If you have a worker’s compensation claim and have applied for or collect social security benefits, you would be well advised to consult with a worker’s compensation attorney and/or social security attorney prior to settling your worker’s compensation claim.
In Indiana, most worker’s compensation settlements are comprised of compensation for a person’s permanent partial impairment (“PPI”). PPI is defined through case law as a loss of physical function. PPI compensation is not based on a person’s past or future income loss and is not a wage replacement benefit. It is often paid to an injured worker in a lump sum.
Despite this, the Social Security Administration views worker’s compensation settlements, even just PPI settlements, as income and will use this income to offset the social security benefits due to a claimant. However, this offset can be minimized by the use of particular language in the worker’s compensation settlement documents. This language theoretically spreads the worker’s compensation settlement proceeds throughout the claimant’s life expectancy, typically resulting in a much lesser offset amount or none at all.
Without this language, the Social Security Administration will likely use a person’s temporary total disability rate to offset the social security disability benefits due. This could drastically reduce a claimant’s monthly social security benefits.
Claimants should be sure to avoid an offset to social security benefits (or potential benefits) by consulting with an attorney about the appropriate language to include in a worker’s compensation settlement.