Many times, an individual on worker's compensation later gets social security disability. How does a lump sum payment affect social security? The answer depends on how the settlement documents are drafted. Worker’s compensation attorneys often try to draft settlement agreements to minimize any offset of SSDI benefits. Social Security will look at the language of the worker’s compensation settlement document to decide how much of the settlement is subject to offset.
For example, Mr. Smith's attorney might specify that the $24,000 is meant to be a $50 per month payment for every month until he reaches 65 ($24,000/480 months). Social Security would calculate any SSDI offset based on $50 per month for 480 months. Because Mr. Jones would have a lower monthly income from workers' comp, he would lose less SSDI, or might escape the offset entirely.
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