Will I lose disability benefits if I receive compensation benefits?

Question: Will I lose my disability benefits if I start to receive compensation benefits?

Answer: You didn’t say what type of disability benefits you’re receiving, and what type of compensation benefits you might get soon, so I’ll try to address of all the possible situations you might be in.

If you are currently receiving Social Security disability benefits (SSDI), veterans disability compensation benefits will not decrease your benefit check (nor will any other VA benefit). Workers’ compensation benefits, on the other hand, will decrease your Social Security benefits — SSDI and workers’ comp benefits can’t total more than 80% of what you earned before you became disabled.

If you’re receiving SSI, most types of income will reduce your SSI check. This includes veterans disability compensation, workers’ compensation benefits, state temporary disability payments, military pensions, and most other veterans benefits, with a few exceptions (which I’ll list below).

Social Security treats all of these benefits as unearned income, and they will cause your SSI check to be decreased. The amount of your unearned income is simply subtracted from the federal SSI payment (sometimes $20 of the unearned income isn’t counted, depending on the benefit).

Now for the exceptions. The following VA benefits aren’t considered countable income and should not affect your SSI payment:

  • aid and attendance benefits
  • housebound benefits
  • benefits that are used to pay unusually high medical expenses
  • clothing allowance for those who use prosthetics or wheelchairs, and
  • payments made to children of Korean or Vietnam veterans for certain birth defects.

If you’re currently receiving private disability benefits from a long-term disability (LTD) insurance policy, whether or not workers’ compensation or veterans disability compensation will reduce your LTD payments (called “offsetting your benefits”) depends on what the language in your LTD policy says and whether both types of benefits are for the same disability.