Individuals who are injured or who develop an occupational condition or disease arising out of their job may be entitled to Workers’ Disability Compensation benefits by virtue of the fact that they had medical bills or lost wages caused by the injury/condition/disease. All related, reasonable, and necessary medical expenses should be covered. Payment of your medical bills does not hinge on how bad the injury was or whether any time was lost from work. However, payment for your lost wages does require a bit more. You must be off at least 14 consecutive days in order to have all lost days compensated at the appropriate benefit rate.* In addition, you may have to prove that your injury/condition/ disease prevents you from earning wages in the same salary range, in other work that you are qualified and trained to perform, other than the job you were performing at the time of your disability.
Occasionally, a worker is injured badly enough or is sick enough that Social Security Disability comes into play. Social Security is much more restrictive in terms of the seriousness of injury/condition/disease, the amount of time lost, “waiting periods”, set-offs (or coordination) of workers’ compensation benefits, and the benefit rate. Unless you have already been unable to work for 12 consecutive months or are expected to be, you normally won’t qualify for Social Security Disability Benefits. The Social Security definition of disability is that you have an injury/condition/disease that is so bad that you are unable to engage in any “substantial gainful activity” for 12 full months or more. Social Security Medicare coverage is normally not available until you are disabled for 29 months. If you are found to be disabled under the Social Security Act, you still do not get paid for the first five full months of your disability. It does not matter how long your disability eventually lasts, you still lose those first five full months as a “waiting period”. Next, Social Security will determine if your worker’s disability compensation benefits affect the benefit rate you are entitled to. A typical full Social Security Disability rate might be around $1,500/mo. If you do not receive any workers’ compensation, that is the amount you could expect to receive for each month of your disability after the five full months waiting period, with the possibility of a COLA increase each December. However, if you receive Long Term Disability and/or certain types of Pensions, you may have to reimburse the LTD insurer or pension for payments they made for any of the same months you receive Social Security Disability benefits. If you are also receiving workers’ compensation benefits, you might not get your full Social Security disability rate. In general, Social Security does not allow you to receive in combined workers’ disability compensation benefits and Social Security disability benefits, more than 80% of your best year’s average monthly earnings. They usually use the highest-earning year during the five years before your disability began.**
For example:
Best year: $48,000 = $4,000/mo. average
Earnings: (80% max. allowed = $3,200/mo.)
Workman’s: At $700/wk x 52 = $36,400/yr.
Comp. pay divided by 12 months = $3,033.33/mo.
Since Social Security won’t let you collect more than $3,200/mo in workers’ disability compensation benefits and Social Security disability benefits combined, you will only receive $166.67/mo ($3,200-$3,033.33) in Social Security disability benefits, rather than your full $1,500/mo. in Social Security Disability. Frequently, workers’ compensation claims are settled or “redeemed” for a lump sum in lieu of continuing weekly benefits. You would think that once you settled your workers’ compensation claim for a lump sum and ended those weekly benefits, Social Security would no longer reduce your Social Security benefits. You would be wrong. Unless the Workers’ Compensation Magistrate who approved the settlement makes special findings clearly stated in the Redemption (Settlement) Order, Social Security will treat your lump-sum settlement as though you continued to receive weekly benefits at the same rate until that lump sum is exhausted.
For example:
Workers’ Compensation Settlement: $75,000
WC Benefit rate before settlement: $700/wk.
If the Redemption Order contains no language limiting the attribution of the money to you, Social Security will deem you to still be receiving $700/ wk for the next 107 weeks. Accordingly, they will continue to offset/coordinate your Social Security benefits at that rate for a little more than two years so that instead of $1,500/mo, you would only receive $166.67/mo. To avoid this type of offset, your Redemption Order needs to attribute the portion of the money you will receive from the settlement as being spread over your life expectancy. By doing this you greatly reduce the monthly amount that is attributed to workers’ disability compensation benefits and thus eliminate or greatly reduce any offset to your Social Security benefits.
If you do settle your workers’ compensation claim and you are collecting Social Security benefits, you also have to consider Medicare’s interests. As stated above, a person entitled to Social Security disability benefits will also be entitled to Medicare health insurance coverage. Medicare coverage will go into effect 29 months after the date that you are found to be disabled by Social Security (5 month waiting period plus 2 years). Medicare is a “secondary payer.”. That means that if there is a primary payer, then Medicare will not pay for medical treatment. If an individual is entitled to workers’ compensation benefits, the primary payer for work-related medical expenses would be the employer or the employer’s workers’ compensation carrier. Therefore, to settle the workers’ compensation claim where the person is on Medicare or is Medicare eligible within 30 months, Medicare’s interests must be considered so that Medicare is not stuck for future work-related medical expenses. As a result, a medical trust account entitled, ‟Medicare Set-Aside” (MSA), must be established. To do this, an analysis of what the future work-related medical expenses will have to be performed and submitted to Medicare for approval. Once this has been approved, the workers’ compensation case can be settled and the defendant’s employer/insurance carrier would not only have to pay the lump sum settlement amount but would also have to fund the MSA account. This account usually is administered by the worker and can only be used to pay future work-related medical expenses.
*If only 0-7 days are lost, none are paid. If only 8-13 are lost, only the 8th through 13th are paid. **Other formulae are used in certain circumstances The partners of the Law Firm of Borella & Amsbaugh, P.C., Arthur A. Borella, and Richard M. Amsbaugh have a combined 55 years of legal experience. We represent individuals in Worker’s Disability Compensation claims, Social Security Disability claims, as well as all types of personal injury claims. For a free consultation, please contact us.
Any suggestions concerning future topics to be discussed in this column can be mailed to Arthur Borella at 40400 e. Ann Arbor Road, Suite 201, Plymouth, MI 48170-4590. In addition, Mr. Borella can be reached by e-mail at aaborell@yahoo.com, or by phone at 1-800-553-3024.
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