Many injured workers are eligible for Social Security disability and/or long-term disability benefits in addition to workers’ compensation benefits. However, there are rules that limit how much of each type of benefit you can receive.

 Minnesota Workers’ Compensation Offset

An “offset” is the reduction of a benefit by the amount of another benefit.

Minnesota workers’ compensation temporary total (“TT”) disability benefits are not reduced by Social Security disability benefits.

Minnesota workers’ compensation permanent total (“PT”) disability benefits are reduced by Social Security disability benefits, but not until after you’ve received $25,000.00 in PT benefits (and only if the PT benefits and Social Security disability benefits are based upon the same injuries). Then, PT benefits are reduced by the amount of Social Security disability benefits.

If your workers’ compensation date of injury was before October 1, 1995, then there may “supplementary” benefits available to make up for that offset.

Social Security Offset

Federal law does not allow injured workers who are also eligible for Social Security disability benefits to receive more than 80% of their monthly average current earnings (“ACE”) in both Social Security (retirement and/or disability) AND workers’ compensation wage loss (TT and/or PT) benefits.

The ACE is a figure that the Social Security Administration (“SSA”) calculates by either averaging your highest consecutive 5 years of earnings OR by using the highest year of earnings in the 5 years prior to your disability onset date.

So, if you are receiving both workers’ compensation and Social Security disability benefits, and those benefits added together are MORE than 80% of your ACE, then your Social Security disability benefits will be reduced to keep your monthly Social Security disability and Minnesota workers’ compensation benefits at or below 80% of your ACE.

In calculating these amounts, the SSA will not only consider how much you are receiving in Social Security disability benefits but will also include any benefits your minor children are receiving as a result of your disability.

If you settled your Minnesota workers’ compensation claim on a lump sum basis, then there should be “Social Security” language in the Stipulation for Settlement that breaks down the lump sum into monthly amounts for purposes of calculating a possible potential Social Security disability offset for the duration of your life expectancy. Attorney’s fees should be left out of this calculation.

Social Security retirement benefits should not be reduced by workers’ compensation benefits. But, workers’ compensation benefits WILL reduce by any amount of Social Security retirement benefits.

Long-Term Disability Benefits

Long-term disability (“LTD”) benefits are generally governed by the terms of the LTD policy. Most LTD policies have provisions in the policy that require their insureds to apply for Social Security disability benefits if the insured has also applied with them for LTD benefits. This is because the policies also usually have provisions that will reduce the amount of LTD benefits by however much the insured also receives in Social Security disability benefits. This is a dollar-for-dollar offset, but most LTD policies will pay the insured a little something each month even if the Social Security disability benefit completely wipes out the LTD benefit (usually $100).

Many LTD carriers will require their insureds to sign a reimbursement agreement of some sort in which the insured promises to pay back the LTD insurer for any month in which they received both LTD and Social Security disability benefits. That agreement can apply retroactively – meaning, if you are collecting LTD benefits and then later qualify for Social Security disability benefits, any Social Security disability benefit back pay can be counted against you. *Keep in mind that any attorney’s fees you had to pay to someone in a Social Security disability claim should not be counted against you in calculating an offset against LTD benefits.

There isn’t any real way around any of these terms. Most people are not aware of them when they sign up for LTD benefits, but the LTD policy ends up being pretty much a sham if you end up qualifying for both benefits (which most do).