Would You Benefit From Both?
If you have been injured or become sick as a result of your employment, you may currently be receiving workers' compensation benefits. If your sickness or disability is going to be permanent or will last for an extended period of time, you may also qualify for Social Security Disability (SSDI).
You may be tempted to apply for SSDI while you are drawing workers' compensation so that you can double dip. Unfortunately, there are systems in place to keep you from profiting beyond a certain point. Here are a few things you may need to know.
Drawing Both May Create a Workers' Compensation Offset
When you draw temporary disability benefits through workers' compensation insurance in most states, you draw about 66% of your average current earnings (ACE) you were receiving at the time of your injury up to a maximum amount. You may draw more depending on your state and your employer's insurance company.
Once you apply and are approved for Social Security Disability, your benefits, as well as those your family members may be entitled to, will be added together with your workers' compensation benefits. Any amount that exceeds 80% of your average current earnings will then be deducted from your Social Security benefit.
In some cases, this can offset your Social Security benefit all the way to zero. This offset will continue until you reach your full retirement age, or until you are no longer eligible to receive workers' compensation or any other benefits.
Even if this is the case, there are other benefits to being granted Social Security:
You Will Also Qualify for Medicare When You Are Approved for Social Security Disability
Medicare can help to cover any of your medical expenses that are not covered under workers' compensation, which can be especially advantageous if you no longer have insurance benefits through work.
You Will Not Have a Delay in Receiving Your Benefits
Even if there is a complete offset of your Social Security benefits for a period of time, once you are no longer receiving these benefits, your Social Security will start immediately. You will not have to go without income during the application and approval process.
You Will Receive Any Cost-of-Living Increases That Occur During This Period
Annually, Social Security beneficiaries receive a cost-of-living adjustment (COLA). While a COLA is not guaranteed to occur, there have only been three times over the last ten years that it did not.
The increase in the cost of living means that your benefit will receive a raise. Even if your benefit is offset, you will be eligible to receive the increase. So when your benefit is restored, the increase or raise will be reflected in the amount you receive.
Drawing Both May Impact Your Taxes
As you are probably aware, in most cases, your workers' compensation benefits are not taxable. If you qualify to draw both and your Social Security benefit is offset, you will still receive a 1099 at the end of the year showing the taxable income that you would have received had you not been offset.
If you receive a 1099, it means that your non-taxed workers' compensation benefit may be converted to taxable Social Security income depending on your family's financial situation. A 1099 is something you want to ask your tax professional about prior to filing for your benefits.
If you have questions pertaining to your workers' compensation case or need help because you have already filed for and been denied Social Security disability benefits, contact Bahrie Law. We will stand up for your rights and help you get the compensation that you deserve.