The state of Louisiana is one of 15 states in the nation that has “reverse offset” laws on the books for workers’ compensation (WC) and Social Security Disability Income (SSDI) benefits that may be targeted for elimination under the current administration’s proposed budget. A reverse offset means that compensation benefits are reduced by the amount of SSDI benefits the injured employer is receiving. This, in essence, saves the workers’ compensation insurance carrier money. In 35 other states, the offset is in the other direction: SSDI benefits are reduced by the amount a claimant is receiving in workers’ compensation benefits. President Trump’s budget calls for an elimination of these reverse offset laws, potentially saving the federal government approximately $164 million over 10 years.
Reduction of Workers’ Compensation or Disability Benefits due to SSDI Benefits
Congress amended the definition of full retirement age for the purposes of Social Security benefits in 1983 from age 65 to age 67, depending on the year of birth of the recipient. Notwithstanding these changes, the age that the Social Security Administration (SSA) was entitled to reduce benefits when a person was receiving both SSDI and WC never changed, despite proposals for change in 2007 and 2008. Consequently, the SSA can only reduce SSDI payments through age 65.
The prior president signed HR 5771, which was enacted by the Senate and the House, amending the Internal Revenue Service’s (IRS) code to amend several aspects of the code including striking the age 65 and inserting retirement age to allow for longer offset of WC benefits.
States with Reverse Offsets
Thirty-five states across the country statutorily grants the SSA authority to reduce SSDI benefits when the claimant or disabled worker is also receiving WC benefits. In 15 states, however, it is the workers’ compensation insurance carrier – or the employer, if self-funded – who gets the benefit of the offset. Aside from Louisiana, these states include: Alaska, California, Colorado, Florida, Minnesota, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Washington, and Wisconsin.
Each one of these states has its own specific laws allowing for a reduction in WCs benefits. Nonetheless, they all offset WC benefits, and not SSDI benefits, when a claimant is receiving both. Generally, these states reduce benefits so that the combined payments for the claimant and his or her dependents does not exceed 80 percent of the employee’s average weekly wage. Typically, the states also have provisions that note the reduction of WC benefits cannot go beyond age 62 or 65, depending on the circumstances. The laws also contemplate a change in SSDI law which, in turn, will affect WC benefits by increasing or decreasing those payments accordingly.
Trump Administration’s Proposed Budget
The current administration’s 2018 budget proposal calls for changes to the country’s SSDI programs. If any of these changes are enacted, it is certain they will have substantial impacts on insurance companies, employers, state agencies, and claimants. The current programs that are set to be changed under the proposed budget includes:
- Requiring applicants to look for employment prior to applying for SSDI benefits;
- Establishing a time limit on receipt of benefits when the claimant is expected to return to work;
- Encourage state rehabilitation offices to encourage earlier intervention;
- Require those with disabilities that are caused by arthritis or lower back pain to first receive occupational health rehabilitation prior to receiving benefits;
- Include vocational services and wellness care in state Temporary Assistance for Needy Families (TANF) programs; and
- Rate the efficacy of Washington State’s Centers of Occupational Health & Education (COHE) and see if key features would be transferrable to other states or areas.
Another proposal includes reducing the amount of retroactive SSDI benefits that new claimants are entitled to receive. The reduction would go from 12 months to six months. Retroactive SSDI payments differ from SSDI back payments in that the former are paid when the claimant applies late while the latter are payments for delayed decisions. It is estimated that these changes would decrease SSDI payments in 2018 by $113 million. These cuts would continue for nearly a decade and create a total savings of $1.4 billion by 2027. The administration also seeks to offset SSDI benefits by unemployment benefits that are received, resulting in a 10 year savings totaling $2.5 billion.
Currently, there are only a handful of states in the nation that do not require an applicant’s claim to be reviewed by DDS (Disability Determination Services) before the claim is heard before an ALJ (Administrative Law Judge). Trump’s proposed budget would force all states to make a subsequent consideration of an SSDI application by the DDS before a claimant’s appeal may be heard by an ALJ. Reportedly, this change would save approximately $2.1 billion, although how precisely has not been made clear.
Finally, the budget proposes a one-year probationary period for all ALJs in an effort to ensure they are performing efficiently and satisfactorily prior to receiving appointment to the bench for life.
Potential Effects of the Proposed Budget Changes on Disability Benefits
The potential impact will likely be felt across constituencies if these proposed changes go into effect. Some real changes may include:
- Those who have filed claims – or those waiting for claim decisions – could see reduced retroactive payments, potential shifts in the payer of benefits, and possible increased rehabilitation opportunities;
- State agencies may be required to provide additional services at the state level;
- Insurance carriers may have to pay more to claimants with private insurance as a result of a shift in costs (i.e. higher payments due to lowered SSDI benefits which, in turn, may result in higher premiums); and
- Employers may be asked to provide more accommodations for disabled workers who are returning to work, may face higher premium payments, higher benefit costs (if self-insured), or may choose to lower benefit amounts.
Consult with a Veterans’ Disability Lawyer in Louisiana
Whether or not the Trump administration’s proposed 2018 budget is passed, it is likely that the way people collect disability payments through Social Security will change over the next several years. For this reason, everyone should keep a close eye on the potential upcoming changes. Contact the skilled attorneys at Ascend Disability Lawyers LLC for more details on how these changes may affect you directly. Reach out to us today to schedule your initial, no obligation, consultation.