This post is Washington workers’ compensation specific and will not likely apply to anyone receiving social security benefits plus other sources of workers’ compensation benefits or other public disability benefits. As applied in Washington State, the Department of Labor and Industries (“DLI”), or self-insured employer where applicable, is allowed to take the offset (see prior posts to describe how the offset is calculated) until the injured worker reaches the age of 62. Because of quirk in the law, the Social Security Administration (“SSA”) gets to take the offset between the ages of 62-65. Thereafter because SSA does not offset retirement benefits, the offset reverts back to the DLI or a self-insured employer.
The problem arises in how SSA calculates the average current earnings (“ACE”) for the 62-65 offset period. When one is initially found eligible for social security disability benefits AND workers’ compensation benefits, the offset is calculated, typically using the ACE (there are other methods to calculate the maximum benefit, this post only applies to those whose maximum combined benefit is set by using 80% of the ACE) to set the maximum amount one can receive through a combination of both workers’ compensation and social security disability benefits (80% of the ACE). Then over time, one is entitled to cost of living adjustments (some are entitled to yearly increases, some are entitled to triennial increases of workers’ compensation benefits – the difference being the subject of a different posting). If one is disabled and entitled to both benefits at an early age, by the time one reaches 62 the increases to the combined benefits can be pretty significant. The effect of the increases is to increase the ACE so the 80% figure is higher and higher over time allowing for higher and higher payments from the combined systems.
This is all well and good, but then along comes the age 62 reverse of the offset by the SSA. Instead of using the higher ACE calculated by utilizing increases in wages over time to avoid the benefits being eroded by inflation (i.e. that higher figure being used by the DLI), SSA goes all the way back to the original ACE to calculate the offset. This can result in a DECREASE in the combined payments by 100s of dollars per month. In those cases where there is a delay in Social Security implementing the offset (as is not unusual given the volume of cases they must address) there is not uncommonly a substantial overpayment assessed by SA by retroactively applying the offset. IF both SSA and DLI used the same ACE, then when DLI retroactively reversed its offset in response to SSA retroactively applying its offset the underpayment from DLI would match the overpayment from SSA and it would be a wash – the underpayment received from DLI could be sent to SSA to pay the overpayment. However, because DLI is using a higher ACE, there is a much smaller underpayment from DLI than the overpayment from SSA and many disabled workers are left owing SSA thousands of dollars with no source of monies to pay it. It is possible to request waiver and where the overpayment is not the disabled worker’s fault (as is always the case in this circumstance) and where repayment would be a substantial hardship on the disabled worker. However SSA will look at all the disabled workers’ income and assets and where there are assets or where the spouse has a good job, waiver may be denied.
Whether any overpayment is waived or not, that does not solve the problem that is created by using the old ACE which ignores inflation and increased cost of living since the disabled worker was first entitled to both disability income and workers’ compensation benefits. Again, the result is a reduction of combined payments which can run into 100s of dollars per month (each case is slightly different based on the individual disabled worker’s income history is and the amount of the social security and DLI benefits).
Unfortunately, the use of the original ACE, rather than an updated ACE, appears to be consistent with federal law. There is no provision in federal law to ever use an updated ACE unless the ACE is adjusted by SSA over time by application of the triennial adjustment process. There is no provision, where social security benefits have been paid at the full rate (as is the case where the workers’ compensation payer is taking the offset) to apply an adjusted ACE during the 62-65 reverse offset process.
Is there a solution?
On a case by case basis it might be advantageous for a disabled worker to switch to early retirement at age 62 (SSA does not offset retirement benefits). That may or not be advantageous to a disable worker. Each case is individual based on earnings history the size of the family benefit (i.e. the number of others claiming on the account, etc.).
The only real solution, in addition to seeking waiver for any overpayment created by retroactive application of the offset, is to seek to change the law. That is problematic. In seeking Congressional support to modify the law we would be faced with the fact of the huge federal deficits (fixing this would cost social security money) plus this anomaly only appears to apply to Washington State disabled workers. There is a chance that some of the other states that are allowed to take the offset may face similar situations, but we are unusual in that we are allowed to take the offset only up to ager 62 and then lose it until age 65.
Injured workers need to be aware of this issue, plan and prepare for the switch of the offset at age 62 (knowing if there is a delay in SSA applying the offset that it most likely be done retroactively with assessment of an overpayment) and to try to plan of potential reduction of the total combined benefit when the worker has been disabled for, and on both benefit systems, for an extended period. Further reading can be found at: https://secure.ssa.gov/poms.nsf/lnx/0452120265.
3 thoughts on “The Social Security Offset Nightmare – it only gets worse.”
hi I have a question I was hurt on a construction job , intentional , unfortunately my claim was open until I had a physical capacity examine which stated will not hold a sedentairy job at this time, and then came the Ime 10 days later and what a joke they lied in the report short, did no kind of physical examine except touch lightly does that hurt, state they had my mri films and i state i have them with me they said have all we need. Then in report state no films available then came the ax The ime dr. state pre-existing conditon unrelated to the on the job injury degenerateve disc disease.. I about fell off the chair, i have indent in my neck and horrible nerve pain, i have torn disc lumbar herinated discs, loss of right side swollen ankle and right hand documented. anyway i wrote a protest, and they state we will send u to another ime and hold u in abeyance I state isn’t it true that if the on the job injury lit up and aggravated the conditons is it not true the department is still not responsible? miller vs the state, i can not get anykind of answer any way the new ime everyone states is a perponderence of medical against me. so i got scared hired an attorney and they told the state i’m not going to the ime now the state upheld the decision keeping my claim closed and when i asked about how we are going to fight this i;m told just fight it . i felt i should have gone to the ime…..so i’m frustrated and i now have to write another appeal to the board now… I have dr.s backing me My attending stood in the office and exact words you are being railroaded thery are going over my head, I’m not able to work i’m in alot of pain all the time can sit stand I can’t understand how the department can come up with theses ime ‘s …dr. that just don’t do qualified work or examines,, and write lies in there reports. My on the job injury was quite significant. I can’t return to work unless i have 100 percent releade from my dr. I was sent a letter from my union. Can’t work anyway So now how can a person get there own IME? broke depressed and frustrated
Yours is a common story. The “IME” doctors do what they can to ignore Miller v. Department (lighting up or aggravating a pre-existing condition). I’ve even had “IME” doctors say the don’t believe in the concept of lighing up a pre-existing asymptomatic condition and will not offer an opinion to that extent, despite state law as outlined in Miller. You have an attorney and unfortunately must fight this injustice at the Board of Appeals. Good luck.
I was Worker’s Compensation before I was approved for Social Security Disability. What happened was, both together went over my 80% amount, with Social Security calculating the gross amount of my Workers Comp into the offset. My Workers Comp attorney takes 20% off the top. According to the Social Security rules, related attorney fees and medical expenses generally are exempted from the offset. For a year now, I’ve been trying to get a refund of the offset set where my attorney fees were calculated into it. I found out that I keep talking to stubborn dummies, within the Social Security system. Where does Social Security hide their intelligent employees? I told my attorney to structure awards by capping my award at $425 a week, to keep under the 80% figure. What does my attorney do, he sends me a lump sum check for $4500, which would be fruitless for me to cash, which is on top of another claim I’m currently collecting on. I tend to believe that there are many SSD recipients who have an over offset situation, and it doesn’t get rectified. Thank you.