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Can You Receive Disability Benefits and Workers' Compensation at the Same Time?

Tom Taulli, EA
Written by Tom Taulli, EA
Published on May 20, 2022

Key takeaways:

  • There are different types of disability benefits that you may qualify for, such as Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).

  • If you are injured at work, you may qualify for workers’ compensation. You could also be eligible for SSDI and SSI.

  • To qualify for Social Security disability benefits, your doctor must note that the disability is expected to result in death or last for at least 12 months.

Man fallen on the job at a construction site.
-Oxford-/iStock via Getty Images

In 2020, there were more than 1.1 million illness and injury cases in the workplace that resulted in missed days at work. The median days lost from these workplace incidents was 12. For people who do not have large savings, these missed days at work can be devastating for a family’s finances.

States have workers’ compensation programs that can provide financial assistance to employees who experience workplace injuries. These benefits can pay for medical bills, rehabilitation, lost wages, and funeral bills.

You may also be eligible for federal disability programs. They include Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). The Social Security Administration (SSA) administers these programs.

Below, we will review how these programs work, how long the benefits last, and the qualifications.

What disability benefits are available to you?

If you experience a work-related injury or illness, you may qualify for workers’ compensation. You should report your claim to your employer prior to your state deadlines. Your employer’s insurance carrier will investigate your injury or illness. They will either approve or reject the claim.

You may also be eligible for benefits through the Social Security Administration (SSA), such as Social Security Disability Insurance (SSDI). This program covers many types of disabilities, including qualified work-related injuries or illnesses. You can apply for SSDI if your disability prevents you from working because of a physical or mental impairment that is either of the following:

  • Expected to result in death

  • Expected to last for at least 12 months

To receive SSDI benefits, you will usually need at least 40 work credits or 10 years of work history at jobs where you paid Social Security taxes. However, there are lower requirements for younger people.

You will also need to fall within one of these categories to receive SSDI:

  • A worker who is blind or has low vision

  • Disabled worker under age 65 (The family may also qualify for benefits)

  • Disabled widows or widowers who are age 50 or over — additionally, the deceased spouse must have enough work credits with the SSA

  • Those disabled before age 22 may qualify if a parent or grandparent has Social Security coverage and is disabled, retired, or dies

You may also qualify for SSI. This provides benefits for those who are disabled as well as persons 65 or older or who have low vision.

SSI is needs-based. Unlike SSDI, you won’t need a certain number of work credits with the SSA to qualify for monthly benefits.

To qualify for SSI, you must have limited resources. This means you have less than $2,000 in assets if you are single and $3,000 if you are married. These amounts typically do not include your residence, car, and household items.

For 2022, the SSA estimates the average monthly benefit will be around $1,358 for all disabled workers. You can find your estimated benefit amount on your SSA online profile.

What is workers’ compensation?

Most employers are required to purchase workers’ compensation for full-time employees. Independent contractors, gig workers, and volunteers are typically not covered.

Once you notify your employer about your injury and illness, they will file a workers’ comp claim with the insurance company. You do not have to do anything. But if the insurance company denies the claim, you have the right to appeal the decision. You might want to hire a qualified attorney.

Each state has its own workers’ compensation system. The coverage, benefits, and deadlines can vary. For example, if you work in Texas, your employer may or may not have workers’ compensation coverage. State laws in Texas do not require employers to purchase workers’ comp. You should visit your state’s website for more information about workers’ compensation requirements.

Can you receive disability benefits and workers’ comp simultaneously?

Yes, but there are limitations. You can receive both SSDI and workers’ compensation benefits. However, the SSA or state may reduce the monthly benefit if your workers’ compensation benefit exceeds a certain amount.

Workers’ compensation generally provides your benefits within a month of notifying your employer of an injury or illness. For example, Pennsylvania requires the insurance carrier to provide the first check to you within 21 days, and Massachusetts has a 14-day deadline if your claim is approved. This means that workers’ compensation benefits can provide support before you start SSDI, which has a 5-month waiting period.

However, you may not qualify for SSI. You must have limited income to qualify for SSI benefits. SSI has a formula that reduces your benefits for your wages, self-employment earnings, and other income. Workers’ compensation is a form of unearned income which could reduce your benefits or eligibility for SSI.

How long can you receive disability benefits?

Generally, you will lose workers’ compensation benefits when a physician says you can return to work and there is no more need for medical care. This can be a few weeks to a year or more.

If you have a permanent disability, then the benefits will last for the rest of your life. The insurance company may offer you a lump-sum settlement. You’ll need to consult a lawyer to determine how much money you qualify for.

For both SSDI and SSI, you will lose your benefits when:

  • You return to work.

  • You are incarcerated.

  • You reach full retirement age. At this time, you will collect Social Security retirement benefits.

Will you continue to receive disability benefits after a workers’ comp settlement?

It’s possible. You may be eligible for SSDI after a workers’ compensation settlement. This can happen before or after you get approved for workers’ compensation. But the SSA may reduce your benefits, depending on your earnings.

However, you probably will not qualify for SSI. The amount you receive from the settlement will likely mean you do not meet the limited-resources requirement.

What’s the difference between workers’ comp and disability benefits?

The table below shows the differences between workers’ compensation, SSDI, and SSI:

Workers’ compensation Social Security Disability Insurance (SSDI) Social Security Income (SSI)
Federal or state program? State program Federal program Federal program
Disability rules Work-related disability Disability expected to result in death, or last for at least 12 months Disability expected to result in death, or last for at least 12 months
How to receive benefits You must notify your employer of the injury You file a claim with the SSA You file a claim with the SSA
Qualifications You qualify if you are an employee Generally, you need 40 work credits with the SSA You must have limited income and resources
Source: Medicare.gov

What can you do if your disability benefits or workers’ comp runs out?

Depending on your state, you might have a right to appeal the termination of workers’ compensation. But you will need evidence from a doctor that you are still disabled and cannot work. Pay attention to state deadlines for bringing an appeal, and consult with qualified legal counsel to help you navigate the process.

For SSDI, you can also appeal a termination of benefits. But you must do this within 10 days of receiving the notice from the SSA.

If these options do not work, you might qualify for SSI. Without the benefits from workers’ compensation or SSDI, you may meet the requirements for limited income and resources.

What are disability offsets?

An offset is a reduction in SSDI benefits. If you receive income from other sources, you may not receive the full amount of SSDI benefits that you were eligible for. You must disclose your sources of income for your applications for SSDI and workers’ compensation.

You will also need to contact the SSA and insurance carrier for any changes. This includes increases in income and decreases, such as if your workers’ compensation runs out. The SSA will periodically investigate the income of beneficiaries to ensure it matches what you reported.

The offsets are for both installments and lump-sum amounts for workers’ compensation. The combined benefits cannot exceed 80% of your average earnings before the disability. The formula includes state benefits and disability payments from private insurance policies.

For example, suppose your average earnings were $3,500 per month:

  • You get injured while on the job and receive workers’ compensation of $2,000 and SSDI of $1,800.

  • Your combined benefit of $3,800 exceeds 80% of your average earnings before the disability.

  • This will mean that the combined monthly payment will be reduced to $2,800. That’s 80% of the $3,500 in average monthly earnings.

  • The SSA reduced your benefits by $1,000.

Some states like California, New York, and Washington have laws that reduce SSDI benefits for those receiving workers’ compensation. The reason is that the policy is to replace income, not potentially create more income.

The bottom line

Generally, you can receive disability benefits and workers' compensation at the same time. But there are limits. If your total disability benefits exceed limits, your monthly state or Social Security income may decrease. 

You should check to see how long you can receive disability benefits. You typically receive the benefits until your disability ends and you can work again. If your benefits run out, you might appeal the decision. It’s best to seek qualified legal counsel if you run into any issues.

References

Mass.gov. (n.d.). What an employee should know about workers' compensation insurance in the pandemic.

Pennsylvania Department of Labor & Industry. (2019). Workers' compensation & the injured worker.

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Social Security Administration. (2022). 2022 Social Security changes - COLA fact sheet.

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Texas Workforce Commission. (n.d.). Workers' compensation.

U.S. Bureau of Labor Statistics. (n.d.). Injuries, illnesses, and fatalities.

GoodRx Health has strict sourcing policies and relies on primary sources such as medical organizations, governmental agencies, academic institutions, and peer-reviewed scientific journals. Learn more about how we ensure our content is accurate, thorough, and unbiased by reading our editorial guidelines.

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