Workers Compensation and
Social Security Offset
Feb. 23, 2022
If you are eligible for and receiving workers compensation benefits in Kansas and are also receiving Social Security Disability Insurance (SSDI) benefits, you may be subject to what is known as an “offset.”
The Social Security Administration (SSA) defines an offset in this way: “If you receive workers compensation or other public disability benefits, and SSDI benefits, the total amount of these benefits cannot exceed 80% of your average current earnings before you became disabled.”
This offset is certainly something to consider if you become disabled and receive payments from workers compensation.
The Kansas Workers Compensation Act (KWCA) had already made accessing and qualifying for benefits more difficult, but with the state’s subsequent adoption of the AMA’s 6th edition of its “Guides to the Evaluation of Permanent Impairment,” even more restrictions were placed on physicians in their evaluations of disability.
These two developments – the KWCA and the AMA updated guides – have been the subject of much debate and legislative advocacy by attorneys representing employees deserving of workers compensation benefits.
At Slape & Howard in Wichita, Kansas, we have joined with other legal groups in proposing changes to the KWCA to make the system more friendly for workers injured on the job or stricken with an illness that is work-related.
If you need to file a workers compensation claim or file an appeal for a denial of benefits, contact us immediately at Slape & Howard wherever you are in the state. We have the knowledge, resources, and experience to help you navigate the system.
How Social Security Calculates the Offset
The SSA bases its calculation of the offset for a dual SSDI/workers compensation recipient on what it calls the “applicable limit.” Once this limit is determined, you cannot receive more in benefit payments than the limit allows, and your SSDI will be adjusted downward to bring things into alignment.
The applicable limit is based on the higher of these two figures:
80% of the worker’s pre-injury income, known as “average current earnings,” or
The total of SSDI received by all family members of the recipient’s family in the first month of payment by workers compensation, known as “total family benefit”
Generally, the average current earnings will be higher, and the SSA will use that figure.
Calculating Average Current Earnings
The SSA takes the highest of one of three amounts to determine average current earnings:
The average monthly wage upon which SSDI is based
The “high five,” or the average monthly earnings from the highest five years in a row
The “high one,” or the average monthly earnings from a single calendar year, either the year of the disability onset or the highest average in the preceding five calendar years
The “high one” standard is the one usually employed.
How the SSDI Offset Works
Assume your average current earnings are calculated to be $4,000 a month. That would make you and your family eligible for $2,200 a month in SSDI benefits, but you also receive $2,000 a month in workers compensation benefits. This brings your total of benefits to $4,200, which is more than 80% of $4,000 (your average earnings), which computes to $3,200 a month. In this case, your SSDI will be reduced by $1,000 a month to bring your total benefits in line with the 80% ceiling of $3,200.
Lump Sum Settlements
If you arrange to convert your workers compensation benefits to a lump sum payment instead of a monthly stipend, the SSA will convert that figure into a monthly benefit. One way they do this is to take the monthly payment previously received and divide the lump sum by that amount.
For instance, if you were receiving $1,200 a month and then receive a $24,000 lump sum settlement, the SSA would work the math and figure that represents 20 months of payments ($24,000 divided by $1,200 equals 20), so any offset would be in effect for the next 20 months.
However, attorneys have been known to word lump sum settlements in a way that reduces or eliminates the offset. Suppose the lump sum recipient above was only 25 years old. His attorney could fashion the settlement to say that the recipient would get $50 a month in workers compensation benefits until age 65. That low monthly figure might reduce or even avoid any offset.
How Legal Counsel Can Help
If you have any issues with workers compensation in Kansas, you should seek legal advice and representation to fight for what’s due to you. The attorneys at Slape & Howard are on your side. We have helped countless others recover the compensation owed to them from an injury or illness sustained at work.
Remember, the workers compensation system is underwritten by insurance companies who are in the business to make money for themselves, not necessarily to help you in the way you deserve. We can deal with the insurers while you get back on your feet. If you need to file or appeal a workers benefit claim anywhere in Kansas, contact us immediately.
Also, you may qualify for SSDI while on workers compensation. There may be ways to reduce your exposure to an offset. If you’re applying for SSDI along with workers compensation, let us work with you to help maximize the benefits you can retain.