The Interplay Between Social Security and Workers’ Compensation Benefits

By Marla A. Joseph, Esquire

I. Social Security and Social Disability offsets

There are various offset calculations that may apply when a claimant is receiving both workers’ compensation and Social Security benefits. In order to determine the extent of any offset, as well as the benefit that will be considered primary, one must consider: a) the date of the claimant’s injury; b) the claimant’s age; c) the commencement date of the Social Security benefit; and c) the specific type of Social Security benefit that the claimant has received or may be eligible to receive throughout the course of his worker’s compensation claim.

Section 204(a), which applies to work injuries occurring after June 24, 1996, permits an employer to take an offset of 50% of a Claimant’s old age Social Security benefit (a.k.a. Social Security). Section 204(a) of the Act states, in relevant part:

77 P.S. § 71(a), as cited in White vs. WCAB (City of Pittsburgh), 38 A.3d 103 (Pa. Cmwlth. (2011), Appeal denied by White v. Workers’ Comp. Appeal Bd. (City of Pittsburgh), 2012 Pa. LEXIS 1419 (Pa., June 27, 2012).

In White vs. WCAB (City of Pittsburgh), supra, the claimant argued that on the basis of age, Section 204(a) violated the equal protection clause of the Pennsylvania Constitution, Article 1 Section 1, Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 71(a). The court explained:

White, supra, at 1033.

The White court held that the Legislature had a rationale purpose for enacting Section 204(a), as it served the legitimate interest of cost containment for employers and the concomitant competitive benefit such cost containment offers for Pennsylvania businesses. Furthermore, the court held that the old age offset provision was a rationale basis to meet this objective. The court stated:

Id. at 1036. (Footnotes omitted).

Since Section 204(a) has been upheld on constitutional grounds, it is important for the practitioner to ensure that all threshold elements have been satisfied. As noted above, Section 204(a) applies only to injuries occurring after June 24, 1996. Moreover, Section 204(a) only entitles an employer to a 50% offset if the Claimant began receiving Social Security Old Age benefits after her work injury. Id. Furthermore, the only Social Security benefit to which Section 204(a) applies is Social Security Old Age benefits. In White, supra, the court stated:

Id. at 1036.

While an employer may take a 50% offset when the aforementioned threshold criteria are satisfied, Claimant’s attorneys should review each client’s particular economic and legal situation because a Claimant has no legal obligation to collect Social Security old age benefits and there may be an economic benefit for a claimant who chooses to delay her receipt of Social Security old age benefits. For example, claimants who are born between 1943-1954 are eligible for full Social Security Retirement benefits at age 66. (See http://www.ssa.gov/pubs/ageincrease.htm for a detailed listing of the applicable Social Security retirement ages based on birth year.) If a claimant in this age category elects to take her Social Security Retirement benefits at age 62, not only will she receive about 30% less in monthly Social Security benefits (see http://www.ssa.gov/retire2/agereduction.htm for the effect of early retirement), but she will begin receiving a lower workers’ compensation check, that could ultimately result in a lower lump sum settlement.

Another important consideration is whether it may behoove a claimant to delay the receipt of Social Security Retirement benefits. It is important to emphasize that those who elect early Social Security Retirement benefits must opt in to receive early Retirement/Old Age benefits. By deferring receipt of old age benefits beyond full retirement age, not only may this maximize your worker’s compensation income, but for every year that one defers her receipt of Social Security Retirement benefits up to age 70, the Social Security Administration will increase your annual benefit.

Footnote 6 of White, supra, states: Claimant lists in her brief other types of Social Security benefits not required to be offset pursuant to Section 204(a) of the Act including: wife’s insurance benefits, husband’s insurance benefits, child’s insurance benefits, widow/widower’s insurance benefits, mother’s/father’s insurance benefits, parents’ insurance benefits, and disability insurance benefits. Cl. Br. at 11.

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