Workers’ Comp Offset Continues Until Full Retirement Age

Empire Justice January 12, 2016

Until recently, the offset (reduction) of Social Security Disability Insurance (SSDI) benefits paid to a claimant who is also receiving Workers’ Compensation benefits ended when the claimant reached age 65, and SSD benefits converted to retirement benefits.

Under the offset provisions, SSDI benefits were reduced so that total benefits received (WC plus SSDI) did not exceed 80 percent of the recipient’s average current earnings from before the worker became disabled.

In 1983, Congress amended the definition of full retirement age (“FRA”) for purposes of Social Security benefits.  For those born before Jan. 2, 1938, FRA remained age 65.  For those born thereafter, FRA has increased, ranging from 66 to 67 depending on the year of birth.  See https://www.ssa.gov/planners/retire/retirechart.html.

Despite the 1983 amendments, the age at which the offset (reduction) of SSD benefits due an individual’s receipt of Workers Compensation benefits was not changed; it remained 65.  But as result of legislation adopted in December 2014, SSA will now be able to continue offsetting Social Security benefits through the workers FRA, up to age 67.  Under the ABLE Act (now part of the Tax Increase Prevention Act of 2014 signed into law December 19, 2014), the age until which the Workers’ Compensation offset applies has been tied to the increased FRA for Social Security.   For individuals receiving Social Security Disability benefits and Workers’ Compensation benefits, Social Security benefits will be reduced through their FRA, not just until the reach age 65.  This change became effective December 19, 2015.

SSA, in its “rush” to implement the new law, issued proposed regulations on January 4, 2016, in 81 Fed Reg. 41-42, available at https://www.gpo.gov/fdsys/pkg/FR-2016-01-04/html/2015-33036.htm or https://www.gpo.gov/fdsys/pkg/FR-2016-01-04/pdf/2015-33036.pdf. Comments are due by February 3, 2016.

A good summary of the changes detailed above is available here:  http://www.wci360.com/news/article/balancing-workers-compensation-and-the-social-security-offset.  The text of the new law – Pub. L. 113-295 – is available here:  https://www.congress.gov/bill/113th-congress/house-bill/5771 .

Thanks to Greg Phillips of Segar and Sciortino and Paul Ryther in Rochester for keeping us up to date.