How to Figure Out How Much Your SSD Benefits Are Being Reduced by Workers' Comp Benefits

    People frequently ask me about the impact of Social Security disability benefits on workers' compensation benefits.  Often individuals do not receive their full Social Security disability benefits because the benefits are offset in whole or part by workers' compensation benefits.

    To calculate your offset, you first must contact the Social Security Administration and ask them to tell you your ACE (Average Current Earnings) and PIA (Primary Insurance Amount). Your ACE is calculated based on earnings before your onset of disability. Your PIA is the amount you would receive if you elected to retire at normal retirement age. 

    The upper limit of compensation you may receive is either 80 percent of your average current earnings or the total amount of Social Security disability benefits received by all members of the your family in the first month that workers' compensation benefits is received, which is called the “total family benefit.”  For most SSDI recipients, 80 percent of Average Current Earnings will be the higher figure, and that will be the one that Social Security uses to calculate the offset.

    Assuming that 80 percent of your Average Current Earnings (ACE) is the higher number, you may not receive more than 80 percent of your ACE in combined workers' compensation and Social Security disability benefits.

    Let's give an example.

    Assume that your ACE equals $3,000.00 and your PIA Amount is $1,000.00. In your case, 80 percent of your ACE, $3,000.00, is $2,400.00.

    Let's assume that you are receiving $500.00 a week in workers' compensation benefits.  This translates into monthly workers' compensation benefits of $2,166.67 ($500.00 per week times 52 weeks equals $26,000.00 divided by 12 months equals $2,166.67).  Remember that you cannot earn more 80 percent of your Average Current Earnings.  Because you are receiving $2,166.67 in monthly workers' compensation benefits, your monthly Social Security disability benefits will be $233.33.  (Average Current Earnings $3,000.00 times 80 percent equals $2,400.00 minus $2,166.67 monthly workers' compensation benefits equals $233.33 in Social Security disability benefits).

    If you were not receiving workers' compensation benefits, you would receive your PIA, or $1,000.00.  The difference, therefore, is $766.67. In other words, because you are receiving workers' compensation benefits, your Social Security disability benefits are $766.67 less than they otherwise would be.

    Under most circumstances, if you settle your workers' compensation case, you can probably get a substantial increase in your Social Security disability benefits, provided there is a large offset.

     For more information from the Social Security Administration, click here.