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TO: Members Workers Compensation Lawyers Association Ltd.

FROM: David A. Bryant

DATE: October 27, 1997

RE: Proposed Federal Rule Changes Involving the Social Security Offset to

Workers’ Compensation Benefits



The Social Security Administration has issued proposed rule changes that could affect the benefits that your clients receive if they qualify for Social Security disability and workers’ compensation. Comments concerning these rule changes are due by November 3, 1997 and should be submitted directly to the Commissioner of Social Security, PO Box 1585, Baltimore, MD 21235.


These regulations stand a good chance of being adopted unless we can attract the public’s attention. The following action is suggested:

  1. As soon as possible submit your comments to SSA addressing the key points what you wish to focus on.
  2. Emphasize the complexity of the issue, the difference between the states, the fact that the changes will hurt poor working people the hardest.
  3. Copy of US Senators and Member of Congress.
  4. Share the attached information with as many colleagues (including insurance attorneys) as possible.
  5. Involve any other state organizations that will be affected including labor, women’s groups, minorities, and the elderly. SSA and Congress must hear form angry citizens, in their own words, in order for these regulations to be delayed, amended, or withdrawn.

Don’t delay, act now.



The Social Security Administration (SSA) has proposed changing its regulations, concerning workers’ compensation offset provisions (Federal Register, Vol. 62, Number 171, September 4, 1997). SSA presently offsets (reduces) social security disability benefits if an individual also receives workers’ compensation benefits and if both amounts combine to exceed 80% of pre-disability income. SSA benefits are reduced by the amount in excess of 80%.

Ordinarily, both social security and workers’ compensation benefits are paid monthly so it is easy to determine the amount of the combined benefits However, when workers’ compensation is paid in a lump sum (as a result of a settlement) that lump sum has to be estimated as a monthly amount so the combined benefits can be determined. Under current regulations, the worker can prorate the lump sum settlement based on the worker’s life expectancy or worklife which in turn reduces the overall combined amount. SSA wants to prohibit the lifetime probation.

Also, under the new proposal, SSA would be allowed to use the State’s maximum allowable compensation amount in some circumstances, which is usually much larger than the normal. Average weekly wage. This higher workers’ compensation amount will more easily exceed the 80% threshold when combined with social security, resulting in a reduction in social security benefits.


  1. It will penalize low wage earners (primarily minorities and women) who need social security the most. Because of caps on workers’ compensation and social security benefits, high wage earners are not affected by offset provisions.
  2. Disabled people will no longer be able to exclude "related expenses" like ramps, modified housing, and special vans form these calculations. SSA wants to include these expenses, thus reducing benefits to those individuals most severely disabled.
  3. The new regulations may be applied retroactively. The proposed regulations have stated no effective date. If applied retroactively, this would cause incredible disruption to the financial stability to those already receiving benefits. Word on the street is that all structured settlements prior to the enactment date will be grandfathered.
  4. Through this proposal SSA regulators are attempting to overturn Federal court decisions, which will engender expensive class-action litigation. The Federal Judiciary has already studied the offset issue and has ruled that the present calculation method meets the intent of the Social Security Act, yet SSA continues its policy of non-acquiescence.
  5. There is no empirical data t back up these proposed regulations. In the comment to the proposed regulations SSA used non-specific generalities, without any data, to support its position. The offset methodology has been in existence since 1965 and no compelling reasons exist t change in not.
  6. The new regulations do not apply to all States. Fourteen States (40% of the active workforce) may be exempt from the new rules. Injured workers shouldn’t be treated differently by any Federal agency simply because of location.
  7. There are no significant savings, if any, to SSA. Less than 3% of all SSA claims will be affected by the changes and SSA has acknowledged there will be no real cost savings. In fact, once the ramifications of this change are fully realized, it will probably increase overall costs (see number 9, 10, and 11).
  8. The SSA, a Federal administrative agency, is refusing to follow State law on various workers’ compensation issues. SSA is trying to push a "one size fits all" formula on the States, when each State has a different system and claims are different.
  9. Cost shifting will occur to other Federal and State agencies. In denied workers’ compensation cases, the individual has been receiving social security to subsist and all other bills have mounted up. Usually the settlement goes to pay back bills and helps the individual get caught up. When this money runs out and if the person is still disabled, public assistance agencies at the State and Federal level will be forced to pick up the tab. If claims cannot be settled it may take years to get them resolved. Medicaid will be hit the hardest.
  10. There will be an increase in litigation. The correct calculation of the average weekly wage is essential under the proposed rules. How it is done depends on State law and can be quite complicated. If done improperly by SSA, the Federal courts will be full of claims contesting this issue. There will also be a challenge in vario9us jurisdictions to the potential discriminatory practice created by this rule change, as well as class action lawsuits. Finally, if claims cannot be settled they must be tried and this will clog up court calendars in various States.
  11. These regulations will increase the cost of workers’ compensation insurance companies, self-insured employers and the business community. Public policy encourages settlement of claims. These changes will seriously deter the ability of the parties to settle because the injured worker will be unable to afford the reduction in social security benefits, the overall costs will rise because of the inability to close the file.


The proposed rule changes by Social Security are unfair and unwarranted, and seek to make significant changes through the rule-making process without full public input and in disregard to Federal court decisions on the same issue. The changes should be opposed and, at the least, public hearings should be held across the country so that the issue can be fully and publicly discussed.


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