In Tennessee, injured workers may be entitled to receive both Social Security Disability Insurance and workers' compensation benefits if they are unable to return to work due to a workplace injury. Each program provides financial assistance, but specific rules apply when an individual qualifies for both. Also, a legal mechanism known as the offset rule limits the total amount of benefits an individual can receive.

Workers' compensation is a state program that provides employees injured on the job with reimbursement for medical expenses, rehabilitation costs and partial lost wage replacement. In Tennessee, as in most states, workers' comp is a no-fault system. The employee does not have to prove that the employer or any of its staff was negligent: only that the injury’s cause was job-related.

Social Security Disability Insurance (SSDI) is a federal program that provides financial support to individuals who are unable to work due to a disability, whether or not job-related. To qualify, an individual must have a long-term condition that is expected to last at least a year or result in death.

When an individual is eligible for both workers' compensation and SSDI, there are rules that coordinate these benefits to prevent an overlap. The individual’s total combined benefits cannot exceed 80 percent of their average earnings before the disability began. These earnings are typically calculated based on the worker's highest-earning years prior to the injury or disability or on their average earnings over a specific period.

If the worker’s combined benefits exceeds this 80 percent limit, the Social Security Administration (SSA) reduces the SSDI benefits to bring the total amount within the allowable limit. This reduction is known as the workers' compensation offset.

Let’s say a worker in Tennessee was earning $4,000 per month before their injury. The maximum combined benefits they can receive from SSDI and workers' compensation is 80 percent of this amount, or $3,200 per month. If the worker is receiving $2,500 per month in workers' compensation benefits, their maximum SSDI benefit would be $700 per month.

The workers' compensation offset stays in effect until one of several conditions occurs:

  • The workers' compensation benefits stop.
  • The injured worker reaches full retirement age, at which point SSDI benefits convert to retirement benefits and are no longer subject to the offset.
  • The injured worker negotiates a lump-sum workers' compensation settlement that specifies how the payment is allocated over time (ideally over the worker’s remaining lifetime), potentially reducing the impact of the offset.

An experienced Social Security Disability attorney can help to structure a workers' compensation settlement in a way that minimizes the impact on SSDI benefits. In Tennessee, workers’ compensation cases often settle with a lump-sum payment rather than continued weekly benefits. The settlement can be structured to spread the lump sum over the worker’s expected lifetime. The agreement could specify that a lump-sum settlement will be converted to monthly payments of a certain amount, and that figure will be used in calculating the offset, resulting in a smaller reduction of SSDI benefits.

Massengill, Caldwell & Coughlin, P.C. assists clients in Bristol, Kingsport Johnson City and throughout Upper East Tennessee and Southwest Virginia in pursuing SSDI benefits. Call 423-797-6022 or contact us online to schedule a consultation.