Michigan workers compensation lawyer explains how a settlement can affect your Social Security disability benefits.
A person who is receiving workers compensation can also apply for Social Security disability benefits. These are provided by the federal government to individuals who cannot work because of sickness or injury.
Social Security will reduce your monthly check if your combined workers compensation payments and Social Security disability benefits exceed 80% of your average current earnings. The intent of this reduction is to make sure that combined benefits are not excessive.
You can avoid or minimize this offset by settling your workers compensation case for a lump sum cash payment. This is done by prorating your settlement over life expectancy.
How the math works
If average current earnings are $2,000 per month, total combined workers compensation and Social Security benefits are limited to 80% or $1,600.
This means a person who is receiving $1,200 per month from workers compensation can only collect an additional $400 from Social Security. This is true even if the Social Security amount is supposed to be much higher.
If a person settles a workers compensation case, the lump sum payment can be prorated over his or her lifetime. For example, a 45 year old man has a life expectancy of 33.33 years. A $150,000 settlement would equal $375.03 per month.
Adding the prorated amount to an estimated full Social Security disability benefit of $1,100 equals $1,475.03 per month. This total is below the $1,600 threshold so the offset is eliminated.
Here is a screenshot of what this looks like on a Michigan redemption order.
It is a big decision to settle your workers compensation case. Many factors must be considered before you agree on the amount. We can help you find out the value of your case and maximize your total benefits.
Call (855) 221-2667 for a free consultation with our Michigan workers compensation lawyers. There is no charge unless you recover additional benefits or obtain a settlement.
– Alex Berman is the founder of Michigan Workers Comp Lawyers. Hes been representing injured and disabled workers exclusively for more than 35 years. Alex has helped countless people obtain workers compensation benefits and never charges a fee to evaluate a case.
– Photo courtesy of Creative Commons, by RambergMediaImages.