Maryland Workers’ Comp And Social Security Disability: How The Two Benefits Interact

A serious work injury can leave you unable to return to your job, facing mounting medical bills, and wondering how you are going to make ends meet. If you are exploring your options, you may have come across both Maryland workers’ compensation and Social Security Disability Insurance, commonly known as SSDI. Many people do not realize that it is possible to receive both at the same time. But there is an important catch: receiving one can affect how much you receive from the other.

Receiving Both Benefits Is Allowed, But There Are Limits

There is no law that prevents an injured worker from collecting workers’ compensation and SSDI simultaneously. These are separate programs with different eligibility requirements, and qualifying for one does not automatically disqualify you from the other.

That said, federal law places a cap on how much a disabled worker can receive in combined benefits. Under 42 U.S.C. § 424a, if a worker’s combined workers’ compensation and SSDI payments exceed 80% of their average pre-disability earnings, the Social Security Administration will reduce the SSDI payment to bring the total back down to that threshold. This reduction is commonly called the workers’ compensation offset.

The offset generally applies to workers under the age of 65. Once a person reaches full retirement age and transitions to Social Security retirement benefits, the offset typically no longer applies.

How Lump-Sum Settlements Can Complicate Things

One situation that catches many people off guard involves lump-sum workers’ compensation settlements. You might assume that accepting a one-time settlement payment closes the book on any offset concerns, but that is not necessarily the case.

When a worker receives a lump-sum settlement, the Social Security Administration generally prorates that amount to calculate a monthly equivalent. That prorated figure can still trigger or extend an offset, reducing SSDI payments even after the workers’ compensation case has formally closed. Certain costs, such as medical and legal expenses, may be excluded from the calculation, but the overall process is detailed and the stakes are significant.

Some factors that can influence how benefits interact include:

• The amount and structure of the workers’ compensation award or settlement
• Whether the settlement agreement specifically addresses how it should be prorated
• The worker’s average pre-disability earnings used to calculate the 80% cap
• Whether the worker is also receiving any other public disability benefits
• The worker’s age at the time benefits begin
• Whether dependent family members are also receiving Social Security benefits tied to the claim

Getting any of these factors wrong can lead to unexpected reductions in monthly income at an already difficult time.

Why the Details in Your Settlement Matter So Much

The language used in a workers’ compensation settlement agreement can have lasting consequences for SSDI benefits. How an agreement is structured, how costs are allocated, and how the settlement is described can all affect how the Social Security Administration interprets and applies the offset.

This is one reason why coordination between a workers’ compensation claim and a potential SSDI claim deserves careful attention from the beginning. Decisions made early in the process can affect benefit amounts for years to come, sometimes well into the future.

Speak with an Attorney Before Making Decisions

If you are dealing with a work-related injury that has left you unable to return to work, the financial picture can become complicated quickly. Understanding how workers’ compensation and SSDI interact is not something you have to figure out on your own. Our Baltimore workers’ compensation lawyers at Iamele & Iamele, LLP are here to help injured workers understand their situation and explore every avenue of financial recovery available to them. We encourage you to reach out and schedule a confidential consultation with us today.

Source:

ssa.gov/policy/docs/ssb/v65n4/v65n4p3.html