Although never anyone’s objective when they’re injured, it is not entirely uncommon for a Vermont work injury to result in an inability to return to work. Sometimes, even if the work injury isn’t preventing you from working, a different physical or emotional condition leads to that result. Regardless of whether you make a claim for PTD benefits through the Vermont workers’ comp process, a person who is unable to work may be entitled to social security disability insurance (SSDI) benefits from the United States Government. The Vermont workers’ compensation process is entirely separate from the federal SSDI process, but applying for and/or receiving SSDI benefits while a workers’ comp claim is pending adds a minor twist to certain aspects that claim.
Workers’ compensation and SSDI generally interact in two ways. First, if you are receiving SSDI benefits at the time your workers’ compensation claim results in a lump sum payment (either on a Form 22 for PPD or a Form 16 full and final settlement), your SSDI benefits may be reduced as a result of that payment. This reduction, known as an “offset,” occurs when your combined monthly SSDI and workers’ compensation benefits add up to more than 80% of your pre-disability “average current earnings.” Fortunately, there are opportunities to reduce (or even eliminate) this offset with the help of an attorney. First, your attorney’s fees, expenses of litigating the claim, vocational rehabilitation costs, and any past or future medical expenses which are included in the lump sum amount (unless paid by Medicare) may be excluded. Second, the offset can be significantly reduced by breaking out the lump sum amount over the rest of your anticipated life expectancy. While you’ll still receive the full lump sum amount, detailed settlement documents can “amortize” that payment over the hundreds of months you’re expected to live, thereby also reducing or even eliminating the offset by bringing your combined monthly payment below the 80% “average current earnings” mentioned above. If the offset is not eliminated entirely, it will nonetheless end when you reach retirement age and begin receiving social security retirement benefits. A person who receives only social security retirement benefits is not subject to the offset at all.
The second way social security benefits affect your workers’ compensation claim is due to Medicare’s refusal to be primarily responsible for paying medical bills attributable to a workers’ comp injury. This refusal arises in two ways. First, Medicare will demand that it be repaid for any previous medical bills relating to your injury. Second, if you are fortunate to negotiate a full and final settlement (including compensation for future medical expenses), Medicare requires that its “interests” be protected with respect to future medical treatment — it does not want you to receive compensation for future medical expenses now, but then make Medicare pay for that treatment later. To avoid shifting the burden of future medical expenses to Medicare, a Medicare Set Aside (“MSA”) usually must be obtained by the insurance carrier, which estimates your future medical expenses. Depending on the amount of the settlement, and your status as a Medicare beneficiary (or a potential Medicare beneficiary), the MSA also may need to be submitted to the Centers for Medicare and Medicaid Services for review and approval. This process can take several months as well. Ultimately, the MSA funds will need to be placed in a separate bank account and used to pay for your future injury-related treatment. Medicare will then pay for treatment after the MSA has been fully spent.