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Friday, September 29, 2023

Impacts of a Governmental Shutdown

The effects of a government shutdown on state workers' compensation systems and their integration with Social Security will vary depending on the specific circumstances of each state. However, some general trends can be expected.

Workers' compensation insurance

Premiums paid by employers fund workers' compensation systems. During a government shutdown, employers, including Federal contractors, may be less likely to pay their premiums on time, leading to financial difficulties for workers' compensation systems, creating an additional burden on uninsured funds and the solvency funds established for insurance companies.

Social Security MSA recovery

Social Security Medicare Set-Aside (MSA) recovery authorizes the Social Security Administration (SSA) to recover money from workers' compensation settlements to cover future medical expenses. The process is authorized by the Medicare Secondary Payer Act (MSP).

The Centers for Medicare & Medicaid Services (CMS) Medicare Program will continue during a lapse in appropriations at a significantly reduced staffing level. 

During a government shutdown, the SSA may be less likely to process MSA recovery requests, which could delay or prevent workers from receiving their full settlement amounts or moving forward with administrative appeals of determinations.

Impair Workplace Safety and Accountability

The Occupational Safety and Health Administration (OSHA) would be forced to limit workplace inspections, denying workers essential protection against safety risks. Americans who are owed back pay for work would face delays due to the majority of Department of Labor investigations being suspended.

Claim Investigation and Formal Discovery

Responses for record requests from Federal agencies, including accident reports, payment information, and medical records, may be delayed. The information is essential to assess the nature and extent of an injured worker’s disability and calculate any offsets (i.e., pension, Social Security, or other reimbursements to Federal medical providers) that may not be accessible during a Federal governmental shutdown. 

government shutdown could significantly impact state workers' compensation systems and their integration with Social Security MSA recovery. Workers injured on the job or receiving workers' compensation benefits should be aware of the potential disruptions and take steps to protect their rights.


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

Blog: Workers ' Compensation

LinkedIn: JonGelman

LinkedIn Group: Injured Workers Law & Advocacy Group

Author: "Workers' Compensation Law" West-Thomson-Reuters

Recommended Citation: Gelman, Jon L., Impacts of a Governmental Shutdown, (9/29/2023),