Michigan workers comp lawyer explains how a workers comp settlement can increase your Social Security disability benefits.
Workers comp is a no-fault system and you don’t have to prove any negligence on the part of your employer to get benefits. Workers comp pays wage loss, vocational rehabilitation, and medical treatment. You can trade the future value of these workers comp benefits for a lump sum settlement. This is known as a redemption.
How to increase your Social Security disability benefits
You can get workers comp and Social Security disability benefits at the same time. Social Security will however reduce your monthly benefit if your combined workers comp and Social Security disability benefits exceed 80% of your average current earnings. The intent of this offset is to ensure that your combined benefits are not excessive.
An example of how the workers comp offset works
Bob Smith gets $3,000 per month in workers comp benefits. Bob Smith also gets $1,500 per month in Social Security disability benefits.
Social Security determines that Bob Smith’s average current earnings are $5,000 per month based upon his best year in the last five prior to his disability.
The combination of Bob Smith’s workers comp and Social Security disability benefits equals $4,500.00 ($3,000 + $1,500) and 80% of his average current earnings is $4,000.00 ($5,000 x .80).
Since Bob Smith’s combined workers comp and Social Security disability benefits ($4,500) exceed 80% of his average current earnings ($4,000), his monthly Social Security disability benefit is reduced by $500 per month.
Avoid the offset with a workers comp settlement
You can avoid this offset by settling your workers comp case for a lump sum payment. The law allows you to prorate the workers comp settlement over your lifetime reducing or in most cases eliminating the offset.
Using the example above, Bob Smith is 50 years old and has a life expectancy of 28.78 years according to the CDC. If Bob Smith settles his workers comp case for a lump sum payment of $200,000 then it can be allocated at the rate of $579.10 per month for his life.
Bob Smith has now eliminated any offset because his total monthly workers comp and Social Security disability benefits ($2,079.10) are below his average current earnings ($4,000). Bob Smith will now get a great workers comp settlement and his full Social Security disability benefits.
Get help from an experienced workers comp lawyer
The goal should always be to maximize the amount of benefits that you receive. You can get a lump sum settlement from workers comp and continue to get Social Security disability benefits.
To speak with one of our workers comp lawyers, call (855) 221-COMP for a free consultation. There is no fee unless workers comp benefits are recovered for you.
- Alex Berman is the founder of the law firm. He’s been representing injured and disabled workers exclusively for more than 30 years. Alex has helped countless people obtain workers comp benefits and never charges a fee to review a case.
- Photo courtesy of Creative Commons, by Dave Dugdale.