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How Does A Lump Sum Settlement Affect Social Security Disability

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On The Other Hand Existing Ssdi Benefits Can Limit The Terms Of A Personal Injury Settlement

How do Lump Sum Payments Work in Social Security Disability?

If you were already receiving Social Security Disability payments when the personal injury occurred, this means you are not working. Therefore, any PI settlement would be less than if you were working. The settlement would not include compensation for lost wages and lost future earning capacity. This often results in a significantly lower personal injury settlement or award.

Also, the defending party in the personal injury case may make an unreasonably low settlement offer. They may justify this by arguing that since you are already claiming disability, your pre-existing disabling condition is at least partly responsible for the serious nature of your recent injuries.

For example, SSDI for COPD would not reasonably affect your settlement for back injuries suffered in a motorcycle wreck. However, the SSDI benefits youre receiving for severe back problems very possibly could. You and your lawyer would need to demonstrate the differences between your ongoing disabling condition and the personal injury.

It is also common practice for insurance companies and attorneys for opposing parties in a personal injury case to delve into your personal history looking for anything that could reduce your PI settlement amount.

Lump Sum Settlement And Social Security

Once a lump sum settlement is accepted and a C& R is completed, how does that affect the Social Security Disability benefits currently being paid? The IW is currently being paid Social Security Disability benefits.For example, the lump sum settlement amount is X-amount of dollars after Medicare Set Aside and attorney fees. Do the Social Security Benefits continue as before and the lump sum settlement goes into the bank to be used however for the IW’s care? The IW is rated 100% disabled and not able to return to work at any given time. thanks in advance.

Important Differences Between Ssi And Ssdi

Two main types of Social Security benefits are available to disabled individuals. Social Security Disability Income benefits provide relief to disabled individuals who have paid into the Social Security trust fund through income contributions. Most employers arrange for a percentage of employees paychecks to automatically contribute to Social Security. SSDI is an entitlement benefit as those who receive it contributed toward it.

Supplemental Security Income is a needs-based benefit. This federally funded supplemental income program offers economic relief to low-income individuals with disabilities and older adults who need financial assistance to cover necessities. Unlike SSDI, SSI requires meeting certain income requirements. The sudden windfall of a personal injury lawsuit settlement may not interfere with entitlement benefits for the most part, but it is possible to affect the recipients SSI.

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What Should I Do If I Receive A Lump Sum Payment

If you receive a lump sum payment, it is always best to talk to an advocate or attorney who understands SSI eligibility and the effect of a lump sum on SSI eligibility.

15 P.O.M.S SI 01140.200.G.3, available at .

16 See endnote 19 below about additional exempt resources relating to self-employment or a business or items used as an employee such as a second car.

17 20 C.F.R. § 416.1210 .

18 See end note X regarding changes in the law affecting at least 20 CFR § 416.1222.

19 For rules on deeming of resources, look at 20 C.F.R. §§ 416.1202, 416.1203, and 416.1204.

21 You can also look at 20 C.F.R. §§ 416.1161 and 416.1163.

22 You can also look at 20 C.F.R. §§ 416.1161 and 416.1165.

34 20 C.F.R. § 416.1201 P.O.M.S. SI 01120.112, available at .

35 Payment is income to the individual providing the care or services. If an ineligible spouse or parent receives in-home supportive services payments for services provided to anyone other than his/her eligible spouse or eligible child, the payments are included as income subject to deeming .

36 20 C.F.R. 416.1103 In-home supportive services payments are medical or social services and are not income when paid directly to an eligible individual to pay for the services . However, the payment is income to the individual providing the care or services .

66 20 C.F.R § 416.714.


The Herren Law Firm Is Ready To Help

What Happens to Your Workers

Applying for Social Security for disability is a long process, and most claims are denied at the outset, requiring appeals. This is where you may need an attorney to handle your claim so you can start receiving benefits. If your insurance company is denying your claim, an attorney can step in and get the process moving again.

Weve helped over 4,000 Houstonians just like you get the disability benefits they need. Call us today at 682-8194 or 529-7707 to schedule your free consultation. Our contingency fee arrangement means you only pay us if we win your case.

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The Workers Compensation Offset

The amount of Social Security Disability benefits you receive and/or the Social Security dependent benefits your family receives will be reduced in any month that WC and Social Security Disability overlap if your and your familys Social Security together with your workers compensation exceed 80% of your Average Current Earnings as determined by the Social Security Administration . If there is an offset, the offset will be against your dependents benefits first. If additional offset is required, your benefit will be reduced also.

For example, if your average current earnings are $2,000.00, eighty percent of your average earnings would be $1,600.00. If you are getting $1,300.00 from workers compensation, the most you and your dependents could get from Social Security would be $300.00 a month. In this example, your benefits would be reduced to $300 during the offset period and your dependents would receive no benefits during that period.

Why Apply When There Is An Offset

Even if your total benefits between workers comp and Social Security Disability are no more than the workers compensation alone during the offset period, there are benefits to applying for Social Security Disability while on workers comp. First, you have no way of knowing for sure how long workers comp benefits will continue or whether or how much you might receive in a closing settlement. In contrast, if you qualify for SSDI and remain disabled, your benefits will continue to your normal retirement and then be automatically switched to Social Security Retirement benefits. Also, Medicare starts after twenty-four months of SSDI entitlement even if benefits are suspended for the workers compensation offset. Lastly, if you are able to return to work, any year that you are on Social Securitys books as disabled will not count against you as a year of zero or low earnings when your Social Security Retirement benefits are calculated at retirement time.

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Reporting A Lump Sum Settlement

Changes that may affect your SSI benefits, including receipt of a lump sum settlement, must be reported to Social Security. The report must be made within 10 days of the end of the month in which you received the settlement.

Penalties can be severe for failing to report a lump sum settlement. The Social Security Administration may take the following action against you for failing to timely report the receipt of funds payable to you as a lump sum settlement:

1). Force you to repay any overpayment that you received from SSI.

2). Impose a penalty by reducing SSI payments that you are entitled to receive by a minimum of $25 and up to as much as $100 for the month that you failed to report the additional resource.

3). If the SSA has evidence that you knowingly made a false or misleading statement to conceal receipt of a settlement, it may withhold benefits for six months for a first offense. Subsequent violations may result in benefits being withheld from you for up to 24 months.

Giving away the settlement funds to someone to prevent the settlement from affecting your SSI benefits does not prevent SSA from taking action to reduce your benefits and impose sanctions against you.

How Can I Maximize My Disability Benefits In North Carolina

How Workers’ Compensation can offset Social Security payments , minimizing ssdi offset or ssi offset

Since a combined benefit that equals 80% of your former income represents a loss, you would naturally rather that your Workers Comp benefit didnt have such an impact on your SSD payment. And, with a little planning, there are ways we can help you make that happen.

There are three general approaches, which we would have to make sure really worked for you before we would recommend it:

These strategies may require specific language in your workers compensation settlement and must be consistent with what is allowed by the North Carolina Industrial Commission, which administers the workers compensation program.

A full review by an experienced North Carolina workers compensation attorney who also understands Social Security Disability programs can help you understand whether you are eligible to receive benefits from both programs. The attorneys of Younce, Vtipil, Baznik & Banks, P.A., have the knowledge and experience, and are ready to assist you.

If you are in North Carolina, contact Younce, Vtipil, Baznik & Banks, P.A. in Raleigh for a free, no-obligation review of your disability benefit today. We can help if you are in the middle of applying for Workers Compensation or SSD or if you need to appeal a denied claim. Call us today.

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Use Irs Publication 915 Worksheets To Figure Your Tax

It may be to your advantage to claim all of the lump sum in the current tax year or to use the IRS worksheets to spread it over previous tax years. If you choose to spread it over previous tax year, you won’t need to amend the tax returns from those years. You can figure out which is to your advantage using a worksheet filed with your current tax return. You will pay the lesser amount as determined by the worksheet.

If you received a lump-sum SSDI payment, you will see the amount included in Box 3 of the Form SSA-1099 received from the Social Security Administration.

Worksheets provided in IRS Publication 915 can be used to determine the taxable portion of a retroactive SSDI payment.

These calculations are best handled with tax preparation software or by using a tax professional to prepare your return.

Do Workers’ Compensation Benefits Offset Social Security Disability Payments

If youre collecting workers compensation benefits and Social Security Disability Insurance payments at the same time due to a work-related injury or illness, you may find you wont be eligible for the full amount of both. This is known as the “workers comp offset” and is subject to a number of complicated rules, regulations, and best practices.

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What Is A Resource

A resource is something you own, such as cash, land, life insurance, personal property, or anything else you own which could be converted to cash and used for food or shelter.13 In addition, what you receive from the sale or exchange of a resource, such as a house or a car, is not considered income but rather remains a resource. See section 7 below.

An individual can only have $2,000 worth of nonexempt resources and a married couple $3,000 worth of resources on the first moment of the first of the month 14 Otherwise, you are ineligible for an SSI payment for that month. This means that if you receive a payment that will become a countable resource in the following month, you must spend down to the $2,000 countable resource level before the beginning of the month following receipt in order to remain eligible for SSI. Note: The amount of money in your bank account on the first is the amount shown minus any outstanding checks 15

Some things are excluded from resources, which means they are not counted toward your resource limit. They are exempt resources. These include household goods, one car,16 housing assistance, or burial spaces.17 For more examples of excluded resources, visit .18

Do I Have To Report My Settlement To Ssdi

Chester County Workers Comp Lawyers

Yes, a settlement amount must be reported to the Social Security Administration within 10 days of being received. However, a Social Security Disability payment and a personal injury settlement should not directly affect each other. Receiving a settlement should not impact your SSDI benefits because it doesn’t qualify as income, which SSA considers when deciding what you’re eligible to receive.

This differs from SSI , where lawsuit settlements count towards the eligibility threshold. If the settlement amount you receive puts you over the qualifying amount, it could cause you to reduce or lose SSI benefits.

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Trends In Social Security Disability Benefits And Workers’ Compensation

Social Security disability benefits and workers’ compensation had different trends in benefits paid relative to covered payroll. Social Security disability benefits grew rapidly in the early 1970s and then declined through the late 1980s, after policy changes in 1977 and 1980 reduced benefits and tightened eligibility rules. From 1989 to 1996, Social Security benefits again rose as claims and allowances increased during the economic recession of 1990â1991 . Since then, benefits relative to covered wages have been fairly stable .

Workers’ Compensation: Benefits, Coverage and Costs, 2002

The trend in workers’ compensation benefits as a share of covered wages follows a very different pattern. Total workers’ compensation benefits were less than Social Security disability benefits during the 1970s but grew steadily throughout the 1970s and surpassed Social Security disability benefits in the mid-1980s. While Social Security disability benefits were flattening out during the mid-1980s, workers’ compensation payments continued to grow at a rapid rate. Then, as workers’ compensation payments declined as a share of covered wages after 1992, Social Security disability benefits rose.

Social Security And Lump Sum Pensions: What Public Servants Should Know

If you work for an employer who does not participate in Social Security but has their own pension instead, you probably know that your Social Security options can be complicated with tricky rules that only apply to teachers and other public servants. These rules include the Windfall Elimination Provision and the Government Pension Offset.

Individuals often look for a way to soften the impact of these rules. Time and again I hear individuals wondering if they can sidestep these rules by simply taking their pension in a lump sum. After all, in just about every reference to these rules, the Social Security Administration says that the rules apply to individuals with a pension from work where no Social Security taxes were paid.

Soif theres no a pension being paid, do the rules still apply?

They do, but with a few exceptions. For certain individuals, taking a pension out in a lump sum can be a valid method of sidestepping these rules. If this interests you, read on. The rules for when and how are complicated, and you dont want to mess this up.

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Can I Receive Workers Comp As Well As Social Security Disability Benefits

If you qualify for workers compensation and Social Security Disability Insurance benefits, then yes, you can receive both.

SSDI administers a federal program managed through the Social Security Administration , and individual states administer workers comp programs. Receiving Workers Compensation has no impact on whether your SSDI claim is accepted and does not disqualify you from Social Security Disability Insurance benefits.

Re: Ss Retirement And Lump Sum

Can SSA go back 10 years for a lump sum workers comp settlement?

I had a previous quote of $5600.00 for medicare set-aside.From where? That would mean the future medical needs are but $311/year…or about $25/month… that doesn’t cover a office call. Even at Medicare approved charges. Was there ever a MSA proposal submitted to CMS/Medicare for review/approval.? I am 62 and my award is for life.My life expectancy is 80 does the wc end then? That’s another 18 years.Doesn’t matter what your award is, or life expectancy… IF you take the cash payment, you are closing out the claim. What they are paying for is the estimated remaining PD indemnity, at a reduced amount or “todays dollars”, and money to fund a WCMSA. I don’t see a MSA being $5600 for 18 years.They are offering about 10 years in the lump sum .Ten years of what?And, the atty fees are going to come out of the indemnity allocation. You cannot reduce the MSA for atty fees. The atty fees are not going to be added on by the ER/IC. I expect the set-aside will be more.Future medical/WCMSA is not going to be more that previously estimated, or approved by CMS… if anything it would be less…you are older now than when the offer/approval was made.

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What Are Average Current Earnings

Social Security figures your earnings in one of three ways to determine your average current earnings. The number determines your benefit amount, and it may be affected by your workers compensation settlement, depending on which method Social Security uses.

  • High-Five Formula: Social Security will use the average monthly wages for your five highest pay
  • High-One Formula: Social Security may choose to use the highest calendar year during the past five years, instead of averaging across five years. The earnings amount will still be based on an average month.
  • Average Monthly Wage Formula: Social Security may use your average monthly wages across your working life to determine your disability benefit amount.
  • Most of the time, Social Security will use the High-One Formula, but there are exceptions. Thankfully, Social Security will use whichever formula results in a higher benefit amount.

    Lump Sum Payments And Ssi Eligibility

    This publication tells you how a lump sum payment can affect your SSI. Lump sums are things like a retroactive check, an inheritance or a gift. It gives different ideas for spending or saving the lump sum. It tells you how to report it to Social Security. It tells you how to get help if you have questions about lump sum payments.

    Note: This publication contains general information only. Everyones situation is different. Be sure to consult an attorney or advocate knowledgeable in these matters for specific advice.

    Many people have questions about how a lump sum payment will affect their eligibility for Supplemental Security Income . This publication will discuss how lump sum payments affect eligibility for SSI.

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