Thanks to worker’s compensation laws, the majority of individuals who suffer job-related injuries will have temporary financial help. This is because most states require businesses with even one employee to carry some type of workers’ comp insurance. And the goal of such policies is to support the employee until they’re well enough to return to their job. But, as one reader recently wrote in asking, what happens when that back-to-work day never comes? “After a forklift accident, my doctor says I’m permanently disabled and cannot go back to construction work. Do I have to wait until my workers’ comp payments run out to apply for SSDI? If not, when should I apply for Social Security disability?”
This is a very good question, and the answer is no — you don’t have to wait. Nor should you. Here are the reasons you should actually get that application in well before your workers’ compensation benefits lapse.
Qualifying for Disability Insurance if You’re Permanently Disabled
Before applying for Social Security Disability Insurance (SSDI), it’s important to determine if you even meet the qualifying criteria.
The Social Security Administration (SSA) determines if applicants are eligible by first looking at their work history. Yes, this is before they even consider the disability in question. Because if the financial requirements are not met, then an applicant won’t qualify.
To be eligible for SSDI benefits, in general, a person must have worked at least one-fourth of their adult life. Meaning there have been adequate contributions to Social Security through their employment payroll taxes over the years. This is the “duration” test.
Additionally, an applicant must have worked five of the last 10 years. This is the “recent work test.” And this is why it’s very important not to wait too long to file for SSDI. The longer you put it off, the more risk there is that you’ll no longer have enough recent work credits.
Work credits are how the SSA keeps track of a person’s work history. You can earn one credit per quarter, four credits per year. In 2023, it takes $1,640 in covered earnings for one credit. You must earn $6,560 to get the maximum four credits for the year.
A SSDI applicant must show they earned 40 work credits over their career (younger applicants might qualify with less). And 20 of those credits must fall in the last 10 years. To get SSDI if you’re permanently disabled, you must apply while you still have enough recent work credits available. If you wait more than five years, it will likely be too late.
What Else Do I Need to Be Eligible for SSDI if I’m Permanently Disabled?
In addition to work history, the SSA will consider if the applicant is incapable of working for a year. This is because the SSA does not award benefits for partial disability. In the case of our reader, the designation of “permanently disabled” should likely satisfy that requirement.
However, it’s important to note that workers’ comp claims and SSA disability claims do not use the same criteria. A person who qualifies for workers’ comp could very well find themselves unable to meet the SSA’s definition of disability. And while the listing of impairments that qualify is extensive, an applicant must show definitive medical proof of their condition.
The SSA will also assess if the applicant’s permanently disabled status means they cannot do any other work at all. In the case of our reader, future construction jobs are out. But the SSA considers age, education, and any other skills when assessing SSDI eligibility as well.
If there seem to be potential work options in a different field, the claim may not be successful.
But, if the applicant is unable to do other work of any kind, the SSA will award disability benefits.
Why Should Someone Apply for Disability While Still on Workers’ Comp?
There are several reasons not to wait to apply for SSDI while still receiving workers’ comp benefits. We already discussed the risk of work credits expiring if a person waits more than five years. But there are other reasons to apply sooner than later.
To begin with, it can take a long time for a disability claim to work its way through the system. If an individual doesn’t start their application until after their workers’ comp expires, they could find themselves without any income.
It’s also important to note that if a claim is successful, the SSA won’t pay any benefits for six months. So again, to minimize any lapse in benefits, make sure to apply well before workers’ comp runs out.
The final reason to apply for SSDI while still on workers’ comp is you might qualify for both.
Is it Possible to Qualify for Workers’ Comp and SSDI at the Same Time?
It is possible for someone to receive both workers’ comp and SSDI benefits simultaneously. However, to prevent over-payment, it’s likely there will be a reduction in the SSDI benefit while both are in play. That’s because of something known as the workers’ compensation offset rule.
This rule states that the amount someone receives in workers’ comp and SSDI cannot exceed 80% of their pre-injury earnings. Effective since 1965, the reason for this “offset” is to prevent excessive government payouts to one person. If the total is above 80%, the SSA will deduct enough money from the SSDI entitlement to bring it down.
Also, this rule is only in effect when the individual is receiving government sponsored workers’ comp and disability. For example, SSDI is a federal program and many workers’ comp programs are state run. But sometimes employers offer private benefits, or individuals have personal disability insurance. Those non-government sponsored benefits will not factor into any workers’ comp offset calculations.
So, why apply for both SSDI and workers’ comp if the SSA will incorporate deductions? Most people who qualify for both end up receiving more money than if they had just one or the other. And if the individual’s workers’ comp benefits terminate, then the SSA will reassess and adjust SSDI benefits accordingly.
What to Know About Lump Sums and Free Legal Help
One other thing to keep in mind here is lump sum settlements. For example, if the injured reader above took a lump settlement to close the workers’ comp claim, does that count? It might. Unless it’s written into the settlement agreement to prorate that amount over the course of the claimant’s lifespan. Otherwise, the SSA might recalculate the workers’ comp benefits in a way that lowers potential SSDI payments even more.
This is one reason why hiring a skilled disability attorney is so important. There are so many loopholes and calculations that the average layperson is not aware of that may affect claims. But since disability lawyers work on these types of cases daily, they know all the ins and outs. Plus, because they work on contingency, you won’t pay anything out of pocket until your claim is successful.
If you are permanently disabled, don’t wait to file your claim. Get the help you need today, so you’ll have the funds you need tomorrow.
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Kimberly Dawn Neumann
Kimberly Dawn Neumann is a multi-published NYC-based magazine and book writer whose work has appeared in a wide variety of publications ranging from Forbes to Cosmopolitan. She graduated summa cum laude from the University of Maryland, College of Journalism. For more, visit: www.KDNeumann.com, Instagram @dancerscribe, and Twitter @KimberlyNeumann