compensation check and Social Security check combined are more than 80 percent of what you were making before you became disabled. However, settlement can sometimes reduce or even eliminate the offset. We can do this by telling the Social Security Administration that your settlement is meant to be divided over your entire lifetime. When you divide a lump sum settlement over your entire lifetime, it appears to be a much smaller amount. This may lead the Social Security Administration to increase your Social Security check. The advantage of doing this is that you can sometimes get a lump sum settlement and still receive close to the same amount monthly you received before you settled your case. However, this is not always the case. We would need to do a careful calculation to determine how settlement would affect your Social Security check.
For an example of how this works, let’s consider the client who was previously making $30,000 per year and is now getting $300 per week in workers’ compensation benefits. As we described in our prior post, this fictional client could only receive a total of $2000 per month in Social Security Disability Benefits and Workers’ Compensation benefits combined (this is 80 percent of $30,000 per year). In this scenario, the Worker’s Compensation benefits would reduce this client’s Social Security Disability benefit to a maximum of $700 per month. Now, suppose after expenses and fees, this same client settled his case for $150,000 and was 45 years old at the time of his settlement. That would give him a life expectancy of 35.4 years based on current life tables. The Social Security Administration will allow us to divide up the client’s portion of the settlement by his life expectancy. In this case, that would make the weekly amount appear to be $81.48 per week or $353.08 per month. As a result, this client could now receive up to $1646.92 in Social Security Disability benefits rather than the $700 he could receive before setting his case. That’s an increase of almost $950 per month in this client’s Social Security Disability benefit.
As the above shows, sometimes there are factors outside of the Workers’ Compensation case itself that will affect whether or not it’s a good decision to settle your case. Settling your case can allow you to have a lump sum and with an increased Social Security check, keep your monthly pay close to the same as it was before you settled your case. However, it differs from case to case and these calculations can be complicated. Also, the Social Security Administration requires specific language in your Workers’ Compensation settlement documents in order to take advantage of this trick.
If you think your Social Security check is getting reduced because of your Workers’ Compensation check, give us a call and we’ll help you calculate your offset and how a settlement would affect your offset.
Social Security will not allow you to make more than 80 percent of what you were making when you were working. Sometimes when you combine your Workers’ Compensation check with your Social Security check, the total amount will go above 80 percent of what you were making when you were working. When that happens, Social Security will reduce (also known as offset) your Social Security check until you get below 80 percent of what you were making before you were disabled.
For example, if you were making $30,000 per year before you became disabled, 80 percent of your salary would be $24,000 per year or $2000 per month. $2000 would then become the most you could make in Social Security Disability and Workers’ Compensation combined each month. Now suppose you were receiving $1300 a month in Worker’s Compensation benefits. The difference between $2000 and $1300 is $700. Therefore, Social Security would likely reduce your Social Security check to $700.
Obviously, every situation is different. You might not have an offset or your offset might be even larger than the one described above. If you want help calculating your offset, we would be happy to help. You might have options to get rid of your offset. Specifically, if done right, settling your Workers’ Compensation case can sometimes reduce or totally eliminate your offset.
It’s not a good sign when the current budget director takes unsolicited shots at the SSDI program and the Americans who depend on it to survive.
In a recent interview, on the CBS program “Face the Nation,” Mick Mulvaney, President Trump’s budget director states, “Do you really think that Social Security disability insurance is part of what people think of when they think of Social Security? I don’t think so.” Mulvaney went on to say, “It’s a very wasteful program, and we want to try and fix that.”
As attorneys who have represented tens of thousands of individuals suffering from a variety of physical and mental impairments, we disagree. While there are flaws in every system, the Social Security Disability program protects and helps millions of Americans who can’t work due to their severe medical impairments and resulting symptoms and limitations. The Social Security disability program provides help for individuals who have spent years working and paying into Social Security, only to encounter an unexpected trauma or diagnosis such as a debilitating car accident; multiple sclerosis; degenerative disc disease; traumatic brain injury; major depression, or any number of other physical or mental impairments. The program provides a bridge for individuals who may only be out of work for 12 months, due to a cancer diagnosis and treatment, for example, before returning to full-time employment.
Mulvaney may be right, people may not think of Social Security disability insurance when they think of Social Security, but they should. People should think about the millions of Americans who depend on disability to survive. Individuals who may have never been able to work due to a condition they were born with or, individuals who worked their whole lives, paying their taxes each paycheck, and never thinking they would be out of work due to a health condition, rendering them unable to pay their bills and in danger of losing their homes. Disability benefits are an extremely important and necessary part of Social Security and to our country.