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  1. #1
    Join Date
    Dec 2010
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    23

    Default Lump Sum Settlement and Social Security

    Once a lump sum settlement is accepted and a C&R is completed, how does that affect the Social Security Disability benefits currently being paid? The IW is currently being paid Social Security Disability benefits.

    For example, the lump sum settlement amount is X-amount of dollars after Medicare Set Aside and attorney fees. Do the Social Security Benefits continue as before and the lump sum settlement goes into the bank to be used however for the IW's care?

    The IW is rated 100% disabled and not able to return to work at any given time.

    thanks in advance.

  2. #2
    Join Date
    Feb 2007
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    Calif
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    Default Re: Lump Sum Settlement and Social Security

    This issue has been discussed again and again... look under "disability benefits"...
    There should be language in the settlement documents to avoid any SSDI offset if possible..>SSA can assist with this. Your atty should be aware however.

    There are provisions in the IRS codes about taking cash settlements... purchase of an annuity would provide a life time stream of tax free income... self investing that cash won't replace the amount you have been receiving in weekly benefits. Taxes and inflation will eat that up.

    Cash lump sum in a C&R is not always the best option for settlement... something to seriously consider.
    For example, the lump sum settlement amount is X-amount of dollars after Medicare Set Aside and attorney fees. Do the Social Security Benefits continue as before and the lump sum settlement goes into the bank to be used however for the IW's care?
    The amount of the PD indemnity is what can potentiall affect or cause offset to SSDI.

    Please read the other threads...then come back with your specific questions.

  3. #3
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    Dec 2010
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    23

    Default Re: Lump Sum Settlement and Social Security

    Thank you, BvIA. I will read the other threads as per your recommendation.

    this helps.

  4. #4
    Join Date
    Dec 2010
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    23

    Default Re: Lump Sum Settlement and Social Security

    Okay, I have spent some time reading other threads pertaining to this subject.

    I did not find the answer I needed as we are not looking at a structured settlement. Most of the posts I was able to find regarded structured settlements.

    I am looking at lump sum settlements with the purpose of self-investing into an annuity and getting income stream that way, because we need an X amount of money upfront to do home improvements for the IW because of his 100% rating to make things easier for the IW to get around. We realize that copays would come out of our pockets. With a structured settlement, we cannot do the home improvements. With a lump sum settlement and continuing the SSDI (We don't have SSI or Medicaid) benefits without offset would be good. But is that possible for PTD?

    In other words, I am asking if SSDI benefit amounts can continue at the current rate without changing it to an offset after a lump sum settlement. It seems there is legal language that can be written into the settlement pertaining to that.

    Thanks

    Thank you

  5. #5
    Join Date
    Mar 2007
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    Georgia
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    Default Re: Lump Sum Settlement and Social Security

    sacmb, YES there absolutely IS specific Social Security Language that MUST be used in the lump sum settlement to avoid a SSDI offset for those benefits. Make sure the AA knows HOW to write the settlement with that language.

    Basically what it says is X dollars is paid to IW for X weeks, expressed as an estimate of the life expectancy of IW at the time. Say the IW is 50 yo female. Life expectancy for such lets say is 78.5 years of life. Therefore the settlement dollars are Prorated for 28.5 years. That figure is then expressed as X $'s/mo as WC income.

    Depending on the settlement amount this usually allows for NO offset for SSDI. However, IF there is a sizable dollar amount being paid in lump sum from WC and the IW is an older worker then there may very well be at least a small offset for SSDI. It all depends on the age of IW and the settlement amount.

    Hope this helps you to clarify how the SS language is used to IW advantage when SSDI is a consideration.

    TC & BW

    Steel
    "He who is his own lawyer has a fool for a client"
    Abraham Lincoln


    Take Care and Be Well.

  6. #6
    Join Date
    Dec 2010
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    23

    Default Re: Lump Sum Settlement and Social Security

    Hi SteelMagnolia,

    That explains it to me! I wondered about that and we will talk to our attorney about that. Thank you so much for clarifying it for me! It helps me understand it better and to have a better grasp of this process.

    sacmb

  7. #7
    Join Date
    Feb 2007
    Location
    Calif
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    Default Re: Lump Sum Settlement and Social Security

    I am looking at lump sum settlements with the purpose of self-investing into an annuity and getting income stream that way,
    You need to discuss your options with an annuity specialist, you CAN get paid a cash payment up front, and continuing TAX FREE stream of income... you can NOT self invest and replace the weekly benefits you are -currently receiving in WC.
    With the annuity you can structure the payments to avoid any SSDI offsets and take the full benefit, when you reach normal/full retirement age the offset would stop anyway, and then increase the annuity benefit...

    When you take into consideration taxes and inflation you cannot replace the benefit rate.
    IRS has a rule that provides for the tax free annuity...but it must be purchased by the ER/IC...you can't buy it yourself. In the long run, the IW comes out with more money, and potentially estate value.
    The MSA should also be funded by annuity...again, more money over time. And estate value.

    Cash lump sum for life pension claims is not IMO in the best interests of the IW.
    And... if you negotiate this right, with a good comp atty, you should be able to get cash in the settlement for medically necessary changes to your home...WC pays for those, Medicare does not.
    We realize that copays would come out of our pockets.
    When there is a MSA in place, you cannot use that money for anything Medicare would not normally pay for. So those changes in your home cannot be paid from a MSA. When you use the MSA to pay for services, you do not have a copay or deductible..only when Medicaer pays for services, once the MSA is exhauste.

    Hopefully you have an atty handling these issues for you... this should not be a DIY project... there are too many variables if you don't fully understand the process and system.

  8. #8
    Join Date
    Dec 2010
    Posts
    23

    Default Re: Lump Sum Settlement and Social Security

    BvIA:

    We have an WC attorney, we have a tax man, an estate planning attorney and we have a financial advisor whom my side of the family uses for their portfolio. We are not DIY's. I know that MSA does not pay for home improvements. I was thinking of the lump sum paying for the improvements. I am not even looking at the MSA. I am thinking only of the lump sum amount and what can be done with it and/or if the SSDI benefits stops or changes to an lower amount as an offset because of high lump sum amount possibilities.

    The other poster mentioned legal language so I am looking into that with our WC attorney.

    thanks!

  9. #9
    Join Date
    Feb 2007
    Location
    Calif
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    Default Re: Lump Sum Settlement and Social Security

    You'll have to find out if OK is one of the states that lets the ER/IC take any offsets there may be... that is done in some so as to avoid any offset to the SSDI benefit.

    It would be rare for the ER/IC to agree to cash out a 100% PTD claim and not want the medical included.

    If the changes to your home are found medically necessary by the treating Dr, and/or comp court, the ER/IC would be responsible for those costs, and not the IW. Why would you pay where someone else is liable?
    an estate planning attorney and we have a financial advisor whom my side of the family uses for their portfolio.
    Have you discussed with these professionals the IRS rules for providing annuity to pay a life time income...tax free...? Cuz you can't do that post taking the cash.

  10. #10
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    Mar 2007
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    Georgia
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    Default Re: Lump Sum Settlement and Social Security

    Quote Quoting humanpj View Post
    Talked to my attorney yesterday about this what great timing. If you get a lump sum they require you to sign a document stating you will not get SSDI for 30 months. If you take payments then you can get SSDI without waiting problem is ss will offset difference so your maximum disability amount will not be higher. So basically you have to figure out what is best in your situation
    YES humanpj you do have to weigh ALL of the information carefully and do what is in YOUR best interests. I see a huge RED flag when an attorney asks you to sign a document that you won't file for SSDI for 30 months. That is HUGE, IMO. The Federal Government has very clear written guidelines about WC settlements and SSDI/Medicare. That 30 month period of time is exactly what meets the guidelines for SSDI/MC. Why would your attorney be resistant to include the SS language necessary to pro-rate the settlement money over the life time of the IW? It does NOT cost the AA one cent to properly word the documents to minimize the SSDI offset and you could potentially loose tens of thousands of SSDI benefits in the course of 30 months. Unless the actual dollar amount you are to receive is in the millions and you become independently wealthy from it why would you agree to give up SSDI benefits that you have worked for and paid into your entire working life? That makes NO sense to me whatsoever.

    Also I am putting up a couple of links for you, just some food for thought. Just make sure you make the best decision for YOU and your circumstances. Best of Luck to You.

    http://www.buchanandisability.com/do...9;s%20Comp.pdf

    http://www.cms.gov/WorkersCompAgency...Memorandum.pdf
    Last edited by SteelMagnolia; 06-14-2011 at 11:45 AM.
    "He who is his own lawyer has a fool for a client"
    Abraham Lincoln


    Take Care and Be Well.

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