Social Security Offsets in the Proposed U.S. Budget
Sep 2, 2017One item in President Donald Trump's proposed 2018 budget could have a major impact for workers' comp payers: the elimination of the reverse offset in benefits for those who receive both workers' compensation and Social Security Disability Insurance (SSDI).
Section 224 of the Social Security Act (42 U.S.C.. 424a) places a ceiling on combined SSDI and state workers' compensation benefits. The statute states that SSDI “shall be reduced” by the amount necessary to ensure that the sum does not exceed 80 percent of pre-disability average current earnings. The offset applies until the claimant reaches 65 years of age, or when payments end.
Federal legislation passed in 1981 prohibited states from adopting reverse-offset laws, but 15 states that already had such laws in place were grandfathered in. In the reverse-offset states, workers' comp benefits are reduced rather than the SSDI payments. That translates into significant savings of millions of dollars for employers, carriers and self-insureds.
The 15 reverse-offset states are Alaska, California, Colorado, Florida, Louisiana, Minnesota, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Washington and Wisconsin.
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