Social security applicants and receipients who have worker’s compensation claims would be well advised to consult with a worker’s compensation attorney and/or social security attorney prior to settling their worker’s compensation claims. 

In Indiana most worker’s compensation settlements are comprised of compensation for a person’s permanent partial impairment (“PPI”).  PPI is defined through case law as a loss of physical function.  PPI compensation is not based on a person’s past or future income loss and is not a wage replacement benefit.  It is often paid to an injured worker in a lump sum. 

Despite this, the Social Security Administration views worker’s compensation settlements, even just PPI settlements, as income and will use this income to off-set the social security benefits due to a claimaint.  However, this offset can be minimized by the use of particular language in the worker’s compensation settlement documents.  This language theoretically spreads the worker’s compensation settlement proceeds througout the claimant’s life expectancy, typically resulting in no or a much lesser offset amount. 

Without this language, the Social Security Administration will likely use a person’s temporary total disability rate to offset the social security disability benefits due.  This could reduce a claimant’s monthly benefits drastically. 

Claimants should be sure to avoid an offset to social security benefits (or potential benefits) by consulting with an attorney about the appropriate language to include in a worker’s compensation settlement.