In brief, the answer is “yes,” you can receive both Social Security Disability Insurance (SSDI) benefits and workers’ compensation benefits at the same time. However, there is an offset that reduces your SSDI payments so that the combined payment from SSDI and workers’ compensation is no greater than 80 percent of your income prior to when you became disabled. Note that this is based on how the Social Security Administration determines your previous “gross income,” not how the Louisiana Workers’ Compensation Commission defines it. This article provides a quick discussion of these issues.
New Orleans SSDI Attorneys — Differing Ways of Defining Previous “Income”
In general, the SSA uses your long-term earning trends to calculate your past “income.” To further complicate matters, the SSA has three different methods, one based on your lifetime earnings, one based on the last five years, and one based on your wages, salary, and earnings in the 12 months prior to your disability. See 42 U.S.C 424(a)a. This is actually good for the SSDI claimant since the SSA chooses whichever calculation results in the largest “average income.”
By contrast, for Louisiana workers’ compensation claims, payments are, in general, calculated your earnings in the month (four weeks) before the accident or another event that caused your disability.
New Orleans SSDI Attorneys — the Offset and Workers’ Compensation Lump-Sum Payments
As noted, while a worker might receive both types of benefits, there is an offset required by federal law which limits the combined benefit to 80 percent of a worker’s average income as determined by the Social Security Administration. This is accomplished generally by reducing the amount of the SSDI payment. This is the so-called “offset.” Note that the offset generally favors the federal government. The workers’ compensation insurance carrier pays full benefits, but the SSDI is reduced. There is an exception where the worker is deemed permanently and totally disabled as a result of the workplace accident. In that case, the offset is reversed. Full payment is made by SSDI and the workers’ compensation benefit is reduced. This nuance is not particularly important to the worker since, in the end, the combined amount is still limited to 80 percent of the worker’s income.
However, these issues become VERY important if there is a lump sum payment made as part of a workers’ compensation settlement. Lump-sum settlements are very common and are routinely approved by the Louisiana Workers’ Compensation Court. But just as routinely, the SSA treats such lump-sum settlements as a replacement for monthly benefit payments. As an example, if the lump-sum payment is $120,000, the SSA might deem that as equivalent to $1,000 per month paid over 10 years. Being deemed “monthly payments” in this manner would then allow the SSA to reduce monthly SSDI payments by $1000 per month as to come within the 80 percent limit of the worker’s previous average income.
To reduce the effects of the offset, it is important that the settlement agreement — and the court’s order — specify how the lump sum is being calculated. If some part of the lump sum is being paid to cover medical expenses, then such should be specifically itemized in the agreement and order. Then, whatever is being paid for lost wages should be specified in terms of rate paid, the periods used (weekly, monthly, annually) and the total number of periods that the lump-sum settlement is intended to cover.
The best practice is to specify that the lump-sum amount for lost wages is intended to cover the remainder of the worker’s expected future employment. This should be based on actuarial tables, economic modeling, and on present-value of wages paid now. A long coverage period — the worker’s remaining work-life — creates the smallest monthly or other periodic payment. Generally speaking, if done and documented correctly, the SSA will use the settlement agreement and the court’s order in its calculations. In the end, a lump-sum payment will still result in an offset — reduction of the monthly SSDI payments — but the settlement agreement and court order can minimize the amount of the offset.
As can be seen, it is very important to have skilled and experienced New Orleans SSDI counsel to provide advice and legal assistance if you have a situation involving both SSDI and workers’ compensation.
New Orleans SSDI Attorneys — Reason for the Offset
In general, the reason that an offset is applied in cases of disability and workers’ compensation is to prevent “double recovery” by the disabled workers. Some understanding of this is gained by looking to the different rationales for the different programs. As many know, workers’ compensation programs are for workers who are injured on the job. The workers’ compensation system was put into place to put an end to complex and ongoing litigation by workers who were injured.
A worker who is injured at work is not allowed to sue in a court of law for compensation for the injury. Rather, he or she is eligible for workers’ compensation benefits. Part of the “social bargain” is that the worker is entitled to benefits regardless of fault (unless the accident was deliberate or intentional). This eliminated long litigation periods over who or what caused the accident — good for businesses — and workers received nearly automatic payments that helped with medical care, recovery and lost wages — good for the workers. Workers’ compensation programs are run by the States.
By contrast, SSDI is run by the federal government and is a program intended to help those who are unable to work for whatever reason, not just because of a work-related injury or accident. To allow a worker to recover both benefits would allow a “double” recovery and defeat some of the purposes behind both programs.
It is also important to remember that not all injured workers will be eligible for SSDI. To qualify for SSDI, the worker must be unable to engage in “substantially gainful activity.” Being injured at work does not necessarily mean that you cannot engage in any type of work. Yes, maybe you can no longer do the work you were doing. But you may be able to other types of work. Under those circumstances, you are not considered “disabled” by the SSA even though you might receiving workers’ compensation payments.
New Orleans SSDI Attorneys: Contact Ascend Disability Lawyers, LLC Today
For more information, contact the proven New Orleans SSDI lawyers at Ascend Disability Lawyers, LLC. If you have been disabled by a workplace injury, we can help you maximize your chances of success in obtaining SSDI benefits and can offer help with respect to any offsets. We have years of experience helping New Orleans and Louisiana disabled workers obtain their SSDI benefits. Contact us via email or by calling (855) 631-2544.