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New Social Security Rules Take Effect – change to the workers’ compensation offset

March 25, 2016
Greg Tuite

There has been quite a bit of press regarding changes to the Social Security Act that were agreed to last Fall as part of the federal budget. One of the provisions eliminated the “file and suspend” strategy that was used by married couples to maximize social security retirement benefits for the couple. For example, Jack who is 66, and thus at full retirement age (FRA,) could file for retirement benefits and suspend collection until age 70 where he would collect a higher monthly amount.

When his spouse Jill reaches FRA, she could file for a spousal benefit that equaled half of Jack’s benefit. She would then wait until age 70 to file for her own benefit, which would also be higher than at age 66. This strategy has been eliminated except for certain couples that are “grandfathered” in. Even the grandfathered only have until April 29, 2016, to file with Social Security.

Workers Compensation Offset

The new law impacts Social Security recipients who also have a workers’ compensation claim. This is due to changes in what is known as the “workers compensation offset”. Receipt of workers’ compensation has always affected a Social Security disability recipient. In certain situations, the receipt of weekly temporary total disability (TTD) benefits could reduce or even eliminate monthly social security disability benefits. This reduction is based on a calculation that looks at:

  • Past earnings
  • The amount of the monthly disability
  • The amount of the workers’ compensation

This reduction can apply to settlements and awards as well as TTD. Before the amendments, any reduction because of the workers’ compensation offset would end at age 65. Under the amendments, the offset will continue until the person reaches full retirement age. For anyone born after 1959 FRA is 67. Thus social security will apply for an additional 24 months.

Luckily, there are strategies to deal with the workers’ compensation offset. Our lawyers can draft settlement language that reduces or eliminates the workers’ compensation offset. These are techniques that are recognized and accepted by Social Security. If you have a work injury and are on Social Security disability or thinking of applying, feel free to contact us to discuss how to deal with the “workers’ compensation offset”. Contact us at 877-965-5777.

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