After a serious workplace injury, you may suddenly find yourself worrying about how to pay your bills, cover medical costs, and replace the income you and your family rely on. That concern is real for many South Carolinians, especially for injured workers who cannot return to their jobs right away or at all. In many cases, it is possible to receive both workers’ compensation and Social Security Disability benefits, but coordination rules apply, and mistakes can reduce the total amount you receive.
At Joye Law Firm Injury Lawyers, we have helped injured workers secure meaningful financial recovery through both programs. In one case, Managing Partner Ken Harrell represented a diesel mechanic in a workers’ comp claim. The man suffered from repetitive stress injuries which required surgeries in both of his arms. Harrell secured a $156,000 workers’ compensation settlement and structured the agreement to protect the client’s eligibility for a higher monthly Social Security Disability payment. In another case, our team helped a mechanic who fell from an elevated platform obtain a $127,000 workers’ compensation settlement, which included a Medicare set-aside account to cover future medical care related to the injury. We also assisted him in successfully securing Social Security Disability benefits to help protect his long-term financial stability.
Read on to learn how workers’ compensation and Social Security Disability work together, who qualifies, how offsets apply, and how to protect your full benefits under federal and South Carolina law.
How Workers’ Compensation and Social Security Disability Interact
Workers’ compensation and Social Security Disability are two separate programs with different purposes. Workers’ compensation is a state-based system that provides benefits to employees injured on the job. On the other hand, Social Security Disability Insurance (often called SSD or SSDI) is a federal program run by the Social Security Administration. It provides income replacement for those who have become disabled and are unable to work due to a disability, regardless of how the injury occurred. SSD benefits are based on the recipient’s earnings record and may also include coverage for certain medical expenses and physical rehabilitation services.
Because both programs replace income, federal law limits how much you can receive when benefits overlap. This limit is known as the offset rule. The goal is to prevent combined payments from exceeding a set percentage of your pre-injury earnings.
Even with offsets, many disabled workers still receive meaningful combined benefits. The structure matters, especially if you receive a lump sum workers’ compensation settlement.
Many of our most seriously injured workers’ compensation clients can also receive Social Security disability benefits. Injured workers may end up applying for SSD because their permanent physical restrictions due to their injuries (combined with a host of other factors) make it impossible for them to hold down a job.
For example, imagine that you are a 55-year-old who has worked in the construction industry for nearly 40 years. You hurt your back while working and you end up having a multi-level lumbar fusion surgery. At the end of your treatment, your surgeon places a number of permanent physical restrictions on you, including lifting no more than 25 pounds.
Your workers’ compensation benefits should cover the cost of your medical treatment and partial wage replacement during recovery. However, it won’t come as a surprise to anyone that most construction companies have little use for a worker who can’t lift more than 25 pounds, and it would be difficult at that age to transition to a new industry in which you have no experience.
With these facts, our law firm would certainly pursue a claim for total and permanent disability benefits under the South Carolina Workers’ Compensation Act.
Should I Apply for Social Security Disability Before or After a Workers’ Comp Settlement?
You may qualify for both programs if all of the following apply:
- You suffered a workplace injury or occupational illness.
- You are unable to work for at least 12 months or face permanent disability.
- You earned enough work credits under Social Security rules.
- You meet the Social Security Administration’s definition of disability.
Receiving benefits from one program does not block a claim under the other. We usually advise our clients to hold off on applying for SSD benefits until their workers’ compensation case is settled. Why do we do that? Applying for Social Security Disability Insurance benefits can significantly hamstring any efforts to maximize someone’s settlement in a workers’ compensation case as a factor in many workers’ compensation settlements is the injured worker’s projected future medical expenses. If an injured worker has applied for Social Security disability, the medical coverage component of the workers’ compensation case cannot be settled unless a Medicare set-aside account (MSA) is established. How a MSA works is a complicated issue that will not be addressed in length here but suffice it to say that not having to deal with the issue of a MSA can sometimes help us procure a larger workers’ compensation settlement for our clients. Also, if you are receiving weekly workers’ compensation benefits, the amount you would receive from Social Security would typically be very low because Social Security will get a full credit for the benefits being paid as part of the workers’ compensation claim.
Again, applying for SSD benefits while your workers’ compensation case is pending limits our ability to maximize your workers’ compensation case by settling it on a clincher basis. A clincher settlement is a universal settlement that resolves ALL of your entitlement to further benefits under the Workers’ Compensation Act, including future medical care.
In many instances, a primary driver of the final settlement figure in workers’ compensation cases is the projected future medical costs the injured worker is likely to incur.
How the Offset Rule Limits Combined Disability Payments
Federal law caps combined disability payments at 80 percent of your average current earnings. Average current earnings often come from your average monthly wage or average weekly wage before the injury.
If your workers’ compensation payments plus SSD payments exceed that limit, Social Security reduces SSD benefits. This reduction is called a federal offset. Workers’ compensation benefits are not reduced. Only SSD payments change.
Example:
If your average current earnings equal $4,000 per month, your maximum combined benefits equal $3,200. Workers’ compensation pays for partial wage replacement benefits at 66⅔% of an individual’s average weekly wage up to the limit set each year. With an average of 4.35 weeks per year, workers’ compensation would pay $2,900 per month, meaning the maximum SSD benefits would only be $300 per month based on this example. *
Understanding this calculation helps protect long-term security disability benefits, especially in settlement planning.
