Workers’ Compensation Offset of Social Security Retirement Benefits – Can it be stopped?
THE HISTORY: In Washington State the workers’ compensation system has been offsetting a claimant’s receipt of social security retirement benefits since 1986. Social Security disability benefits have been offset since the 1970s, but it took a while longer to implement an offset to retirement benefits. All injured workers who were not on Social Security Retirement in July 1986 have had their later entitlement to retirement benefits subject to the potential for offset.
Generally the offset is calculated based on either a worker’s average current earnings (ACE) or their time loss rate. The average current earnings are calculated based on the highest calendar year earnings of the worker divided by 12 to find an average month. The offset is then calculated by taking 80% of the ACE. That figure represents the maximum beyond which the combination of SS retirement and worker’s compensation benefits cannot exceed. Since a worker’s compensation cannot be reduced because of the offset, if that 80% figure is below the time loss rate, then the time loss rate will be used to calculate the “cap”. In that latter case all of the retirement benefits are subtracted from the time loss benefit and the worker receives no increase due to the entitlement to retirement benefits. Where the ACE is higher than the time loss rate, then the workers’ compensation benefits are reduced to the point where the retirement benefits plus the workers’ compensation benefits equal the ACE figure. In that case the worker receives more money than on workers’ compensation alone, but still at a reduced rate due to the social security offset. There are periodic cost of living adjustments provided, either yearly for those whose time loss rate is the basis for the offset or every three years if the ACE is the basis for the offset. [Yes, it is complicated!]
The offset was challenged as being in violation of the Washington State constitution but that was rejected by the Washington Supreme Court in 1993. A recent challenge to a similar law in Utah was successful as the Utah Supreme Court found it violated the Utah and U.S. Constitutions (exactly the opposite decision from Washington’s court some 16 years earlier). It is unlikely the Washington Court would be willing to revisit that issue having already considered and ruled on the issue, despite the different outcome in Utah.
CAN THIS BE FIXED? A bill has been introduced in the Washington Legislature (HB 1211) to repeal the retirement offset. That bill has yet to gain any real traction despite being introduced again this year. Representative Steve Kirby (D-Tacoma) is the only sponsor of the bill and remains committed to its passage, but without more support the bill is unlikely to move forward. The Legislature is out of session for the year and meets in short session next year. Although economic times are tough for the state, they are also tough for those workers’ on time loss or pension benefits and who are having their hard earned retirement benefits from social security offset against their compensation benefits.
WHAT CAN YOU DO? All legislators respond to constituents’ needs and demands in one form or another. One call might receive a polite reply, dozens calls from different constituents might raise an eyebrow (and polite replies), hundreds of calls might reflect a groundswell, thousands of calls might reflect a movement was underway. If every injured worker called their representative and asked them to contact Representative Kirby to become a co-sponsor on the bill (or at a minimum to otherwise support the bill) and if every injured worker called their state senator and asked them to support the bill when it gets to the Senate the bill can ultimately have a change of passage.
IS THERE HOPE? Even with a strong groundswell from the injured worker community the bill is not assured of passage. While it has strong support on equitable grounds (SS retirement is based on a lifetime of work and is intended to replace wages during a worker’s retirement years) and has nothing to do with disability or the disability system (which offsets workers’ compensation and SS disability to make sure a worker has incentive to return to the work force and that life will not be too comfortable – financially – on disability) the bill will have a huge fiscal impact on the Department of Labor and Industries. On all bills filed which affect the state budgetary process the agency involved files a “fiscal note” with the Legislature advising what the financial impact will be if the legislation is passed. While workers’ compensation benefits are not funded out of general revenues – rather from employer and worker premiums – if there is a large fiscal impact it could include the need for some premium increases or consideration thereof. This could spook the Legislature into rejecting the bill despite large popular support from constituents.
FINAL WORD: The bill will go nowhere despite the good intentions of Rep. Steve Kirby unless support can be generated from other legislators. The way to start that process is to spread the word among injured workers, friends of injured workers, unions, disabled support groups, retirement groups, etc. If those groups can get behind this bill, and should a steady groundswell rise up, the Legislature cannot ignore it. Like all long marches, they must begin with the first step. Rep. Kirby can be reached at: email@example.com. Let him know you care. Let you own Representative know you care. Step up and make some phone calls, send some emails, spread the word that the time has come to pass HB 1211 and repeal the social security retirement offset from Washington State workers’ compensation benefits.
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