It is fairly common for an injured worker to receive Social Security disability benefits and also receive a settlement for workers’ compensation. According to Social Security, “If you receive workers’ compensation or other public disability benefits and Social Security disability benefits, the total amount of these benefits cannot exceed 80 percent of your average current earnings before you became disabled.”

Here’s how I handle this situation: in any settlement where an injured worker is receiving Social Security Disability Insurance (SSDI) benefits, an attorney representing that person and/or the injured worker must think about how a lump-sum settlement affects the SSDI benefits for the person. There will probably be a decrease in benefits because “workers’ compensation and other public disability benefits may reduce your Social Security benefits,” according to the Social Security Administration.

Some items can be kept out of the workers’ compensation settlement total for Social Security benefits purposes. This list includes, but is not limited to, such things as: attorney fees; litigation expenses; past medical bills that need to be paid; future medications expenses; future medical care expenses; and vocational services expenses. Taking away these parts of the settlement can and should increase the value of the net settlement to the injured worker. The remaining net settlement should then be distributed proportionally over the injured worker’s life expectancy. The overall result of your attorney preparing for your settlement by making these calculations means that a workers’ compensation settlement will decrease your Social Security disability benefits less.