Written by:
Linda Cosme – Vice President of Disability Policy & Strategy, Citizens Disability
Can I Get Disability After a Workers' Comp Settlement?
Maintaining financial stability is a major concern for workers after becoming disabled. However, seeking disability benefits after receiving a workers’ compensation settlement is complicated and often time-consuming. Understanding how your benefits and workers’ compensation settlement interact is key to keeping yourself afloat after a workplace injury.
Understanding Workers' Compensation Settlements
Workers’ compensation provides benefits to employees who suffer work-related injuries or illnesses. This compensation covers medical expenses and lost wages, helping injured workers cover expenses when they cannot work.
In some cases, it’s necessary to negotiate a workers’ comp settlement rather than the monthly benefits. When this happens, you may receive the agreed-upon amount either as a structured or lump-sum settlement.
A structured settlement means the employee receives the negotiated amount in monthly installments rather than all at once. A settlement paid out in only one installment is called a lump-sum settlement. Whether you accept a structured or lump-sum settlement can affect your disability benefits due to the impact on your monthly income.
Overview of Disability Benefits
Two Social Security programs are potentially available to people with disabling conditions that prevent them from working.
Social Security Disability Insurance
Social Security Disability Insurance, or SSDI, is a disability benefit available to disabled people with qualifying work histories. To receive SSDI, you must have a disability that limits your ability to work and have accrued enough work credits to be eligible for the program. SSDI benefits are based on your highest 35 years of earnings, or lifetime average earnings for people with fewer than 35 years of work history.
Supplemental Security Income
Supplemental Security Income, or SSI, is a program available to low-income people with disabilities regardless of their work history. Many SSI recipients have lifelong disabilities and have never been able to work, and thus, have not accrued sufficient work credits to qualify for SSDI.
To qualify for SSI, you must have little to no household income and assets. Eligibility varies depending on the size of your family, whether anyone in your household works, and other factors.
Eligibility for Disability Benefits Post-Settlement
It’s possible to be eligible for disability benefits after receiving a workers’ compensation settlement. If you meet the individual criteria for the program you’re applying for, you may qualify for benefits.
However, securing disability benefits after a workers’ comp settlement isn’t always easy. You may be financially eligible for SSDI or SSI benefits, but the program will still need to determine whether you are considered disabled for benefits purposes. Providing comprehensive medical evidence to substantiate your symptoms and support your disability claim is critical to receiving SSDI or SSI in addition to your workers’ comp payout.
Impact of Workers' Compensation on Disability Benefits
A workers’ compensation settlement can affect your eligibility for benefits because settlements are considered income, and Social Security programs have strict income and asset limits. Therefore, your Social Security benefits may be reduced in proportion to your workers’ comp payments.
The SSA imposes an “offset” when determining if and by how much to reduce your SSDI benefits. Combined workers’ comp and disability benefits that exceed 80 percent of your current average earnings will result in a benefits reduction.
Some public benefits don’t affect your SSDI benefits. If you receive SSDI benefits, and Veterans Administration (VA) benefits or Supplemental Security Income (SSI), your SSDI benefit will not be reduced, there is no 80% offset for these programs
The SSA calculates your benefits offset using your average monthly earnings from one of three different periods of your career. Your current average monthly earnings are compared to your average monthly earnings from the highest-earning five years of your career and the single highest-earning year of your working career. The highest of these amounts is used to calculate your offset.
The nature of your workers’ comp settlement can also impact your disability benefits. A structured settlement in which you receive an agreed-upon amount of money each month will affect your benefits differently than a lump-sum settlement, potentially helping you avoid an offset.
Strategic Considerations Before Settlement
There are strategic considerations to keep in mind before agreeing to a workers’ compensation settlement.
Structured Settlements
Structuring your workers’ comp settlement over time can minimize the impact of settlement payments on your SSDI benefits.
When you accept a lump-sum workers’ comp settlement, the SSA calculates a monthly amount for you to receive based on your previous earnings or existing monthly workers’ comp benefits. A structured settlement can lower this amount because it clearly specifies how much money will be paid monthly. If you accept a settlement that states you are to receive $500 monthly rather than an SSA calculation of $1,200 monthly, the impact of your workers’ comp settlement on your benefits is significantly lower.
Never accept a settlement of any type without speaking with a workers’ compensation attorney.
Legal and Medical Expenses
The money you receive in a lump-sum settlement intended to reimburse you for legal and medical expenses you paid out-of-pocket can count toward your income for SSA calculations, unnecessarily increasing your benefits offset. It’s possible for the SSA to exclude this income, but it requires legal and medical documentation to prove the money was meant to cover fees.
An experienced workers’ comp attorney will draft a settlement agreement explicitly setting aside your legal and medical reimbursement from the rest of your settlement income. This money will be excluded from SSA calculations, minimizing the settlement’s impact on your benefits.
Timing of Applications
It’s important to apply for SSDI or SSI as soon as possible after receiving your workers’ compensation settlement. The disability benefits process commonly takes years, and most applicants are denied on their first try. Don’t risk financial trouble by waiting until your workers’ comp settlement is running out to file for benefits.
Application Process for Disability Benefits
The process of applying for disability benefits can be complicated, but here are the general steps:
- Initiating the Claim: When filing your initial application, you must complete the SSA’s application paperwork, gather extensive documentation of your disability, and demonstrate how it matches the SSA’s criteria for eligibility.
- Providing Medical Records: Detailed, comprehensive medical records are the single most important part of your SSDI or SSI application. You’ll need to request all your medical records from your health care providers covering at least 12 months prior to the date of filing or the date last insured, especially records and testing from doctors specializing in your condition. For example, oncologist for cancer, cardiovascular for heart disease, orthopedists for bone conditions, or endocrinologist for the treatment of diabetes.
- Navigating Appeals: The majority of initial disability benefits applications are denied. You can appeal an unfavorable or denied application with a Request for Reconsideration.
During reconsideration, a different DDS disability examiner and state agency medical consultant will review your initial application and any new medical records or evidence that you or your representative has submitted with the appeal. If the reconsideration is also denied, you can appeal and Request for a Hearing by an Administrative Law Judge (ALJ). If the ALJ issues an unfavorable decision, you can file a Request for Review of Hearing Decision at the Appeals Council. Finally, if you have not received a favorable outcome, an attorney can appeal the final unfavorable decision to a United States District Court. Be persistent and thorough in appealing your application. A certified disability advocate can help you through the appeals process and represent you in any hearings your case may require.
Work With a Disability Lawyer or Certified Advocate
Working with experienced professionals like the team at Disability Advice can help you maximize the chances of your claim for a successful outcome. Delays aren’t always predictable, and approval isn’t guaranteed. However, having an advocate on your side who’s worked extensively with the SSA and knows how to handle the application process can be the difference when applying for SSDI.
Frequently Asked Questions (FAQs)
Common questions we hear about receiving disability benefits after a workers’ compensation settlement include:
Can I Receive Both Workers' Compensation and SSDI Benefits Simultaneously?
Yes, it’s possible to receive both workers’ compensation and SSDI benefits simultaneously. However, receiving workers’ comp may decrease your monthly SSDI payment. Your workers’ comp settlement and SSDI benefit combined cannot exceed 80 percent of your average earnings before you became disabled.
How Does a Lump-Sum Settlement Affect My SSDI Benefits?
Receiving a lump-sum workers’ comp settlement rather than a structured settlement with monthly payouts doesn’t mean your SSDI benefits are unaffected. Rather, the SSA calculates the monthly amount you would have received from your lump-sum settlement and then offsets your SSDI benefits using that amount.
The language of your workers’ comp settlement plays a major role in determining how the SSA applies your benefits offset. Always talk to a workers’ comp attorney before accepting a settlement offer.
Will My Disability Benefits Increase After My Workers' Compensation Ends?
Yes, SSDI benefits will increase after your workers’ compensation ends. Once you’re no longer receiving the additional benefits from your workers’ comp settlement, your SSDI benefits will increase to the full amount you would have received if not for your workers’ comp benefits offset.
How Do Legal Fees From My Settlement Influence the SSDI Offset Calculation?
How legal fees from your workers’ comp settlement influence your SSDI offset calculation depends on the language surrounding legal fees in your settlement agreement. An experienced workers’ compensation attorney can help you draft a settlement in such a way that legal fees from the settlement don’t count toward the SSDI offset.
What Steps Should I Take if My SSDI Benefits Are Reduced Due to a Workers' Compensation Settlement?
If your SSDI benefits have been reduced due to a workers’ compensation settlement, you have options. Reach out to a disability benefits attorney who can help you understand your benefits reduction and do everything they can to mitigate the loss.
How Disability Advice Can Help
If you’re receiving a workers’ comp settlement and need assistance accessing SSDI or SSI benefits, Disability Advice is here to help. We can connect you with advocates and attorneys who can assist you through every step of the claims process, helping you get the benefits you need as quickly as possible.
Reach out to our team online today for your free legal consultation.
- Free case evaluation
- Assist with denied claims
- Ensure you have all documents
- Make the process easy for you
Written by:
Linda Cosme – Vice President of Disability Policy & Strategy, Citizens Disability
- Understanding Workers' Compensation Settlements
- Overview of Disability Benefits
- Eligibility for Disability Benefits Post-Settlement
- Impact of Workers' Compensation on Disability Benefits
- Strategic Considerations Before Settlement
- Application Process for Disability Benefits
- Frequently Asked Questions (FAQs)
- How Disability Advice Can Help
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“Professionalism at its best. From intake to getting my claim started, they are the ones you need. 100% recommend to everyone.”
Pablo P.
“Having never gone through this process before, it was very easy and straightforward. VERY professional and polite.”
Alan A.
“I had a great experience with my representative. She was very friendly and she made the process very easy. I’m glad I had the pleasure to work with her in filing my claim. She provided great customer service.”
Dana C.
“I was very nervous about reaching out for help with disability benefits. This experience was so much easier than what I thought it would be. They were understanding and supportive, and answered all of my questions. I would highly recommend them.”
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