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Settlement Impact on Social Security

PA Workers Compensation Settlement Impact on Social Security

Are you thinking about settling your PA Workers Compensation case but worried about the settlement impact on social security?  Receiving workers’ compensation can impact the amount of your disability payments under Social Security.  Of all Social Security beneficiaries, nearly one-fifth also have some connection to workers’ compensation programs.  When the combination of workers’ compensation and Social Security Disability payments would exceed 80% of the worker’s average earnings, the Social Security benefit is reduced by such amount as necessary to limit the total of payments to that 80% of earnings.   See Article “Alleged Social Security Overpayments.”

There are three different methods Social Security can use in order to properly determine the amount of the worker’s average earnings.  When the workers’ compensation payments are regularly paid, it is easy to determine what the effect on Social Security will be.  However, there are two instances where the injured worker may be caught by surprise.  The first occurs when the employer does not initially pay the workers’ compensation claim, but the claim is later awarded, along with back workers’ compensation benefits.  In this instance, Social Security may determine that the combined amounts representing past months exceeded 80% of average income, and assess the injured worker with an overpayment of Social Security benefits.

The second way this occurs is when a workers’ compensation claim is settled for a lump sum payment.  When a worker’s compensation settlement is made, the lump sum is prorated to reflect the monthly rate that would have been paid if the settlement was not paid as a lump sum.  Current law permits the proration of the lump sum settlement over the course of the injured worker’s expected lifespan, which can minimize the chances of a reduction in Social Security Disability by lowering the possibility of reaching the 80% threshold for any month. However, the appropriate language must be included in the settlement agreement in order to be certain that Social Security prorates the lump sum in this fashion.  Therefore, it is best to contact an Experienced Pennsylvania Workers’ Compensation Attorney prior to settling your claim.

Ira H. Weinstock, P.C. is located in Harrisburg, PA and serves clients in and around Central Pennsylvania. Contact our experienced Harrisburg attorneys today, we can travel if necessary.

800 North 2nd Street, Harrisburg, PA 17102
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