It is important for attorneys and members of the claims management team to understand the impact Social Security Disability (SSDI) has on their claims. This is due to many reasons, including the increasing number of workers’ compensation claimants who are either receiving these benefits or will receive them during an open claim.
How does someone become eligible for SSDI benefits and what impact does it have on my workers’ compensation cases?
An individual must apply for SSDI benefits through the Social Security Administration. As a general rule, a person must meet the following criteria to qualify for benefits:
- Have a physical or mental condition that prevents them from engraining in “substantial gainful activity” (SGA);
- The SGA is expected to last for at least 12 months;
- Be under the age of 65 years; and
- Have accumulated at least 20 social security credits in the 10-year period prior to their disability.
A third party can receive information on a beneficiary’s status via the SSA-3288 Consent for Release of Information.
What factors should I consider when the claimant in my workers’ compensation claim receives SSDI benefits?
There are many items interested stakeholders must consider once a claimant in a workers’ compensation claim applies for and receives SSDI benefits.
- Entitlement to permanent total disability (PTD) benefits. In some instances, there is a statutory presumption the employee is entitled to these benefits. In other jurisdictions, compensation judged and industrial commissions will strongly consider this as evidence of permanent disability.
- Limitation on ability to receive various wage loss benefits. If the award is for Social Security retirement (OASDI) benefits, there may be an applicable retirement presumption defense.
- An award of SSDI benefits should also make claims handlers and attorneys consider a Medicare Set-aside in any settlement.
Presumptions and other considerations vary in each state. Always consult with an attorney if you have questions.
How do Social Security and Medicare impact my workers’ compensation case?
Medicare Secondary Payer compliance is an important issue to understand in workers’ compensation claims. A claimant will become eligible for Medicare two years after their date of the disability. Once a claimant becomes eligible for Medicare benefits, it is important to fully investigate a claim and consider Medicare’s interest as part of ongoing litigation and resolution of the claim. Issues to consider include:
- Conditional payments: These are payments made by Medicare when it is reasonably expected that payment will not be made by a primary payer (insurance carrier).
- Future Medicals: Interested stakeholders should also evaluate their cases for preparing a Medicare Set-aside allocation and understanding the voluntary MSA review and approval process.
- Section 111 Reporting: Insurance carriers will likely have reporting obligations for Ongoing Responsibility for Medical (ORM) and Total Payment Obligation to Claimant (TPOC) once a case settles. Failure to report can result in fines of up to $1,000 per day/per claim.
What are the common pitfalls to avoid in workers’ compensation cases?
Several states have SSDI “reverse offset” provisions built into their workers’ compensation benefits systems that impact cases involving a claimant receiving benefits. The purposes of these offset provisions are to ensure a claimant does not receive a benefit windfall or excessive benefits when being paid both workers’ compensation wage loss (TTD, TPD and PTD benefits) and their SSDI award.
In other instances, a claimant may also receive Medicaid benefits. Investigation of this issue is important as state Medicaid agencies have rights of recovery that could cost the unsuspecting the payment of additional monies.
Effective claims management starts with understanding the impact of SSDI and Medicare benefits on workers’ compensation. This includes the eventual entitlement to Medicare and opportunities to use an offset. Failure to consider these matters can become a costly mistake for any workers’ compensation program.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a 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 & lead trainer of Amaxx Workers’ Comp Training Center.
Workers’ Comp Roundup Blog: https://blog.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.