How workers’ compensation affects your Social Security benefits
More than 80% of the American workforce is covered by workers’ compensation insurance, a no-fault insurance paid by employers that provides medical care, wage replacement, and rehabilitation benefits to employees who suffer work-related injuries or illnesses.
While “disability payments from private sources, such as private pensions or insurance benefits, don’t affect your Social Security Disability Insurance (SSDI) benefits,” states the Social Security Administration, “workers’ compensation and other public disability benefits… may reduce your SSDI benefits.”
How workers’ compensation affects your Social Security benefits
The agency says that when the total amount that you receive from workers’ compensation or other public disability benefits, along with Social Security Disability Insurance benefits exceeds 80% of your average current earnings prior to becoming disabled, the excess amount will be reduced from your benefits. “Your Social Security benefit will be reduced until the month you reach your full retirement age, or the month your other benefits stop, whichever comes first,” states the SSA in a pamphlet on the subject.
This cap includes the SSDI benefits that you receive as well as benefits payable to your family members, in addition to your workers’ compensation or other public disability payments.
Benefits that will not cause a reduction in your SSDI benefit include Veterans Administration benefits, State and local government benefits if Social Security taxes were deducted from your earnings, and Supplemental Security Income (SSI).
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