Minnesota Workers Compensation and SSDI
There may be a time when you are receiving Minnesota workers’ compensation benefits that you may also be awarded social security disability benefits. It is important to understand how receiving both benefits can affect one another. Both of these benefits systems are different and have their own benefit structure. Social Security Disability Insurance (SSDI) is a federally run program while workers’ compensation is state run. The requirements for qualifying for benefits for each system are different.
The Social Security Act provides for several different types of benefits. These include retirement benefits, disability insurance benefits, and survivor’s benefits. In Minnesota, when an injured employee receives both SSDI and workers’ compensation benefits, the Social Security Act requires an offset against the social security disability benefit for workers’ compensation received. It is important to speak with a Minnesota workers compensation attorney and SSDI attorney that understands how both benefits work so you receive the correct benefits.
How is an Offset Determined?
Depending on the type of benefits you are receiving from Minnesota workers’ compensation will dictate whether your workers’ compensation benefits or SSDI benefits will be reduced. There are three different scenarios where an offset may occur
SSDI is reduced by full payment of workers’ compensation benefits
Federal Law requires that individuals who receive both workers’ compensation and Social Security disability benefits that they cannot receive a total amount of benefits greater than 80% of the worker’s pre-injury income. The Social Security Administration uses a formula to determine the maximum total benefits, from both programs, that a claimant can receive from Social Security disability benefits to stay below that figure.
In Minnesota if you are receiving Temporary Total Disability Benefits “TTD Benefits” and SSDI, and the total amounts are greater than 80% of your pre-injury income, SSA will deduct enough to get it under 80%. If you run out of TTD or TTD stops, SSA will adjust your SSDI benefits to the full amount once you let them know.
Your SSDI will not be reduced by any private disability programs such as pensions or long-term disability.
You should keep in mind this does not apply if an injured worker is receiving social security retirement as it only applies to SSDI.
Workers’ compensation is reduced by full payment of SSDI benefits
Minnesota is a “reverse offset” state. What this means is that workers’ compensation benefits that are paid as Permanent Total Disability “PTD” may be paid without an offset for SSDI. However, before it can be applied $25,000.00 of weekly compensation benefits must be paid. Only after $25,000 will SSDI pay the full amount.
In the event you have received temporary total disability benefits before receiving PTD benefits you may be able to have your TTD reclassified as PTD. By doing so, you can recover additional benefits for SSDI if they had previously offset for receipt of TTD.
Only in limited situations will Social Security accept reclassification of TTD benefits:
- An administrative order or finding of the Department of Labor and Industry which states past, present, and future total disability benefits are deemed to be payments for PTD, or
- A decision of a Compensation judge which states that past, present, and future total disability benefits are deemed to be payments for PTD, or
- A Stipulation for Settlement approved by the Department of Labor and Industry or compensation judge that states that past, present and future total disability benefits are deemed to be payments for PTD benefits.
When the order, finding, decision or approved stipulation reclassifies TTD as PTD, the offset is removed effective with the date $25,000.00 in PTD benefits are paid.
If the award does not specify that it is permanent total, then it is subject to a SSA offset.
A Workers’ Compensation Settlement May Affect Your Receipt of SSDI Benefits?
If you have a workers’ compensation settlement and receiving SSDI benefits, or planning on receiving SSDI benefits, it is imperative that you have language in your Stipulation for Settlement addressing social security.
When a lump sum settlement is awarded, SSA does not have a “monthly” amount to use to calculate the correct offset. As result, it is important that language is included to prorate the settlement amount over the injured workers’ life expectancy. Without the Social Security language in the worker’s compensation order, Social Security takes the amount of the settlement, exclusive of attorney’s fees, medical expenses, and other case expenses, and divides by the monthly amount of worker’s compensation benefits that the disabled worker has been receiving in temporary periodic payments. The result of this calculation is the number of months the full offset will continue; thus, the offset will remain the same even though the individual is no longer getting temporary checks from workers’ compensation.
In order to avoid SSA offsetting the settlement proceeds incorrectly, a lifetime proration language needs to be included in the Stipulation for Settlement. Based on the holding in Sciarotta v. Bowen, injured workers are allowed to take the settlement amount and prorate it over their life expectancy. The SSA website offers a life expectancy calculator that can be used. Once you determine the employee’s life expectancy figure, you would simply take the gross lump sum amount and divide it by their life expectancy figure in weeks and months, to get a compensation rate post-settlement.
The Social Security Administration requires an explanation of how the Sciarotta rate was developed. This is done by explaining which life expectancy figure was used and that the Employee’s compensation rate has been prorated pursuant to the holding in Sciarotta v. Bowen.
Speak with a Workers Compensation Attorney
As mentioned before, the interplay between Workers’ Compensation and Social Security Disability can be complex. It is important to have an attorney who is experienced in these areas, to ensure that your rights are protected. Contact a Minnesota workers compensation attorney today to discuss your rights.