Working professionals are often eligible for many different types of earned benefits. People hurt on the job may be able to apply for workers’ compensation benefits. Their employers carry coverage that can cover their medical expenses and replace their lost wages. Workers with severe injuries may qualify for a settlement as a lump-sum payment or in the form of structured payments. Working professionals with major medical challenges may also become eligible for Social Security Disability Insurance (SSDI) in some cases.
How can workers’ compensation benefits affect SSDI eligibility?
What do workers need to know?
SSDI benefits are a type of earned benefit rather than an entitlement program. Professionals have to have an adequate work history to qualify. They may be eligible even if they have valuable personal assets. They generally also need to have a debilitating medical condition that prevents them from maintaining any sort of gainful employment.
The debilitating medical condition that inspires a worker to apply for SSDI benefits might be a work-acquired medical condition. For example, a construction worker may have fallen from a significant elevation and sustained a traumatic brain injury that prevents them from continuing to work. In such cases, a workers’ compensation settlement could impact SSDI benefits.
Sizable settlements could reduce SSDI benefits
There are different types of workers’ compensation settlements. When injured workers receive a settlement, their workers’ compensation benefits could reduce the SSDI benefits that they receive. There is a workers’ compensation offset that applies.
The combined value of workers’ compensation payments and SSDI benefits should not exceed 80% of the professional’s prior average wages. If the sum of the benefits and settlement exceeds 80% of the worker’s prior income, the Social Security Administration may adjust their SSDI benefits to comply with the 80% rule.
In that regard, a lump-sum settlement could be a better option, as it may allow for larger SSDI benefits. However, there could be an offset that applies in the year that the worker receives their settlement funds. Typically, workers’ compensation settlements do not have any significant impact on income tax obligations, regardless of what type of settlement the professional receives. Those dealing with debilitating medical conditions caused by their employment often need help understanding their rights.
Those in need of SSDI benefits while receiving workers’ compensation have the right to obtain legal assistance throughout the application process. Retaining guidance when seeking SSDI benefits for a work-related medical issue can help professionals in multiple ways. They can focus on their physical recovery instead of on paperwork. They can also rely on a professional to advise them of their rights and help them optimize the benefits that they ultimately receive.
