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Getting Workers' Comp and Social Security Disability-Is it Really "Double-Dipping?"

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An injured worker's receipt of Social Security Disability (SSD) benefits can produce an offset from workers' compensation (WC) payments. A workers' compensation recipient who is also collecting SSD cannot receive, in combined benefits, more than 80% of his average current earnings (ACE). Wisconsin is one of nine "Reverse Offset" states whereby any offsets are taken on WC benefits rather than Social Security benefits. Under Wisconsin statutes, for each dollar that the total monthly workers' compensation benefits (excluding attorney fees and costs) plus the monthly benefits payable under the Social Security Act for disability exceed 80% of the employee's ACE as determined by Social Security, the workers' compensation benefits shall be reduced by the same amount, so that the total benefits payable do not exceed 80% of the employee's ACE.

In most states, under Social Security law, a recipient's SSD benefits are reduced when the total of the recipient's disability payments plus workers' compensation (WC) benefits exceed 80% of the ACE. The reduction is taken against the recipient's monthly SSD, not WC. In Wisconsin, however, just the reverse is true and the workers' compensation insurance carrier's liability is reduced.

In Wisconsin, the maximum age for ending the Social Security offset has been 65 since the offset went into effect in 1980. However, since Congress amended the Social Security Act in 2013 by the incredibly-titled "Achieving a Better Life Experience (ABLE) Act," the amendment extends the workers' compensation Social Security offset to the full retirement age (essentially age 66 for those born between 1943 and 1954, and age 67 for those born after 1960). The revised law provides that the offset continues until an employee attains full retirement age. The way this works out practically, for example, for a worker with a $600 monthly Average Weekly Wage ($400 in Temporary Total Disability), or about $30,000 in average current earnings (ACE), 80% ACE would be $24,000 per year or $2,000 per month. If SSD pays $900 per month, WC would be limited to the 80% ACE figure ($2,000) so the WC carrier liability would be limited to $1,100 instead of its $1,720 ($400 TTD rate x 4.3) monthly liability absent the SSD.

The purposes of the two systems-SSD and WC-differ substantially. WC applies the principle that, irrespective of fault, projected costs of injuries can be secured in advance through insurance. Eligibility for SSD benefits requires an employee to build equity in the program through earning income credits. The employer has paid a premium for the worker's injury not based on any offset, and the employee has paid into Social Security for the entirety of his work life. The rationale for the "offset" is loosely based on a "double dipping" assessment, much the same as the "Moral Hazard" rationale for not providing a full pay check to workers who are injured (in order to reduce the incentive to remain off work).

Wisconsin experimented historically with the percentage of Permanent Partial Disability payable for Temporary Total Disability (from 70% to the current 66.66%), based on the notion that the worker should be no better off disabled than if he were working, the 33% diminution assessed as an amount relatively close to his taxation rate. This rationale does not, of course, hold for those workers who exceed the maximum (currently $1,380) wage rate. The "Moral Hazard" rationale for reduction of benefits is based on the theory that an injured worker should not be "better off" because of his injury. In over 40 years' representing injured workers, I've yet to see a worker actually better off because of his work injury.

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