Older Workers And The Retirement Presumption

There are many factors in the United States forcing workers to continue to work into their traditional retirement years.  Although this provides a source of dedicated workers, the downfall is that injuries tend to result in prolonged periods of disability and missed time following an injury.  It is important for members of the claim management team and attorneys defending these claims to coordinate efforts and evaluate the use of a retirement presumption defense.

Misconceptions about the Aging American Workforce 

People are living longer in the United States.  The result is people are staying in the workforce well into their “retirement years.”  A recent survey noted that 37% of non-retired American say they expect to retire after age 65, and 26% at age 65.  This is steady increase for past years when Americans were planning to retire at an earlier age.  This trend is having the following impact on workers’ compensation and other disability programs:

• Increasing pressure and underfunding of the Social Security system = decreased benefits;

• Increasing dependence on other social “safety net” programs; and

• Increasing severity in injuries resulting in higher benefit awards.

Failing to Prepare for the Aging American Workforce

The aging American workforce has caught employers and other interested stakeholders by surprise.  The results of a recent DMEC & Cornell University study titled State of the Field: Absence and Disability Management Practices for an Aging Workforce should serve as a wake-up call.

• 6% of employer respondents “very” to “somewhat” concerned about an aging workforce. The transportation industry had the highest level of concern, and the financial/banking/insurance industry had lowest level of concern;

• 64% of employer respondents have not considered the aging in absence and disability programs. It was also noted that “many organizations are concerned about the implications of an aging workforce, but relatively few have considered an aging workforce in designing integrated absence and disability management programming.”

Effectively Defending Disability Claims with Dealing with Older Employees

The proper defense of every workers’ compensation claim starts with treating the injured worker with dignity and respect.  This is especially the case when dealing with persons who have worked for an employer for a majority of their working career.

One defense available in many jurisdictions is the “retirement presumption.”  This defense is typically codified in a workers’ compensation act.  Under this presumption, a certain age or receipt of Social Security Retirement Insurance Benefits creates the conclusion that a person is retired and not entitled to workers’ compensation disability benefits.  This would include Temporary Total, Temporary Partial and Permanent Total Disability benefits.

Successfully Using the Retirement Presumption Defense

Not all jurisdictions have a “retirement presumption” codified in statute or recognized under case law.  In all instances where such presumption exists, it is important to remember the defense rebuttable.  This means the employee can present evidence to demonstrate they are not retired or do not intend to retire, and thus entitled to future wage loss benefits.

When trying to employ this defense, it is important to evaluate the following factors based on medical and vocational evidence, as well as the actions or testimony of the employee.

• Express intention to retire at a certain age, or implicit actions on their part that suggest a departure from the labor market;

• Actions by the employee to apply for Social Security retirement benefits;

• Information concerning the financial status of the employee. This includes other sources of income, investments, pensions and 401K plans;

• Discussions of retirement by the employee with the employer and their representatives. Information about the employee’s intentions to retire can also be found in medical and vocational records;

• Diligent (or lack thereof) job search efforts by the employee; and

• Testimony from other lay witnesses regarding the employee’s intentions to retire. 

Conclusion

Dealing with an aging workforce entails a number of challenges for stakeholders in the workers’ compensation system.  When claims occur with these parties, it is important to evaluate all possible defenses, including the retirement presumption defense.

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.