Seek legal advice: interplay of New York workers’ compensation and SSDI

When a worker is eligible for both, the combined amount may be subject to offset laws.

Complicated legal issues can arise for a New Yorker with a work-related injury or illness that qualifies him or her for workers' compensation - while also simultaneously for the federal Social Security Disability Insurance program - concerning how each benefit can impact the amount of the other.

Such an injured worker should consult with a lawyer who represents similar clients and who understands the detailed interplay of federal and New York laws and regulations that govern.

Backing up to the basics

It helps to understand the basic roles and features of each kind of benefit. Workers' compensation is a creation of state law providing money benefits for work-related injury or sickness regardless of fault. New York provides such benefits for lost wages due to temporary or permanent partial or total disability, and also covers medical expenses and death benefits for survivors.

On the other hand, SSDI is a federal disability insurance program that pays money benefits to eligible claimants whose physical or mental impairments prevent them from working and are expected to last at least a year or result in death. The medical impairments must not have been work related, although they may have been.

A person eligible for both programs is normally subject to having the two kinds of benefits set off so that the combined benefit amount is less than 80 percent of the person's average weekly wage. (However, the combined reduced amount may not be lower than the amount of the SSDI payment alone.)

The offset's purpose is to make work more advantageous than the receipt of public benefits and to remain true to the public policy reason for each program, namely to replace wages at about the same level they were before the person could not work because of disability.

This is where it can get complicated. The Social Security Administration will normally reduce the SSDI benefit to the point at which in combination with workers' comp the 80-percent level is reached.

However, in certain states, laws exist that reduce the workers' compensation benefits (instead of the SSDI) to the desired combined level. These states are called reverse setoff, reverse offset or reverse jurisdiction states. The SSA only recognizes states that had such programs on or prior to February 18, 1981.

New York is recognized as a reverse setoff state, but its workers' compensation reverse offset law is narrow, applying only to beneficiaries with very old injuries receiving an uncommon type of workers' compensation benefit. In a reverse setoff state, if the state reduction does not bring the combined level down to 80 percent of the person's average weekly wage, the federal SSA then steps in again and reduces the SSDI payment the rest of the way.

The New York beneficiary's attorney can review the calculations of the SSA and the workers' comp award to confirm that they are correct.

Such offsets can be especially complex when the workers' comp is paid out in a lump sum settlement award instead of as ongoing payments. Federal law recognizes that lump sum workers' compensation awards can substitute for the money that would otherwise have been received as ongoing money benefits, and accordingly such a lump sum payment could be subject to the offset provisions.

Legal counsel is especially important in negotiating and drafting a lump sum award, as the designation of the nature of the award as well as the wording of the agreement can make a difference in setoff reduction amounts.

From Schenectady, the attorneys of Silverman, Silverman & Seligman, P.C., represent workers in both workers' compensation claims and SSDI matters in upstate New York.