Written by attorney James Christian Carpenter

The Interplay Between Workers Compensation, Social Security and Unemployment in Minnesota Part 2

Social Security Disability Insurance Eligibility

To qualify for SSDI benefits, an individual must have an impairment that prevents him or her from working that also meets the Social Security Administration's definition of disability. According to the Social Security Administration, an adult is disabled if he or she has a medically determinable physical or mental impairment that:

Results in the inability to do any substantial gainful activity that is expected to result in death or has existed or is expected to exist continuously for longer than one year.

SGA is currently defined as job paying less than $1,000 per month gross.

We prove people are disabled by medical records and the doctor’s restrictions. Detailed restrictions are very important to winning these claims. Generally, it is easier for workers who are over 50 years old to get social security. At 55, the standard is easier to meet. It is also easier for people to qualify who have less than a high school education and/or are illiterate or unable to communicate in English.

I generally do not recommend an employee apply for social security disability until he or she has been unable to work for at least six months; usually, it is better to wait one year. Social Security allows you to wait to apply one year from the start of your period of disability without losing any benefits. Of course, by waiting you are putting off the decision process which can take three months to two years. Before applying for social security disability, an injured worker should talk to a workers compensation lawyer about the impact of applying for such benefits.

Collecting Both Unemployment And Social Security Benefits:

In most cases, an employee cannot collect social security and unemployment at the same time. An employee who receives unemployment following a work injury and who is later found permanently and totally disabled under the social security laws will likely have to pay back unemployment for any amounts paid during the period of disability. There are a few limited exceptions to this.

One exception is if someone was already on social security disability when he or she lost her job (social security allows people to earn up to $1000 per month, or more if in the Ticket to Work Program), unemployment benefits can be awarded.

The Impact Of Social Security Benefits On Workers Compensation Benefits:

Anyone who applies for social security and is pursuing a workers compensation case should have a lawyer. In general, social security benefits will be reduced, if the total benefits received by a worker and his dependents from a combination of workers compensation and social security exceed 80 percent of the employee’s average current earnings at the onset of his disability. 42 U.S.C. § 424a (2006); 20 C.F.R. § 404.408 (2006).

Average Current Earnings is based on an employee’s earning history and is calculated several ways. One way is the highest earnings in the last five years. Lawyers representing the injured worker can negotiate a settlement where the injured worker can receive a large lump sum with no reduction in his or her social security benefits. We can even put in language that can recapture social security benefits that were reduced by the social security offset. One note of caution is that an employee who has his social security reduced by workers compensation benefits is still taxed for the entire social security benefit. In other words, SSA converts a benefit that is not taxable (workers compensation) to one that is taxable by issuing a 1099 for the credit taken by Social Security. I hope that ruling is challenged someday by a tax lawyer, but I understand that to still be the law.

For permanent total disability benefits, social security takes an offset on the first $25,000 in PTD benefits paid to the extent benefits go over 80% of the ACE. The workers compensation carrier then gets to reduce its permanent total disability payments dollar for dollar after the insurer has paid $25,000 in PTD. Any injured worker facing a potential permanent total disability claim needs a lawyer to ensure the insurer is paying the proper amounts.

Social Security, Unemployment And Workers Compensation:

I have had clients apply for all three at the same time. Under this scenario, it is likely Unemployment is entitled to be reimbursed all or part of what it has paid during the period of disability. We often negotiate a payment to unemployment that is much less than 100% of the benefits paid. Workers Compensation or Social Security may be entitled to offsets depending on the type of benefits paid. A lawyer can help the employee maximize his or her benefits in this scenario.

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