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Watch Out For Social Security Reductions Following Workers' Comp Settlements

Settling a workers' compensation case as a Claimant who is receiving or who is expected to receive Social Security Disability Benefits requires careful consideration of the rules utilized by the Social Security Administration regarding workers' compensation offsets. This Post addresses the law with respect to social security offsets from the social security prospective and some practical suggestions to avoid problems.

The social security administration's regulations allow for a reduction of future social security disability payments payable to the claimant in an amount equal to the maximum compensation rate, utilizing the total settlement amount. This avoidable result potentially will cost an unknowing injuried worker thousands of dollars in reduced benefits.

If an injured worker who is attempting to settle his or her workers' compensation case is also receiving social security disability insurance benefits, Social Security Administration (SSA) regulations contemplate reducing future social security disability payments by an amount that takes into consideration Claimant's projected workers' compensation payments that would have been paid had the case not settled.

Often this issue comes up after a case is settled, and the attorneys have closed out the case. In the past, claimants and their counsel have attempted to retroactively amend the settlement documents to take into consideration the social security offset factor. This will not work as the SSA has a specific POM section (DI 52001.021) which instructs the social security judge to deny a petition to lower an offset amount in a situation involving an attempt at amending a settlement document or judicial order.

The lesson to be learned from the Social Security Guidelines is to include protective language in the settlement documents at the time of settlement. If workers' compensation settlemetn does not adequately account for the effects of social security offsets,  SSA might very well take a sizeable offset off future social security payments.  

If, therefore, a workers' compensation settlement amount was reduced because of the fact social security disability payments are being received or are expected in the future,  this point should be included in the workers' compensation document.   This post is not intended to be legal advise for a particular case, as all situations require individual attention.  As a client of Morgan, White-Davis & Martinez, P.A., we can advise you of what is the best course to follow.  

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