What if you are at or near retirement age, injure yourself at work, and start to collect Pennsylvania workers’ compensation benefits? Can you collect Social Security retirement benefits at the same time? What about a pension? A severance? Unemployment benefits? We’re here to provide you with the answers.
Let’s begin with the basics: you get hurt on the job, and the workers’ comp. insurance company for your employer starts to pay you weekly benefits. The amount will be calculated based on a formula – it’s normally between 66.7% and 90% of your weekly wages at the time of your injury. These benefits are non-taxable; no taxes will be deducted, and you will not have to report this money on your tax return.
Things can get complicated if you receive other money in addition to your workers’ comp. benefits. Let’s say that six months after your work injury, you become eligible to receive Social Security retirement benefits, also known as “old age” benefits. Because you need money to supplement your workers’ comp. benefits, you apply for and start to receive Social Security benefits. Under the law, the workers’ comp. insurance company is permitted to take a credit of 50% of your Social Security benefits. So how would this play out? Suppose you’re receiving $800 per week in workers’ comp. benefits. You are approved by Social Security for old age benefits of $2,000 per month, which equates to $460.83 per week. Fifty percent of $460.83 is $230.42 so your workers’ comp. benefits would be reduced by that amount, to $569.58.
However, if you had already been receiving Social Security old age benefits and then injure yourself and start to collect workers’ comp. benefits, the insurance company cannot take a credit – you are entitled to your full workers’ comp. check, unreduced by what you’re receiving from Social Security. There is one caveat; the insurance company is entitled to a credit if a person’s Social Security disability benefits convert to old age benefits.
Will that affect the amount of your weekly workers’ comp. check? It depends. If the pension is from a prior employer – not your time-of-injury employer – there will be no credit. But if you’re receiving the pension from your time-of-injury employer, then the insurance company can take a credit to the extent that it funded those benefits. You may ask – what exactly does that mean? If your employer contributed 25% to your pension account, the insurance company could reduce your workers’ comp. benefits by 25% of your monthly pension payment.
Again, let’s use the hypothetical that your weekly workers’ comp. check is $800. If your monthly pension is $1,500, this would translate to $345.62 per week. If your employer contributed 25% toward your pension, with your payroll deductions covering 75%, then the insurance company could take a credit of $86.41, thereby reducing your weekly workers’ comp. check to $713.59.
Depending on your life circumstances, it may be in your best interest to hold off on collecting these benefits until if and when there is a settlement of your workers’ comp. case. That way, when you start to collect old age and/or pension benefits, there will be no reduction in your workers’ comp. benefits because your case will have already settled.
Severance benefits are also subject to a credit. Suppose that you injure yourself and the insurance company denies your workers’ comp. claim, requiring you to hire a lawyer and file a Claim Petition on your behalf. Then, a few months later, while your petition is pending before the Workers’ Compensation Judge, you and your employer enter into a separation agreement that provides you will receive a severance payment of $5,000. The Judge later grants your petition and awards you workers’ comp. benefits. The insurance company will be permitted to reduce the amount that it has to pay you by the $5,000 that you received in severance benefits.
If you injure yourself at work and the insurance company denies your claim, you may want to apply for unemployment benefits in an attempt to get a steady check while your claim is working its way through litigation before the Judge. You are only eligible for unemployment benefits if you acknowledge on the application which you submit that you are able and available for some type of work, even if it is part-time, light-duty work. If you state that you are unavailable for work, unemployment will consider you ineligible because you are temporarily removed from the workforce. If you are granted unemployment benefits and then the Judge rules in your favor and grants you benefits, the insurance company will be able to reduce the amount it pays you in workers’ comp. benefits by the amount of unemployment benefits that you received.
The theory behind the law regarding credits is that a person should not be able to “double dip” and receive two forms of benefits at the same time, which would essentially allow the person to receive more on workers’ comp. and other benefits than if they were actually working. In deciding whether you should apply for these benefits while pursuing a workers’ comp. claim, you should contact an experienced workers’ comp. lawyer, preferably a lawyer at Pearson Koutcher Law. We specialize in workers’ comp. law, it’s all we do. Our firm is comprised exclusively of lawyers who have represented injured workers for more than 25 years. We will zealously represent you in your claim and advise you on all facets of your claim, including the pros and cons of applying for other benefits. We will fight the insurance company hard and do our best to ensure that you receive all the workers’ compensation benefits to which you are entitled. Do not hesitate — call us today for a free consultation.