Yes, you can get disability benefits after a workers’ compensation settlement. Settling a workers’ comp claim does not disqualify you from Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), but the settlement will almost certainly change what you receive. SSDI gets reduced by an offset that caps your combined benefits at 80% of your pre-disability earnings. SSI is harder: the settlement counts as both income and a resource, and a lump sum of any real size can wipe out eligibility until you spend down or shelter the money.
How the SSDI Offset Works
Federal law prevents you from collecting full SSDI and full workers’ comp at the same time. Under the workers’ compensation offset, your combined monthly payments from both sources cannot exceed the higher of two amounts: 80% of your “average current earnings” before you became disabled, or the total SSDI benefit payable to you and your family in the first month both benefits overlapped.1Office of the Law Revision Counsel. 42 USC 424a – Reduction of Disability Benefits If the combined total exceeds that cap, the SSA reduces your SSDI by the excess. Your workers’ comp payment stays the same.
A quick example. Suppose your average current earnings were $4,000 a month, giving you an 80% cap of $3,200. If SSDI pays you $1,800 and workers’ comp pays $1,600, the combined $3,400 is $200 over the cap. The SSA cuts your SSDI from $1,800 to $1,600 for that month. You still receive $3,200 total.
Your average current earnings figure is set using whichever of three formulas produces the highest number, so the cap is usually generous. Every three years, the SSA recalculates it against national wage growth, which tends to raise the cap over time.2Social Security Administration (POMS). DI 52170.015 – Form SSA-3643 Offset Worksheet Triennial Redetermination An offset that bites hard at the start often shrinks or disappears entirely after several redeterminations.
How a Lump Sum Gets Converted to Monthly Income
A lump-sum settlement is not treated as one month of income. The SSA converts it into a monthly equivalent and spreads the offset across the corresponding period.3eCFR. 20 CFR 404.408 – Reduction of Benefits Based on Disability on Account of Receipt of Certain Other Disability Benefits
The weekly rate it uses follows a priority order. First, whatever rate the settlement agreement specifies. If the settlement is silent, whatever periodic rate you were receiving before the lump sum. If you never received periodic payments, the maximum workers’ comp rate for your state on the date of injury.4Social Security Administration (POMS). DI 52150.060 – Prorating a Workers Compensation/Public Disability Benefit Lump-Sum
This is where the words in your settlement agreement do real work. A $60,000 lump sum prorated at a $1,000 weekly rate becomes about 60 weeks of income for offset purposes. The same $60,000 prorated at a lower rate specified in the settlement stretches across more weeks and generates a smaller monthly figure, which may fit under the 80% cap.
What to Put in the Settlement to Shrink the Offset
Two features written into federal regulations can meaningfully reduce or eliminate the SSDI offset. Both have to appear in the original settlement document; the SSA will not accept them added afterward.5Social Security Administration. How Workers Compensation and Other Disability Payments May Affect Your Benefits
Excludable Expenses
Before calculating the offset, the SSA subtracts amounts you paid or will pay for medical, legal, and related expenses connected to the workers’ comp claim.3eCFR. 20 CFR 404.408 – Reduction of Benefits Based on Disability on Account of Receipt of Certain Other Disability Benefits Attorney fees, past medical bills, and future medical costs all qualify when documented in the settlement or supported by bills, receipts, or a detailed statement from your attorney or physician. Future medical expenses, including a Medicare Set-Aside, are excludable when designated in the settlement itself. Undesignated future medical expenses do not count until you actually incur them. Itemizing every excludable cost in the agreement is one of the most effective ways to lower the offset and is something many claimants overlook.
Life-Expectancy Spread
When a settlement says the lump sum is intended to cover the rest of your expected working life, the SSA divides the total across that entire period rather than prorating it at your prior weekly rate. A 45-year-old with a $48,000 settlement and a life-expectancy spread could see the SSA divide the amount over roughly 20 years, producing a monthly equivalent small enough to stay under the 80% cap and avoid any offset at all. Without the spread language, the same $48,000 might generate a much larger monthly figure and a corresponding SSDI reduction. If you are negotiating a settlement while receiving or applying for SSDI, this provision belongs at the top of your priority list.
Reverse Offset States
About 15 states have a “reverse offset” plan, where the state reduces your workers’ comp payment and the SSA leaves your SSDI alone.6Social Security Administration (POMS). DI 52105.001 – Reverse Offset Plans The combined total comes out the same, but the mix shifts in your favor because SSDI carries Medicare eligibility and cost-of-living adjustments that workers’ comp does not. Whether the reverse offset applies depends on when the state’s plan was enacted and the type of benefit involved; some states apply it only to certain categories. Confirm with your workers’ comp carrier or attorney whether your specific benefit qualifies.
When the Offset Ends
The workers’ comp offset applies only until you reach full retirement age, at which point your disability benefits convert to retirement benefits and the offset drops off.7Federal Register. Extension of the Workers Compensation Offset From Age 65 to Full Retirement Age Full retirement age currently ranges from 66 to 67 depending on your birth year. The offset also ends if your workers’ comp payments stop before then.
SSI Is a Different Problem
Supplemental Security Income runs on separate rules. SSI is needs-based, with a maximum federal payment in 2026 of $994 per month for an individual and $1,491 for a couple.8Social Security Administration. How Much You Could Get From SSI Workers’ comp counts as income for SSI, and income reduces your payment close to dollar for dollar after a small exclusion.9Social Security Administration. Supplemental Security Income Eligibility Requirements
The bigger issue is the resource limit. Once a lump-sum settlement lands in your account, it counts as a resource. SSI caps resources at $2,000 for an individual and $3,000 for a couple.10Social Security Administration. Spotlight on Resources Almost any meaningful settlement pushes you over that limit immediately, ending SSI payments until you spend down or shelter the money. For someone relying on SSI, an unplanned lump sum can erase benefits for months or years.
Protecting SSI Eligibility After a Settlement
Two tools can keep settlement funds from disqualifying you.
Special Needs Trust
A first-party special needs trust (sometimes called a d4A trust) holds settlement funds outside your countable resources. You must meet the SSA’s definition of disabled and be under age 65 when the trust is established. The trust can be created by you, a parent, grandparent, legal guardian, or a court.11Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets The trade-off is a Medicaid payback: whatever remains in the trust at your death repays Medicaid for benefits paid on your behalf during your lifetime. For substantial settlements, it is often the best way to preserve SSI.
ABLE Account
An ABLE (Achieving a Better Life Experience) account is a tax-advantaged savings account for people with disabilities. Up to $100,000 in an ABLE account is excluded from SSI resource calculations.12Social Security Administration. Spotlight on Achieving a Better Life Experience (ABLE) Accounts The 2026 annual contribution limit is $19,000, so you cannot deposit a large settlement all at once. Balances above $100,000 count as a resource and pause your SSI payments until spent down. ABLE accounts fit smaller settlements well and can complement a special needs trust for larger ones.
Medicare Set-Aside
If you are already on Medicare or likely to be within 30 months, your settlement may need to include a Workers’ Compensation Medicare Set-Aside Arrangement (MSA). An MSA earmarks part of the settlement for future injury-related medical expenses Medicare would otherwise cover.13CMS.gov. WCMSA Self-Administration CMS generally reviews proposed MSAs when a current Medicare beneficiary’s settlement reaches $25,000, or when the claimant is likely to become Medicare-eligible within 30 months and the settlement reaches $250,000. Amounts designated as an MSA also count as excludable expenses in the SSDI offset calculation, so the same provision protects your Medicare coverage and shrinks the offset.
Reporting the Settlement
You are required to report any workers’ comp settlement to the SSA, which collects the details on Form SSA-546.14Social Security Administration. Workers Compensation/Public Disability Benefit Questionnaire SSA-546 Report it promptly. If you do not, the SSA will eventually catch the payments through data matching with workers’ comp insurers and state agencies, and you will face an overpayment notice covering every month your SSDI or SSI was too high. The agency recovers overpayments by withholding 50% of your monthly SSDI or 10% of your SSI until the debt is repaid.15Social Security Administration. Resolve an Overpayment If you are no longer receiving benefits, it can intercept your tax refund or garnish wages. You can request a waiver when the overpayment was not your fault and repayment would cause hardship, but approval is not guaranteed. Reporting the settlement when you receive it is the simplest way to avoid the problem entirely.