Social Security Offset of Worker’s Compensation

In Washington State, RCW 51.32.220 allows for the offset of two types of monetary benefits if an individual receives payments for Social Security Disability. Those two state benefits are temporary total disability and permanent total disability, colloquially known as time loss and pension. Notice that the statute does not permit the state to reduce awards for permanent partial disability, colloquially described as PPD. The statute fails to explicitly mention loss of earning power benefits. Washington State can only offset time loss or pension benefits in the month following the month in which the Department is notified by the Social Security Administration that they are paying Social Security Disability.

RCW 51.32.225 indicates that persons receiving Social Security Retirement, an offset against the same time loss or pension benefits, may be made by the State, so long as pension was awarded after July 1, 1986. If an individual who was previously receiving Social Security Disability and has had those payments converted to Social Security Retirement, the State’s offset formula is based on 42 U.S.C. § 424a, which is the same offset formula utilized in RCW 51.32.220. That is, the offset calculation is the same between the two State statutes.

What is significant is the time restriction the State has. Notice that the offset against State benefits any earlier than the month following the month in which the Social Security Administration notifies the Washington State Department of Labor and Industries that the injured worker is receiving Social Security benefits.

The Federal system has no such restriction! It is not unusual for injured workers to receive letters even years later indicating that the Social Security Administration cares naught for the State offset and that they intend to assess an overpayment against the previously paid worker’s compensation benefit going back as far as the Social Security and Worker’s Compensation benefits were both being paid. Sometimes, this can be many years in arrearage and amount to many thousands of dollars, well beyond the ability of the injured worker to pay.

The Social Security Administration (SSA) issues Program Operations Manual System (POMS) notices that explain their authority and procedure for their actions. POMS DI 52120.265 directly addresses the Social Security Administration’s offset procedure against Washington Worker’s Compensation benefits. The SSA indicates that they will offset any and all monetary benefits paid to injured workers in Washington State. Those benefits are: time loss compensation, benefits paid during Option 1 vocational plans (Option 2 is excluded), loss of earning power, pension, permanent partial disability, money paid in a formal structured settlement, and third party side bar consideration with self-insured employers. The offset is imposed by SSA for the retroactive period of the award of Social Security Disability, and the month after the beneficiary attains age 62. In March of 1982, Washington extended its offset provision from age 62 to 65 for workers receiving time loss or pension on or after January 1, 1983.

If there is a third party action against which the Department of Labor and Industries is reimbursed to some extent, there is no Social Security offset against the amount repaid to Labor and Industries.

The amount of Social Security offset may be reduced by the amount of attorney fees paid to obtain the Worker’s Compensation benefits.

If you receive both worker’s compensation benefits and Social Security disability or retirement benefits, you must seek the advice of an attorney experienced in these offset provisions to understand how they will apply to you. You may also want to consult someone at either the Washington State Department of Labor and Industries and/or the Social Security Administration. The last thing you want is an unpleasant surprise years after you are comfortable in your life thinking all offsets have been taken. Remember that the Social Security Administration is aggressively recovering their offset long after the Washington State Department of Labor and Industries took theirs within their one year limit. Remember, the Social Security Administration does not have this one year limitation. It is best to be prepared.