On-going workers’ compensation benefits or a recent lump sum settlement can create significant problems with your SSDI or SSI case. In order to avoid potential problems that could prevent you from recovering monthly benefits, you absolutely must advise your Social Security lawyer about any workers’ compensation case you have pending at any point during your Social Security case.
The Workers’ Compensation Offset
Generally, if you are receiving temporary total (TTD) weekly wage benefits from a workers’ compensation carrier, those weekly benefits will offset, dollar for dollar, your Social Security monthly benefits. Since your monthly recovery from workers compensation is likely to be higher than your SSDI payment, most of the time, the offset is total. In other words, SSDI will not pay you for those months in which you are receiving workers’ compensation checks.
Workers’ Compensation Settlements
Most of the time when you settle your workers’ compensation claim, that settlement represents a negotiation between you and the insurance company about the expected cost of future TTD benefits and future medical care. In theory, any substantial settlement would result in a long term offset of past and future SSDI benefits, which means that many claimants would have no incentive to apply for Social Security, or settle their workers’ compensation cases.
Georgia courts have addressed this problem by allowing workers’ compensation claimants to treat their lump sum workers’ compensation settlements as lifetime payments for purposes of offset. Thus, a $25,000 settlement would be treated not as $25,000 but as around $70 per week (or $303 per month for the next 30 years. This would result in some offset to future Social Security payments but not a total offset.
In order to take advantage of this type of pro rata treatment of your workers’ compensation lump sum, special language (called a “Hartman clause”) must be inserted into your workers’ compensation settlement. This is why it is so important for both your Social Security lawyer and your workers’ compensation lawyer to coordinate efforts. If you do not properly pro rate your workers’ comp. settlement, you could cost yourself thousands of dollars in future Social Security payments. Jodi recently told me about one of her cases where her client applied for Social Security without telling her, right before settlement negotiations began. An offer of over $100,000 was made but Medicare asked for a set aside of close to $40,000. In other words, Jodi’s client cost himself $40,000 by filing for SSDI before talking to her.
Medicare Set Asides
Another reason to ask your workers’ compensation lawyer to coordinate efforts with your Social Security lawyer has to do with something called the Medicare set aside. Medicare, as you probably know, if facing significant budget deficits and they are looking for ways to reduce their financial exposure.
Specifically, workers’ compensation settlements in Georgia must set aside a negotiated percentage of that settlement to cover future medical costs. In other words, Medicare takes the position that if you settle your workers’ compensation case for $75,000, some amount – perhaps $15,000 to $20,000 depending on the nature of your medical problem – should be set aside to cover future medical costs. Medicare does not want you to shift all of your future medical costs to the Medicare system when there is money now available to cover some of these costs.
If you have not yet applied for Social Security at the time you settle your worker’s compensation case, Medicare will not ask for a set-aside since there is no pending financial risk to Medicare. So, in some cases, it may make more sense to wait to apply for Social Security until after you settle your worker’s comp. case.
At the same time, you cannot wait too long to file for Social Security because your eligibility for SSDI may run out.
As you can sense, coordinating SSDI, workers’ compensation and Medicare can get quite complex. The main thing to remember here is that you need to let both your Social Security and your Georgia workers’ compensation lawyer know that you have two actual or potential claims, and that you should not take any action with regard to either of your claims without first talking to your lawyers.