Social Security Retirement & Worker's Compensation

You have the right to Social Security retirement or disability benefits as well as workers' compensation insurance, which pays for the costs of an on-the-job injury, as a wage earner. The Social Security retirement pension begins paying at 62 for early retirement, while workers' comp benefits have no age limit. There's no offset on either side if you're eligible for both.

By federal law, all wage-earners pay into Social Security through a system of payroll taxes. Employers and workers contribute an equal percentage while self-employed people contribute both shares. A worker is eligible for retirement after accumulating 40 work credits. You get a single credit by earning a specific amount of money and paying tax on it. You can earn four credits every year.

Each state writes and enforces laws on workers' compensation. They require employers to carry compensation insurance coverage either through private carriers or a state-administered fund. Certain businesses may be exempt in some states. In New York, for example, single-owner businesses, partnerships and corporations without employees are exempt, as well as non-profit groups with no compensated members except clergy and teachers. Employers with coverage generally can't be sued by workers for on-the-job injury.

A worker covered by Social Security retirement and workers' compensation can draw benefits from both sources. There's no reduction in work comp indemnity for lost time if you draw Social Security retirement, which doesn't restrict your right to work. Nor is there any effect on medical benefits. By the same token, Social Security won't cut your retirement benefits if you receive work comp indemnity. The only benefit offset comes into play if you draw Social Security disability.

If you've been approved for Social Security disability payments, it may limit your benefit. The combination of work comp payments and disability can't exceed 80 percent of your pre-injury wages. In addition, the work comp carrier may take an offset for the disability payments. Workers who suffer a job-ending disability may consider applying for Social Security retirement benefits if they have reached, or are approaching, age 62. This would avoid any offsets. In any case the Social Security disability ends when you reach full retirement age, which varies between 65 and 67 depending on the year you were born.