I was awarded ssdi back to an accident I had at work in 2012. They are now wanting my settlement from workers comp. papers from then. Can they take out the amount of the settlement from my backpay?

Hi,

Possibly. Social Security has a workers compensation offset provision that limits the combined monthly amount of Social Security disability (SSDI) benefits and workers comp (WC) payments to no more than 80% of a person's average current earnings (ACE). The ACE is usually calculated based on the person's average monthly earnings in their highest earnings year within the 5 year period leading up to their disability onset.

Here's an example: Say Mike gets hurt at work and qualifies for both SSDI and WC benefits. Mike earned $36,000 in his highest year of earnings within the 5 year period prior to his injury. Therefore, Mike's ACE in this example would be $3000 (I.e. $36000/12). Therefore, Mike couldn't be paid more that $2400 per month (i.e. $3000 x .80) in combined SSDI and WC benefits. If Mike's WC payments amounted to $1800 monthly, he could be paid no more than $600 in SSDI benefits even if his SSDI benefit rate would normally be higher than that.

If you receive a lump-sum settlement from Workers Compensation, Social Security prorates the lump sum to arrive at a monthly amount. They then use that monthly amount to determine if your SSDI benefits must be offset. Depending on the amounts involved, that could result in a reduction or suspension of your SSDI payments.

Best, Jerry