The SSDI Offset Game
Frequently we are involved in claims where claimants spend an inordinate amount of time trying to “maximize” their settlement through creative accounting. As you are likely aware, claimants may not receive more than 80% of their pre-disability income through a combination of workers’ compensation and Social Security disability. Unless a reverse offset state, settlement proceeds are prorated over the claimant’s life expectancy and the monthly amount used to reduce the SSDI benefit. While methodologies for calculating the off-set are laid out in the SSA’s POMS the number that feeds those calculations can be detailed in the workers’ compensation settlement documents and for the most part, will be taken at face value by the SSA. How the number is calculated can be very creative. The life expectancy table selected alone can push the life expectancy 2 to 5 years out on the basis of race and gender.
On January 25, 2010, the South Carolina Supreme Court upheld a circuit court decision that the state’s workers’ compensation commission lacked the authority to force the insurer to stipulate in the settlement agreement the prorated calculation desired by the claimant. Claimant felt that the SC WCC possessed the power to order the language and frequently did and therefore should in her case. However the state courts concurred with the commission that it lacked the authority to force the insurer to include the language. The reasons for the insurers steadfast refusal to include the language were not provided. Perhaps insurers in general are tired of watching claimants game the system and just decided not to participate.
Opinion available here
Comment: I have no problem with someone getting every dollar they are entitled to from our friends at the SSA and Medicare. As a taxpayer, I would like to see those entitlements pared back some. But if available, they sometimes make the difference between settling a case and leaving it open.