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Showing posts sorted by relevance for query reverse offset. Sort by date Show all posts
Showing posts sorted by relevance for query reverse offset. Sort by date Show all posts

Tuesday, May 14, 2019

Governor Conditionally Vetoes NJ Supplemental Benefits Bill

The NJ supplemental workers' compensation bill has been conditional vetoed by NJ Governor Murphy. In the conditional veto message the Governor notes that the legislation's unintended consequences would jeopardize NJ's "reverse offset," shift the cost responsibility and not provide an economic benefit to the injured workers. The NJ Senate then took action.

Friday, August 3, 2012

Coordinating Workers Compensation & Social Security: The Inequity Among States Continues

Source: National Academy of Social Insurance

A recently published report by the National Academy of Social Insurance reflects that a "reverse offset" (coordination of benefits) still continues in 15 states. In reverse offset states, the insurance carrier gains the financial benefit of the coordination of benefits and NOT the Federal Social Security system. 

"If a worker becomes eligible for both workers’ compensation and Social Security disability insurance benefits, one or both of the programs will limit benefits to avoid making excessive payments relative to the worker’s past earnings. The Social Security amendments of 1965 require that Social Security disability benefits be reduced
15 (or “offset”) so that the combined totals of workers’ compensation and Social Security disability benefits do not exceed 80 percent of the workers’ prior earnings. 16 Some states, however, had established reverse offset laws prior to the 1965 legislation, whereby workers’ compensation payments are reduced if the worker receives Social Security disability benefits. Legislation in 1981 eliminated the states’ option to adopt reverse offset laws, but the 15 states that already had such laws in place were exempted. 17
15 The portion of workers’ compensation benefits that offset (reduce) SSDI benefits are subject to federal income tax (IRC section 86(d)(3)).

16 The cap remains at 80 percent of the worker’s average earnings before disability, except that, in the relatively few cases when Social Security disability benefits for the worker and dependents exceed 80 percent of prior earnings, the benefits are not reduced below the Social Security amount. This cap also applies to coordination between Social Security disability insurance and other public disability benefits (PDB) derived from jobs not covered by Social Security, such as state or local government jobs where the governmental employer has chosen not to cover its employees under Social Security.

17 States with reverse offset laws are: Colorado, Florida, Hawaii, Illinois, Louisiana, Minnesota, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Washington, and Wisconsin.

More Articles About The Offset
Feb 26, 2011
A NJ Court of Appeals has ruled that the reverse-offset permitted under Federal law was allowed to be asserted by an insurance carrier years after an original workers' compensation judgment was entered. Even though the ...
Dec 01, 2009
Social Security (SSA) has been subsidizing a select group of States since 1981. The workers' compensation insurance carriers in only those select States are permitted to take a credit against SSA payments. The US Congress ...
Mar 23, 2008
In 1984 Congress amended The Social Security Amendments of 1956 and required that workers' compensation benefits were to be offset against the federal Social Security disability insurance benefit. In 1985 the offset was ...

Friday, April 5, 2013

Obama Administration Proposed Social Budget Cut Places More Stress on Workers' Compensation

It has been reported that the Obama Administration will soon propose budgetary cuts in social welfare programs. Those cuts may produce further economic stress on the nation's financially beleaguered workers' compensation system.

A reduction or rationing of medical care through Medicare will remove the safety net available to
injured workers who have been denied workers' compensation benefits initially and are delayed in the administrative/adjudicatory process.

In those states when there is a "reverse offset." the workers' compensation insurance carrier takes an offset when combined benefits exceed the ACE (Average Current Earning) before the onset of lost time, reduction of COLA (Cost of Livening Assessment) the carriers will be required to pay more dollars.

"President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal, administration officials say."

Click here to read the complete article: "Obama Budget Reviving Offer of Compromise With Cuts" NYT

Tuesday, June 22, 2021

NJ Court Upholds Bar on Implementing Triennial Determination

Disability Benefits before age 62 are not entitled to a COLA (Cost of Linving) increase in benefits, a “triennial determination.” The Court reasoned that the 1980 NJ statute allowing for a “reverse offset,” one in which the employer takes the Social Security Disability Offset, also permits NJ law to pre-empt Federal law that mandates such a recalculation. 

Tuesday, December 1, 2009

The Gift That Keeps Giving: The SSA Reverse Offset

Social Security (SSA) has been subsidizing a select group of States since 1981. The workers' compensation insurance carriers in only those select States are permitted to take a credit against SSA payments. 

The  US Congress legislated that if a State had a recognized Social Security Offset Plan in effect on February 18, 1981, then the SSA would not offset workers' compensation benefits to those injured workers. In those jurisdictions, the offset is taken by the workers' compensation insurance carrier, who gains the advantage.

It was recently estimated that that over 583,923 individuals were receiving Social Security Disability Benefits. Of those, 156,096 were eligible for an offset to be taken by SSA. But, of those, 44,748 or 28.7%, were eligible for a reverse offset to be taken instead by the workers' compensation insurance companies.

To read more about Social Security and workers' compensation click here.

Those States that have been designated as "reverse offset"States, and are permitted have  the workers' compensation carrier to take the credit are: California, Colorado, Florida, Louisiana, Minnesota, Montana, Nevada, New Jersey, New York, North Dakota, Ohio, Oregon, Washington and Wisconsin.


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.

Saturday, February 26, 2011

Court Rules Social Security Offset Not Barred by Time

A NJ Court of Appeals has ruled that the reverse-offset permitted under Federal law was allowed to be asserted by an insurance carrier years after an original workers' compensation judgment was entered. Even though the employee pleaded that the insurance company had sat on its rights for years, and done nothing to assert the offset, the Court maintained that the insurance company was entitled to reclaim the benefits it had overpaid.

Since the information provided by parties to define the numerical offset was lacking, and the decision below lacked "specific reasons and analysis," the matter was remanded for further proceedings.

NJ is one of the states that elected to have the insurance company / employer take the offset under the options available in 1980. Most states allow Social Security to take the offset.

Gonzalez v Bristol-Meyers Squibb, 2011WL611722, Docket No. A-2187-09T3 (NJ App Div 2011)

Sunday, March 23, 2008

Collecting Both Social Security Disability Insurance And Workers’ Compensation Benefits Generates Inequality of Benefits

A recent study by the federal government reports that some disabled workers who receive workers' compensation or public disability benefits may receive less money than their counterparts. The reason why this phenomenon occurs is because the Social Security benefit computation is designed to replace more of the lower earner’s pre-retirement or predisability earnings than a higher earner’s.
“The Social Security benefit computation is designed to replace more of a lower earner's preretirement or predisability earnings (average indexed monthly earnings) than a higher earner's. This is done by "bend points" in the primary insurance amount formula, which create three earnings brackets. Earnings up to the first bend point are replaced at 90 percent; earnings between the first and second bend point, at 32 percent; and earnings above the second bend point, at 15 percent, up to the taxable maximum. The three brackets are a convenient way to group workers by income (represented here by AIME). This grouping also helps distinguish differences in replacement rates, which are largely determined by the earnings bracket in which the worker belongs.”

The Social Security disability system was established in 1956 to pay cash benefits to those workers who sustained long-term disabilities and were insured for coverage. On the other hand, state workers compensation systems had been in place since 1911 and may be combined with other public disability benefits in addition to Social Security benefits.

The Social Security system, unlike state workers compensation programs, provides a nationally distributed benefit to over 8 million disabled-worker beneficiaries. State public disability benefits are paid under numerous laws including federal, state or local government were plans that provide compensation for medical conditions that are not work related. Some of them may be short-term such as state temporary disability benefits.

As of December 2005, the date that the study utilized for collection of data, there were 8,305,702 disabled-worker beneficiaries in the Social Security program. Of those beneficiaries, 1,440,772 had some past or present connection to workers compensation or public disability benefits and 798,476 at a current connection to workers' compensation or public disability benefits.

In 1984 Congress amended The Social Security Amendments of 1956 and required that workers’ compensation benefits were to be offset against the federal Social Security disability insurance benefit. In 1985 the offset was eliminated and it was again reinstituted in 1989 by Congress. Further amendments in 1996 to The Omnibus Budget Reconciliation Act Of 1981 extended the offset provision to public disability benefit programs. However, Congress excluded the offsets of workers’ compensation and public disability beneficiaries who are receiving Social Security disability benefits in those states where the State took the offset. These have been named reverse offset states. The state law needed to be in effect as of February 18, 1981. Presently there are 16 states and Puerto Rico that are reverse offset states.

The recent study involving 18 month period from January 2003 through June 2004, identifies that a proximately 11% of all Social Security disability beneficiaries were also entitled to receive state workers compensation for public disability payments. It reported that those who receive combined benefits were most likely to be male, high earners, older it retirement and from the Western states.

The report concludes that the earnings replacement rate for disability insurance beneficiaries under the Social Security system, as measured by the ratio of the monthly disability insurance benefits to the average indexed monthly earnings, demonstrates that disabled workers without workers’ compensation or public disability benefits had higher replacement rates. Therefore, collecting multiple benefits may create an economic disparity.

Monday, March 9, 2015

Is The Reserve Offset Heading for Extinction?

The Obama Administration is proposing stricter collection of workers' compensation payments data of Social Security beneficiaries.

Social Security-Budget Estimates and Related Information
Budget Overview, February 2015

"10. Establish Workers’ Compensation Information Reporting. Current law requires SSA to reduce an individual’s Disability Insurance (DI) benefit if he or she receives workers’ compensation (WC) or public disability benefits (PDB). SSA currently relies upon beneficiaries to report when they receive these benefits. This proposal would improve program integrity by requiring states, local governments, and private insurers that 23 administer WC and PDB to provide this information to SSA. Furthermore, this proposal would provide for the development and implementation of a system to collect such information from states, local governments, and insurers."


With that information, the SSA can determine if the Federal Government is accurately calculating the Federal SSA/Workers' Compensation setoff.

 The obvious inequity, cost shifting, exists in those states where a reverse offset is taken. In those states, ie. NJ, the workers' compensation insurance company takes the offset credit, and NOT the Federal Government (SSA).

The collection and publication of this data will verify the inequity between States and the cost shifting to the Federal government in some states and not others.  A demand for the elimination of this inequity may result in the extinction of the Reverse Offset.

See:  The Gift That Keeps Giving: The SSA Reverse Offset

Saturday, June 25, 2016

The Social Security Financial Report: An Insight Into the Future

Change is coming to the Social Security Disability program based upon the The 2016 Trustees Report that was published this week. It projects that the future finances of the Social Security Disability Trust Fund will require additional funding to remain solvent.

Sunday, February 7, 2021

Investigative Report Raises Issues

The tension between public pension systems and workers' compensation programs was highlighted in a recent investigative report by the NJ State Comptroller. The report raises additional critical issues common to other state and national collateral social insurance programs challenged by current fiscal limitations.

Monday, March 4, 2019

Watered down NJ supplemental benefits heads to the Governor

A watered-down version of the original NJ supplemental workers’ compensation benefits bill has been approved by the Legislature. It now heads to the NJ Governor Murphy for review.

Tuesday, March 8, 2022

Rules Adopted to End NJ Pension Cost Shifting

The New Jersey Department of Labor and Workforce Development [DLWD] adopted Rules embracing the recommendations of  NJ State Comptroller concerning NJ State Pensions. A February 2021 investigative report by the NJ State Comptroller raised critical issues common to other state and national collateral social insurance programs challenged by current fiscal limitations. The rules are effective as of March 7, 2022.  54 N.J.R.448(a). The Rules were adopted without change and have retroactive application.

Thursday, August 19, 2021

Rules Proposed to End NJ Pension Cost Shifting

The New Jersey Department of Labor and Workforce Development [DLWD] has proposed Rules that will adopt the recommendations of  NJ State Comptroller. A February 2021 investigative report by the NJ State Comptroller raised critical issues common to other state and national collateral social insurance programs challenged by current fiscal limitations. The deadline for written comments is October 15, 2021.

Wednesday, September 5, 2018

Totally Injured Workers Maybe Getting an Increase in Benefits

The proposed Trump Administration 2019 Budget (p. 115) may allow NJ workers’ compensation beneficiaries to receive an increase in benefits. By eliminating the Social Security “reverse offset,” totally and permanently injured NJ workers will receive a triennial annual COLA increase.

“The Budget includes a re-proposal to eliminate reverse offsets in fifteen states where Workers' Compensation (WC) benefits and temporary disability insurance benefits (TDI) are offset instead of DI benefits."

Tuesday, October 15, 2013

What a Government Default Will Do To Workers' Compensation

With only hours left, and the politicians in Washington DC still unsettled about how to resolve a US credit default, the focus turns to the impact on workers' compensation programs throughout the country.

Expanding on the problems besieging compensation programs following the US Government Shutdown, things are going to get much worse and very quickly. Social Security will stop paying benefits, its contractors and medical providers. Closing down those contributions will literally suffocate transactional information concerning integration of Medicare Secondary Payer Act benefits and reimbursement. Calculating offsets and reverse offsets will become an impossibility. Insurance companies in reverse offset states will be required to fund more dollars into the system as application flow into the state systems to modify prior awards still being paid.

Employers dependent upon government payments, including funding and contracts, will be unable to pay workers and insurance company premiums. Cascading financial distress will implode the economy and unemployment will become rampant.

Additional burdens will be placed upon injured workers who even already are struggling to make ends meet and obtain medical treatment with absolutely no Federal safety net in place to catch them. Injured workers with pending claims will be unable to seek medical and pharmaceutical benefits from collaterally funded programs.

Federal dollars actually fund over 70% on state rehabilitation programs. These programs will quickly dry up, and the those injured workers who are seeking placement in a new job through rehabilitation will be locked out of the states.

Workplaces will continue to be unregulated as OSHA (The Occupational Health Administration) will be unable to financially fund enforcement programs, new safety programs and even review comments for pending regulations, ie. The Smart Act.

Investigations requirement Federal records, including prior military records, will become increasingly difficult to secure. Stalling this process will delay completed workers' compensation medical records, expert evaluation opinions and the adjudication of workers' compensation claims.

Quite a mess! Not a pleasant prospect to look forward to, as the clock keeps clicking down

Sunday, September 29, 2013

The Government Shutdown is a Kick-In-Gut to Workers' Compensation

Workers' Compensation programs will be impacted by a Government shutdown because of both the offset provisions of the Social Security Act and the Medicare Secondary Payer Act (MSP). Even The SMART Act, recently enacted to hopefully establish a more efficient collection process will be derailed.

As the US House of Representatives, under Republican leadership influenced by The Tea Party, likened in Aaron Sorkin's HBO program, The Newsroom, as "The American Taliban," passed legislation to shutdown the US Government this Tuesday, serious concern exists as to the consequences of the shutdown on workers' compensation programs throughout the nation. 

In many States, whether or not a reverse offset exists, it is essential to determine what a claimant's Average Current Earnings (ACE) are to calculate, and reach a final determination of temporary and permanent disability, in a state workers' compensation claim. The access to those numbers will become difficult to obtain because of administrative rollbacks, and anticipated further delays in claims processing. Even though Federal payments will be forthcoming under protective measures, the claims process will be derailed.

Likewise, the process to obtain conditional payment information will be delayed or non-existent. The provisions of the Medicare Secondary Payer Act mandating reimbursement to The Center for Medicare and Medicaid Services (CMS) will be put on hold. Similarly, reviews for future medical compromises embodied in the Workers' Compensation Medicare Set-aside Agreements (WCMSA) will be delayed just because of administrative cutbacks in the claims system, including the appeals process.

The recently enacted provisions of The SMART Act. long sought by a coalition of cottage industries, and compensation parties, to the reimbursement process itself, will face its first major challenge to implementation as the Internet web-portable becomes non-functional. Recently proposed final Rules will face delay in implementation as the exchange of comments under the rulemaking process become further delayed in the process of submission and response.

Overall, the workers who most need the system to function, and who waited the longest time, in waiting for final adjudication of their claims, will become victim of the process. No matter how long the shutdown extends, the Federal action will highlight the continued deterioration of the complex patchwork process know as workers' compensation. The now antiquated, and once expeditious and remedial insurance system, will have suffered yet another devastating blow in its attempt to survive in a radically changing economic and socio-political system.

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

Thursday, May 7, 2015

NJ State Bar Association Opposes Workers' Compensation COLA Bill

"The New Jersey State Bar Association respectfully has concerns with S-929 (Sweeney) which concerns certain workers' compensation supplemental benefits. The New Jersey State Bar Association opposes this legislation in order to preserve the “Reverse Offset” provision in New Jersey, visa vie Social Security, which provides for a reduction of the workers' compensation benefit of a worker also receiving disability insurance. Enacting this legislation has the potential of harming the economic integrity of New Jersey’s current cost effective system by allowing for a double recovery of disability benefits and workers’ compensation benefits, which will in turn increase the cost of doing business in New Jersey. A potential alternative that would limit these adverse consequences would be to limit the application of the bill to survivor/death benefits. For the reasons set for above, the New Jersey State Bar Association respectfully opposes this bill."

Tuesday, October 2, 2007

NJ Beneficiaries Wait for Supplemental Increase in Workers’ Compensation Benefits

For almost 2 years New Jersey’s most severely injured and their families have been waiting for the legislature to act upon a law to provide for a cost of living increase of their benefits. The legislation, S-1005, would increase benefits of those injured after December 31, 1979. The bill was stalled in the legislature as the parties ironed out technical issues concerning the Social Security reverse offset. NJ is one of the few States remaining that allow workers’ compensation insurance carriers to benefit from Social Security offset rules.

Additionally NJ has side stepped the triennial increase that is provided for under the Social Security Regulations causing NJ’s injured workers not to be allowed to obtain any additional increases in benefits afforded by application of that provision of the Federal law.

The Senate Labor Committee reports favorably Senate Bill No. 1005.
This bill provides, from July 1, 2006 forward, an annual cost of living adjustment in the weekly workers' compensation benefit rate for any worker who has become totally and permanently disabled from a workplace injury at any time after December 31, 1979 and for the surviving dependents of workers who have died from a workplace injury at any time after December 31, 1979.
The cost of living adjustment would be an amount such that, when added to the workers' compensation weekly benefit rate initially awarded, the sum would bear the same percentage relationship to the maximum benefit rate at the time of the adjustment that the initial rate bore to the maximum rate at the time of the initial award, except that the amount of the adjustment shall be reduced as much as necessary to ensure that the sum of the adjustment and the amount initially awarded does not exceed the amount which would cause any reduction of disability benefits payable under the Federal Old Age, Survivors and Disability Act. The amount of the adjustment would be paid from the Second Injury Fund (SIF), which is supported by a uniform assessment spread out evenly over all employers and insurers.
Current law requires such annual cost of living adjustments (COLAs) in the workers' compensation benefit rate for death and permanent total disability to be paid from the SIF, but only in cases in which the injury or death occurred before January 1, 1980. The bill extends the adjustments to cases originating after December 31, 1979, although the adjustments would apply only to benefits paid on those claims after July 1, 2006.
The bill makes no change in the provisions of sections 1 and 9 of P.L.1980, c.83 (C.34:15-94.4 and 34:15-94.5), which provide for the reduction of certain portions of workers' compensation benefits by the amount of Social Security disability benefits paid. In addition, the bill expressly states that the supplemental benefits shall not be paid in a manner which in any way changes or modifies the provisions of those sections.

Monday, November 22, 2010

Congress Told Workers Compensation is a Deteriorating System

The former chair of the 1972 National Commission on Workers' Compensation told Congress that the present system is deteriorating and a new course of action is warranted. Profession Emeritis John F. Burton, Jr., last Wednesday testified before The Subcommittee on Workforce Protections of the Congressional Committee on Education and Labor.

Professor Burton told Congress that during the last 20 years he has observed the "...deterioration in adequacy and equity of state workers' compensation programs..." He reported that "the decline in workers' compensation cash benefits in the states during the 1990's is explained by ....changes in workers' compensation provisions and practice than  is explained by the drop in workplace injuries and disease during the decade."

Burton proposed that Congress consider new legislation to prohibit costs shifting from workers' compensation to Social Security Disability Insurance (SSDI). He advised the Subcommittee that cost shifting was continuing because 15 states were permitted to continue "reverse offset" provisions, the Social Security Administration (SSA) was paying benefits to workers who were not totally disabled under workers compensation acts, and a larger number injured workers were not qualifying for workers' compensation benefits.

As Professor points out, the aging workforce further complicates the burden placed upon the nation's Medicare system. With the erosion of the doctrine that workers' compensation takes the worker as it finds him or her, medical treatment for pre-existing conditions will be a growing cost for Medicare and a cost-shift from the workers' compensation system. The NY Times reported that, "Nearly one-fourth of Medicare beneficiaries have five or more chronic conditions. They account for two-thirds of the program’s spending."

A "reaffirmation" of "Federal standards" as enunciated in the 1972 National Commission report were recommended by Burton.  Additionally, he called upon Congress to enact legislation requiring employers and/or their insurance carriers reimburse Social Security for permanent disability cash benefits paid by Social Security for disability flowing from a work related event or disability.