As social security disability benefits attorneys, we answer a number of questions from our clients about circumstances which can affect their benefits. One of the questions we hear most often is:
“How will a workers’ compensation claim affect my SSDI benefits?”
Unfortunately, there is no simple answer to this question. But the bottom line is that some workers who were injured or suffered an illness as a result of their employment will be eligible to receive both workers’ compensation as well as SSDI. However, there is a maximum amount of combined benefits that individuals are allowed to receive from both sources. In order to ensure that an SSDI/workers’ compensation recipient stays below the maximum benefit amount, the Social Security Administration (SSA) will offset that individual’s SSDI benefits. This process of reducing a worker’s SSDI benefit amount in order for the total SSDI/workers’ compensation benefits not to exceed the maximum allowable amount is known as a workers’ compensation “offset.”
The maximum total monthly amount of combined benefits that a recipient is allowed to receive under federal law is known as the applicable limit. A recipient’s applicable limit is calculated in one of two ways. It is the higher of either:
For most recipients, the higher figure will be choice a., 80% of the average current earnings; therefore, this is the figure that the SSA will most likely use when calculating your offset amount.
How does Social Security calculate average current earnings? It takes the highest one of the following three amounts.
For most SSDI recipients, the highest figure comes from c., the average monthly earnings from a single calendar year. Therefore, in order to calculate a recipient’s applicable limit, the SSA will most often calculate 80% of your average monthly earnings from a single calendar year, either the year you began receiving SSDI or one of the 5 years prior to that.
Once the SSA calculates 80% of your average current earnings, they will then look to see how much you are earning from your SSDI and workers’ compensation benefits combined. They then see if this amount is higher than your maximum benefit and, if it is, then they will reduce your SSDI benefits until your total benefit is the maximum allowed.
So, as an example, let’s say that in her highest year of earnings, Sara earned $2000 per month. She now receives $1300 per month in SSDI benefits and $800 per month in workers’ compensation benefits. Sara’s maximum benefit is 80% x $2000, or $1600. The amount she is receiving now is $1300 + $800 = $2100, or $500 more than she is allowed. Therefore, the SSA would reduce Sara’s benefits by $500 per month, bringing her SSDI benefit down to $800 per month. She would continue to receive this reduced amount until she reached full retirement age and began collecting social security retirement benefits.
In case you weren’t already confused by all of the information above, things get even dicier when it comes to lump sum workers’ compensation benefits. Let’s say Jim, 26 years old, is receiving $1500 per month in SSDI benefits. His maximum allowable benefit is $1600 per month. He receives a lump sum workers’ compensation award of $20,000. How will the SSA calculate whether, and by how much, his SSDI benefit should be reduced?
When a worker receives a lump sum workers’ compensation benefit, that benefit is usually accompanied by an agreement which outlines how that lump sum amount should be broken down. If it does not, however, then the recipient will suffer the consequences. The SSA, without appropriate language telling them how that benefit equates to a monthly amount, will be able to use their own formula to calculate the required offset. And the formula(s) used by the SSA are often not to the recipient’s benefit.
This is where having the expertise of a well-practiced attorney can make all the difference. Let’s say Jim’s attorney knew what he was doing, and he used his familiarity with the law (and with Jim’s individual circumstances) and included language in the lump sum agreement which said that the lump sum amount was calculated as $50 per month for 400 months ($50 x 400 = $20,000). Because Jim is receiving $1500 per month in SSDI benefits, and his maximum allowable benefit is $1600, then the SSA would not offset Jim’s SSDI at all. That’s because Jim’s new monthly benefit amount would be $1500 SSDI + $50 workers’ compensation = $1550, less than the maximum benefit of $1600. While many recipients are likely to have their SSDI benefits reduced by some amount, nearly all of them will have their benefits reduced by less if their workers’ compensation lump sum benefit agreement is written by a knowledgeable attorney.
The SSDI benefits application process is a stressful one. But if you have been injured or fell ill as a result of your employment and are therefore eligible for workers’ compensation benefits, the waters become even more murky. Because you have been injured and are unable to work like you used to, you need to be more mindful of your income and expenses than ever before. Hiring an experienced workers’ compensation and SSDI benefits attorney can help to ensure that you are collecting the maximum amount of benefits in order to help you and your family survive during this difficult time.
Imagine if this was you or your spouse. The California Legislature passed SB 863 and the recent Dubon case has taken the Workers’ Compensation courts out of deciding medical issues. This has effectively denied crucial medical care for thousands if not hundreds of thousands of California citizens. If the Insurance company denies a treatment and does not follow the law, you will likely not get your day in court to challenge the violations. Read the full story from C.A.A.A below:
California Applicants’ Attorneys Association (CAAA): JOSÉ DUBON: The Human Face Behind WCAB Decision; Consequences of Insurers Gaming UR System, Withholding Medical Records
The California Applicants’ Attorneys Association (CAAA), whose members represent Californians injured on the job, today released a UR DENIED story on José Dubon, the injured laborer whose case has resulted in three different Workers’ Compensation Appeals Board decisions, addressing what insurers are required to provide to Utilization Review (UR) to make the UR valid. Insurance carriers’ Utilization Review (UR) denies one in five physicians’ requests for medical treatment – up to 3,500,000 per year. The Dubon v. World Restoration case is an excellent example of the widespread failure of claims administrators to provide adequate medical records to the UR reviewer. “José Dubon’s case has produced a WCAB decision that addresses insurers’ withholding of key medical records. Today, we are releasing the human story behind the Dubon I and II decisions,” CAAA President Bernardo de la Torre. “José waited more than a
decade for back surgery for his work injury. That is unacceptable and outrageous and shows what is wrong with the abuse of Utilization Review (UR). The law requires that injured workers receive medical care in a timely and just fashion.”
“I needed spinal surgery, but UR denied it,” said José Dubon, 56, of Anaheim, who was a laborer for World Restoration for seventeen years before hurting his back in 2004 lifting a toolbox. “The insurance adjustor failed to send my medical records to the UR doctor, who therefore saw no need for my surgery. IMR upheld the UR denial. How can UR and IMR deny surgery without seeing my MRIs & medical records?”
“Insurers’ UR companies blatantly and willfully ignore and violate the law by issuing UR denials that fail to comply with the law, yet there are no effective sanctions or consequences for doing so,” said de la Torre. “In José’s case, the key medical records weren’t sent, the records UR reviewed were woefully incomplete, and were not even itemized. José has been left to twist in the wind with no treatment while the interminable and opaque IMR review process allowed insurers
to avoid their responsibility to provide the doctor’s recommended treatment.”
The WCAB’s decisions allow insurers to game the system by failing to send UR reviewers adequate medical records to support the doctor’s recommended medical treatment, so UR denies the claim. “It takes injured workers years to go through the maze of UR and IMR obstacles. At the end of the maze, IMR Reviewers continue to uphold 84% of the UR denials of doctors’ recommended care – even doing so without examining the key medical records, as in José’s case. If this happened in group health, there would be a patients’ riot,” said de la Torre. See José Dubon’s story here:
–Contributed by Brett G.
Part Four in CAAA’s “What’s Wrong With This Picture?” Infographic on the contrast between the use of IMR decision in Workers’ Compensation vs. Group Health. Read the full article from CAAA below and let us know what you think in the comments section.
Sacramento, CA – The California Applicants’ Attorneys Association (CAAA), whose members represent Californians injured on the job, today continued its “What’s Wrong with this Picture?” series comparing quality health care measures in California workers’ compensation insurance to group health insurance. The fourth release compares the frequency of Independent Medical Review (IMR) decisions regarding denied medical treatment. The 800,000 workers’ compensation insurance patients appealed IMR treatment denials 60,776 times during a twelve-month period, while the vastly greater number of group health patients (16,000,000) filed just 1,558 appeals. This is one IMR decision for every 10,000 patients in group health vs. one for every 131 workers’ compensation patients. The IMR landslide of IMR appeals reflects a fundamental flaw in workers’ compensation: insurers send 3,500,000 doctors’ recommendations for care to their own Utilization Review (UR) companies each year.
“Why do Californians hurt at work have to file 39 times as many IMR appeals of denied care as group health patients?” asked CAAA President Bernardo de la Torre. “Because insurers use UR to deny their own doctors’ recommended medical treatment. Patients appeal to IMR because if the denial stands, it denies care for one year. Because of UR abuse, denying 84% of doctors’ recommended treatment, IMR appeals in workers’ compensation insurance are filed 39 times more often than in group health. There are no meaningful penalties in workers’ compensation insurance, so insurers are free to deny legitimate treatment without consequence. The deck is stacked against patients in workers’ compensation.”
“Hundreds of millions of dollars are spent denying doctors’ recommended medical treatment. The delays in returning to work harm both patients and their employers, who lose their productivity. The disparity between IMR group health and workers’ compensation clearly shows the system is stacked against patients in workers’ compensation insurance,” said de la Torre.
UR has almost quadrupled since 2005, and is one of the fastest-growing costs in California workers’ compensation insurance, costing several hundred million dollars per year. CAAA is urging a thorough overhaul of the UR process. “Overused and costly UR continues to penalize Californians hurt at work,” de la Torre said. “Californians hurt at work are trapped in a system where delay and denial is the norm. The contrast between medical care denials in the two systems is striking.”
CAAA based its report on information from the Division of Workers’ Compensation (DWC) and the Department of Managed Health Care, comparing twelve months’ experience in each of the two systems.