Two of the largest government disability benefit programs are Social Security Disability Insurance (SSDI) and the Workers' Compensation program. One of the main differences between the two programs is that Workers' Compensation provides benefits for disabilities that arise out of employment activity while disabilities that occur out of the workplace can qualify for SSDI.
SSDI is administered by the Social Security Administration (SSA) and only covers long-term disabilities that prevent a person from being able to work for longer than one year. Workers’ Compensation offers coverage for long-term and short-term disabilities. There is a five month waiting period before SSDI benefits can take effect, whereas Workers' Compensation payments become available almost right away upon a worker's initial absence from work due to the injury or impairment.
If an individual turns out to be eligible for both, the two programs can both be paid but the total amount can't exceed 80% of the worker's monthly income. In most cases, the SSDI payment is reduced in order to keep the payment from exceeding the 80% maximum when coupled with the Workers Comp payment. This is known as the workers' compensation offset. In some states, through an arrangement with the federal government the workers' compensation payments are reduced, which is known as the reverse offset.
One thing that can be noted is that at age 65, a person who receives SSDI has their payments are converted to Social Security retirement benefits. Retirement benefits are not subject to the Workers' Compensation offset and will not be reduced.
Workers' Compensation settlements will often come in the form of a lump sum. The SSA will consider the lump sum to be in the form of ongoing payments. Without specific terms spelled out in your workers comp settlement, the SSA can the calculate the lump sum to extend over a period of weeks, months, or years. In some cases the period of the offset can last up to two years or more leaving little to none of your SSDI benefits payable for that time period.
Unless the terms of the settlement specify the structure of the payments or any deductions such as attorney fees this is most likely how the SSA will calculate your offset. This can vary from one state to another but in general, the structuring of your settlement could significantly affect your monthly income and the benefits you are allowed to receive through both SSDI and workers comp.
A Workers' Compensation Attorney will know how to structure the terms of your settlement to maximize the benefit to you and minimize any reductions of your payments. The attorney will often extend the duration of the settlement period to extend for a lifetime thereby lowering the monthly payment thereby reducing or eliminating the offset. Workers' Comp Attorneys will also know how to structure your settlement to have their fees taken out before the calculations for your payments are made, which can also reduce the amount of the offset.