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Eligibility Under Workers’ Comp and the Social Security Disability Insurance Program

The following post is part of our Law Student Blog Writing Project, and is authored by Jessie Smith, a law student from the University of Kentucky.

A disabling injury or medical condition can strike anyone at any time. While rehabilitation and regaining one’s health is limited by the realities of modern medical science, maintaining economic security during these trying times is possible. Depending upon one’s personal circumstances, eligibility under a state’s workers’ compensation program or the federal government’s Social Security Disability Insurance program may provide the financial security blanket needed to guarantee one’s solvency, allowing one to remain focused on what matters most: healing.

Requirements for Eligibility Under Workers’ Comp Programs

Since workers’ compensation programs are administered by individual states, the specific requirements that must be fulfilled in order to be eligible for benefits of the program vary. As a general proposition, any injury or illness for which one seeks workers’ compensation must have been sustained on the job, or must have arisen out of work-related activities.

Additionally, an individual attempting to obtain workers’ compensation benefits must be classified as an “employee.” Some states also distinguish eligibility based upon the type of work that an employee performs. Finally, one’s employer must carry workers’ compensation insurance, or, alternatively, be required to do so by law.

As alluded to earlier, the above requirements are not universal, and may differ from state by state. Generally speaking, however, these requirements are common throughout the United States. It is important to note that there is a laundry list of exceptions to the general rules that may render an otherwise eligible “employee” ineligible. In order to get a better sense of individual states’ quirks, a brief review of some of the eligibility requirements of Kentucky and Ohio follow.

According to the National Federation of Independent Business (“NFIB”), in Kentucky, all employers that (employ one or more employees are required to carry workers’ compensation insurance. That said, sole proprietors, “qualified” partners of a partnership, and “qualified” members of a limited liability companies are excluded from workers’ compensation coverage. Officers of corporations, on the other hand, are considered “employees” by statute, and, thus, workers’ compensation insurance is required for such individuals.

Like Kentucky, Ohio requires all employers with one or more employees to carry workers’ compensation insurance coverage, according to the NFIB. Under Ohio workers’ compensation law, workers’ compensation coverage for sole proprietors, partners of a partnership, individuals that have incorporated themselves as a corporation, and others, is optional. In addition, and unlike Kentucky, the only option for most employers to obtain workers’ compensation coverage in Ohio is via Ohio state’s own program (as opposed to obtaining or maintaining coverage through a private or commercial insurer).

Clearly, the state-administered workers’ compensation programs are unique and can differ greatly between states. While the eligibility requirements and laws governing workers’ compensation can vary wildly throughout the nation, the federally administered Social Security Disability Insurance program applies universally. A brief overview of the eligibility requirements of the Social Security Disability Program follows.

Requirements for Eligibility Under the Social Security Disability Program

So long as the basic requirements are met, employees are eligible for workers’ compensation from their very first day of employment. While not a requirement per se, it is nevertheless important to note that, unlike workers’ compensation programs, Social Security Disability benefits are only available to those that have worked for a longer period of time. As a general rule, in order to qualify for Social Security Disability, one must have accumulated forty “credits,” twenty of which were earned in the past ten years. The number of credits required is determined by the claimant’s age at the time of disability. A younger individual will require less work credits than an older individual. One “credit,” according to the Social Security Administration, is earned for every $1,300 of wages an employee earns. An employee may earn only four credits per year; thus, once an individual earns $5,200 for the year, that individual has earned their maximum four credits for that year.

In addition to earning the requisite number of credits, a person must meet the Social Security Administration’s definition of “disabled” in order to qualify for disability benefits. “Disability” means that a person “cannot do work that [they] did before,” one’s “disability has lasted or is expected to last for at least a year or to result in death,” and the Social Security Administration determines that the one seeking benefits “cannot adjust to other work because of [their] medical condition(s).” If these three definitional elements are met by an applicant, they will be considered disabled, and will thus have satisfied one of the requirements to be eligible for disability benefits.

In addition to the above requirements, one must have “worked in jobs covered by social security.” The individual’s affliction must result in “long-term impairment” that “preclude[s] any gainful work.” Finally, the affliction must be so severe that the social security disability applicant is unable to perform their previous work; further, the applicant must be unable to engage in “any other type of substantial gainful work.”

While the above list of requirements is by no means exhaustive, it is illustrative of what an applicant would be required to do and show in order to qualify for Social Security Disability benefits. Clearly, the eligibility criteria for workers’ compensation programs differ substantially from disability benefits. Nonetheless, under some circumstances, one may qualify for both workers’ compensation benefits and Social Security Disability benefits. When such a situation arises, the issue of offsetting becomes a concern.

The Offsetting Effect of Workers’ Compensation on Social Security Disability Insurance

The Social Security Disability Insurance program requires that, when an individual is eligible for both workers’ compensation benefits and disability benefits, said individual’s disability benefits be reduced. This reduction must result in the combined benefits from the two separate programs being less than or equal to eighty percent of the individual’s “average current earnings.” “Average current earnings,” according to the Social Security Administration’s website, is defined as “the highest of the average monthly wage on which the unindexed disability primary insurance amount is based, the average monthly earnings from covered employment and self-employment during the highest five consecutive years after 1950, or the average monthly earnings in the calendar year of highest earnings from covered employment during the five years ending with the year in which disability began.”

The receipt of workers’ compensation benefits may have an offsetting effect on disability benefits under other circumstances, as well. For example, when a particular state’s workers’ compensation program allows for the possibility of a lump-sum payment being made to the recipient, thereby discharging the obligations of the insurer and/or employer, but simultaneously permits the payment of benefits in a more structured, periodic nature, said settlement is affected by the offset. More specifically, the lump-sum payment is “prorated to reflect the monthly rate that would have been paid had the lump-sum award not been made.”

There are a multitude of exclusions that apply to the offsetting rules. For instance, certain sums expended for medical purposes “in connection with” workers’ compensation are subject to exclusion in figuring the amount of the offset. Likewise, legal fees incurred by an individual “in connection with” workers’ compensation may be subject to exclusion. Finally, many other government benefits may be excluded from the offset, as well, including VA benefits and needs-based benefits, to mention a few.

What Should You Do If You Are Eligible for Workers’ Compensation and Social Security Disability?

When faced with a disabling medical condition or health-related emergency, many may find themselves in dire straits, financially speaking. Luckily, certain government programs, such as the state-administered workers’ compensation programs and the federally administered Social Security Disability Insurance program, exist and may be able to help those in need. While the eligibility requirements may change from jurisdiction to jurisdiction depending upon the program, and can oftentimes be strict, those that qualify may receive the financial security they need to get through some of the most difficult times in their lives.

If you have any further questions, call one of the attorneys at Lawrence & Associates for a free consultation. Lawrence & Associates has handled thousands of claims for injured and disabled men, women, and children. We’re Working Hard for the Working Class, and we want to help you!