How SSDI and Workers’ Compensation Work Together

Both SSDI and workers’ comp provide income if you’re unable to work due to a disability, but they come from different sources:

• SSDI is a federal benefit paid by the Social Security Administration.
• Workers’ compensation is a state-managed insurance program for work-related injuries or illnesses.

You’re allowed to collect both, but your combined monthly benefits cannot exceed 80% of your average current earnings before you became disabled.

The Offset Rule

If your combined SSDI and workers’ comp payments are more than 80% of your average pre-disability earnings, the Social Security Administration will reduce your SSDI benefits to stay within that limit. This is called the workers’ compensation offset.

Example:

If your average monthly earnings before disability were $4,000, the combined benefits from SSDI and workers’ comp can’t exceed $3,200. If your workers’ comp pays $2,500, your SSDI benefit would be capped at $700—even if you were otherwise eligible for more.

How Long Does the Offset Last?

The offset can last until:

• You reach full retirement age,
• Your workers’ comp payments stop, or
• Your SSDI benefits increase enough due to cost-of-living adjustments (COLAs) to eliminate the need for an offset.

What Types of Workers’ Comp Payments Count Toward the Offset?

The offset typically applies to:

• Ongoing periodic workers’ comp payments
• Lump-sum settlements (in many cases)

Lump-sum settlements may be prorated over time unless specifically structured to avoid the offset. It’s wise to work with an attorney if you’re negotiating a settlement and also receiving SSDI.