Disability Benefits vs. Workers’ Comp. Benefits in Massachusetts
If you are eligible for Workers’ Compensation benefits, you deserve the support that was intended for you. However, the situation gets complicated if you are already receiving social security disability benefits. Before filing for Workers’ Compensation benefits in Massachusetts or accepting a settlement, you may be wondering what affect your decision may have on the disability benefit payments you are already receiving.
Generally, you will be able to collect disability insurance and workers compensation benefits simultaneously in Massachusetts. However, you should be aware that your monthly disability benefits may be reduced in part based on how much you are receiving in Workers’ Compensation payments. This is referred to as an “offset.” There is an opportunity to reduce the offset applied to your disability insurance payments. This reduction, referred to as a Sciarotta allocation, can be achieved by including certain language in your Workers’ Compensation settlement agreement. Your lawyer will be familiar with Sciarotta allocations and can ensure that you receive the maximum amount in available benefits.
The Massachusetts Workers’ Compensation lawyers at the Law Office of John J. Sheehan work hard to see that our clients obtain the benefits that they are entitled to as a result of their injuries. If you have questions about the benefits you are entitled to, call (617) 925-6407 to schedule your first consultation for free.
Will Your Disability Benefits Be Reduced Based on Your Workers’ Compensation Case in MA?
In short, your monthly Social Security Disability Insurance (SSDI) benefits will be reduced based on the amount of Workers’ Compensation benefits you are receiving. In certain situations, this “offset” in disability insurance could eliminate your SSDI benefits entirely.
Determining whether an offset exists requires two calculations. First, you must determine the beneficiary’s highest year of income in the five years prior to being injured. If the beneficiary’s average income over the previous 20 years is higher than this figure, then the 20-year average is the figure that is used.
Second, you must use this figure to determine 80% of the beneficiary’s average current earnings (or “ACE”). To do this, take the highest year of income figure, divide it by 12 to find the monthly ACE, and then multiply that by 80%.
For instance, if John was injured in 2018, and his highest year of income over the previous five years was 2016, when he earned $48,000, John’s ACE would be $4,000. Therefore, the critical 80% ACE figure would be $3,200.
The 80% ACE figure is so important because Massachusetts law limits the combination of Workers’ Compensation benefits and SSDI benefits from exceeding this number. To use the above example, if John’s weekly Workers’ Compensation payments were $500 per week (or $2,166.65 per month), he would only be able to receive up to $1033.35 per month in SSDI benefits. Anything in addition to that would fall into the offset.
How Can You Avoid an Offset of Disability Benefits Due to Workers’ Compensation Benefits in MA?
There is a way for beneficiaries to reduce or even eliminate their SSDI offset due to Workers’ Compensation benefits in Massachusetts. This method is known as a “Sciarotta Allocation.” A Sciarotta Allocation can be achieved only when the beneficiary “settles” their Workers’ Compensation claim and includes explicit language in the settlement agreement.
When you settle a Workers’ Compensation claim, you typically receive a lump sum payment up front, as opposed to traditional Workers’ Compensation benefits that are paid out over time, typically in weekly installments. You can choose, however, to have your settlement payment prorated over time in smaller installments than you would otherwise receive from Workers’ Compensation benefits.
For Sciarotta Allocations to work effectively, these settlement payments are prorated according to the beneficiary’s life expectancy. Determining life expectancy is fairly flexible but must be justified by use of a recognized chart. Breaking down the settlement amount to pay out across the rest of the beneficiary’s life creates a “compensation rate.” Because the compensation rate will be minimal, the offset against SSDI benefits will decrease proportionally.
How to Settle a Workers’ Compensation Claim for a Sciarotta Allocation in MA
When a beneficiary agrees to settle their Workers’ Compensation claim, a number of forms must be filed that detail the settlement. These forms must be reviewed and approved by an administrative judge, so it is especially important that you have the assistance of an experienced Massachusetts Workers’ Compensation lawyer when preparing them.
On DIA Form 117, there is a space where the beneficiary will indicate their weekly compensation rate. Using the correct number is critical for executing an effective Sciarotta Allocation. The appropriate number can be found by dividing the total amount of the settlement by the remaining life expectancy of the beneficiary in weeks.
You will have to explain how you arrived at that life expectancy estimate in the designated space on Form 117. You should also mention that the compensation rate has been prorated as permitted by the holding in Sciarotta v. Bowen, the case that created the Sciarotta Allocation.
If your Workers’ Compensation settlement is approved by the administrative judge, you will likely be able to continue to receive the full amount of your SSDI weekly payments as you had previously. This makes Sciarotta Allocations a lucrative option for disability benefit recipients across the Commonwealth of Massachusetts. For help negotiating a Workers’ Compensation settlement in order to engage in a Sciarotta Allocation, speak to one of our seasoned Boston Workers’ Compensation lawyers today.
How Can a Lawyer Help You Receive Disability and Workers’ Compensation Benefits in MA?
Navigating the complex area of Workers’ Compensation and social security benefits requires an experienced legal eye. Your Wakefield Workers’ Compensation attorney can draft and evaluate Workers’ Compensation settlement agreements, complete and file the requisite forms, and help you calculate your weekly benefits to set you on the best path for you.
Concerned About Disability Benefit Offset After Receiving Workers’ Compensation Benefits in MA? We Can Help
The hardworking Somerville Workers’ Compensation attorneys at The Law Office of John J. Sheehan are waiting for your call. Schedule your initial consultation to discuss your disability benefit options today. You can reach us at (617) 925-6407.