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Thursday, April 4, 2019

Trump Administration Proposes Elimination of the Reverse Offset

The Trump Administration in its proposed FY 2020 Budget has proposed elimination of the workers’ compensation reverse offset. The elimination will act as a cost saving measure and will level the playing field for all workers’ compensation system throughout the United States.

The Budget submitted to Congress earlier this month anticipates a cost saving of over $217,000,000 dollars for 2010-2019 alone if the reverse offset was eliminated. See FY 2020 Budget p. 119. “The savings is part of a proposed $1.9 trillion cost savings from mandatory safety-net programs, like Medicaid and Medicare, the federal health care programs for the elderly and the poor.” See, “Trump Proposes a Record $4.75 Trillion Budget”, NY Times 3/11/2019.

The Whitehouse, asserting that the Budget would curb wasteful Washington spending and put taxpayers first, released the following statement, “In the last two years, President Trump and this Administration have prioritized reining in reckless Washington spending. The Budget that we have presented to Congress and the American people, “A Budget for a Better America,” embodies fiscal responsibility, and takes aim at Washington’s waste, fraud, and abuse,” said Acting Director Vought. “Our national debt nearly doubled under the previous Administration and now stands at more than $22 trillion. This Budget shows that we can return to fiscal sanity without halting our economic resurgence while continuing to invest in critical priorities. President Trump’s Budget for 2020 will balance in 15 years, end runaway spending, and secure prosperity for future generations. “Administration Presents President Trump’s Fiscal Year 2020 Budget Request,” 3/11/19.

As Judge David Langham has noted, NJ is one of a few remaining states, that include: Alaska, California, Colorado, Florida, Louisiana, Minnesota, Montana, Nevada,, New Jersey, New York, North Dakota, Ohio, Oregon, Washington, and Wisconsin, where insurance companies/states instead of the Social Security Administration, still are permitted under law, to take a credit. See Social Security Program Operations Manual System (POMS).

Social Security provides that, “Claims that involve a reduction in disability insurance benefits (DIB) benefits due to the receipt of workers’ compensation (WC) and/or public disability benefits (PDB) are selected for a possible benefit increase every three years (i.e., triennially) due to a rise in the national earnings level. This redetermination [REDET] of the ACE is protection against inflation.” See, DI 52150.080 Triennial Redetermination (Redet) of the Average Current Earnings (ACE)

“The New Jersey Workers' Compensation Act permits an offset for social security disability benefits against workers' compensation benefits. Those individuals under the age of 62 who receive benefits pursuant to the Workers' Compensation Act in accordance with either statutory section 34:15-95 or 34:15-12(b) are subject to having their benefits reduced by an amount equal to that payable under the Federal Old-Age, Survivor's and Disability Insurance Act but in an amount not to exceed the reduction statutorily prescribed in 42 U.S.C.A.” Gelman, Jon L, Workers’ Compensation Law, 38 NJPRAC 18.1 (Thomson-Reuters 2018).

And NJ administratively does not allow COLA increases under the Triennial Redetermination [REDET] of the Average Current Earnings (ACE) an adjustment. See, “As long as the State has a process that recognizes the statutory framework of the offset provisions under section 224 of the Act, its application and procedures for addressing the triennial redetermination process under 22470 is within State jurisdiction and not subject to Federal review,” Letter G Sklar to LJ Crider, 12/10/2004, 38 NJPRAC Appendix E, p.473 (Thomson-Reuters 2018).

The Trump Proposal will balance the playing field for all states so costs would be equalized and no one single state would could take an economic advantage by shifting cost to US taxpayers. It would also allow additional benefits to be paid to injured workers in present reverse offset states now unable to obtain REDIT payments. The Trump Administration FY 2020 Budget on this issue is on-point and is a major step forward for all.


Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  has been representing injured workers and their families who have suffered occupational accidents and illnesses.